75 C.L.R.] OF AUSTRALIA. 191' sus ' {HIGH COURT OF AUSTRALIA.) ir TRAR OF TITLES . APPELLANT ; /EFENDANT, AND . Responvents. ~ CROWLE AND OTHERS -. PLAINTIFFs, ON APPEAL FROM THE SUPREME COURT OF QUEENSLAND. ~ Real Property—Registration— Error by Registrar of Titles—Life tenant registered H.C. ov A. for an estate in fee simple—Mortgages by life tenant—Improvements—Dealings — ~ 1947. by remaindermen with expectant shares—Assurance Fund—Claim by remain- ee Brispane, Ke dermen—Measure of damages—Real Property Act of 1861 (9.) (25 Viet. No. 4), #8. 126, 127, 128.* 'The Real Property Act of 1861 (Q.) spar eas ey s. 126: "Any person leprived of any land or of any estate or interest in in consequence of fraud or in consequence of the issue of 'certificate of title to any other person or in consequence of any entry in the register book or of any error or omission ¥ (E SBet bead of title or in any entry in the register book may bring and ite an action at law in the ipreme Court for the recovery of damages against the person" who derived benefit by such frand or in m ence of the issue of such certifi- "cate of title or by such entry or in ~ consequence of such error or omission Provided always that no such action 'shall le or be sustained unless the same _ In consequence of an error by the Registrar of Titles, a person entitled to a Tif estate in two parcels of land with remainder to her six children was registered in 1883, under the Real Property Act of 1861, for an estate in fee simple, She mortgaged both parcels of land by duly registered bills of mort- gages to different mortgagees and erected an hotel on one piece of land. In 1902 an action was commenced by the remaindermen, three of whom were infants, against the Registrar of Titles and the life tenant. The Court ordered shall be commenced within six y from the date of such deprivation except nevertheless that any person being under the disability of coverture or infancy or absence from the colony or of unsoundness of mind may bring such action within Act contained shall be interpreted to subject to any action of ejectment or for recovery of damages any purchaser or mortgagee bona fide for valuable consideration of any land under the « provisions of this Act although his vendor or mortgagor may have been registered as proprietor through fraud or error or may have derived from or and MeTiernan JJ. H. ©. or A. 1947. Se REGISTRAR oF TrtLes v. Crowe. HIGH COURT gages. three children of age, they would be entitled to an indemnity ont o! assurance fund, The judgment proceeded on the basis that no relief co be obtained against the assurance fund until the remainders fell into posse In 1904 the three children of age gave mortgages to the same mortgagee their respective interests in the two parcels of land. A foreclosure oi absolute was made in favour of the mortgagee and a y in 1911 vesting the lands in the mortgagee for all the estate or interest | interest in the hotel land from the mortgagee, who transferred to them estate or interest in that land. Meanwhile in 1907 the mortgagee of the o land, on the life tenant's default, exercised a power of sale and sold at transferred the land to a bona-fide purchaser for value. 1943 of the life tenant insolvent and unable to indemnify any of the remaindi men, the action was brought on for further consideration. hotel land and for the value of the other land. Held that the remaindermen were entitled to recover damages from urance fund in respect of the hotel land, even though the value o of the mortgage debt, the measure of damages being the value of the land the state in which it was at the time of the deprivation, including the improve- ments thereon free of encumbrance. Spencer v. Registrar of Titles, (1908) A.C. 235, followed. shares had not lost their right of action, as the mortgagee of their intere took subject to the mortgages given by the life tenant, and their right to indemnified did not pass from them to the mortgagee of their interests. Decision of the Supreme Court of Queensland (Stanley A.J.): Finucane v- Registrar of Titles (No. 2), (1947) Q.S.R. 26, affirmed. through a person registered as pro- prietor through fraud or error whether by wrong description of land or of its boundaries or otherwise " By s. 127: "In case the person against whom such action for damages is directed to be brought shall be dead or shall have been adjudged insolvent or shall have absconded out of the jurisdiction of the Supreme Court then. in such case it shall be lawful to bring an action for damages against the Registrar-General as nominal defendant for the purposes of recovering the amount of the said damages and costs against the assurance fund herein- Tt was declared that, in default of the life tenant indemnifying th After the death Judgment before described and in any such and also in any case in which dam may be awarded in any action agi the person deriving benefit. by fraud or in consequence of the of any certificate of title or othe) as aforesaid and the Sheriff shall n a return of nulla bona or shall that the full amount with costs awarded cannot be recovered from such the Treasurer of the Colony upon Teocipt of « certificate of Iudge | the Supreme Court and of a warrant under the hand of the Govern hereinafter provided shall pay | amount of such damages and costs ~ absconding beyond the juris 75 C.L.R.J OF AUSTRALIA. Aprnat from the Supreme Court of Queensland. On 6th July 1901, six plaintiffs brought an action against the Registrar of Titles as nonfinal defendant for the recovery, against the Assurance Fund established under the Real Property Act of 1861, of damages for the deprivation of an estate in fee simple in remainder expectant on the life estate of their mother, Johanna Finucane, in consequence of an error in an entry in the register book. The plaintifis were the six children of William and Johanna Finucane, three of them, Mary Beatrice Finucane, Ellena Eugenia Finucane and George William Barron Finucane, being sui juris and the other three infants suing by their next friend, George William Barron Finucane. Both William Finucane and Johanna Finucane were joined as defendants and by consent Griffith C.J. stated a special case for the Full Court (Finucane v. The Registrar of Titles (1) ). Judgment was given for the plaintiffs for (1) a declara- tion that Johanna Finucane was entitled to an estate for life only in the lands and was a trustee thereof for an estate in fee simple in remainder for the plaintiffs, (2) an order that the register book be rectified by entering upon it a memorial of the preceding declaration but that such declaration and entry were subject and without the unrecovered balance thereof as the case may be and shall charge the same to the account of the assurance fund Provided always that the assurance fund shall not be liable for payment 'of any damages after the expiration of six years from the time when the cause Of action arose Provided also that any person so subsequently found within the j) diction shall be liable to be iad in 'the name of the Registrar-General for the amount of the damages and costs so recovered from the assurance fund " By s, 128: "Every action which shall be brought by any person to recover damages for or by reason of any loss or damage occasioned by any omission mistake or misfeasance of the Registrar-General or any of his officers or clerks in the execution of their duties under the provisions of this Act shall be brought against the Registrar-General as nominal defen- dant and in case in any such action the plaintiff! recover final judgment 'against such nominal defendant. then: the application or motion of such plant any Judge of the Supreme urt shall and he is hereby directed to certify to the Treasurer the fact of such judgment having been recovered and the amount of damages and costs recovered and thereupon or before the expiration of two calendar months after such judgment is so certified the said 'Treasurer upon the receipt of a warrant under the hand of the Governor shall pay the amount of such damages and costs to the person recovering the same his executors or administrators and shall charge the same to the account of the assurance fund hereinbefore deseribed Provided always that notice in writing of every such action and of the cause thereof shall be served upon the Attorney-General and also upon the Registrar-General one calendar month at least before the commencement of such action Provided also that the Registrar- General shall not be personally charge- able upon any judgment recovered as aforesaid nor shall any process or notice in or relating to any such action (except as aforesaid) be served upon the gistrar-General but all such cee and notices shall be served upon the Attorney-General for the time being " (1) (1902) Q.S.R, 75. H. C. or A. 1947. ated Reotstrar oF Tittes v. Crownn. < § 2 H.C. or A. prejudice to such encumbrances liens or interests already notifi 1947. SH ReorstRaR or TITLES CROWLE. v, HIGH COURT and (3) a declaration that Johanna Finucane was bound to indemni the three plaintiffs of full age against ahy loss which they m severally sustain by reason of any dealings in the pleadings mentic by Johanna Finucane with the lands, and that in default of making such indemnity the plaintiffs were to be severally entitle to a like indemnity out of the assurance fund. Further consid tion of the action was adjourned. William Finucane died in 1927 and the estates in remait fell into possession on the death of Johanna on 4th May 1943. the meantime the three plaintifis of full age had mortg their expectant shares. The plaintiff Mary Beatrice Finu married and became known as Mary Beatrice Crowle. Johanr died insolvent, unable to indemnify any plaintiff. The action brought on before Stanley A.J. who gave judgment for the plaint for £3,000, the amount of the mortgage debt on the lands know as the " Lands Office Hotel" lands and for £6,000, the value « lands known as the " Lilian Cooper" lands: Finucane v. Regist of Titles (No. 2) (1). : : From this decision the Registrar of Titles appealed to the Court. Further relevant facts appear in the judgment hereunder. Fahey (with him O'Hagan), for the appellant. The evide shows that the result of the expenditure of the moneys raised | the mortgage of the " Lands Office Hotel" lands in erecting hotel thereon is a benefit of value greater than or at least equal the mortgage debt. Therefore no losses have been sustained reason of the dealings with the land by Johanna. The remain men are entitled to compensation only for a loss and not for benefit (Hayes v. Bourne (2); Registrar of Titles v. Spencer (3 This question was not raised or decided in the previous proceed (Finucane v. Registrar of Titles (4) ). The three remainde age mortgaged their interests in the land and by the fore haye lost all their interests therein. They received value for tho interests and ultimately suffered no loss. By reason of thi closure they lost their rights to the land and their right to ps of the Registrar of Titles, but by their own dealings resulting - order for foreclosure. If they are entitled to any damages, t (3) (1909) 9 C.L.R. 641. (1) (1947) Q.S : (4) (1902) Q.S.R. 75. (2) (1895) 7 75 C.L.R.] OF AUSTRALIA. any benefit they have received from their dealings should be deducted #- ©. oF A- pro tanto, McGill K.C. (with him O'Sullivan), for the respondents. The remaindermen are entitled to the "Lands Office Hotel" lands free of encumbrance. They are entitled to the lands with the buildings. It does not matter if the mortgage moneys were used for the purpose of erecting an hotel on the lands. The measure of damages is the cost of freeing the lands of the encumbrance (Spencer v. Registrar of Titles (1); Registrar of Titles v. Spencer (2)). The reasons for judgment in these cases are not inconsistent. The remaindermen's right is to have the land unencumbered. In order to indemnify them Johanna would have had to pay off the mortgage debt even though she spent the money on improvements. The three remaindermen have not lost their right of action by the foreclosure order. Their rights flow from the judgment and they never parted with those rights. If they did part with those rights, they repurchased them from their mortgagee. As to the " Lilian Cooper" lands, the foreclosure order and vesting order were ineflective being made after the mortgagee had exercised his powers of sale. Fahey in reply. Cur, adv. vult. Tue Court delivered the following written judgment :— This appeal is brought from a judgment or order given or made on 21st October 1946 upon further consideration of an action in which the original judgment was pronounced on 11th December 1902. By the judgment under appeal the plaintiffs recovered from the assurance fund under the Real Property Act of 1861 indemnities amounting in all to £9,000 or thereabouts. The plaintiffs are remaindermen or successors in title to remainder- men under limitations contained in a settlement made on 15th August 1863, Of the land subject to these limitations the successful claim against the assurance fund relates to two parcels. On one parcel the Lands Office Hotel stands, and it is convenient to refer to the parcel as the hotel land. The other parcel afterwards passed into _ the hands of Dr. Lilian Cooper, and it is convenient to call the parcel the Cooper land. At the date of the settlement the title to both pieces of land was under the general law. The limitations were - to two grantees to uses (doubtless intended to be trustees of the (A) (1908) A.C. 239. (2) (1909) 9 C.L.R. 641. 1947. Se Recistran oF 'Tittes CROWLE. June 23. ReGIsTRaR or TrTLEs vs CROWLE. Latham C.J. Rich J. 'McTiernan J. - settlement) to the use of the settlor for life and after his death to th HIGH COURT [1947, use of the grantees to uses during the life of the settlor's dau; Johanna upon trust to pay the rents and profits to her for life her separate use during coverture and subject to a restraint up anticipation, and after her death to the use of such of Johan the remaindermen in respect of whose interest the claim is mad In the event all attained full age but three of them were still infi at the time of the original judgment in 1902. In 1882, the settlor having died and one of the grantees to also having died, the survivor of such grantees applied to b both parcels of land under the Real Property Act on the foo that he was seised of an estate in fee simple therein. This was accepted by the Master of Titles, and the Registrar-G on 21st December 1882 issued certificates of title in the applicant's name as proprietor of an unencumbered estate in fee simple in tl respective parcels of land. Ane a é On 11th January 1883 the registered proprietor who had thus established transferred for a nominal consideration | parcels of land to Johanna for an estate in fee simple, and she bee: the registered proprietor. In this action the Full Court of the Supreme Court of Queens decided that, under the limitations, the uses:in favour of the rem so that they took the legal estate (Finucane v. Registrar of Titles Consequently there was no foundation for the issue of a certi of title on the footing that the surviving grantee to uses was se in fee simple. Nevertheless, as, Johanna took the transfer as a volunteer, th Court considered that the land vested in her upon trust after h death for the remaindermen. She, however, mortgaged ¢ parcel of land by duly registered bills of mortgage. The mo: judgment the mortgage was still on foot, but the mortgagees aft wards exercised their power of sale, and on 20th November 190 transfer to the purchaser, who took bona fide and for value, registered. In May 1901 Johanna was adjudged insolvent and there no available assets of her estate. In July 1902 the remaindermé (1) (1902) QS.R. 75. 75 C.L.R.J OF AUSTRALIA. commenced the action as plaintiffs, the three infants by their next friends. The Registrar of Titles was at first the only defendant named, but afterwards Johanna was joined. After the Full Court had answered certain questions raised by a special case, a judgment was pronounced in the action. It was declared that Johanna was entitled to an estate for life only in the two parcels of land, and that she was a trustee for an estate in fee simple in remainder for her three children who had already attained full age and for such other of her children who should in her lifetime attain full age, or being daughters marry under age, as tenants in common. It was ordered that the register book should be rectified H. C. or A. 1947. se RecrsTrarR or TrtLes v Crowze. Latham C.J. Rich J. Dixon J. MeTiernan J. by entering upon it a memorial of the declaration and a statement ~ that Johanna was seised of an estate for life only in the lands with remainder to the persons so declared entitled as tenants in common, but that such declaration and entry were made subject and without prejudice to encumbrances, liens, estates and interests already notified by entry in the register. By this reservation the priority over the estate in remainder of the two mortgages given by Johanna was preserved. The judgment proceeded to declare that Johanna was bound _ to indemnify the three children who had then attained full age against any loss which they might severally sustain by reason of any dealings in the pleadings mentioned with the lands by Johanna. Curiously enough, the declaration ignored the contingent right of the infant plaintiffs to a similar indemnity, perhaps because it was _ considered that no declaration should be made except in support __ of vested interests. The dealings by Johanna which the pleadings mentioned were the two mortgages. Next, the judgment declared that, in default of Johanna's making the indemnity which the judgment bound her to make, the three plaintifls, the children of Johanna who had attained full age, would be severally entitled to the like indemnity out of the assurance fund. Finally, the judgment dealt with costs and adjourned further consideration and reserved liberty to apply. As appears from the reasons of the Full Court (1), these declara- tions proceed upon the footing that until the remainders not only vested but fell into possession the plaintiffs, the remaindermen, could obtain no relief against the assurance fund. The life tenant Johanna did not die until 4th May 1943. The action was brought on for further consideration. In the meantime, however, various transfers and devolutions of the interests of some of the plaintiffs had taken place. As a result (1) (1902) Q.S.R. 75. YOL.LXXY. 13 H. C. or A. 1947. ed REGISTRAR or Trrtes . Crowe. Latham C.J, Rich J. Dixon J 'MeTiernan J. HIGH COURT changes were made in the parties to the action which it is unnece; further to mention. But there was one dealing of importa the remaindermen who were of full age at the commencem the action. In 1904 two of them by one instrument of mo: and the third of them by another instrument of mortgage secu mortgage debt, without personal liability, over their res; interests in both the hotel land and the Cooper land. These ments were not registered but were protected by caveat. In oT a foreclosure order absolute was made in favour of the mortg and the judgment by which this was done included a vesting o made as under the Trustees and Executors Act of 1897, by which was ordered that the lands should vest in the plaintiff (the n m¢ gagee) for all the estate of interest of the defendants (the morta and each of them. Whatever may have been the operation of this vesting order ij relation to the mortgagors' remainders in the hotel land, it cl had no effect in relation to their interests in the Cooper land, wh as already stated, had previously been sold by the mortgagee of t fee simple in pursuance of the power of sale conferred by Johai mortgage, the priority of which to the remainders was preset by the declarations in this action. Presumably the sale did realize the amount of the mortgage debt and in relation to the t remaindermen's interests in the Cooper lands it is hard to see any effect at all could be given to the foreclosure order. Su quently, in 1922 to be precise, the three remaindermen repurch their interests in the hotel land from their mortgagee, who them a transfer as tenants in common of all his estate and inter in that piece of land. Upon the foregoing facts, Johanna having failed to ind any of the six remaindermen, the plaintiffs now representing interests claimed that they were entitled to receive fro assurance fund, in respect of the hotel land, the amount of th mortgage debt secured over it by Johanna's mortgage, and i respect of the Cooper land, the value of the land, which wa: at £6,000. In answer to this claim the Registrar of Titles Sail st contentions, all of which were overruled by Stanley A.J., who h the action, The learned Judge awarded in respect of each of six remaindermen £1,000 as representing his or her interest Cooper land, and one-sixth of the amount necessary to cleat the encumbrance over the hotel land, i.e. about £500 each or 8, 0 in all. On appeal from the judgment of Stanley A.J. the Ri 75 OLR.) OF AUSTRALIA. 199 of Titles did not rely on all the contentions raised before him. The ' ©. oF A. position which the Registrar took up was briefly as follows. i First, he maintained that none of the remaindermen could recover pyc screan anything in respect of the hotel land, on the ground that the or Trrtes mortgage money raised by Johanna had been applied by her in 2 erecting the hotel thereon and that the value which the buildings Crowe. so erected continued to give to the land at the time of the death of , the life tenant, Johanna, in 1943 was greater than, or at least equal to, the amount of the mortgage debt. Next, the Registrar contended that the three remaindermen who had mortgaged their interests in 1904 and whose interests so mort- gaged had been foreclosed in 1911 could recover nothing either in respect of the hotel land or of the Cooper land, on the ground that no right to recoupment from the assurance fund acerued until their interests fell into possession upon the death of Johanna and that at that date they had lost their interests. The repurchase and transfer to them of the hotel land was, in the Ri 4 contention, the acquisition of a new and original title which was irrelevant. It should be remembered that the three remaindermen in question were adult at the time of the original judgment, which expressly mentions them as entitled to an indemnity, and does not refer to three children who were infants. But the Registrar of Titles conceded that, as to the Cooper lands, there must be paid out of the assurance fund in respect of each of the three last-men- _ tioned children whose remainders have since vested, the value of the land as at the death of Johanna, that is £1,000 each. Itis convenient to deal first with the contention that the mortgage by the three remaindermen first mentioned of their interests in the two pieces of land and the subsequent foreclosure and vesting order precludes any recovery from the assurance fund on account __ of their interests. The rights of these. plaintiffs or the plaintiffs representing their interest against the assurance fund depend, strictly speaking, 5 upon the judgment, though in saying this it is not intended to 'suggest that the result would be any different if they still directly depended upon ss. 126-128 of the Real Property Act. But by the declaration the rights of these remaindermen as at that date passed into judgment against the Registrar-General. They were declared ~ upon the the default of Johanna in indemnifying the three remain- dermen to be entitled to the same indemnity from the assurance fund. It may seem curious that a declaration of an obligation to indemnify was made against an insolvent and that the contingency - of her default was made the basis of the liability of the assurance =e ee HH. C. or A. 1947. Rue 'TrvLes v. CROWLE. Latham ©.J, iy 'J- ders those interests were subject to the two respective mortgag HIGH COURT (1947, fund. Doubtless the reason for this is in part to be found in terms of ss. 126-128 and in part in the fiduciary character apparent ascribed to Johanna. But at all events so it was. he sie of or ia to an intereat in land and it is a right to have a money sum paid over, or at all events provided and applied. When these three remaindermen in 1904 mortgaged their remain- _ given by Johanna which took priority over and were encumbrance upon all the estates in remainder. The mortgagee of the interests in remainder eee took subject to these encumbrances. not, ines pass one the Raa oneanen It may be conceded that the event upon which the remaind would fall into possession must occur before the indemnity beca enforceable. But it does not follow that a claimant against tl assurance fund for deprival of a future interest must at the time when the interest falls into possession still retain some interest in — the land. The very ground of his claim is that he has been depriv« of an interest and that might well mean his whole interest. There- % fore in the present case it cannot be necessary that the remaindermen should retain until the death of the life tenant those interests whi survived in them in spite of the dealings which call for the indemnity — be indemnified. : These reasons are not the same as those of Stanley A.J. for decid this defence against the Registrar-General, but we agree in conclusion. It is convenient now to go back to the first defence, which relat only to the hotel lands but covers all the interests therein remainder. In our opinion this defence also fails and substantially — 5 for the reasons given by Stanley A.J. sfc Tt is ea bliatvedl by the decision of the Privy Council in Spencer v. Registrar of Titles (1) that the loss or damage to which a ee a (1) (1908) A.C. 235, at p. 236. 75 C.L.R.] OF AUSTRALIA. against the assurance fund is entitled is to be measured by the value of the land in the state in which it was at the time when he is taken to have been deprived of it and, if before that date buildings have been erected thereon, though not at his expense, that means with the buildings on it. If then the life tenant had built the hotel out of her own moneys and by her dealings the remaindermen had suffered a total deprival of the land, they would have been entitled to the value of the land and buildings. Again, if she had built the hotel at her own expense and there had been no unwarranted dealings by her prejudicing the remaindermen's interests, on her death they would have been entitled to the land as improved by the buildings without any charge or recoupment of the expense to her estate. In the third place, it is clear that they are entitled to the land free from any encumbrance created by her and that she was bound to clear off the encumbrance which she created. Why in these circumstances should she be entitled to offset the amount by which she increased the value of the land by erecting the buildings against the amount she must otherwise make good ? If she cannot do so, why should the plaintiffs be in a worse position as against the assurance fund ? We think that it is clear that in working out their rights against Johanna the plaintifis would have been entitled to insist that she clear off the mortgage and that had she done so, either as a result of their insistence or as a result of the mortgagees enforcing her personal covenant, she could not have charged the remaindermen with any part of her expenditure upon the hotel. That was her affair and must be considered an independent act on her part the consequential gain enuring in fact to the remaindermen being no necessary consequence of the wrong done to them or their interests. We do not think that this is any the less so because she included in the mortgage a covenant on her part to build the hotel. The hotel > might have been built out of any money. It might have been burned down or demolished. It might have been rebuilt. It might have fallen into disrepair and have ceased to give the land any additional value. Prima facie, the amount of the mortgage debt is the measure of damages in such a case as this : see Queens- land Trustees v. Registrar of Titles (1). The issue of the certificate to the surviving grantee to uses is the erroneous step to which the loss of the remaindermen is attributable, but the loss was mitigated by the possibility of fixing Johanna, as a yoluntary transferee from him, with a trust in favour of the (1) (1893) 5 Q.LJ. 47, at pp. 50-51. H. ©. or A. 1947. ee RecistRan or TrtLes * CrowLe. Latham ©.5. Rich J. Dixon J. McTiernan J, 202 HIGH COURT H.C. or A. yemaindermen and rectifying the register to preserve their 1947. ders, 'The mitigation 'could not or did not extend to the 1 Se Reorsrear OF discharge of either mortgage and no reason has been shown or the real loss of the plaintiffs in respect of the hotel lands s re not be considered to be the equivalent of the mortgage. Crown. The appeal should be dismissed with costs: Appeal dismissed with costs. Declare such are recoverable by plaintiffs age entitled to be indemnified out of ee im respect of such costs a