Case to review:
There are two parts to this task: Part A and Part B. You must complete BOTH parts.
Answer the following questions about the case succinctly, in your own words (that is to say, do not just ‘cut and paste’ from the judgment) using no more than 1,300 words (not including footnotes and headings - note no bibliography is required):
1. What was the issue in the case? (8 marks)
In this case, the applicant was the beneficiary of two trusts, the trustees of who are the registered owners of two properties in Maidstone and another in Williamstown. On the other hand, the respondents were legal practitioners who worked together under a partnership arrangement. In March 2005, they lodged caveats on the titles of the properties on behalf of their client Bloomingdale with the Land Titles Office. Therefore, the applicant instituted a claim for compensation against the respondents based on s. 118 of the Transfer of Land Act 1958. They did this against the respondents rather than the client for loss that occurred as a result of the lodgement for the caveat. Based on the application of the respondents, orders were given within the proceeding that the question is adjudicated as a preliminary question premised upon Rule 47.04 of the Supreme Court (General Civil Procedure) Rules 2015. The preliminary question was determined by a judge in the Trial Division after a hearing that took place on August 2018. The judge held that the respondents were not a ‘person’ capable of lodging a caveat with the Registrar for the reasons given under s. 118 of the Act. However, the judge did not answer the second section of the question that was seeking to determine whether the applicant is restricted to ask compensation from the party identified as the caveator within the caveats. This was because the judge found it to be unnecessary or unwarranted.
The judge answered the preliminary question based on certain assumed facts in the case. First, the judge assumed that the applicant and Bloomingdale were equal unit-holders in both trusts, which owned the properties through the trustees. At a given stage, Bloomingdale lodged the initial caveats on the property to cover its interests. It was also assumed that the only shareholder and director of Bloomingdale was Antonio Gangemi. In May 2003, a dispute came up between the applicant and Gangemi concerning their joint business dealings as well as rights within the properties. On the other hand, the respondents continued to act as solicitors to Gangemi and Bloomingdale with regards to the dispute. An attempt aimed at mediation ended up with the signing of a heads of agreement signed by Gangemi and Bloomingdale on one hand, and the applicant as well as associates on the other. The agreement was that the former two parties would transfer their interests to the applicants and their entities. Bloomingdale duly passed over its unit holdings in the trusts and effected withdrawals of the first caveats. These withdrawals were subsequently lodged by the respondents. It means that at this stage, only the applicants were entitled to the beneficial interests within the properties. Further, after 18 months, the respondents lodged additional caveat on behalf of the respondents. This resulted in the loss and damage that the applicant claims to have suffered.
2. Why did the person lodging the caveat (whoever that was) have no reasonable cause to lodge it? (10 marks)
According to s. 118 of the Transfer of Land Act 1958, there is a provision for compensation for lodging caveat without reasonable cause. Therefore, any person that lodges any caveat with the Registrar without any reasonable cause will be found to be liable to compensate any individual that suffers damages depending on the order of the court. In this case, the plaintiff sued the defendants claiming that as at the time of lodging the 2005 caveats, they should have known that Bloomingdale did not have any caveatable interest. Therefore, they could not have reasonably had a honest belief supported by reasonable grounds. However, the judge held that the solicitors were not a “person” putting a caveat based on this particular position of the Act. It is for this reason that the plaintiff applied for leave to appeal.
Accordingly, it is an established principle that the law the person that lodged the caveat did not have reasonable cause to lodge it simply for two reasons. First, the person did not have a caveatable interest. In addition, the individual did not have an honest belief premised upon reasonable grounds that he had a caveatable interest. In addition, the caveatable interest can only occur if the interests of the person are the ones that are most likely to be impacted by the lodging of this caveat. In this case, the person that lodged the caveat did not have reasonable cause, and instead would be the one that would be required to pay compensation if the interests of another party were affected. This compensation would be in the manner prescribed by the courts, which must be deemed to be just as well as commensurate with the loss or damage that is likely to be suffered.
3. Explain how the Court used principles of statutory construction to determine " within the meaning of s118 of the Transfer of Land Act 1958 (Vic)? Keep in mind that s 118 of the TLA (Vic) is the equivalent of s 74P of the RPA (NSW), but the latter is much wider in its application, because it covers not just lodging a caveat but also causing a caveat to lapse and refusing to withdraw a caveat without reasonable cause. (8 marks)
In this case, the court emphasized that it is not a rule of statutory construction that the words utilized within a statute should be granted the literal meaning. This is the case unless it is needful to ensure that the provision is consistent with the objective of the statute as a whole. First, the court determined that ss. 89 (1) and 118 of the Transfer of Land Act 1958 (Vic) use the words “any person” instead the word “caveator. This is deliberate as it is a function of the reality that the act of claiming and lodgement come before the caveat is recorded. Moreover, the opening phrase “any person lodging” as contained in s. 118 is in present tense as it is the actual point under which the concept of “reasonable cause” is to be evaluated. It is the point at which the individual wants to lodge or is in the process of lodging the caveat. Similarly, the caveat has not been recorded at this time in the Register. It is the crucial point for the assessment irrespective of the time the claim is made for compensation by a person that suffers damage. Essentially, s. 89 (1) acts at the same point in time, that is the time before its recording within the Register.
The construction of this position is derived from the New Zealand Court of Appeal decision that described the phrase “any person lodging a caveat.[footnoteRef:1] It holds that this is not restricted to the caveator as both the client, solicitor or any individual that is responsible for lodging the caveat may be asked to cater for the compensation. It could include the solicitors, their employees or registration agents amongst others. Besides, the idea of “reasonable case” holds that a solicitor may not conceal the identity behind the existence of an instruction to lodge a caveat if in so doing would be like acting without reasonable cause.[footnoteRef:2] [1: Gordon V Treadwell Stacey Smith CA217/95  NZCA 110 ;  3 NZLR 281 ] [2: New Galaxy Investments Pty Ltd v Tomson  NSWCA 153]
In the statutory construction to determine that the caveator's solicitors were not a "person lodging a caveat” the courts adopted an interesting line of thought. The courts argued that as long as the caveat is lodged by a person that claims interest in the land, the agent acts in the position of the person. In reality, this implies that the acts of the person lodging the caveat could be stated to be that of the principal. However, the court also recognizes the fact that s. 118 should be read together with that contained in s. 89 (1). It means that the person that lodges the caveat is within the meaning of s. 89 (1), the one claiming estate or interest in the said land.
Significantly, the courts argued that the fact that ss. 89 (1) and 118 used the word “any person” as opposed to “caveator” means that claiming and lodging come before the lodging, and this should be assessed before recording.
Using no more than 700 words (as above), set out your own views as to whether the New Zealand case of ; which the Victorian Court of Appeal declined to follow in this case, or the two New South Wales cases of and relied on by the respondent in this case, better articulate a legal principle for protecting registered proprietors of land from caveators lodging caveats when those caveators have no reasonable cause to lodge their caveats. (14 marks)
Note: in answering Part B it will not be sufficient to simply summarise what the judgments you are reviewing say. You will need to evaluate them to answer the policy question as asked.
I believe that the New Zealand case of still articulates well the legal principle of protecting the registered proprietors of land from individuals that may lodge caveats when in real sense they do not have the reasonable cause to lodge the caveats.[footnoteRef:3] It emphasizes that any individual that lodges the caveat must have reasonable cause to dos so such that it does not make another person to sustain damage. In reality, this is meant to ensure that only those that are empowered whether they are individuals or solicitors are the only ones that lodge the caveats as they have reasonable caveatable interest as well as encouraging the idea of honesty in the execution or lodging of these caveats. [3:  NZCA 110;  3 NZLR 281 ]
Similarly, I believe that this case best represents what should occur within the realm of property law. It serves as a warning to professionals like solicitors or their agents who may be held liable for compensatory damages whenever they improperly lodge caveats. Significantly, this law would act as deterrence to illegal conduct, especially if it can be proven that such persons did not exhibit reasonable grounds to lodge the caveat. It also warns those that may act without establishing a honest belief that they have a caveatable interest in the said land or property.[footnoteRef:4] [4: Ss 143 and 146 of the Land Transfer Act 1952. ]
My position in support of the findings in case is also because of the fact that it addresses the issue of agency as well as stipulating the authority of agents. Therefore, the people or professionals that lodge caveats on behalf of others may be precluded from doing so as long as they do not have reasonable cause to effect the caveat. This would essentially protect the legitimate proprietors of land from people that may lodge the caveats when in real sense they do not have reasonable cause for doing so. Additionally, this case is applicable in the following circumstances as it provides for a mechanism for compensation through the provision of damages. It means that people will be encouraged to be honest in their dealings at all times. They must also admit that they need to act only when they have reasonable cause to do so on behalf of others.
The case also ably demonstrated the distinction and applicability of the term “any person” within the meanings of s. 137 and s. 146 of the Land Transfer Act 1952. The significance and relevance of this is that it demarcates the distinction between the caveator and the agent that may be called to lodge the caveat on behalf of the caveator. Essentially, this provides a way through which those that are acting in agency relationships can be allowed to act on behalf of the principal or others. The implication of this is that it imposes a duty of offering sound legal advice on when and how to lodge legal caveats.
Therefore, I think that the Gordon case is still applicable in the circumstances that would require the protection of the proprietary interests of others as at the time of lodging the caveat. It will ensure that only those that have caveatable interest in the property and are willing to act honestly can lodge the caveats. Without the reasonable cause belief as ably articulated in , it would be difficult to ensure that people suffer at the hands of unscrupulous persons, solicitors or agents. While the Court of Appeal in Victoria may have failed to apply it in the present case, the reality is that it brings alive the intent and meaning of s. 118 of the relevant statute. Therefore, it is the best case to be applicable in the circumstances of this case, aimed at protecting the interests of people in land.