Saade v Registrar-General

[1993] HCATrans 132

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S86 of 1992

B e t w e e n -

NOELEEN SAADE

Applicant

and

REGISTRAR GENERAL

First Respondent

SAADE KHOURY

Second Respondent

RONALD JOHN POPPERT

Third Respondent

Application for special leave

to appeal

Saade 6 21/5/93

DAWSON J
GAUDRON J

MCHUGH J

TRANSCRIPT OF fROCEEDINGS

AT SYDNEY ON FRIDAY, 21 MAY 1993, AT 9.56 AM

(Continued from 30/4/93)

Copyright in the High Court of Australia

MR D.M.J. BENNETT, QC: If the Court pleases, I appear for

the applicant with my learned friends,

MR P. HALL, QC and MR D. MALLON.	(instructed by
Dibbs Crowther & Osborne)

MR B.A.J. COLES, QC: If Your Honours please, I appear for

the respondent with my learned friend,

MR J.E. SEXTON. (instructed by the Crown Solicitor

for New South Wales)

DAWSON J: Yes, Mr Bennett.

MR BENNETT:  Your Honours, I have an outline of submissions

which I hand to the Court.

DAWSON J: Yes, Mr Bennett.

MR BENNETT:  Your Honours, the section appears at pages 124

and 125. Might I just quickly show Your Honours

the structure of that. It is a very old section.

It goes back to the various Acts in the last

century and the ambiguities in it have been
faithfully preserved when the Act has been

re-enacted.

126.(1) Any person deprived of land .....

(a) in consequence of fraud; .....

may bring and prosecute in any Court ..... an

action for the recovery of damages.

(2) An action ..... shall, ..... be brought -

subject to these other subsections -

against the person -

(b) upon whose application the erroneous

registration was made; or

(c) who acquired title to the land ..... through

the fraud.

So you have got the two people, the fraudster who

achieves the erroneous or fraudulent registration

and the person who gets the benefit of it.

DAWSON J: In this case, Mr Saade and Mr Khoury?

MR BENNETT: Yes, Your Honour. Subsection(3) then says:

In every case in which the fraud, error,

omission, or misdescription occurs upon a

transfer for value -

Saade 7 21/5/93

that is this case -

the transferor receiving the value -

that is Saade -

shall be regarded as the person upon whose

application the certificate of title was

issued.

So that just confirms that (b)	is Saade. It
stresses that is the person we	are talking about,
in a sense is the key person.	Subsection (4) does
the same thing:

Except in the case of fraud -

well, this was fraud, so the paragraph does not

apply, but it is relevant to the structure -

the person upon whose application such land

was brought under the provisions of this Act,

or such erroneous registration was made -

again, Saade -

shall, upon a transfer of such land bona fide

for value cease to be liable -

so there is special provision that, if there is no

fraud, the person who caused the transfer to be

made ceases to be liable on a further transfer for

value. Then we get (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 -

that is a reference to subsection (4), or - and

this is the section we are concerned with -

GAUDRON J:  Do you say it is confined to section 4?

MR BENNETT: Probably, Your Honour. It is not relevant to

this argument, but probably, yes. It talks about

"such person" and "ceases to be liable ..... as

aforesaid", which are the precise words at the end

of (4). Those words appear three lines later and

it would seem to suggest it is referring to it.

But the part which is relevant is paragraph (b):

when the person liable for damages -

and that is the ambiguity -

Saade 21/5/93

under this section is dead, bankrupt, or

insolvent, or cannot be found within the

jurisdiction,

then you can sue the Registrar-General.	I will
come back to 127 later on.

Two problems arise under subsection (5). The

first is, what if they are both parties to the

fraud, the transferor and transferee as here? The

phrase here is "the person liable for damages under

the section is dead, bankrupt" et cetera. There

was a decision of the Supreme Court of Queensland

in 1897 on virtually an identical section which

said very clearly that what this is referring to is

the person referred to in (3) and (4), the.

principal felon, if one likes, the transferor, and
that decision is referred to in Cannaway in 1902 as

the principal authority on this section. It was

three years before this consolidation of the Act

and, in our respectful submission, it was clearly

intended to be preserved. I will hand up copies

of that case and show Your Honours the passages in

a moment.

It was also inferentially supported by this

Court in Registrar-General v Behn, and I will hand

that up to Your Honours in a moment. May I, just

before doing that, show Your Honours the second

point. The words "or cannot be found within the

jurisdiction", the situation here was that Saade

absconded to Lebanon, in fact with a child of the

marriage, at the time and was there for about

10 years. When the trial came on he came back to

Australia. There is a question as to whether that

continues to applies or applies once and for all.

Both the two cases I have referred to suggest that

it is once and for all.	You only have to establish
it at the time.

Again, before I come to the cases, may I just

say this to the Court. Both those constructions

are in accordance with manifest common sense and

the intention of the legislature because, in the

normal case - and it is interesting in how many of

the cases under this section this is so - the

person defrauded does not know whether the

recipient is a party to the fraud or not. The

person knows there has been a forged transfer and

knows that the transferor is fraudulent. The

person does not know if the transferee is a party

or not. Both in this case and in the Queensland

case it is interesting to note that there was some

vacillating on that subject. The Queensland case

refers to that as being one of the major factors

because the purpose of the section is to enable you

to, if the principal offender is in some way not a

Saade 9 21/5/93

person you can get an effective judgment against,

to sue the Registrar-General.

May I hand up to Your Honours those two cases.

The Queensland case is Cox v Bourne, (1897) QLJ 66,

and the case in this Court is Registrar-General v

Behn, (1981) 148 CLR 562. If I take Your Honours

first to Cox v Bourne - I will not take

Your Honours through the facts on a leave

application but Levy was the transferor, the

principal person involved, and a Mrs Dare was the

transferee. Initially the plaintiff commenced

proceedings alleging that Mrs Dare was a bona fide
purchaser and then during the trial, as here, the

plaintiff changed his mind on that possibility.

Page 68, line 4 in the first column:

Mr. Lukin, for the defendant Bourne, maintains

that the plaintiff is not entitled to judgment
in this action, and contends that upon the

facts as now appearing plaintiff was bound to

exhaust his remedies against Mrs. Dare -

the purchaser -

who was neither dead nor insolvent, and had

not absconded, before seeking recourse to the

Assurance Fund, that the action is, therefore,

brought too soon -

and he goes on about that. Then in the second

column, a third of the way down:

This being the state of the case, I

proceed to consider whether the plaintiff's

prima facie case against the defendant Bourne

is displaced by showing (as was shown at the

trial) that Levy was not the only party to the

fraud ..... It happens that in this.case

Mrs. Dare, the other party to the fraud,

became herself registered as

proprietor ..... But I do not think that this

circumstance is material. S. 126 -

it had the same number -

gives a right of action (which, indeed, would

probably have existed at common law) against

"the person who derives benefit from the fraud," which, I think, must be taken to include any person who derives benefit from

the fraud ..... It may happen that several

persons derive benefit from the same fraud,
but that this circumstance is wholly unknown

to the person defrauded. Would it, then, be a

good defence to an action against the

Registrar of Titles to allege that another

Saade 10 21/5/93

person, besides the person who is dead or

insolvent or has absconded, derived benefit

from the fraud, and that that other person is

alive, has not absconded, and is not

insolvent; at any rate, without also alleging

that that fact is known to the plaintiff? If

this is the true construction, the Act sets a

trap for an innocent victim of fraud -

And one could not see a clearer case of that than

this one -

which I cannot think that the Legislature

intended. The victim's right of action would

depend not upon the facts known to him, which

would be sufficient to establish his right -

et cetera. So that is on the first point. While I

am on this case, I may as well show Your Honours

what it says about the second point, then I only

need to go to each case once.	It is the next few
lines, on page 69 line 3:

I think that when once the conditions set

forth in s.127 exist, with respect to the

actual and immediate perpetrator of the fraud,

the right of action is complete against the

Registrar of Titles, whose liability, it seems

to me, is put in the place of that of the

person defrauded. And even if the plaintiff

knew of the existence of other parties to the

fraud, it is ordinarily no answer to an action

against one person for a wrong to show that

some other person is also liable.

So the action is complete once it is

established - - -

GAUDRON J: Was the section 127 there referred to the same as

section 127 in the present Act or does it refer to

what is section 126 - - -

MR BENNETT:	No, Your Honour. Section 127 is set out on page 68, three-quarters of the way down the first
column, and it seems to be 126(5).

GAUDRON J: Subsection (5), yes, thank you.

MR BENNETT:  The Registrar-General v Behn which I have

handed to Your Honours makes both points again,

although in different circumstances. If

Your Honours go first to page 571, this was a case where there was only one fraudster involved so it

is inferential on the first point, but at the

bottom of page 571, about point 8 against the word

"damages" in the left margin:

Saade 11 21/5/93

The respective measures of the damages recoverable by action against the person primarily liable and against the Registrar- General_ are the same, but the liabilities are several, and the extinction of the cause of action against the person primarily liable

does not extinguish the cause of action

against the Registrar-General.

This was a case where there had been a recovery of
damages against the principal fraudster but only on

a very limited cause of action, and the main cause

of action had not been brought and was probably

barred by Anshun. The argument was you could not

sue the Registrar-General because you were barred

against the principal fraudster. But, more
importantly, higher up on that page, the first full

paragraph, this is the second point:

The relevant condition imposed by sub-

s.(5)(b) upon the arising of the statutory

right to damages out of the assurance fund is

that "the person liable for damages under this

section" be insolvent. The phrase "liable for

damages" refers to the liability created by

the section and that liability is imposed by

sub-s.(2) upon a person so soon as a

deprivation falling within sub-s.(l) occurs.

The phrase does not refer to a liability to

suffer the recovery of a judgment for damages

either at the time when proceedings under sub-

s.(5) are commenced or at the time when those

proceedings are brought to judgment. The

insolvent to whose liability sub-s.(5)(b)
refers is the person upon whom sub-s.(2)(c)

imposes the statutory liability, that is to

say, Cornie.	When liability under the section
was imposed on Cornie, it was insolvent.	The

requirements of sub-s.(5)(b) were then

fulfilled, and the cause of action against the

appellant arose.

There is a similar short paragraph in the judgment

of the Chief Justice Sir Harry Gibbs, with which

the present Chief Justice agreed. That appears at

page 566, the bottom line:

in other words, the liability of the
Registrar-General is co-extensive with the
liability of the person primarily responsible

for the fraud.

Then the next page, line 5:

It is apparent that s.126(l)(a) was not

intended merely to declare that a person

deprived of land in consequence of fraud may

Saade 12 21/5/93

bring such action as was available to

him ..... creates a statutory cause of action.

Then about 10 lines further down, against the words

"the lapse of time." in the margin:

If a person who is so liable is insolvent the

Registrar-General is liable for the damages

which might have been recovered against him.

Plainly the intention of the legislature is

that the successful plaintiff can recover

damages commensurate with the loss he has

sustained -

to put him in the same position.

Now, Your Honours, we would therefore submit

that in the one sentence which appears at page 125

of the application book His Honour

Mr Justice Meagher failed to take into account that

there was clear authority to the contrary.	He
said:

It is difficult to see how, on the learned

judge's interpretation of the facts, the

Registrar General could possibly be liable

under s.126. His Honour must, therefore, have

taken the view that the Registrar General was

liable under s.127.

That is the whole of the discussion of this point.

In the concurring judgment of Justice Sheller at

page 129 there is a short discussion where

His Honour simply says, without mentioning either

of these cases:

Powell J found that Mr Khoury was not a

bona fide purchaser ..... but rather a knowing

and willing party ..... Thus Mr Khoury both fell

within the class of person described in

s 126(2)(c) ..... It follows that subs (5) did

not apply -

So it is just a straight rejection of the point

established in the earlier case. There is no

injustice to the statutory fund because the fund

has a right of recourse against the wrongdoers

under sections 131 and 132.

DAWSON J: Could you get a judgment against both the

Registrar-General and, in this case, Mr Khoury?

MR BENNETT: Yes, Your Honour. In Behn that occurred. If a

person is insolvent, for example, or bankrupt, yes.

GAUDRON J: Can you explain to me how it can be that if the

Registrar-General was making an argument that he

Saade 13 21/5/93

is not liable because another party is, he can

file a notice of appeal that does not seek an

order against that party. I would have thought

that must be a case where he was obliged to make

some election.

MR BENNETT:  Your Honour, we would so submit.

Proceedurally, the result is quite bizarre.

His Honour Justice Meagher referred to the

melancholy consequence - - -

GAUDRON J: But it must be that you just cannot pursue an

appeal on that ground without seeking an order, I

should have thought.

MR BENNETT: Precisely, Your Honour, we would so submit.

GAUDRON J: As a matter of plain procedural fairness to

everyone.

MR BENNETT:  Your Honour, we put this case as one where the

interest of justice, apart from anything else,

require that the application be granted. There is

a secondary question. I will not take Your Honours

to it, unless Your Honours wish me to, under

section 127. There is an alternative argument

based on the meaning of the word "inapplicable" in

that section which the court rejected very briefly.

The issue is important for this reason: since

Breskvar v Wall, where one has absolute

indefeasibility, this type of problem is occurring

more and more; these sections which seem to be

similar in most of the States contain this

ambiguity and have passed it down .... we would

submit, with respect, a settled interpretation of

it which the Court of Appeal has simply ignored.

It ought to be reaffirmed and this case provides a

useful opportunity to do so and to create fairness in relation to people who are deprived of title by

means of the system of indefeasibility which

operates for the benefit of all registered
proprietors.	And the protection of that system,

the thing which enables that system to work fairly,

notwithstanding the dramatic effect of depriving a

person of land when there is a forged transfer

registered, is this provision.

In our respectful submission, the application

should be granted.

DAWSON J:	Thank you, Mr Bennett.	Mr Coles.
MR COLES:	May it please Your Honours.	Both in the Court of

Appeal and before Mr Justice Powell the focus of the present applicant's case was primarily placed

on section 127 of the Act. It would now appear, we

would think, Your Honours, that the Court of

Saade 14 21/5/93

Appeal's determination, from which leave is sought

to be brought, as to which, of course, is focused

on the non-applicability of section 127, is not

really challenged in its accuracy. Rather, what is

put now before Your Honours is that there should

have been a verdict for the applicant based on

section 126 on the footing that section 126(5)

applied, that is to say that there was a person

liable under section 126(2) who satisfied the

requirements of subsection (5), in this case by
being absent from the country.

That requires the applicant, firstly, to identify Mr Saade as a person who qualifies for

liability under section 126(2); (b) or (c) would be

the only relevant ones. He could not be a (b)

person because this Court has held in Franzon and the Registrar-General that erroneous registration

means a registration resulting from some error in

the registration process, some disconformity

between the instrument and the administrative

processes. So inasmuch as it would appear that

subsection (3), upon which reliance is placed,

seems to be referable more to subparagraph (b) of

subsection (2) than any other subparagraph, the

conclusion would readily enough be reached, we

would think, that subsection (3), even treating

Mr Saade as in effect the person upon whose

application a certificate of title was issued, and

therefore the person upon whose application, I

suppose, the so-called erroneous registration was

effected, treating Mr Saade as qualifying in that respect, one still cannot, consistently with this

Court's decision in Franzon, treat Mr Saade as a

subsection (b) person.

Plainly, as a matter of language, Mr Saade is

not a subsection (c) person. Mr Khoury is the

subsection {c) person because it was Mr Khoury who

did, and Mr Saade who did not, acquire title to the

land through the fraud. Equally, this Court has

held in the same case, that is to say Franzon's

case, that the person referred to in subsection (c)

is not the person - rather, I should say before
subsection (c) applies, one must identify fraud on

the part of the person acquiring title to the land.

Mr Justice Powell so identified fraud and Mr Khoury

was plainly a participant in that fraud. That

means there was a cause of action against Mr Khoury

under subsection (c) as, indeed, the Court of

Appeal found and as, indeed, Mr Justice Powell had

found, but for His Honour's fears at the trial as

to the operation of the question of some estoppel.

That being the case, Your Honours, one asks

then, bearing in mind that subsection (5) cannot

provide a means for access to the Torrens assurance

Saade 15 21/5/93

fund unless one has a proper defendant under

subsection (2), how is it that Mr Saade could ever

qualify as a defendant under section 126(2)? Now,

the Cox v Bourne line of country is significant in

one very material respect. In Cox v Bourne, as

with a number of other authorities, including Heron

v Broadbent and others to which the trial judge

referred, there is one significant difference

between that type of case and the present. That

significant difference is this: in each of those

case the fraudster, the Mr Saade, the person who
effects the fraud in the first instance, himself in

the course of that process first causes himself to

be registered on the title and then, once so

registered, causes himself, as the registered

proprietor fraudulently so recorded, to deal with

the land for his own advantage. In those cases, in

Cox v Bourne plainly, and the others to which the

trial judge referred, it has this result that it

immediately makes Mr Saade something, if they were

the facts, it immediately makes the fraudster a

person to whom 126(c) applies. That is to say the
person perpetrating the fraud is a person who

himself acquired title by fraud and, therefore,

there is a cause of action under subsection (2).

And if that person is insolvent or beyond the seas,

there is a cause of action against the assurance

fund under subsection (5), but not otherwise.

The difficulty, as has been pointed out in a

number of cases in New South Wales, is this: where

the forger as in the present case does not himself take title to the land, then there is seemingly no

cause of action against the assurance fund under

subsection (5). At least that seems to have been

the conventional wisdom in New South Wales for some

years and is supported in terms by at least one

decision, that is to say a decision of

Mr Justice Needham in Amor v Penrith Projects which

I am not sure we need to burden Your Honours with a

copy unless Your Honours would wish to see one.

The problem is unless the forger himself acquires

title to the land, and therefore becomes a

subparagraph (c) person under subsection (2), then

there is simply no basis for bringing a cause of

action against him and, therefore, since it is the

subsection (2) defendant who must satisfy the

subparagraph (S)(b) criteria of insolvency or

absence from the jurisdiction or the like, then

there can be no cause of action against the

Registrar - - -

GAUDRON J: Assume you are right. How can you file a notice

of appeal without seeking an order against the

person who is also party to the proceedings whom,

on your argument, is liable and because of his

liability you escape it?

Saade 16 21/5/93

MR COLES:  I can only answer that by saying that no point

certainly was taken about that procedural

irregularity, if it were one -

DAWSON J:	No one was there to take it.
MR COLES:	- - -we do not concede that it was at the moment.

GAUDRON J: No one was there to take it. They were taking

advantage of it. That is clearly what was

happening.

MR COLES:	The appeal was brought from the judgment or order of the trial judge, which was a judgment in favour
of Mrs Saade, for damages against the appellant.
It was a matter of indifference, in that respect,
practically whether it was necessary also for the
Registrar-General to seek any other order. There
was no cross-claim, I should say that relevantly
mattered in that respect.

GAUDRON J: You see, on one view, if section (S)(a) is not

confined to subsection (4) then it will avail you

nothing if you do not seek an order against the

person liable because, in the circumstances of

this case, he will have ceased to be liable by

virtue of the judgment itself.

MR COLES: With respect, I can only agree with Mr Bennett

that the correlation between the expressions at the

foot of subsection (4) and the prefatory words of

(S)(a) are so compelling that the conclusion for

which, I think, we both contend must be the correct

one.

GAUDRON J: It may be the same result for other reasons, in

any event.

MR COLES: Otherwise there is no apparent answer to

Your Honour's question save that - indeed, the

unhappy feature of this case is that it was well

open - and this may be something Your Honours

perhaps have to take into account in considering

whether the justice of the case does require a

grant of leave, if other criteria are satisfied -

it was open to Mrs Saade herself to bring an appeal

against the finding against her, that Mr Khoury's

liability had been in effect destroyed. He plainly

was liable to her but His Honour at the trial

erroneously concluded th.at she was estopped from

maintaining that claim as a result of some

interlocutory activity.

DAWSON J: It is a bizarre result, is it not?

MR COLES: It is an unfortunate result, with respect, and

one can only wish, from Mrs Saade's point of view,

Saade 17 21/5/93

that she had brought an appeal herself against

Mr Khoury. One would imagine that the present

proceedings would be not distracting Your Honours.

Your Honours, the only other matter we would want to say in response to what Mr Bennett has said

is this, that if what I have just put to

Your Honours is not right, that Mr Saade is a

subsection (2) person and therefore, prima facie,

there was a scope there for inquiring whether he

satisfied - or whether the plaintiff, in effect,

proved the subsection (5)(b) ingredients, one finds

this state of affairs extremely curious if the

cause of action against the Registrar-General can
be pursued in the case of a person said to

satisfied a subsection (5) ingredient where that person is in the country at the very time of the

trial. Indeed, Mr Saade not only was in the

country but he was called on subpoena by one of the

other parties and gave evidence at the trial.	He
was certainly not absent from the jurisdiction.

Now, we would be inclined to suggest that

Your Honours would conclude that that point of

itself is so unlikely to arise in the future that

little explication from this Court is required as

to the statutory conundrums that may arise as to
the correct time at which a (5)(b) defendant must

be absent. But there is not, we would respectfully

submit, a seriously arguable consideration to the

contrary for these reasons: firstly, it is a

truism of the administration of this branch of

legal activity that damages for deprivation of

interest in land under section 126 are assessed at

the date of the trial. That was certainly said by
the Court of Appeal in Behn's case and there was no

contrary indication by this Court when the appeal

came to this Court from The Registrar-General v

Behn. It would therefore be very curious if, at

the very time when one is to assess damages by

reference to subsection (5), one were to assess

them on a hypothesis which was contrary to the fact

to which subsection (5) was directed.

GAUDRON J: Would there not, however, be a limitation

consideration to be taken into account in all of

this?

MR COLES:  In the present case, that may have been the case.

The trial judge and the Court of Appeal both noted

that Mrs Saade had sought to sue Mr Saade and had

never served him.

GAUDRON J: No. And more than six years had elapsed by the

time, had it not, that he re-emerged?

Saade	18	21/5/93
MR COLES:	Yes, but the statement of claim had issued.	Now,

I should say, however, that there is in New South

Wales a two year cap on serving statements of claim

but, having said that, there is also provision

which no doubt would be amply activated for

extending the two year cap where a person - - -

GAUDRON J: Within the two years or

MR COLES:  No, within or without. There are two routes to

that end, either the extension of time provisions

under the rules or the irregularity proceedings. out-of-time statement of claim and have the

irregularity excused if it is a proper case. So

there was no impediment, in our submission, should
the question have arisen, upon Mrs Saade serving

Mr Saade - indeed, even in the precincts of the

court as he gave evidence or perhaps after he gave

evidence before Mr Justice Powell. But she chose

not to do so and, again, Your Honours may be

required to consider whether the justice of the

case -

GAUDRON J: I do not think you can serve within the precincts

of the court, can you?

MR COLES:  It has been said so, Your Honour. I do not stay

to address Your Honours on that question.	He
certainly was amenable to being served and

Your Honours may have to consider, we have to sadly

record, that her failure to do so may be yet

another consideration militating against what

otherwise might be a great injustice to Mrs Saade

if leave were not granted.

Those are our submissions, if the Court

pleases.

DAWSON J: Thank you, Mr Coles.

We need not trouble you in reply, Mr Bennett.

There will be a grant of special leave in this

case.

MR BENNETT:  Would Your Honours be prepared to permit me to

amend the draft notice of appeal by adding a ground

based upon the failure of the Registrar-General to

appeal against Mr Khoury?

DAWSON J:	Mr Coles?
MR COLES:	I cannot oppose the application to amend,

Your Honours, but - - -

Saade 19 21/5/93

DAWSON J: You can debate the issue at a later stage. Leave

will be granted.

MR BENNETT: If Your Honours please.

AT 10.27 AM THE MATTER WAS ADJOURNED SINE DIE

Saade 20 21/5/93