Zeljko Mrsa (as Executor of the Estate of the Late Ivan Mrsa) v Mrsa
[2014] WASC 482
•18 DECEMBER 2014
ZELJKO MRSA (as Executor of the Estate of the Late IVAN MRSA) -v- MRSA [2014] WASC 482
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 482 | |
| Case No: | CIV:2532/2010 | 17 & 18 NOVEMBER 2014 | |
| Coram: | ALLANSON J | 18/12/14 | |
| 21 | Judgment Part: | 1 of 1 | |
| Result: | Damages assessed at time when land could reasonably have been sold with simple interest Notice of indemnity and third party claim dismissed | ||
| B | |||
| PDF Version |
| Parties: | ZELJKO MRSA (as Executor of the Estate of the Late IVAN MRSA) LINDA ANN MRSA REGISTRAR OF TITLES VINKA GRUBELICH |
Catchwords: | Property law Transfer of Land Act 1893 (WA) s 205 Registration of proprietor by fraud Statutory cause of action Assessment of damages Time at which loss assessed Pre-judgment interest Notice for contribution or indemnity Tort of deceit Limited class of representee |
Legislation: | Evidence Act 1906 (WA), s 11 Rules of the Supreme Court 1971 (WA), O 13 r 7(2), O 13 r 7(3), O 22 r 3(2) Transfer of Land Act 1893 (WA), s 48, s 75, s 195, s 196, s 199, s 201, s 205, s 210 |
Case References: | Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262 Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205 Clark v Urquhart [1930] AC 28 Commercial Banking Company of Sydney Ltd v RH Brown & Co [1972] HCA 24; (1972) 126 CLR 337 Magill v Magill [2006] HCA 51; (2006) 226 CLR 551 Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 Registrar of Titles (WA) v Franzon [1975] HCA 41; (1975) 132 CLR 611 Registrar of Titles v Spencer [1909] HCA 69; (1909) 9 CLR 641 Registrar-General v Behn [1980] 1 NSWLR 589 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
LINDA ANN MRSA
First Defendant
REGISTRAR OF TITLES
Second Defendant
VINKA GRUBELICH
Third Party
Catchwords:
Property law - Transfer of Land Act 1893 (WA) s 205 - Registration of proprietor by fraud - Statutory cause of action - Assessment of damages - Time at which loss assessed - Pre-judgment interest
Notice for contribution or indemnity - Tort of deceit - Limited class of representee
Legislation:
Evidence Act 1906 (WA), s 11
Rules of the Supreme Court 1971 (WA), O 13 r 7(2), O 13 r 7(3), O 22 r 3(2)
Transfer of Land Act 1893 (WA), s 48, s 75, s 195, s 196, s 199, s 201, s 205, s 210
Result:
Damages assessed at time when land could reasonably have been sold with simple interest
Notice of indemnity and third party claim dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr T Stephenson
First Defendant : No appearance
Second Defendant : Mr G T W Tannin SC & Ms M J Elliott
Third Party : Mr S W O'Sullivan
Solicitors:
Plaintiff : Eastwood Sweeney Law
First Defendant : No appearance
Second Defendant : State Solicitor for Western Australia
Third Party : Ian Farquhar & Co
Case(s) referred to in judgment(s):
Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262
Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279
Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205
Clark v Urquhart [1930] AC 28
Commercial Banking Company of Sydney Ltd v RH Brown & Co [1972] HCA 24; (1972) 126 CLR 337
Magill v Magill [2006] HCA 51; (2006) 226 CLR 551
Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170
Registrar of Titles (WA) v Franzon [1975] HCA 41; (1975) 132 CLR 611
Registrar of Titles v Spencer [1909] HCA 69; (1909) 9 CLR 641
Registrar-General v Behn [1980] 1 NSWLR 589
1 ALLANSON J: Ivan Mrsa, now deceased, was the registered proprietor of a piece of land at 215 Wattleup Road, Wattleup. On 30 September 2004, the Western Australian Planning Commission became the registered proprietor of that land. The transfer was pursuant to a contract for sale, purportedly executed on behalf of Mr Mrsa by his daughter, Linda Ann Mrsa, acting under a power of attorney.
2 The plaintiff claims that the power of attorney was forged, that Ms Mrsa had no authority to deal with her father's property, and that she acted fraudulently in executing the transfer and receiving the proceeds on the sale.
3 Mr Mrsa commenced these proceedings in 2010. He died on 16 December 2011.
The parties
4 The executor of the estate, Zeljko Mrsa, has been substituted as the plaintiff. He is the older son of the deceased.
5 Linda Mrsa is the first defendant. She is the youngest of the Mrsa children. She is also known by her married name of Linda Fearnley.
6 The second defendant is sued as the nominal defendant under s 205 of the Transfer of Land Act 1893 (WA) (the Act).
7 The third party, Vinka Grubelich, is the oldest of the Mrsa children.
8 For clarity, I will refer to the deceased as Mr Mrsa, and to his sons by first name and family name.
The land
9 The land is more fully described as Lot 49 on Plan 7712, being the whole of the land comprised in Certificate of Title Volume 1569 Folio 595. It has an area of about 2.5 ha. Mr Mrsa also owned Lot 2, on which there is a house that was occupied by Ms Mrsa and her family.
The plaintiff's claim against Ms Mrsa
10 The plaintiff obtained default judgment against Ms Mrsa on her failure to file a defence. Judgment was entered on 2 August 2013, and subsequently amended on 26 September 2013. Under that judgment, Ms Mrsa is to pay the plaintiff damages to be assessed, and costs to be taxed if not agreed.
11 For some time before the entry of the default judgment, Ms Mrsa played no active part in these proceedings, and there is some doubt whether she is still in Australia. None of her family remains in contact with her.
12 The plaintiff sought to proceed with the assessment of damages against Ms Mrsa in these proceedings, treating the trial of the action as the occasion for assessment. However, the plaintiff failed to give Ms Mrsa notice of the assessment: see Rules of the Supreme Court 1971 (WA) O 13 r 7(2) and (3), as applied by O 22 r 3(2). That is an irregularity and could be rectified. Ms Mrsa remained a party, and the trial proceeded on the Registrar's claim against her to indemnify the state for any damages it must pay.
13 There is, however, a second difficulty. In the statement of claim, as it stood when default judgment was entered, the plaintiff sought damages at common law together with interest on the award of damages 'from 30 September 2004 until payment or judgment'. The plaintiff wished at trial to proceed to an assessment with damages to be assessed on the basis of equitable fraud, on the value of the property at about August 2013, and with pre-judgment interest to be compounded. Ms Mrsa had been given no notice of those changes.
14 I did not proceed with the assessment against Ms Mrsa, and said I would give my reasons for that course in the judgment.
15 If a defendant does not appear at trial, the court may decide to proceed in his or her absence. The court has power to amend the pleading in the defendant's absence, but may choose not to because of the risk of injustice to the absent defendant: Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 288. In the present case, the proposed amendment would substantially change the measure of damages. In submissions, counsel for the plaintiff suggested that the default judgment may be unsound if the plaintiff was confined to the pleaded case of fraud at common law. If that is so, it should have been brought to the attention of the registrar when the plaintiff applied for default judgment.
16 I also took into account the apparent lack of utility in proceeding to assess the damages against Ms Mrsa. The plaintiff says that he does not know where she is, or know how a judgment might be enforced. It is likely that she is not in Australia.
17 Finally, the plaintiff's claim against the registrar is independent of any claim or judgment against another party. Although the registrar claims against Ms Mrsa, that claim is based on indemnity for the loss suffered by the state and requires no assessment of the damages Ms Mrsa would be liable for in the action by the plaintiff.
18 Having regard to these considerations, I decided not to proceed with the assessment of damages against Ms Mrsa on the plaintiff's claim.
The claim against the Registrar of Titles
19 Section 205 of the Act provides, in its relevant parts:
Any person sustaining loss … by the registration of any other person as proprietor and who by the provisions of this Act is barred from bringing an action of ejectment or other action for the recovery of the land, estate or interest may in any case in which the remedy by action for recovery of damages as herein provided is inapplicable bring an action against the State with the Registrar as nominal defendant for the recovery of damages.
20 If, as the plaintiff alleges, the Western Australia Planning Commission became registered as proprietor of the land by reason of Ms Mrsa's fraud, Mr Mrsa (and now his estate) has a claim under s 205. He suffered loss by the registration of the Planning Commission as proprietor. By s 199 of the Act, no action of ejectment or other action for the recovery of the land lies against the Planning Commission as the registered proprietor. The action for damages under s 201 of the Act is not applicable, because the relevant fraud was not the fraud of the Planning Commission: see Registrar of Titles (WA) v Franzon [1975] HCA 41; (1975) 132 CLR 611, 618 - 619. None of the other statutory causes of action for damages in pt XII of the Act apply in these circumstances.
21 Accordingly, subject to the court being satisfied that Ms Mrsa did act fraudulently, the issue in these proceedings between the plaintiff and the Registrar is the proper measure of damages. Initially, that gave rise to two questions:
1. As a matter of fact, it not having been admitted, did Mr Mrsa or his estate obtain any of the proceeds of sale that were received by Ms Mrsa. This question fell away. There was evidence that the plaintiff did not receive any benefit from the sale - including an affidavit prepared by Mr Mrsa before his death in which he said he did not see any of the money - and no evidence to the contrary. The Registrar called no evidence. Counsel for the Registrar conceded, correctly, that the evidence supported a finding in favour of the plaintiff (ts 120). This made it unnecessary to entertain a detailed analysis of the available bank documents relating to Ms Mrsa's accounts.
2. As a mixed question of fact and law, should damages be assessed at the time when Mr Mrsa lost his interest in the land by the registration of the Planning Commission, or should it be assessed at some later time. The plaintiff argues that the appropriate time is when the land could reasonably have been sold, following the executor obtaining a grant of probate in the estate of Mr Mrsa.
22 The value of the land at the time the Planning Commission became registered, and its value at the later date, have both been agreed:
1. As at the date of the sale of the Property (August or September 2004), $315,000.
2. Shortly after the death of Mr Mrsa (November 2012 - August 2013), $1,290,000.
The measure of damages under s 205
23 Under s 205, damages may be recovered for loss by a variety of causes: omission, mistake or misfeasance of the Registrar or any other officer or clerk in the execution of their respective duties under the provisions of this Act; error, omission or misdescription in any certificate or title or any entry or memorandum in the Register; or the registration of another person as the proprietor. The section draws no distinction between the various events or acts that can give rise to a claim.
24 In this case, the plaintiff has suffered loss by the registration of the Planning Commission as the proprietor, and is barred from bringing an action of ejectment or other action for the recovery the land. The extent of the plaintiff's loss must be determined, and he is entitled to the amount of money that would place him in the same position as if the deprivation of his title had not taken place; he is entitled to full compensation: Registrar of Titles v Spencer [1909] HCA 69; (1909) 9 CLR 641, 645, 653, 654.
25 In some circumstances, the proper measure of damages under the statute will be the value of the land at the time of deprivation of title by the registration of another proprietor. In others, damages may be assessed by reference to the value of the land of which the plaintiff was deprived at the time of judgment. In Registrar-General v Behn [1980] 1 NSWLR 589, Mahoney JA (Moffitt P and Samuels JA agreeing) said:
Each case must, in my opinion, be considered according to its own facts, and the damages awarded must be commensurate with the loss he (the plaintiff) has sustained, and such as will put him 'in the same position, so far as money can do it, as if the wrongful act complained of had not been done': Registrar of Titles (WA) v Spencer (597).
26 The unchallenged evidence of the plaintiff was that Mr Mrsa would not have sold the land in his lifetime. While there is general evidence that the Planning Commission was purchasing land for the purposes of the Rowley Road extension, and may ultimately have acquired Lot 49, or part of it, the evidence does not support a finding that the Planning Commission would have acquired all of Lot 49, or would have acquired it at any particular time. Specifically, the evidence does not establish that Lot 49 would have been purchased or resumed before Mr Mrsa's death. I find that, but for the registration of the Planning Commission in 2004, Lot 49 would not have been sold until after Mr Mrsa's death.
27 In these circumstances, I accept that the true measure of what the estate has lost must be the value of the land when the executor could have sold it. It was not in dispute that the earliest reasonable opportunity for sale was between November 2012 and August 2013.
28 There is an alternative time at which the loss could be assessed - when the plaintiff discovered the loss of his title in 2008. He was then, however, in Croatia. By 2009, the plaintiff had sought compensation from the state. The statutory declarations made in 2009 were for that purpose. This action was commenced in 2010. It was not suggested on behalf of the Registrar that there was a subsequent rise in the value of the land as a result of the plaintiff failing to act more quickly, and there is no evidence that was the case.
29 Accordingly, I assess damages as the value of the land when the plaintiff, acting reasonably, could have sold it following the grant of probate. The sum agreed by the parties, should damages be assessed on that basis, is $1,290,000.
The notice of indemnity and the third party claim
30 The Registrar, as second defendant, has claimed against Ms Mrsa by a notice for contribution or indemnity. By third party proceedings, the Registrar seeks damages against Ms Grubelich; further or alternatively a declaration that she is liable to indemnify the Registrar against any claims, losses, actions, damages, costs and expenses arising in connection with the Registrar's liability in the proceedings.
31 When damages and costs have been recovered from the state by an action under s 201 of the Act, s 195 and s 196 provide for the state, by an action in the name of the Registrar, to recover from the person who would otherwise have been liable for those damages. There is no equivalent provision where the state is directly liable under the statutory cause of action provided in s 205.
32 The Registrar relies on a direct cause of action in the tort of deceit to recover against either, or both, of Ms Mrsa and Ms Grubelich.
33 The elements of the tort of deceit were stated by Viscount Maugham, in Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205, 211, in a passage quoted with approval by the High Court in Magill v Magill [2006] HCA 51; (2006) 226 CLR 551 [37]:
First, there must be a representation of fact made by words, or, it may be, by conduct. The phrase will include a case where the defendant has manifestly approved and adopted a representation made by some third person. On the other hand, mere silence, however morally wrong, will not support an action of deceit. Secondly, the representation must be made with a knowledge that it is false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true. Thirdly, it must be made with the intention that it should be acted upon by the plaintiff, or by a class of persons which will include the plaintiff, in the manner which resulted in damage to him. If, however, fraud be established, it is immaterial that there was no intention to cheat or injure the person to whom the false statement was made. Fourthly, it must be proved that the plaintiff has acted upon the false statement and has sustained damage by so doing.
- See also Banditt v The Queen [2005] HCA 80; (2005) 224 CLR 262 [2].
34 The damages for deceit, leaving aside questions of remoteness, will be 'the sum representing the loss suffered by the plaintiff because the plaintiff altered its position in reliance on the defendant's misrepresentation': Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494, 510 - 512 (McHugh, Hayne and Callinan JJ). In Clark v Urquhart [1930] AC 28 at 67 - 68, Lord Atkin said the measure of damages is 'the actual damage directly flowing from the fraudulent inducement'.
The defence and statement of claim against the first defendant and third party
35 In pars 7 and 8 of the defence and statement of claim against the first defendant and third party, the Registrar alleges against Ms Mrsa, in effect, that:
1. On or about 31 August 2004, she represented to the Registrar that she was the lawful attorney of Mr Mrsa by way of a power of attorney, and had his lawful authority to sell, transfer or mortgage any land belonging to Mr Mrsa (including Lot 49). Ms Mrsa knew and intended that the Registrar would rely on those representations.
2. On or about 7 September 2004, she, or someone acting with her knowledge and approval, applied to the Registrar for the issue of a replacement duplicate certificate of title. In this application, Ms Mrsa represented that she was Mr Mrsa's lawful attorney, the duplicate certificate of title had been lost or could not be located, and she was acting with the authority of Mr Mrsa. She knew and intended that the Commissioner of Titles and the Registrar would act on those representations.
3. On or about 30 September, she signed and caused, or allowed to be caused, the lodging of the transfer of Lot 49, signed by her as the attorney of Mr Mrsa, and represented to the Registrar that she was Mr Mrsa's lawful attorney and had his authority to transfer the property. Ms Mrsa knew and intended that the Registrar would act on the signature on the transfer form and the other representations she had made to effect the registration of the Planning Commission as the proprietor of Lot 49.
36 The Registrar pleads that, if the representations set out above were false as alleged by the plaintiff, Ms Mrsa made those representations fraudulently in that she knew they were false, or she was reckless, not caring whether they were true or false. The plea of recklessness is superfluous. The particulars of the alleged fraud are consistent only with deliberate falsehood.
37 Ms Mrsa has not filed a defence to the notice for indemnity.
38 The Registrar has also claimed against the third party, Ms Grubelich, for damages at common law by reason of her fraud, including damages for deceit: par 7(c) and par 8. The Registrar alleges against Ms Grubelich:
1. On or about 23 December 2003, she signed the power of attorney as a witness to its execution by her father.
2. In signing the power of attorney, she represented to all who read the power of attorney that she had seen Mr Mrsa execute it in her presence.
3. She made that representation knowing and intending that it would be relied upon by whomever Ms Mrsa presented the power of attorney to.
39 The Registrar pleads that Ms Grubelich made the representation pleaded against her fraudulently in that she knew it was false, or was reckless, not caring whether it was true or false: par 10.
40 The Registrar claims that, induced by and acting in reliance on the representations made by Ms Mrsa and Ms Grubelich, the Registrar registered the transfer of land and the Planning Commission became the registered proprietor of the land.
41 The Registrar pleads that the fraud of Ms Mrsa and/or Ms Grubelich has caused it to suffer loss and damage in that the fraud has made the Registrar liable to compensate the plaintiff for the loss and damage suffered: par 12.
42 The Registrar does not allege that Ms Mrsa and Ms Grubelich acted in concert, and does not allege that Ms Grubelich knew the use to which the document she witnessed would be put. In particulars, however, the Registrar alleges that Ms Grubelich knew the import and effect of falsely witnessing the execution of a document that would be presented to others, and knew that Ms Mrsa would use the power of attorney to induce other persons to believe that Ms Mrsa had authority to deal with Mr Mrsa's property.
The defence to the third party claim
43 Ms Grubelich admits signing the power of attorney. She pleads that at the time she put her signature on the power of attorney, Mr Mrsa was not present and had not signed the document: par 4(e).
44 Ms Grubelich says that she was not making a representation to all who might read the power of attorney that she had seen Mr Mrsa execute the document in her presence, and denies making any representation knowing and intending it be relied upon by whomsoever Ms Mrsa presented the document to, including the Registrar: pars 4(f) and 4(g). Ms Grubelich further says that when she was requested by Ms Mrsa to sign as a witness to Mr Mrsa's signature, she did not know or understand the content and purpose of the power of attorney 'other than that she was told by the First Defendant that it would assist the First Defendant and her husband to borrow money': par 5(b). She pleads that:
1. There was no suggestion of any intent to sell land: par 5(c).
2. She did not know or understand that by signing the document she might be taken to know or understand its content and the class of people to whom it may be presented or what may be done by its use: par 5(d).
3. Ms Mrsa did not explain or fully explain, and so Ms Grubelich did not know or understand, what Ms Mrsa intended to do with the power of attorney: par 5(e).
4. Ms Mrsa did not explain or fully explain, and so Ms Grubelich did not know or understand, that the power of attorney would be used by Ms Mrsa to induce others to believe that she had authority to deal with Mr Mrsa's property: par 5(f).
5. The power of attorney is, with the addition of the signature purporting to be that of Mr Mrsa, 'materially different to the power of attorney as presented to [her]': par 5(g).
6. Before about April 2008, she did not know or understand or reasonably expect that Ms Mrsa intended to lodge the power of attorney with the Registrar or anyone else, or intended to act in a manner inconsistent with the wishes of Mr Mrsa: pars 5(h) and 5(i).
45 Ms Grubelich denies that any loss or damage was caused by any fraud, either perpetrated by her or with her assistance.
The evidence and findings
The making of the representations
46 The evidence is of quite limited compass and was largely unchallenged. Some of it was admitted by consent. With Ms Mrsa not being present, I have not used evidence admitted by consent in making findings against her, except where that evidence would be otherwise admissible (such as the business records of Landgate).
47 It is necessary to make findings on the allegations of deceit. In making these findings, I am conscious that the Registrar alleges serious criminal conduct, and such finding should not be lightly made. In determining whether I am satisfied of the conduct alleged, I have looked for clear or cogent proof, and had regard to the likelihood of Mr Mrsa's daughters behaving in such a way, and to the gravity of the consequences of a finding that one or more of them has behaved fraudulently: see Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170, 170 - 171.
48 Documents lodged with the Registrar show:
1. On 7 September 2004, an application was made in the name of Ms Mrsa, supported by a statutory declaration, for a replacement duplicate certificate of title for Lot 49. In the statutory declaration, the maker declares that she is the attorney for her father under the power of attorney signed 23 December 2003. Having regard to the admissions made by Ms Mrsa to members of her family at various times (see below), I am satisfied that the application was made by Ms Mrsa and the statutory declaration is hers.
2. In September 2004, a Form T2 for the transfer of Lot 49 to the Planning Commission was lodged. It is signed 'Linda Ann Mrsa as the attorney for Ivan Mrsa' as the seller. Power of attorney no J4218 is specified on the form.
49 Power of attorney no J4218 is dated 23 December 2003. It purports to appoint Linda Ann Mrsa as the attorney of her father:
with the powers and authorities as may be necessary and convenient to enable her to manage, to conduct and carry on my property affairs and business in the same manner and with the same powers and authorities in all respects as if I were personally present.
- Specifically, it authorises the attorney 'To sell to any person all or any Lands'. Those words are emphasised in the document by being in bold and italicised. The document is purportedly signed 'in the presence of Vinka Grubelich of 377, Eighty Road, Baldivis, Homemaker'.
50 By consent, the court received a report of John Horton and Associates, Investigators, Forensic and Security Consultants, following an examination of the power of attorney. The opinion expressed by Mr Horton is not disputed by any party: Mr Mrsa's signature had been forged on the power of attorney by tracing. The forger had not fully erased the tracing and traces of lead pencil can still be found following the general alignment or flow of the ink signature.
51 Independently of Mr Horton's report, the evidence established the document was forged. First, before his death, Mr Mrsa made an affidavit in these proceedings, attaching a statutory declaration dated 26 May 2011. He declared that he did not, at any time before 2007, complete or sign his name as donor of a power of attorney, and did not authorise any attorney to do anything on his behalf: see exhibit 2. Second, Mr Mrsa had been in Croatia since 1997 and had not travelled to Australia since then. He could not have signed the power of attorney in Ms Grubelich's presence. Third, in an affidavit sworn 21 June 2011, again attaching a statutory declaration, Ms Grubelich gives this account of how she came to witness the signature:
8. On or about 23 December 2003, my sister Linda Mrsa came to me. She was heavily pregnant at the time. She was in a bit of a nervous state and said to me, 'Sis, I need a favour, you're the only one that can help me'. I said to her 'if I can, I will help you, what is it?' She said 'There is a project that David and I would like to invest in but as we have no money or property, we would like to use Dad's land as collateral so we can borrow from the bank'.
9. She continued to tell me that to have something for the bank, she and her partner at the time, David would like to put up Dad's property as collateral. She said this project would give them a 'jump start' to get a head financially because they had been struggling and she was sick and tired of constantly battling, by this time she was crying and in a state.
10. I understood the reference to the property to mean Lot 49, since Linda and David were already living in the house at Lot 2.
11. I remember feeling worried about her situation and had pity on her, particularly since she was heavily pregnant and crying at the time.
12. After saying these things, she produced a document and put it on the dining table where we were sitting.
13. It was a document with several pages which I flipped through but did not read.
14. Having placed the document on the table, she didn't tell me what the document was. I didn't ask her what it was. She just told me it was to let her borrow money from the bank and use Dad's land as collateral.
15. Linda then said she needed my signature as a witness. I said to Linda 'I trust you but how can I witness it without Dad's signature on the paper?' Linda then responded by saying words to the effect 'that's okay. I will write Dad's signature. It's not hard to copy it'.
16. I wasn't sure what Linda was referring to and I did not ask her about it.
17. I have since become aware that this was a Power of Attorney document but I didn't realise that at the time. I thought I was signing a document to allow Linda to borrow money from the bank only.
18. I then said words to the effect, 'how can you go about this without a Power of Attorney?' By that I meant, how can you get the collateral without a Power of Attorney? Linda told me 'there is a way of getting round it'. I didn't know what she meant by this and I didn't ask because she was still crying.
19. I then signed the document in the space where it said 'witness'. At the time of signing I noticed that there was no signature in the place where Dad was supposed to sign.
52 In her oral evidence at trial, Ms Grubelich confirmed the truth of what she had earlier said in her statutory declaration.
53 Zeljko Mrsa also gave evidence of admissions made by Ms Mrsa about her conduct. In an affidavit sworn 26 August 2014, received as his evidence in chief, he said that, at a family meeting on 16 May 2008, Ms Mrsa admitted [31]:
1. She signed Mr Mrsa's signature on the power of attorney, filled in the statutory declaration, and approached 'State Planning' to sell them the land, and sold the property.
2. The money was put into an investment that went bad.
54 I am satisfied that Ms Mrsa forged the power of attorney and lodged it at Landgate, or caused it to be lodged. She obtained a replacement duplicate certificate of title by falsely declaring that she was her father's attorney, and that the certificate was lost. She used the forged power of attorney to sign the transfer form on behalf of her father, leading to the registration of the Planning Commission as proprietor of Lot 49. She received the purchase price and used it for her own purposes.
55 I am accordingly satisfied that Linda Mrsa made the representations alleged against her, and did so knowing they were false. It was, on her part, a deliberate fraud.
56 Ms Grubelich gave evidence at trial, after requesting a certificate under s 11 of the Evidence Act 1906 (WA). She did not dispute the truth of what she had earlier said in her statutory declaration.
57 Ms Grubelich said that she remembered the document which Ms Mrsa showed her, and which she signed, as different from the document in evidence. In leading that evidence, counsel for Ms Grubelich did not attempt to depart from an admission that (except that it did not contain a signature purporting to be that of Ivan Mrsa) the power of attorney was in its present form when it was signed by Ms Grubelich (ts 85).
58 Ms Grubelich's explanation of how the document she signed was to be used as 'collateral' with the bank was confused and confusing. Although she used the term collateral in her statement, and said in evidence that is what Ms Mrsa told her, she professed no understanding of how the land would be used as security for a loan. In her evidence-in-chief, she said she thought it was a 'safety net' for Ms Mrsa to borrow money. In cross-examination, she said she did not know about money matters. When pressed about why she signed the document, and whether she knew what she was doing was wrong, she retreated to saying she was sorry, but could not answer (ts 98).
59 She did, however, agree that she believed the document would be used to borrow money from a bank. She did not know which bank. She also agreed that she signed understanding that her father knew nothing about the document (ts 99).
60 Ms Grubelich attempted to minimise her role, or at least the extent of her knowledge. The other members of the Mrsa family also attempted to minimise her responsibility. Zeljko in particular referred to her vulnerability to requests from her sister, because of the relationship between them.
61 But Ms Grubelich admitted her role in falsely signing as a witness to her father's signature. I have taken into account her limited formal education - she left school in year 9 - and her evidence that she did not understand how the document would be used. I am satisfied that she knew that it was wrong to sign as a 'witness' in the way she did. This was demonstrated by her later fear that Ms Mrsa would implicate her when the family discovered the fraud (ts 102). I am satisfied that Ms Grubelich knew her signature was likely to be used to verify a false signature, purporting to be that of her father.
62 I also believe that Ms Grubelich understood the nature of the document she was signing, at least to the extent that she understood it was a document that would enable Ms Mrsa to deal with their father's property. On her own evidence, she later became concerned that her sister might use the document to take her father's property.
63 It would be difficult to even 'flick through' the power of attorney without understanding some of its intent. It begins by reciting that Mr Mrsa does 'hereby appoint a proper person as my attorney'. The second paragraph states that it appoints Linda Ann Mrsa 'to be my attorney and to do and execute all or any of the following acts deeds and things on my behalf'. There follows 12 numbered paragraphs, with headings in bold and italics identifying to the relevant power. The first of them is headed 'To sell to any person all or any Lands'.
64 I am, accordingly, satisfied that Ms Grubelich represented that the power of attorney had been signed by her father. She did so knowing that representation was false. It is likely that she did so to enable her sister to obtain a benefit by using her father's property, although it is difficult to say what benefit was in her contemplation. On her own admission, she believed her sister was to use the document to obtain money from a bank, using the land as collateral.
65 Those findings against Ms Mrsa and Ms Grubelich are not in themselves sufficient to establish liability to the Registrar for deceit.
Intention
66 It is an element of the cause of action that the representation was made with the intention that it would be acted upon by the plaintiff, or by a class of persons which will include the plaintiff.
The case against Ms Mrsa
67 I am satisfied that Ms Mrsa intended to deceive the Registrar. Her conduct in obtaining the replacement duplicate certificate of title, and signing the transfer as her father's attorney, lead inevitably to that conclusion.
The case against Ms Grubelich
68 The Registrar's case is that the class intended to be deceived by the false representation was whomever Ms Mrsa presented the power of attorney to. Therefore the Registrar (or the state) is within the class of persons to whom Ms Grubelich made the representation, intending that they would act upon it.
69 A false representation can, of course, be made to a general audience. In Commercial Banking Company of Sydney Ltd v RH Brown & Co [1972] HCA 24; (1972) 126 CLR 337, Gibbs J said:
The plaintiff in a common law action of deceit must establish, amongst other things, that the false representation was made with the intention that it should be acted upon by the plaintiff, or by a class of persons which will include the plaintiff, in the manner which resulted in damage to him: Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205, at p 211. It is not, however, necessary that the representation should have been made to the plaintiff himself. It is enough that it was made to another person with the intention that it should be acted on by the plaintiff. In Swift v Winterbotham (1873) LR 8 QB 244, at p 253, it was said in the judgment of the Court:
'It is now well established that in order to enable a person injured by a false representation to sue for damages, it is not necessary that the representation should be made to the plaintiff directly; it is sufficient if the representation is made to a third person to be communicated to the plaintiff, or to be communicated to a class of persons of whom the plaintiff is one, or even if it is made to the public generally with a view to its being acted on, and the plaintiff as one of the public acts on it and suffers damage thereby.'
71 Had the evidence shown Ms Grubelich to be better educated and more financially aware, the inference may have been drawn that she intended the document to be used to deceive a wider, or unrestricted, audience. Having seen her give evidence, and having regard to the evidence regarding her education and work history, I am not satisfied that inference should be drawn. I find that she intended to represent that she had seen her father sign the document should Ms Mrsa use it as 'collateral' to obtain a loan from a bank. Her actual intention did not extend beyond that limited class of representee.
Causation
The case against Ms Mrsa
72 The Registrar appears as nominal defendant, on behalf of the state. The plaintiff's damages are recovered against the state, and are to be recovered out of the Consolidated Account: s 210 of the Act.
73 For the Registrar to recover in deceit, the Registrar must show that the state sustained damage by the Registrar acting on the false representations made by Ms Mrsa. Because fraud is proved, it is not necessary to show that Ms Mrsa intended to cause the state loss or damage.
74 The Registrar pleads that:
1. in obtaining the replacement duplicate certificate of title, and in executing the transfer of land as her father's attorney, Ms Mrsa made various representations to the Registrar, knowing and intending that the Registrar would act upon them: par 7(d) and (e); par 7(g) and (h); par 7(k) and (m); and
2. induced by and acting in reliance on those representations, the Registrar issued a duplicate certificate of title for Lot 49, and registered the transfer form: par 7(i) and (j); and
3. Ms Mrsa's fraud has made the Registrar liable to compensate the plaintiff for loss and damage, and she has caused the state to incur that liability and the costs and expenses arising in connection with it: par 12(b).
75 Ms Mrsa's fraud was material to the registration of the transfer, and so to the state incurring liability. The fraud by which the replacement certificate of title was obtained did not directly cause loss; it did, however, provide an instrument by which the later fraud was facilitated.
76 In that sense, the damages claimed are caused by the fraudulent inducements which, I find, were made. But for Ms Mrsa's fraud, the title of the Planning Commission would not have been registered and the statutory compensation provision would not have been enlivened. Causation, in the legal sense, is not, however, confined to that factual question.
77 In pt XI of the Act, the legislature has provided for recovery of compensation payments by the state where those payments were made under s 201. There is no provision for recovery of payments made under s 205. The liability of the state under s 205 arises out of the operation of a statutory compensation scheme. That scheme supports the operation of a title registration system that provides for indefeasibility of title. The liability of the state does not depend upon fraud or some other tort. Relevantly, in this case, it depended on three factors: the registration of the Planning Commission as proprietor; the provisions of the Act which bar the plaintiff from bringing an action of ejectment or other action for the recovery of land; and the remedy by action for recovery of damages under the Act being inapplicable. In my opinion, the Act does not contemplate any payments made by the state, as a result of its liability under s 205, being a loss that is recoverable in an action in deceit or any other tort. Within this statutory scheme, the loss is not caused by the deceit.
78 Because of my findings on this issue, it is not necessary to address another troubling feature of this case. The deceit was committed by Ms Mrsa falsely representing her authority to the Registrar, as the officer who maintains the Register under s 48 of the Act. Ms Mrsa intended to deceive the Registrar acting in that capacity, and also to deceive the Registrar and the Commissioner of Titles in their functions under s 75 of the Act. The Registrar appears as a nominal defendant to the plaintiff's action, by reason of s 205. The claim against Ms Mrsa and Ms Grubelich is not, however, a claim in which the Registrar is interested. If such a claim is available it should, in my opinion, be brought by the State of Western Australia.
The case against Ms Grubelich
79 The representation made by Ms Grubelich was one step removed. Ms Mrsa represented that she had the authority of her father. She did so relying on the document which Ms Grubelich falsely represented to have seen her father sign. The causation question is, however, essentially the same. Ms Grubelich's conducts meets the 'but for' test, but in my opinion is not the cause of the state's loss.
Damages
80 I am not satisfied I should find for the Registrar on the notice of indemnity or the third party claim, and those claims should be dismissed.
81 If I am wrong in those conclusions, the measure of damages would be the amount ordered in favour of the plaintiff. The Registrar also claims the costs and expenses 'arising in connection with the Second Defendant's liability, if any, to the Plaintiff in these proceedings'. Those amounts described as expenses have not been proved.
Interest
82 The plaintiff argued for pre-judgement interest to be awarded on the sum assessed as damages, with either simple or compound interest at the rate of 6%. The plaintiff led no evidence to demonstrate which of those bases of calculating interest would provide proper compensation for his loss.
83 I have accepted that Lot 49 would not have been sold. The evidence is that, up until 2004, the land was leased from time to time, sometimes as a market garden, with Ms Mrsa taking the proceeds of the lease and using them to pay outgoings on the land (affidavit of Zeljko Mrsa, sworn 26 August 2014, par 9). The plaintiff obtained no profit from the use of the land.
84 Had I accepted that damages should be assessed on the value of the land at the time the plaintiff was deprived of title, a stronger argument for compound interest could have been made. But on the basis on which I have assessed damages, the plaintiff has the benefit of capital appreciation over approximately eight years, during which it paid no outgoings. The land was sold as soon as practicable after the executor obtained probate.
85 In the circumstances, the plaintiff has not established an evidentiary foundation for the award of compound interest. I am satisfied that simple interest should be awarded, at the rate of 6%. Interest should run from August 2013 - that being the time of the assumed sale.
86 I will ask the parties to bring in a minute to reflect these reasons.