REGISTRAR GENERAL vy SAADE THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MEAGHER, SHELLER JJA and SAMUELS AJA 9 June 1992, 18 June 1992 [1992] NSWCA 206 REAL PROPERTY, ASSURANCE FUND, ESTOPPEL FACTS: Mrs Saade, half owner of matrimonial property, is deprived of her interest in the land by the fraud of her husband who forged her signature on a transfer in favour of Mr Khoury, who was a party to the fraud. Her husband disappears in Lebanon and cannot be sued. In an interlocutory proceeding in 1982 Mrs Saade agrees to withdraw a caveat on the property, and Powell J finds that she is estopped from suing Mr Khoury. She successfully sues. Registrar General appeals. HELD: No order against the Registrar General can be made under s127. There was always in existence a right conferred by s126 to sue Mr Khoury. When Mrs Saade withdrew the caveat, she did not abandon her claim for that interest. The destruction of one remedy for one's rights, leaving other remedies intact, is not the same as destroying one's rights, particularly if the destruction is neither final nor permanent. Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Real Property Act 1900, s126, s127 Meagher JA After a strenuous contest, the facts as eventually found by Powell J can be simply stated: the hapless Mrs Saade, who was a half-owner of the matrimonial property, was fraudulently deprived of her interest in it by the activities of her husband, who forged her signature to a Memorandum of Transfer of the entire property in favour of Mr Saade Khoury. Mr Khoury was a friend of the fraudulent Mr Saade, was well acquainted with exactly what was happening, and was in all senses particeps criminis. Mrs Saade then bestirred herself to obtain her legal remedies. She could not successfully sue her husband, the person primarily liable for her misfortunes, because he disappeared to an unknown address in Lebanon. (In fact she commenced proceedings against him, but could not serve them on him.) She did sue Mr Khoury, and, after a decent interval, also sued the Registrar General. Powell J held that she could not succeed against the former, but could against the latter. She also sued successfully a Mr Poppert, the solicitor involved in the transaction. From this decision the Registrar General has appealed, but - curiously - Mrs Saade has not, and less curiously - neither has Mr Poppert. The actual course which the pleadings took from time to time was a good deal more complicated than my bare narration would suggest, but there is no point in setting them out in detail, except for one point. That point, which concerns Mr Khoury, is vital to an understanding of Powell J's decision, and it arises out of an interlocutory skirmish which took place before Rath J in March 1982. At this stage Mrs Saade's claim was protected by a caveat on the matrimonial property. As against Mr Khoury, Mrs Saade's Statement of Claim claimed that he was either the actual forger of her signature or privy to the forgery and that she therefore retained her former interest in the property. The relief she sought against him was a declaration that her interest in the land still existed, an order for rectification of the register to reflect that fact, and (alternatively) damages. Mr 2 UNREPORTED JUDGMENTS Khoury, in his defence, denied all material allegations, and by a Cross-Claim sought a declaration that his title to the property was not affected by any equity in favour of Mrs Saade. At this stage Mrs Saade was making no claim against the Registrar General. On 8 March 1982 Rath J, by consent, ordered the withdrawal of Mrs Saade's caveat and gave her leave to join the Registrar General. Mrs Saade also undertook to the Court not to lodge another caveat on the property, but was granted leave to apply for a release from the undertaking on one day's notice. Some years later, in December 1989, Powell J had to consider the effect of Rath J's orders on Mrs Saade's claim against the Registrar General. It is not clear whether, when Powell J upheld Mrs Saade's claim against the Registrar General he did so under s126 or under s127 of the Real Property Act, 1900. Insofar as they are relevant, those sections read as follows: "126.(1) Any person deprived of land or of any state, or interest in land - (a) in consequence of fraud; or (c) by the registration of any other person as proprietor of such land, estate, or interest; or may bring and prosecute in any Court of competent jurisdiction an action for the recovery of damages. (2) An action under subsection one of this section shall,... subject to subsections three, four and five of this section, be brought and prosecuted against the person - (b) upon whose application the erroneous registration was made; or (c) who acquired title to the land, or the estate or interest therein, through the fraud, error, omission or misdescription. (3) In every case in which the fraud, error, omission, or misdescription occurs upon a transfer for value, the transferor receiving the value shall be regarded as the person upon whose application the certificate of title was issued to the transferee. (4) Except in the case of fraud or of error occasioned by any omission, misrepresentation, or misdescription in his application, or in any instrument executed by him, the person upon whose application such land was brought under the provisions of this Act, or such erroneous registration was made, shall, upon a transfer of such land bona fide for value cease to be liable for the payment of any damages which might have been recovered from him under this section. (5) In any of the following cases, that is to say, - (a) where such person ceases to be liable for the payment of damages as aforesaid; or (b) when the person liable for damages under this section is dead, bankrupt, or insolvent, or cannot be found within the jurisdiction, such damages with costs of action may be recovered out of the assurance fund by action against the Registrar-General as nominal defendant. 127.(1) Any person sustaining loss or damages... who by the provisions of this Act is barred from bringing proceedings in the Supreme Court for possession, or any action of ejectment in a District Court, or other proceedings or action for the recovery of such land, estate, or interest, or to whose claim every such proceedings or action would be inapplicable may, in any case in which the remedy by action for recovery of damages as hereinbefore provided is inapplicable, bring an action against the Registrar-General as nominal defendant for recovery of damages..." URJ REGISTRAR GENERAL v SAADE (Meagher JA) 3 It is difficult to see how, on the learned judge's interpretation of the facts, the Registrar General could possibly be liable under s126. His Honour must, therefore, have taken the view that the Registrar General was liable under s127. That section provides, as may be seen, that a person who sustains loss or damage from any dealings with his land may sue the Registrar General if, but only if, he has no statutory right under s126 to sue some other person. His Honour then held that, although Mrs Saade once had a statutory right to sue Mr Khoury under s126 of the Act, she lost that right by virtue of the doctrine of estoppel when Rath J made his orders in March 1982; and accordingly at the time of judgment any statutory remedy against Mr Khoury was "inapplicable" within the meaning of s127(1). Since, therefore, on his Honour's interpretation, Mrs Saade's statutory rights to damages under s126 against the husband (if, indeed, they ever existed), were "inapplicable" because of his sojourn in Lebanon and her statutory rights under s126 against Mr Khoury had been extinguished by estoppel, and were therefore equally "inapplicable", and there was no possibility of having rights under s126 against any other person, there was no barrier to her claim against the Registrar General. Central to this argument is his Honour's view that an estoppel against Mrs Saade arose out of the orders of Rath J. His Honour took the view that the estoppel involved was either an issue estoppel in the strict sense or an "estoppel" of the kind considered by the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. In my view it was neither. By its terms Rath J's orders were in no sense "final"; Mrs Saade had the right on one day's notice to seek leave to lodge a new caveat. Nor did they release or compromise any claim against Mr Khoury. All she did was abandon - and then, temporarily - one of her remedies against Mr Khoury, whilst continuing to press her claims against him. To withdraw a caveat claiming an interest in land is not the same thing as abandoning the claim for that interest. The destruction of one remedy for one's rights, leaving other remedies intact, is not the same thing as destroying one's rights, particularly if the destruction is neither final nor permanent. Thus, where, at the hearing before Powell J, Mrs Saade sought relief against Mr Khoury there was in existence no outstanding judgment or order - either of a final or of an interlocutory nature - which was inconsistent with the orders she was then seeking. His Honour's views on estoppel were, in my view, insupportable. It must, therefore, follow that no order against the Registrar General could be made under s127, because there was always in existence a right in Mrs Saade conferred by s126 to sue Mr Khoury. Mr Hall QC, senior counsel for Mrs Saade, in addition to seeking to maintain his Honour's views on estoppel, put an alternative argument which, if accepted, would justify the making of an order against the Registrar General under s127. He argued that the word "inapplicable" where secondly appearing in s127(1) should be read as meaning not "impossible" but rather "inappropriate", and that it was inappropriate for Mrs Saade to sue Mr Khoury under s126 because she did not know, at the time she instituted proceedings, whether his involvement in the transactions was innocent or fraudulent. This argument may be dismissed simply. The word "inapplicable" in context clearly means "impossible". I am accordingly of the view that the Registrar General should succeed. Mr Hall QC asked us if we came to that conclusion to make against Mr Khoury the orders which we think should have been made in the first place. Alas, we cannot. Mr Khoury, although a party to the proceedings before us, did not appear. The Registrar General's appeal did not seek the making of any order against Mr 4 UNREPORTED JUDGMENTS Khoury. The melancholy result is that he, like his friend Mr Saade, cannot be made the subject of any order in this litigation. In my view, the following orders should be made: 1. Appeal allowed. 2. The judgment and orders of the Court below, so far as the same affect the appellant, be set aside. 3. In lieu thereof, judgment be entered in the proceedings in favour of the appellant. 4. The first respondent is to pay the appellant's costs both below and on appeal but to have a certificate under the Suitor's Fund Act in respect of the appeal. Sheller JA I have had the benefit of reading the judgment prepared by Meagher JA. Powell J found that Mr Khoury was not a bona fide purchaser for value of the property but rather a knowing and willing party to the execution by Mr Saade of his fraudulent design. Thus Mr Khoury both fell within the class of person described in s126(2)(c) of the Real Property Act and did not cease by force of subs(4) to be liable for the payment of damages recoverable under the section. It follows that subs(5) did not apply to allow such damage to be recovered out of the assurance fund. As Meagher JA has explained in his judgment damages were not recoverable against the Registrar General under s127. I agree with the reasons given and the orders proposed by Meagher JA. Samules AJA I agree with Meagher JA. 1. Appeal allowed. 2. The judgment and orders of the Court below, so far as the same affect the appellant, be set aside. 3. In lieu thereof, judgement be entered in the proceedings in favour of the appellant. 4. The first respondent is to pay the appellant's costs both below and on appeal but to have a certificate under the Suitor's Fund Act in respect of the appeal. Counsel for the Appellant: BA Coles QC / IM Wales Solicitors for the Appellant: HK ROBERTS - CROWN SOLICITOR Counsel for the Respondent: PM Hall QC / IG Harrison Solicitors for the Respondent: GORDON L BEARD AND McDONALD