Whittem v Arcadi; Nield v Whittem

[1993] HCATrans 72

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A20 of 1992

B e t w e e n -

BRUCE CORBETT WHITTEM

Applicant

and

ANTONIO ARCADI

Respondent

Office of the Registry

Adelaide No A21 of 1992

B e t w e e n -

HUGH COWELL NIELD

Applicant

and

BRUCE CORBETT WHITTEM

Respondent

Applications for special leave

to appeal

DEANE J
DAWSON J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 12 MARCH 1993, AT 10.32 AM

Copyright in the High Court of Australia

Whittem 1 12/3/93

MR R.J. WHITINGTON: If it please the Court, I appear for

the applicant in the first matter, and for the

respondent in the second matter.	(instructed by
Grope Hamilton)

MR G.B. HEVEY:  If it please the Court, I appear for with my

learned friend, MRS. BOLZON, for the respondent.

(instructed by Michell Sillar Lynch & Meyer)

MR D.M.J. BENNETT, QC: If it please the Court, I appear

with my learned friend, MR S.H. MILAZZO, for the

applicant in the second matter.	(instructed by
Piper Alderman)

DEANE J:  Am I correct Mr Whitington, that if the

application in Neild succeeds, you wish to press on

with an application for leave in Whittem v Arcadi?

MR WHITINGTON: That it so.

DEANE J: But if the application in Neild fails you do not

wish to press on with your application for leave?

MR WHITINGTON:  Yes, that would be so.

DEANE J: If you just give us a moment. In that case, the

convenient course would seem to be to hear Mr

Bennett in the second matter. Yes, Mr Bennett.

MR BENNETT: If the Court pleases.

DEANE J:  You seem to be travelling around the country

wherever our video camera goes, Mr Bennett.

MR BENNETT:  Technology is wonderful when it enables one to

go from Sydney to Adelaide or Brisbane to appear

before Your Honours in Canberra. Your Honours,

when this Court decided Breskvar v Wall in 1971, it

resolved a long-standing controversy at law schools

and among legal academics and practitioners between

the deferred indefeasibility school and the

absolute indefeasibility school.

It resolved that dispute for six of the eight

jurisdictions in Australia because the provisions of the Real Property Act in Queensland which were

involved in that case were similar to those in all

the other States except South Australia and in the Australian Capital Territory. South Australia and the Northern Territory, however, have a totally

different form of a section concerning

indefeasibility and the issue which arose in this

case is whether there is absolute or deferred
indefeasibility where there is a forged or void

instrument under that section.

Whittem 12/3/93

That is an issue which has been considered by

four judges in this,State - two of the Supreme

Court and two of the Federal Court - and they have

divided two judges to two on that issue.	The
point is a classic patent ambiguity. If

Your Honours go to page 41 of the application book

Your Honours will see the provision at section 69 of the Real Property Act. It starts at line 10.

DEANE J:  Mr Bennett, can I take you back for a moment.

Implicit in what you said is the fact that this provision has been copied or adopted in the Northern

Territory. Is that so?

MR BENNETT:  Your Honour, the Northern Territory provision

is not identical and there are differences in other

parts of the provision which might affect some of

the arguments. But the words which are concerned
in this case are the same in South Australia and

the Northern Territory.

DEANE J: And the same comma?

MR BENNETT: Yes, Your Honour, I am almost certain there is.

I will have that checked by my learned junior, but my recollection is that there is a comma.

Your Honours see there are the usual

preliminary words at line 10, then subsection (I)

deals with fraud and says that there is an

exception in the case of fraud which does not

affect a bona fide purchaser:

for valuable consideration, or any person bona

fide claiming through or under him.

Then subsection (II) deals with forgery or

disability. It says:

In the case of a certificate ..... obtained by

forgery or by means of an insufficient power

of attorney or from a person under some legal

disability, in which case the certificate or

other instrument of title shall be void -

so, stopping there, there was a simple provision
that the instrument of title would be void if

obtained by a forged instrument. That, of course,

would create deferred indefeasibility. Then there

is a proviso:

Provided that the title of a registered

proprietor who has taken bona fide for

valuable consideration shall not be affected

by reason that a certificate or other

instrument of title was obtained by any person

through whom he claims title from a person

Whittem 3 12/3/93

under disability, or by any of the means

aforesaid.

Now, the ambiguity is this: the view for which we

contend says that that means that the title is not

affected if it is obtained bona fide and it was

obtained through another person, whether it is

disability or any of the other means aforesaid.	In
other words, the words:

or by any of the means aforesaid -

relate back to the words preceding the word

"title". The alternative view is that those words

relate back further, so that the words:

from a person under disability -

govern the reference to "obtaining through another

person". So that deferred indefeasibility only

operates in the case of disability.

Now, it is a classic, "All my black and white horses to x and my other horses toy" case. Does

he get the black horses and the white horses or the

black and white horses? It is a classic case where

one can read it either way.

DEANE J:  The comma does not help you though, does it?

MR BENNETT:	The comma does not help me, Your Honour, no. have not put anything in the outline about	I
punctuation. There are some early cases which suggest that one should not look at punctuation.
The more modern view is that one should.

It would ultimately be our submission that

whether or not one looks at punctuation depends, to

some extent, on the date of the statute and that, with early statutes, punctuation is less reliable

than with more modern statutes because of the fact

that in early statutes they may well have been

inserted by printers or other persons rather than

as part of the drafting process.

But the other aspect is that commas in the

last century, and this is an 1886 Act, were used

very often with less precision than they are today

and in different ways to the ways they are used

today. And if my construction is right there is a

reason for the comma, and that is that the two

phrases "from a person under disability" and "by

any of the means aforesaid" are the two phrases

which are being compared by the disjunctive "or".

They begin with a different preposition, one begins

with "from" and one begins with "by", and the comma

may well be a recognition of that grammatical

Whitten 12/3/93

difference which requires a separation of that

type.

TOOHEY J: Excuse me, Mr Bennett, are these provisions the

original provisions of the Act?

MR BENNETT:  Your Honour, no, the original Act I think was

in the 1860s. I will have that checked in a

moment, Your Honour.

TOOHEY J: There are two questions involved in the one

question, namely, whether the Real Property Act of

1886 was the original Act, but so far as the 1886

Act is concerned, are the provisions with which we

are concerned in their original form?

MR BENNETT:  Yes, Your Honour. What I am not certain of is

whether it was identical in the precursor to this Act, and my recollection is that this section did

not appear in this sort of form. But I am not

certain of that and obviously that will be

clarified before any appeal.

Now, Your Honours, the second reading speech

makes it absolutely clear, in a way that second

reading speeches rarely do, exactly what was
intended, and that appears at pages 43 to 44 of the
application book, and they deal with the precise

point and answer it, and Your Honours see at the

bottom of page 43 line 28:

"Subsection 2 related to titles obtained by

forgery or legal disability. A man who

obtained a title by means of forgery would

have a title which could be defeated by the

person whose name was forged. This was right,

because the person whose signature was forged

had no means of protecting himself, whilst the

person who took the forged signature had the

opportunity of satisfying himself of its

genuineness. Any certificate under those

circumstances would not convey the title. It

was necessary to protect innocent persons who	had no means of tracing deception, and
therefore any one purchasing bona fide from
the person who held a forged certificate would
have his title upheld notwithstanding the
forgery. Under this subsection there would be
no certificate of title which might not be ultimately challenged either immediately or in the remote future, if it were transmitted by means of a forged instrument. Therefore he
thought they had taken taken the proper course
to protect any honest man.

et cetera. So, Parliament clearly intended

deferred indefeasibility, and the evil to which the

Whittem 5 12/3/93

section was directed, if one is limited to that

because there is no section lSAA in South Australia

- the mischief to which the section was directed

was the mischief of a person who took a forged

transfer being able to defeat an innocent owner

when he registered it, as long as he was innocent,

the evil being that he had more chance of detecting
the forgery than the owner who would not know his

signature had been forged.

So, we know the mischief. We know exactly the

remedy selected and there was a patent ambiguity

which can readily be resolved, and in my respectful

submission, the resolution of that is a matter of

importance. It is a matter which effects South

Australia and the Northern Territory. It is necessary to determine whether the decision

effecting six jurisdictions in Breskvar v Wall

applies to the other two jurisdictions and the

difference of opinion between two judges and two

judges makes it clear that the point is one on

which minds can and have differed.

It is interesting to note that

Justice Debelle, at page 44, at line 20, says:

I do not think that the reference in the

second reading speech should override the

plain meaning of the words -

We would respectfully submit that the other meaning

is at least equally open, if not more open. It is

more likely that the other meaning is correct on

the syntax alone, because if the absolute

indefeasibility view was correct, why, one wonders,

was forgery put in subsection (II) at all. It is

simply not distinguished from other cases of fraud,

and the only reason for putting forgery in

subsection (II) must have been the reason which in

fact we know from the second reading speech, namely

to create deferred indefeasibility in the case of

forgery.

Your Honours will recall, of course, that

prior to Breskvar v Wall, the better view in
Australia was in favour of deferred
indefeasibility. There was a decision in Victoria

in Clements v Ellis in which, although the reasons

given by the majority differed, there was a strong

judgment by Chief Justice Sir Owen Dixon in favour

of deferred indefeasibility. There was a New

Zealand decision in which the judges had divided

two votes to two, Boyd v Mayor of Wellington and

there was the Privy Council decision in

Assets Co Ltd v Mere Roihi, and there were various

decisions in New South Wales, which Your Honours no

doubt recall. But the Privy Council in Frazer v

Whittem 6 12/3/93

Walker created a revolution which was followed by

this Court in Breskvar v Wall. That is interesting

when one goes back to one of the original - to the

home of the Torrens system, if one likes, where one

sees that there is a section which was far more

clearly in favour of deferred indefeasibility.

Now, the second aspect of that, it is an

aspect on which I must succeed to win the appeal,

although it is not on its own a special leave

point, but it is an equally short question, it is

whether the word "forgery" has some special narrow

meaning in subsection (II).

Your Honours will recall that Justice Debelle took the view that "forgery", in subsection (II),

had a narrow meaning, and did not include matters

such as altering writing above a signature but only

included an actual forged signature. In this case,
of course, there was an actual forged signature of
the witness and, unlike Brott's case, the signature
of the witness is an essential precursor to

registration and the name of the witness was

forged. It was not the person named. The two

people who bore the name, the two justices of the

peace who bore that name, both gave evidence that

it was not them. And as a result, this was a case

of forgery in the strict sense.

If the Court was against me on that, we would

say in any event that "forgery", in

subsection (II), has its normal meaning, and it is

clear from various of the judgments in Brott's

case, as well as earlier cases, that it certainly

includes altering words above a signature or adding

words above a signature. And a number of the

judgments in Brott's case refer to the addition of

words above a signature as being forgery. So we

would submit that that point is not going to detain

Your Honours for long.

There is a third issue which was raised by the dissenting judge, Justice Olsson, who decided in

favour of the present applicant on both the points

I have addressed, but found against us on another

point. He said that had the solicitor not been

negligent, and the mortgage been registered, then
there would have been time or an opportunity to

exercise the power of sale before anyone found out

about it and thereby to confer deferred

indefeasibility.

That, we respectfully submit, is simply wrong.

The provisions of the Real Property Act require notice to the mortgagor before sale, so had the

mortgagee obtained registration and immediately

sought to exercise the power of sale, he would have

Whittem 12/3/93

needed to notify the mortgagor, who would no doubt have commenced these proceedings and we would have

been exactly where we are today. So, in our

respectful submission, that argument, which was not

raised at the trial and was only referred to by one

of the judges in the Full Court, is simply not a

reason why leave would be refused.

The point is therefore likely to be decisive

of the case. I am told by my learned junior that

there is a comma in the Northern Territory Act, so
that answers Your Honour's first question. May it

please the Court.

DEANE J: Thank you, Mr Bennett. Yes, Mr Whitington.

MR WHITINGTON:  May it please the Court, in our submission

the application turns entirely on the syntax and
the punctuation of a short section in the Real

Property Act which is, subject to a possible

cognate section in the Northern Territory, unique

to South Australia and which raises an issue of

purely local concern.

There is no issue in this State as to whether

or not Breskvar v Wall applies. It clearly applies

and governs the operation of the Torrens Title

system in this State, subject only to the express

statutory provisions which might affect it. The

matter was fully considered in the Supreme Court,

it has been fully considered now on a number of

occasions in South Australia. No new argument has

been put and, in our respectful submission, no

issue can arise on the appeal that has not already

been properly canvassed and dealt with.

The interpretation placed upon the section by

the majority of the Full Court plainly accords with

the natural meaning of the words and punctuation

actually used in the provision. In our submission,

words can be strained to almost any meaning, but

read with a reasonable degree of good will. This

section has only one meaning, and it is significant

to place emphasis on the repetition of the

preposition "by" in the section. Can I take the

Court to page 41 of the appeal book, at line 35.

The Court will see that the - perhaps if I go back

to the proviso again:

Provided that the title a registered

proprietor who has taken bona fide for

valuable consideration shall not be affected

by reason that a certificate other instrument

of title was obtained by any person through

whom he claims title from a person under

disability, or by any of the means aforesaid:"

Whittem 8 12/3/93

The repetition of the preposition "by" is of significance. The use of the word "or" is also

significant as that indicates that the phrase, "by

any of the means aforesaid" is intended to qualify

the verb "was obtained" .

It was submitted by my learned friend that a

contrary meaning should be placed upon the section.

However, if the meaning for which the applicant

contends was the intention, it could have been

expressed quite easily. Would the Court please

turn to page 43 of the appeal book where there is

referred to a passage from a report of 1873 which

gave rise to the 1886 amendment, and that contains

a proviso, different in terms of that actually
enacted, but which would, in fact, clearly do the

work that my friend contends for. That proviso was

in these terms:

Provided always, that the title of a purchaser for valuable considerations shall not be defeasible on the ground that a certificate of

title was obtained by any persons under whom

he claims title by means of fraud or forgery,

or that a certificate of title or other

instrument was obtained by any person under

whom he claims title by means of an

insufficient power of attorney, or from an

infant, married woman under disability, or

insane person.

That clearly creates deferred indefeasibility in

the case of forgery, and the difference between
that proviso and the proviso actually enacted is

stark.

In our submission, it would be wrong to assume

that the section was not carefully crafted in 1886

and to attribute less care about the use of

punctuation, for instance, than it might be given

in this day and age.

It was submitted that unless forgery is marked

out for deferred indefeasibility, there is no

reason to place it in section 69(II), and that

sufficient work would have been done under

section 69(I) because forgery by definition would

be a case of fraud.

There is a short answer to that, and that is

that the three cases mentioned in section 69(II)

all had a particular legal consequence at common

law in common. Each of them resulted in a void

instrument. It was clearly the intention of the
draftsman to pick up that common feature and to

deal with the instruments of that kind in a common

way but to produce different consequences.

Whittem 9 12/3/93

Had that not been done, there would have been an outstanding question under this Act as to

whether a forged instrument, which at common law

was void, could ever give rise to title when

registered. That was a consideration not finally

resolved until the High Court spoke on the point in

Breskvar v Wall and held that a void instrument,

notwithstanding that it was void, could create

legal rights on registration. Obviously that

question would have arisen in the mind of the
draftsman of this section and he sought to put the
matter beyond doubt by specifically addressing the
case of forgery. That explains the presence of
this particular case along with the other cases

involving a person under disability or an

insufficient power of attorney in section 69(II).

The consequence of the interpretation for

which the applicant contends would be to drive a
wedge between people who are defrauded by forgery

and people who are defrauded by some other means of

fraud. In the latter case, under section 69(I),
the victim of a fraud who secures registration of
his instrument would immediately gain indefeasible

title, subject always to personal equities. If he

had done anything along the way which rendered his

title liable to be defeated by equities, then it

might be defeated. But subject to that, fraud

alone would not render his title defeasible.

However, if the fraud is perpetrated by a

concocted instrument which therefore constitutes a

forged instrument, then he would be in a much

weaker position and, in our respectful submission,

there is no reason consistent with a rational and

coherent scheme under the Torrens Title legislation

to create that distinction. It would make the

operation of the Act entirely adventitious and the

rights of parties dependent entirely on the nature

of the scheme or trick perpetrated by the

fraudulent intermediary in a case such as this.

That point is underscored, as I have already

mentioned, by the fact that in Breskvar v Wall the

instrument was at common law a forgery and

therefore void. It was also void for statutory

reasons. None the less, the High Court there

treated the cause of invalidity as irrelevan and

therefore, in effect, assimilated forgery with

fraud.

Coming to the matter of the second reading

speech, when read closely, in our submission, it is

not entirely clear. In our respectful

submission - and the full speech is contained in

the book of authorities submitted by the applicant

on this application - when one reads it, it is

Whittem 10 12/3/93

clear that it is not transcribed in the modern way.

It is a speech reported in the third person, and

one cannot be sure about the means by which it was

reported or transcribed, and therefore one cannot

attribute to it the same reliability as one might

to a modern second reading speech on the

introduction of a bill.

In any event, it contains elements that are

consistent with a notion in certain cases of

immediate indefeasibility and deferred

indefeasibility in other cases, such as disability.

But our fundamental submission is that the speech should not be allowed to override the plain meaning

of the words. Assuming it is proper to refer to

the speech, then the question of the mischief to be

found there can be a matter of some contention, and

the majority of the Full Court identified an

alternative mischief, that is, a mischief designed
to deal with not concocted documents in the broader

sense, but with documents which were forgeries because they contained counterfeit signatures.

So, in our respectful submission, if any

regard is to be had to the second reading speech,
then it should be treated in the way it was by the
majority, that is, with considerable discretion,
but that the proper mischief to be identified is a
mischief of counterfeit signatures, that is,
signatures of the registered party. Section 69

therefore should be confined to the case of forgery

by counterfeit signatures and not extended to the

case of an alteration or fabrication of an

instrument.

It was contended by my learned friend that

this document was a forgery for another reason,

that is, because the signature of the witness was

forged and therefore it fell outside the case that

we contend for because we assert that the signature

of the registered proprietor was his own. In fact,

in our submission, that contention is not open.

The signature of the witness is not essential to

validity. The provisions in the Real Property Act

that provide for the signature of witnesses are

facultative only, and they do not void the

document. That was decided by the High Court in

Barry v Heider in 1914.

In short, in our submission, special leave

should be refused because this is a matter that is

essentially a South Australian matter, and it has

been properly addressed by the courts in South

Australia on several occasions and no new issues

have been raised.	They are our submissions, if the
Court pleases.

Whittem 11 12/3/93

DEANE J: Thank you, Mr Whitington. Yes, Mr Bennett.

MR BENNETT:  If the Court pleases. Your Honour, there are

six short points. First, my friend submitted that

Breskvar v Wall applied in South Australia. In a

strict sense that is true, because Breskvar v Wall

extends to all void instruments. But the

significant and recurrent issue decided by Breskvar

v Wall concerns the immediate indefeasibility of a

forged instrument and that, of course, does not

apply in South Australia if this decision is

incorrect.

Secondly, my friend referred to the use of the

word "by" as supporting his syntax but, with

respect, that does not work. If Your Honours go to

the section, just very quickly on page 41, my

friend's construction involves the two phrases

following the word "by" being treated in parallel

as both governed by the word "obtained". The

problem is that the first is "by any person" who became such a person "under disability", and the

second is "by any of the means aforesaid".	One is
referring to an action; one is referring to a

person. It is a zeugma really, it is using the

word "by" in slightly different senses, and that is

something which, I submit, is a matter of grammar,

while frequently used for the purpose of ·humour is

not strictly correct.

The third matter concerns the 1873 report. We

would submit that the section shows a clear
intention not to follow the report, as does the

second reading speech, and therefore the report merely operates by way of contract and does not

assist my learned friend.

Fourthly, my friend submitted that the common

element in the three matters in subsection (II) was

voidness and that explained the need to refer to

forgery there. It is true that that is a common

element of those three, but it still would be

surprising if forgery were included in it when it

was not proposed to create any different regime

than that created in subsection (I) in relation to

forgery.

Fifthly, my learned friend submitted that

there was no reason for a distinction and that it

would be surprising if a forgery were treated as

creating a different result to fraud. The answer

to that is twofold: first, forgery is a more

serious type of fraud. In general forgery is

regarded as more serious than common or garden

fraud. But, secondly, and perhaps more

importantly, is the point made in the second

reading speech that a person can protect himself

Whitten 12 12/3/93

against fraud, he cannot protect himself as easily

or often at all against forgery.

Sixthly, my learned friend submitted that the

second reading speech was unreliable because it was

old and the means of reporting were not reliable,

but, Your Honours, there is no ambiguity in the

second reading speech. It states, clearly and

directly, a policy consideration which was the
mischief and the solution for it, and one could not

really imagine any erroneous or careless supporting

making much difference to that.

Finally, in relation to the witness, we are at

issue on that question, but it is referred to by

Justice Olsson at page 61 of the appeal book, where

His Honour refers to the requirement of attestation

and says that he regards it as "mandatory and not

directory". We respectfully submit that is correct

and it is not inconsistent with Barry v Heider.

But that is a very minor point in which we are at

issue if the matter proceeds.	May it please the
Court.

DEANE J: Thank you, Mr Bennett. The Court will take a

short adjournment to consider this application.

AT 11.06 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.11 AM:

DEANE J:  An appeal in this matter would involve the

construction of s. 69(II) of the Real Property Act

1886 (SA). Apart from the Northern Territory, that

provision has no equivalent in Torrens System

legislation elsewhere in Australia.	The question
of its construction turns to a significant extent

upon punctuation and syntax and, in our view,

involves no real question of principle. Nor does

it appear to us that the construction favoured by

the majority of the Full Court is clearly mistaken.

To the contrary, we are inclined to think that it

is the preferable one.

In these circumstances, it would be

inappropriate to grant special leave to appeal to

this Court. Accordingly, the application for

special leave to appeal is refused.

MR WHITINGTON:  May it please the Court, I ask for costs.

Whittem 13 12/3/93

DEANE J:	Mr Bennett?
MR BENNETT:	I have nothing to say, Your Honour.

DEANE J:  The application is refused with costs. We now

come on to Whittem v Arcadi. Mr Whitington, has

there been a change in your attitude?

MR WHITINGTON: There has not, if the Court pleases. We do

not wish to proceed with that application and we

would submit to an order as to costs.

DEANE J: Very well. Mr Hevey, have you anything to say?

MR HEVEY:  No, I do not, Your Honour. I simply make the

formal application for costs.

DEANE J: In Whittem v Arcadi the application for special

leave to appeal is refused with costs.

AT 11.14 AM THE MATTER WAS ADJOURNED SINE DIE

Whittem 14 12/3/93