(2007) NSW Conv R 56-187 Reported Decision : (2007) ANZ Conv R 481 (2007) Aust Torts Reports 81-896 New South Wales Supreme Court CITATION : CHANDRA & ANOR v PERPETUAL TRUSTEES VICTORIA LTD & ORS [2007] NSWSC 694 HEARING DATE(S) : 7-11/05/2007 JUDGMENT DATE : 6 July 2007 JURISDICTION : Equity JUDGMENT OF : Bryson AJ at 1 DECISION : see para [160] CATCHWORDS : NEGLIGENCE – Solicitor - TORRENS SYSTEM – claims for compensation - MORTGAGOR and MORTGAGEE – Construction of mortgage – mortgage forged by persons associated with Mr Pan, not associated with registered proprietors – Mr Miller solicitor obtained new CT on instructions of Mr Pan who falsely told Mr Miller he was authorised by registered proprietors on false claim that original CT was lost – Mr Pan used new CT and forged documents including mortgage and loan agreement to obtain loan from PTV and divert moneys advanced. On the construction of the mortgage and incorporated memorandum HELD that references to mortgage given by registered proprietors did not extend to forged mortgage and hence no debt was secured – registered proprietors obtained declaration that no debt was secured. Consideration of registered proprietors' claim of negligence against solicitor: HELD duty of care, negligence but no loss. Consideration of registered proprietors' claim against RG under ss 120 and 129 RPAct – HELD no loss and also RG protected by defence s 129(2)(b) (remedy available against insured solicitor). On claim by PTV against solicitor HELD no duty of care. Extensive consideration of circumstances in which there is a duty of care against economic loss. On claim by PTV against RG HELD PTV entitled to recover under s 120 and 129. On cross-claim by solicitor against JP who witnessed mortgage HELD – no breach of duty of care by JP who had information about identity of persons signing mortgage from apparently reliable source. LEGISLATION CITED : Civil Liability Act 2002 Real Property Act 1900 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Bryan v Maloney (1995) 182 CLR 609 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452 Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438 Donoghue v Stevenson [1932] AC 562 Esanda Finance Corporation v Peat Marwick Hungerfords (Reg) (1997) 188 CLR 241 Graham v Hall [2006] NSWCA 208 Hawkins v Clayton (1998) 164 CLR 539 Heaven v Pender (1883) 11 QBD 503 Hedley Byrne & Co. Ltd v Heller & Partners Ltd [1964] AC 465 Hill (t/as RF Hill & Associates) v Van Erp (1997) 188 CLR 159 Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326 CASES CITED : Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22,281 Perre v Apand Pty Ltd (1999) 198 CLR 180 Printy v Provident Capital Ltd [2007] NSWSC 287 PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 Scott v Davis (2000) 204 CLR 333 Seltsam Pty Ltd v McNeill [2006] NSWCA 158 Shirt v Wyong Shire Council [1978] 1 NSWLR 631 Small v Tomassetti (2001) 12 BPR 22,253, Sullivan v Moody (2001) 207 CLR 562 Sutherland Shire Council v Becker (2006) 150 LGERA 184 Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 Ultramares Corporation v Touche (1931) 174 NE 441 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 Wyong Shire Council v Shirt (1980) 146 CLR 40 Fatah Chandra - 1st Plaintiff Anje Srikandi - 2nd Plaintiff Perpetual Trustee Victoria Limited - 1st Defendant Registrar-General of New South Wales - 2nd Defendant PARTIES : Stephen Richard Miller - 3rd Defendant State of New South Wales - Cross-defendant to first cross-claim Wendy Donald JP - cross-defendant to second cross-claim. FILE NUMBER(S) : SC 3261/2006 D.E. Grieve QC and Ms D.M. Coulton - Plaintiffs T.G.R. Parker SC - 1st Defendant COUNSEL : P. Walsh -2nd Defendant D.L. Williams SC and D. Shields - 3rd Defendant J.E. Marshall SC and D.F.C. Thomas for State of NSW B. Green - for Wendy Donald JP George Sten & Co Solicitors - Plaintiffs Allens Arthur Robinson - 1st Defendant SOLICITORS : Laurie Ryan - 2nd Dft Ebsworth & Ebsworth Lawyers - 3rd Defendant IV Knight, Crown Solicitor - Cross-Defendants IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRYSON AJ FRIDAY 6 JULY 2007 3261/06 FATAH CHANDRA & ANOR v PERPETUAL TRUSTEES VICTORIA LTD & ORS JUDGMENT 1 BRYSON AJ: Forgery, Issues, Parties. Mortgage AB408089 ("the mortgage") is a forgery. According to its terms it imposes obligations on the plaintiffs, Mr Fatah Chandra and his wife Adje Srikandi and mortgages their house property, 23A Jellicoe Avenue, Kingsford ("the property"), to secure those obligations. The mortgage is registered on folio identifier 45/8098, the Certificate of Title for the property, so it has the effect given to it by the Real Property Act 1900 ("the Act"), particularly ss 40 and 42. It creates an indefeasible title to the estate or interest in land which it purports to create, in favour of Perpetual Trustees Victoria Ltd ("Perpetual Trustees Victoria"), the first defendant. The forged signatures were made by two persons who are not identified in the evidence but who were associates of Mr Joey Pan. It was not conceded that Mr Pan acted without the plaintiffs' authority: but having heard the plaintiffs' evidence, I find that they had no part in the events and did nothing to equip Mr Pan with any information or documents. 2 Mr Pan was the principal figure in a series of fraudulent acts by which he obtained a new duplicate Certificate of Title under s 111 of the Act, on a false application, with which the plaintiffs had nothing to do, supported by a forged Statutory Declaration which falsely said that the original Certificate of Title had been lost. Using the new Certificate of Title and other false documents, Mr Pan obtained two advances of money from Perpetual Trustees Victoria, one for $500,000 on 7 April 2005 and the other for $250,000 on 2 May 2005, and misdirected the proceeds in ways not connected with the plaintiffs. The fact that the transactions were irregular emerged fairly early. There were active Police investigations in June 2005, in which Police took possession of relevant documents, apparently under warrant. Mr Miller, the third defendant, made a written statement to Police on 3 June 2005. Eventually Mr Pan stood trial and was imprisoned. 3 After correspondence from solicitors for Perpetual Trustees Victoria, the plaintiffs made a claim under Pt14 of the Act on 16 May 2006. Perpetual Trustees Victoria delivered to the plaintiffs a notice under s 57(2)(b) of the Act dated 13 April 2006. After correspondence in which the plaintiffs requested an undertaking that no steps be taken pursuant to the notice and the undertaking was not forthcoming, the plaintiffs commenced these proceedings by Summons on 15 June 2006. 4 The business method by which Perpetual Trustees Victoria operated and made the loans now relevant was described in evidence by Mr Stephen Piltz, who was, at the relevant time, Chief Operating Officer of Interstar Wholesale Finance Pty Ltd ("Interstar"). Interstar is a wholesale finance company which offers first registered mortgage loans over real property in Australia and New Zealand. Borrowers seeking a mortgage loan from Interstar apply through other firms, referred to as mortgage originators or financial planners. In the present case the loan application, purportedly in the name of the plaintiffs, which led to the first advance of $500,000 being made to Mr Pan was sent to Interstar by Golden Net International Pty Ltd ("GNI") and was dated 23 March 2005. GNI is referred to as the originator. The application and loan were referred to as "EasyDoc", a type of loan which was available because the valuation of the property offered as security was double the amount being applied for; applicants were not required to provide any personal financial information. Mr Piltz explained that the funds advanced on mortgage loans are funds from trusts administered by Perpetual Trustees Victoria. Perpetual Trustees Victoria operates as the custodian of funds and security documents, including Certificates of Title, but the administration of loans is actually carried out by Interstar. 5 According to the evidence of Mr Piltz, a loan application is reviewed by a loan underwriter within Interstar's organisation. One of the concerns for an underwriter is whether there is credit insurance; sometimes originators have arranged credit insurance for the prospective mortgage loan but if they have not, the loan underwriter approaches a credit insurer and seeks acceptance of the risk. If the risk is accepted and credit insurance is approved the loan underwriter proceeds to review the application and rejects or accepts it. If the loan underwriter accepts the application and approves the mortgage loan, the loan underwriter instructs a settlement agent to prepare the mortgage loan documents and settle the mortgage loan. When the settlement agent has arranged execution of the documents, the settlement agent gives Interstar a certificate certifying that all mortgage loan documents have been executed and loan funds can be drawn down. Interstar has a panel of settlement agents in each State and Territory; in the present case the settlement agent employed by Interstar was a firm called First Title Secure. 6 At about the close of business each day Interstar's Settlements Department produces a report, the PASTA report, specifying the total amount of money required to be advanced pursuant to all mortgage loans that are to be settled the following day, and sends the PASTA report to the financial institution which holds trust funds on behalf of Perpetual Trustees Victoria. In effect Interstar authorises the financial institution to put the amount of the advance at the disposal of the settlement agent. 7 From the evidence of Mr Piltz it can be seen that a loan is not made unless there is credit insurance, Interstar has considered and approved the application and the valuation of the security property and there is certification from the settlement agent that the mortgage loan documents have been executed and the loan funds can be drawn down. In the present case, First Title Secure settled the first advance, saw that the mortgage loan documents were complete, and in doing so signed them on behalf of the mortgagee, paid the stamp duty on the mortgage, arranged for registration of the mortgage and sent the mortgage loan documents to Perpetual Trustees Victoria . 8 The loan advance of $500,000 was made on 7 April 2005. Perpetual Trustees Victoria acted on a document referred to as a Solicitor's Certificate As To Title ("SCAT") given to them by First Title Secure. First Title Secure were not solicitors, but SCAT is the term that was used for the document. Interstar gave Perpetual Trustees Victoria a long schedule entitled 'Transaction Summary', in substance, a PASTA report, on 6 April 2005: this listed many SCATs and gave a long list of transactions and of amounts of money to be sent to named law firms and other organisations in time for settlements to take place on 7 April 2005. The total which the transaction summary asked to be paid out of Perpetual Trustees Victoria's Interstar Millennium Warehouse B Trust on 7 April 2005 was $22,426,487.99, of which $6,219,499.98 was paid to the bank account of First Title Secure. The schedule included reference to the plaintiffs, the loan to them and a sum of $509,700 which was to be paid out by Perpetual Trustees Victoria. The excess over $500,000 related to charges which were to be borne by Perpetual Trustees Victoria. Settlement of the mortgage which named the plaintiffs as mortgagors was effected by First Title Secure on 7 April 2005. First Title Secure had a typewritten authority dated 6 April 2005, apparently signed by the plaintiffs but a forgery, which directed payment of 'the surplus from the proceeds of re-finance' into a bank account of one Jiang Yang Geng at HSBC Bank ("the Geng account at HSBC"). After payment of some further fees, $490,808.25 was paid into the Geng account. 9 Documents dealing with the second advance of $250,000 begin on 20 April 2005 when Interstar gave preliminary approval to a loan application sent to Interstar by GNI. This advance was a "LoDoc" loan: the conditions for approval were not the same as for the first "EasyDoc" loan, but nothing turns on the difference. Documents supporting the further advance include a forged direction and authority to deal with the funds advanced, purportedly signed on behalf of the plaintiffs and dated 27 April 2005. A message from First Title Secure and a transaction summary called on Perpetual Trustees Victoria to remit $256,260.83 for settlement on 2 May 2005. There was no further security document and as far as I can see no further SCAT. The advance was made on 2 May 2005 but for some reason the advance was then paid back to Perpetual Trustees Victoria and held until $250,000 was drawn from Perpetual Trustees Victoria's account on 9 May 2005 and deposited into the Geng account at HSBC, on a forged request form, in the names of the plaintiffs. 10 There are a number of Interstar Millennium Trusts, each established pursuant to a Master Trust Deed of 2 December 1999 ("the Master Trust Deed") and a further document called a Series Notice, particular to each trust, the parties to which are Perpetual Trustees Victoria, Interstar and the financial institution which funds the operation of that trust. The loans in the present case were made out of the Interstar Millennium Warehouse B Trust, the operation of which is funded by Macquarie Bank. The Interstar Millennium Warehouse B Trust was constituted by the Master Trust Deed and a Series Notice dated 11 December 2002 ("the Series Notice"). 11 The role of Interstar as Trust Manager is shown in provisions of the Master Trust Deed. Clause 4.2 of the Master Trust Deed is as follows: 4.2 Trust Manager selects investments Subject to the terms of this deed: (a) the Trust Manager alone shall have absolute and uncontrolled discretion to determine, and it shall be the duty of the Trust Manager to: (i) recommend or to propose in writing to the Trustee (which may be under a Series Notice), the manner in which any moneys forming part of a Trust shall be invested and what purchases, sales, transfers, exchanges, collections, realisations or alterations of Assets shall be effected and when and how the same should be effected; and (ii) give to the Trustee all directions which the Trustee may desire in relation to the above matters; and (b) it shall be the role of the Trustee to give effect to all such recommendations or proposals of the Trust Manager as are communicated by the Trust Manager to the Trustee in accordance with this clause. However, the Trust Manager may not give any direction to the Trustee in relation to a Trust which is inconsistent or conflicts with the terms of the Trust including the Series Notice for that Trust. 12 By cl 4.3(b), the Trust Manager is to give a certification ' that the giving effect by the trustee of the proposal is in accordance with this deed' and, by cl 4.3(d), the Trustee must not make an investment if it knows that it is not an Authorised Investment. Clause 4.3(d) is as follows: 4.3 Investment proposals (d) (Trustee must implement investment proposals) On receipt of any written proposal by the Trust Manager under this clause 4, the Trustee shall implement that proposal and the Trustee shall not be required, nor be under a duty, to inquire or to make any assessment or judgment in relation to that proposal or whether the proposed investment is an Authorised Investment or is otherwise permitted under this deed. Subject to this deed, the Trustee must not make an investment if it knows that it is not an Authorised Investment. 13 By cl 32.16 of the Master Trust Deed, Perpetual Trustees Victoria's liability is limited to its right of indemnity. Among many other things, the Series Notice gives Interstar Securities (Australia) Pty Limited ("Interstar Securities") authority to act as Servicer for the Interstar Millennium Warehouse B Trust. The Series Notice spells out, in great detail, the functions of the Servicer and other parties involved in Perpetual Trustees Victoria's business operation. The Series Notice and the related chain of documents which regulate the responsibilities of mortgage originators and Interstar impose responsibility on Interstar for the correctness of any certification which has been made to Perpetual Trustees Victoria and give Perpetual Trustees Victoria an indemnity against certain events including a failure to ensure that a loan is an eligible loan as defined; of course a loan is not an eligible loan if persons described as the applicants have not in fact sought a loan or mortgaged their property. 14 What Interstar required of originators is set out in the Australian Guidelines Manual ("the Manual"). Borrower identification was part of the function of the originator; this appears from cl 5.1.1 of the Manual which advised: (a) You are required to sight an original passport, Australian drivers' licence, or RTA identification form that includes photograph, address and signature for each borrower. A copy of the document(s) used for identification must be retained on your file together with the details and signature of the persons who sighted the original identification information. 15 Other obligations, ultimately protective of Perpetual Trustees Victoria were imposed on GNI as a mortgage originator. 16 The guidelines were changed, after the experience of Perpetual Trustees Victoria in the present case, so as to give Interstar a function of supervising the performance of borrower identification by mortgage originators. The demonstration which this affords that more precautions could have been taken at the time of the loss offers only slight support to contentions of negligence. 17 It is not provided in the Master Trust Deed or other documents that Interstar or First Title Secure, still less that mortgage originators, should have agency authority, on behalf of Perpetual Trustees Victoria, to originate, examine or approve loan applications, to arrange for the execution of mortgage documents or to investigate loan applications. Indeed it would be surprising if Perpetual Trustees Victoria did delegate any of its functions to Interstar, having regard to the restrictions which exist on the employment of agents by trustees. It is part of the business method or scheme by which Perpetual Trustees Victoria operates that some authority is deputed to the settlement agent, which has power of attorney to execute acceptance of mortgage documents. Except where an authorisation of that kind is expressly conferred, it should be understood that Interstar, First Title Secure and still more clearly GNI, the mortgage originator, operate at arm's length from Perpetual Trustees Victoria and play their parts in bringing the business to Perpetual Trustees Victoria for Perpetual Trustees Victoria to participate in, without any of them acting as its agent. If the whole operation is analysed in terms of economic function rather than in terms of legal relationships, it can be seen that all the parties are playing parts in a business method, scheme or process the purpose of which, is ultimately to facilitate lending by Macquarie Bank. No agency authority is conferred and I see no basis on which agency authority should be implied. 18 As explained by Mr Piltz in evidence under cross-examination, the mortgage insurers or credit insurers were called Gemworth and the title insurers were First Title; First Title Secure is First Title's agent in New South Wales. Mr Piltz referred in evidence to First Title Secure as settlement agent for both Perpetual and Interstar. It should I think, be accepted that, in attending to settlement, First Title Secure performed some agency function for Perpetual Trustees Victoria; but that does nothing to show that earlier steps in the process carried out by GNI and Interstar were carried out under agency authority conferred by Perpetual Trustees Victoria. 19 I announced early in the hearing that I will first decide questions of liability and reserve further consideration of quantum and the form of orders. 20 Senior Counsel for the plaintiffs applied to make some amendments to the Statement of Claim. These amendments are minor and not contentious, and I will give leave as asked. 21 The plaintiffs sued three defendants. There is no significant dispute about the facts relating to the plaintiffs' claim against Perpetual Trustees Victoria; the dispute relates to the meaning and effect of the mortgage and incorporated provisions. The principal claim against Perpetual Trustees Victoria is for 'a declaration that no money is secured by the false mortgage' on the ground that, according to the true meaning and effect of the mortgage, which incorporated provisions in Memorandum AA832328, and in the surrounding facts and circumstances, the mortgage does not actually secure any sum of money on the plaintiffs' property. 22 The mortgage does not say what obligations it secures on the property. It says that the mortgagors: Mortgages to the mortgagee all the mortgagor's estate and interest in the land … and covenants with the mortgagee that the provisions set out in Memorandum No. AA832328 … are incorporated in this mortgage. Memorandum No. AA832328 ("the memorandum") contains these covenants: 2.1 The Mortgage You acknowledge that by the Mortgage You give Us security over: · the Property, and · your right to receive any money or compensation for the Porperty. 2.2 Pay Secured Money The Mortgage is security for payment to Us of the Secured Money and for the performance of all of your obligations under the Mortgage. You agree to pay the Secured Money as and when the Secured Money becomes due and payable in accordance with the provisions of each Secured Agreement orthe Mortgage. 2.4 Pay Expenses You must pay all Expenses on demand. Covenant 3.3 of the memorandum is: All information given to You is true You promise Us that all information given to Us in connection with each Secured Agreement and the Mortgage remains true and correct in every respect. In particular You promise that all answers or statements given by You or on your behalf to any requisitions or enquiry made by Us or on our behalf before You signed the Mortgage in relation to: § the Property, § your interest in the Property, and § your capacity and financial position, remain true and correct in every particular. These should be read with the following definitions in Covenant 1.1 of the memorandum: "Mortgage" means the Mortgage Form including all schedules and annexures and this document. "Mortgage Form" means the form of mortgage that You have executed that refers to and incorporates this document. "Secured Agreement" means: any present or future agreement between Us and You, or any of You, and an agreement that varies such an agreement. "Secured Money" means: § all amounts that are payable at any time or are contingently owing or payable to Us under a Secured Agreement, § all amounts that are payable at any time by You, or any of You, to Us on any other account whatsoever, and § Expenses "Expenses " means all amounts that We incur in relation to: the stamping and registration of the Mortgage Form and any associated dealing, seeking possession of the Property or taking any other action to enforce the Mortgage after an Event of Default, in preserving or maintaining the Property (including paying insurance, rates and taxes), and as a consequence of Us being the Mortgagee, for example, in relation to any litigation or governmental inquiry in respect of the property, the Mortgage or a Secured Agreement. 23 The plaintiffs' claim and Perpetual Trustees Victoria's cross-claim against the second defendant, the Registrar-General of New South Wales ("the Registrar-General"), are not based on fault or fraud but claim damages provided for by ss 120 and 129 of the Act. It is clear and it is conceded that, in a general way, the plaintiffs' claim and circumstances fall within s 120 of the Act, but the Registrar-General relies on contentions to the effect that the plaintiffs have suffered no loss because (adopting the plaintiffs' principal claim) the mortgage does not secure any money against their land. The Registrar-General also relies on defences under ss 129(2)(a) and (b) of the Act. 24 Section 120(1) of the Act provides: 120(1) Any person who suffers loss or damage as a result of the operation of this Act in respect of any land, where the loss or damage arises from: (a) fraud, or (b) any error, misdescription or omission in the Register, or (c) the land being brought under the provisions of this Act, or (d) the registration (otherwise than under section 45E) of some other person as proprietor of the land, estate or interest, may take proceedings in any court of competent jurisdiction for the recovery of damages. 25 There are further provisions about claims for damages under this section in Part 14 of the Act; including: 129 (1) Any person who suffers loss or damage as a result of the operation of this Act in respect of any land, where the loss or damage arises from: (a) any act or omission of the Registrar-General in the execution or performance of his or her functions or duties under this Act in relation to the land, or (b) the registration (otherwise than under section 45E) of some other person as proprietor of the land, or of any estate or interest in the land, or (c) any error, misdescription or omission in the Register in relation to the land, or (d) the land having been brought under the provisions of this Act, or (e) the person having been deprived of the land, or of any estate or interest in the land, as a consequence of fraud, or (f) an error or omission in an official search in relation to the land, is entitled to payment of compensation from the Torrens Assurance Fund. (2) Compensation is not payable in relation to any loss or damage suffered by any person: (a) to the extent to which the loss or damage is a consequence of any act or omission by that person, or (b) to the extent to which the loss or damage: (i) is a consequence of any fraudulent, wilful or negligent act or omission by any solicitor, licensed conveyancer or real estate agent, and (ii) is compensable under an indemnity given by a professional indemnity insurer 26 Mr Stephen Miller, the third defendant, is a solicitor in sole practice in Sydney. Mr Miller was not retained as a solicitor by the plaintiffs, or by Perpetual Trustees Victoria. Mr Miller was approached by Mr Pan, who claimed to be authorised by the plaintiffs, and who gave Mr Miller instructions to apply for a new duplicate Certificate of Title. Until then Mr Miller knew nothing of the plaintiffs, or of Mr Pan. Mr Miller expeditiously prepared an Application for New Certificate of Title and a form of supporting Statutory Declaration to be made by the plaintiffs; he gave these documents to Mr Pan, and when Mr Pan later returned them, apparently completed by the plaintiffs and witnessed by a Justice of the Peace, Mr Miller lodged the Application for New Certificate of Title at the Land Titles Office with the Statutory Declaration, personally attended the Land Titles Office to obtain consideration of the Application for New Certificate of Title, collected the new Certificate of Title and later handed the new Certificate of Title to Mr Pan. Mr Miller prepared a Memorandum of Fees directed to the plaintiffs, but did not send it out to the plaintiffs: Mr Miller instead gave the Memorandum of Fees to Mr Pan who paid it. Mr Miller had no other part in the transactions which led to the delivery of the forged mortgage, the new certificate of title and many other false documents to Perpetual Trustees Victoria and ultimately to the two advances being made. It was conceded, to my mind obviously correctly, that Mr Miller, who had no contractual relationship with the plaintiffs although he thought he had, owed the plaintiffs a duty of care under the law of tort to prevent economic loss being caused to them by his conduct, purportedly on their behalf. 27 By the first cross-claim, after several amendments, Perpetual Trustees Victoria makes claims against the Registrar-General and Mr Miller, to generally similar effect to those made by the plaintiffs. It is alleged that Mr Miller also owed a duty of care to Perpetual Trustees Victoria; the Registrar-General also maintains that Mr Miller owed a duty of care to Perpetual Trustees Victoria and in doing so, it seeks to make out the defence available to it, in limited circumstances, under s 129(2)(b) of the Act. Perpetual Trustees Victoria also cross-claimed damages against the State of New South Wales on fault-based allegations relating to conduct of the Registrar-General and his officers; but this part of the cross-claim has been disposed of by agreement. There was a second cross-claim, which I have dismissed for reasons I state later. 28 Indefeasibility for what? The question 'indefeasibility for what?' posed, in relation to ss 40 and 42 of the Act by Campbell J in Small v Tomassetti (2001) 12 BPR 22,253, must receive an answer which identifies an estate or interest in land, or some obligation which is part of or secured by an estate or interest in land. Distinguishing between an estate or interest in land and a personal obligation created by a registered instrument can be difficult, particularly in relation to a covenant in a lease, to which some authorities relate. In PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 at 679 Giles J gave this view of the effect of indefeasibility: The general position thus indicated is, I think, as follows. That which is attained by registration is, in the words of s 42, an estate or interest in the land. Registration does not validate all the terms and conditions of the instrument which is registered. It validates those which delimit or qualify the estate or interest or are otherwise necessary to assure that estate or interest to the registered proprietor. 29 See too Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326 at 343 per Gibbs J and Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 at 17 per Barwick CJ. The observations of Gibbs J and Barwick CJ are directed to covenants in leases. A covenant in a lease is more readily seen to be part of the estate or interest in land created by the lease than a personal covenant to pay a debt in a mortgage can be seen as part of the estate or interest in land created by the mortgage. To my mind the charge of the debt on the land is an estate or interest in land, and the personal covenant to pay the debt is not, even though it is necessary to understand the personal covenant to see what is charged upon the land. The operation of a mortgage to charge a money obligation on land is recognisable without any difficulty as an interest in land; the personal obligation of a mortgagor himself to pay the debt, by means of enforcement available for debts generally and not by enforcement specifically against the land is, I think, equally clearly not an interest in land; even though it would quite frequently happen that the same personal covenant to pay a debt identifies both what debt is charged on land and what debt the mortgagor is personally liable for. In Small v Tomassetti the careful expressions chosen by Campbell J in stating the conclusion at [15] show, to my mind, that his Honour adverted to the need to express the effect of indefeasibility in terms limited to the estate or interest in land created by registration, notwithstanding that the covenant at [13] was, according to its terms, a personal covenant. 30 When s52 of the Act deals with the transfer of a mortgage it expressly provides for the transferee to have the benefit of the personal covenants contained in the mortgage: this would be superfluous if the transferee, when registered, had the benefit of the personal covenants under the indefeasibility principle. 31 All considerations of indefeasibility come later than ascertaining, on the construction of a mortgage, what, according to its true meaning and effect, is the debt which it secures. Sections 40 and 42 of the Act, while they create indefeasibility, do nothing to enhance what the mortgage actually says. 32 I find considerable assistance in the judgment of Young CJ in Eq in Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22,281. That was a decision on a document which, in the passages set out in that judgment, was closely similar to the document before me, although it is plain that there have been a redraft and some changes of expression. Tsai was a decision on the meaning and effect of the document which was before Young CJ in Eq; and further, it was an interlocutory decision, setting aside, on appeal, a summary judgment which had been given by a Master. Young CJ in Eq's conclusion at [23], relevantly for the issues before him, was that, as there was an issue between the parties as to whether or not the mortgage was ever signed by the mortgagor or merely signed by a person impersonating the mortgagor, there should not be summary disposal of the proceedings. It was not necessary or possible to dispose finally of questions of the meaning and effect of the document, but Young CJ in Eq's expressions show that his Honour reached a firm and strong view. 33 What I have said about the effect of a personal covenant indicates that I respectfully disagree with observations of Young CJ in Eq at [15], and with his Honour's observations at [17] about the effect of PT Ltd v Maradona Pty Ltd at 681 and of what I said in Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452, [2003] NSWSC 1072 at [52]-[53]. (The passage at [52]-[55] is not in the report at 59 NSWLR 452). 34 In Printy v Provident Capital Ltd [2007] NSWSC 287, Studdert J considered the effects of two forged mortgages on the rights of the registered proprietor. Studdert J referred to Small v Tomassetti and to Campbell J's question "indefeasibility for what?", and extensively reviewed the reasoning in Tsai. The first mortgage considered by Studdert J contained terms which are not closely similar to those in the mortgages in Tsai and the present case, but in my opinion, were relevantly similar in that the mortgage did not state in its own terms what debt was secured by it, but used a chain of provisions and defined expressions to secure money owing under a "related agreement", a defined term referred to at[19], "which relates to the mortgagor". The document put forward in Printy was a deed of loan, executed on the same day as the mortgage, which related to an advance of $550,000 and gave rise to identifiable obligations, but was forged and not in fact executed by the registered proprietor. Studdert J concluded to the effect that the forged document did not fall within the references in the mortgage because it was not in fact the registered proprietor's document; see [40]. Studdert J observed at [40] It would have been open to the first defendant to fashion the mortgage obligation so as to make the mortgagor liable not only for his own conduct but for the dishonest conduct of others over whom the mortgagor had no control. However, I accept, as both Mr Wales and Mr Walsh submitted, that the clearest possible expression would have been needed to achieve that effect. 35 By contrast, Studdert J enforced the forged second mortgage, which contained in its own terms acknowledgement of the receipt of the principal and covenants for payment of the principal and the interest; there was no reference to another document or need to identify another document by the identity of the parties to it. 36 Although the cases before Young CJ in Eq and Studdert J turned on the construction of the documents there under consideration, in light of the relevant facts, the approaches which their Honours took have assisted me in the present case. The plaintiffs' case before me is, if anything, stronger than the case on the first mortgage in Printy. The indefeasibility of the mortgage has no effect upon the question whether another document in fact falls within the general words of reference used in the mortgage. 37 When seeking to understand Covenant 2.2 of the memorandum, both in its own terms and by using the defined expression "Secured Money", the reader is led back to the need to identify an agreement which falls within the defined expression "Secured Agreement". Following that definition, unless there is and can be identified an " agreement between Us and You " there is no Secured Agreement and there is no Secured Money identified by reference to a Secured Agreement. 38 Money may be "Secured Money" as defined and hence the mortgage may be security for payment of it, even if the mortgagor does not give any agreement personally to pay the Secured Money. The first sentence of cl 2.2 is the provision which imposes or charges money on the land. The second sentence is an agreement by which, according to its terms, the mortgagor incurs personal liability. 39 The only agreement which might fall within the definition of "Secured Agreement" and comes under consideration now is the loan agreement, and it is altogether clear that it is not, in fact, an agreement between Perpetual Trustees Victoria and the plaintiffs; the plaintiffs had nothing to do with it. No doubt the belief should be attributed to Perpetual Trustees Victoria, at the time of taking the mortgage, that the loan agreement was such an agreement, but whether or not the loan agreement falls within the definition of "Secured Agreement" turns, according to the terms of that definition itself, on whether the loan agreement was in fact an agreement between Perpetual Trustees Victoria and the plaintiffs, and not on whether Perpetual Trustees Victoria thought it was, under the influence of fraud, mistake or under any other influence whatever. What matters is what the loan agreement in fact was. As I find that, with certainty, the loan agreement was not signed by the plaintiffs at all, I conclude that cl 2.2 and references in it to "Secured Money" and "Secured Agreement" do not relate to that loan agreement. 40 It was contended that, in identifying what the reference to a Secured Agreement related to, I should look at the mortgage and incorporated clauses from the point of view of the lender. Involved in this was a contention, as I understood it, to the effect that what was referred to was a document which was a Secured Agreement in the understanding of the lender. In my opinion this is not correct; the reference is to a document which was a Secured Agreement as a matter of objective fact. Upon the evidence, there clearly was no such agreement. 41 Not everything for which the memorandum creates security is payable under a Secured Agreement as defined. Clause 2.2 makes the mortgage security not only for payment of Secured Money, to identify which it is necessary to find a Secured Agreement: Clause 2.2 also makes the mortgage security for "performance of all your obligations under the Mortgage." Reading the definitions in cl 1.1 of Mortgage and Mortgage Form, the Mortgage performance of obligations in which secured by cl 2.2 is "the form of mortgage that You have executed" and again, there is no such form of mortgage, in fact. Clause 2.4 goes further than cl 2.2 as it contains an obligation of the mortgagor to pay all Expenses on demand, and Expenses are included in the definition of Secured Money in cl 1.1. Expenses as defined fall within the definition of Secured Money used in the first sentence of cl 2.2, the part of cl 2.2 which creates a security for payment of money. The first sentence itself breaks into two parts – "The Mortgage is security for payment to Us of the Secured Money" and "The Mortgage is security … for the performance of all of your obligations under the Mortgage." Applying the definition of Mortgage and Mortgage Form, there is no Mortgage to which the first part of the first sentence of cl 2.2 refers. There is no Mortgage which the second part of the first sentence makes security, or under which there are obligations for the performance of which the second part of the first sentence creates security. The agreement in the second sentence of cl 2.2 to pay Secured Money and hence Expenses is not an obligation under the mortgage: there is no Mortgage as defined. There is no document which cl 2.2 makes security for payment of anything. In the second sentence of cl 2.2 the agreement is to pay the Secured Money "as and when the Secured Money becomes due and payable in accordance with the provisions of each Secured Agreement or the Mortgage". There are no Secured Agreement and no Mortgage and hence the personal covenant in the second sentence of cl 2.2 does not extend to Expenses, just as it does not extend to any other part of Secured Money as defined. 42 If contrary to my opinion it is wrong to decide, applying the definitions of Mortgage and Mortgage Form in cl 1.1, that there is no Mortgage which cl 2.2 makes security for payment of anything, and if, contrary to my opinion cl 2.2 creates security for Expenses as defined, almost everything in the four branches of the definition of Expenses fails for a similar reason, that is that they refer to the Mortgage or the Mortgage Form as defined and there is none. This is clear for the first and second branches (stamping and registration, seeking possession). If there is any room for the fourth branch (the consequence of Us being the Mortgagee) to operate otherwise than in relation to a non-existing Mortgage or Secured Agreement, there is no evidence and no reason to think that there has been any expense of the kinds referred to. As to the third branch (preserving or maintaining the property) there is no reason to think and no evidence that Perpetual Trustees Victoria incurred any expense in preserving or maintaining the property, and as the plaintiffs have been in possession throughout maintaining that they are the true owners, it is very unlikely that any such expenses have fallen on Perpetual Trustees Victoria. 43 Looking through the defined meaning of "Expenses," it is hardly possible that there could be any outstanding charge in respect of stamping and registration of the mortgage form and any associated dealing, because arrangements for payment of costs at the time of making the advance must have dealt with that. The only event of default which it was suggested has occurred is failure to pay moneys under the covenants of the mortgage; but as no money was secured there cannot have been such an event of default. There has been no indication on the evidence that Perpetual Trustees Victoria has incurred any amount in preserving or maintaining the property, or any other amount as a consequence of being the mortgagee. 44 Within the terms of the definition of "Expenses", the fact that there is no principal debt seems to be a difficulty for finding, at least in some conjectural cases, that an expense was incurred as a consequence of being a mortgagee. If the true position is that the only thing that the mortgage secures is expenses relating to itself, and there is no principal debt, I have some disquiet about its enforceability. Such a mortgage would seem to be a pure referent; the only thing it secured would be the expenses of its existence. Insofar as its enforcement depended on a remedy which was equitable or discretionary, there would be difficulties. 45 It was also contended that the plaintiffs may incur liability to Perpetual Trustees Victoria in respect of covenant 3.3. Covenant 3.3 does not create a debt or refer to securing a charge on land. According to its terms it is no higher than a contractual promise; conceivably, breach could give rise to liability in damages, but until there was a judgment of a Court awarding damages there would be no debt or obligation to the mortgagee to which charging provisions could attach. Covenant 3.3 is headed "All information given to you is true" but its terms have the reverse sense and it relates to all information given to "Us"; "Us" is not a defined expression (although "You" is) but "Us" plainly refers to the mortgagee in whatever document incorporates the memorandum. As examples of information given by the mortgagor, to which covenant 3.3 could relate, counsel referred to information to the effect that it really was the borrower who had signed the documents, that the documents were in order and enforceable against the persons they spoke of and that the HSBC bank account was really the subject of Authorisation for Transfer of Funds. That is to say, counsel's examples all related to information which it must be supposed was given by persons involved in the fraud. 46 On a literal reading of covenant 3.3 the construction is available that the promise relates to all information given to the mortgagee, by any source at all, in connection with a Secured Agreement. This wide reading does not in my opinion survive reference to context, both the whole context of the mortgage and incorporated memorandum and the immediate context of covenant 3.3. It is overwhelmingly unlikely that the document was intended to mean that the mortgagor gives a contractual warranty for all information of the kind referred to, from any source whatever. If the covenant meant that, it would be on the verge of the absurd; it would extend to a contractual warranty of information obtained by the mortgagee from sources such as a credit reference bureau, or the Australian Bureau of Statistics, in response to enquiries on which the mortgagor had no possible influence, of which the mortgagor had no knowledge, and where the mortgagor had no means of knowledge of the information furnished in answer. The literal reading would incur all four of Gibbs J's disapprobations in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109 – capricious, unreasonable, inconvenient and unjust. If a construction like this is to be given to covenant 3.3, there is no reason why it should not extend to even more absurd examples, such as information about the mortgagor given to an officer of the mortgagee by an unidentified taxi driver on the way to work, or by a fortune-teller. 47 On a reasonable construction and in the absence of an altogether clear indication that an approach of unrestricted literality was intended, Covenant 3.3 refers to information given by or on behalf of the mortgagor, or by sources relevantly related to the mortgagor, such as referees nominated by the mortgagor. That this is correct is to my mind overwhelmingly confirmed by the terms of the second sentence in covenant 3.3 which, when it embarks on exemplification and particularity, refers only to "all answers or statements given by You or on your behalf"; if it was understood that Covenant 3.3 extended to answers or statements not given by the mortgagor or by sources relevantly related to the mortgagor, the particular statement could not have failed to point out that it extended as far as that, and it would have been deceptive if it did fail to do that. 48 The plaintiffs' claim against Perpetual Trustees Victoria has been established. 49 Claims against Registrar-General and Defences. The plaintiffs' claim against the Registrar-General is alternative to their claim that no money is charged on the property. In [15] of the Statement of Claim the plaintiffs allege that if money is charged on their land, 'they have suffered loss and damage as a result of the operation of the Act and, by virtue of s 120 of the Act, the [Registrar-General] is liable in damages to them'. It should be understood from the Statement of Claim that the plaintiffs base their claim on s 129(1)(a) of the Act and on loss or damage alleged to have arisen from: Any act or omission of the Registrar-General in the execution of performance of his or her functions or duties under this Act in relation to the land the relevant act being the registration of the forged mortgage. In the first cross-claim by Perpetual Trustees Victoria, the act of the Registrar-General relied on is the issue of the new Certificate of Title; and there is also reliance on s 129(1)(e) of the Act, where the loss or damage arises from: (e) The person having been deprived of the land, or of any estate or interest in the land, as a consequence of fraud. 50 Counsel for the Registrar-General made a concession on the first day of the hearing which (making small corrections to the transcript) was: Notwithstanding the pleading the Registrar-General's position at trial is that it is accepted that the issue of a certificate of title pursuant to s 111 of the Act brings into play s 129(1)(a): that it is an act of the Registrar-General in the execution or performance of his functions, and to the extent that there is a loss suffered by Perpetual as a result of that then the Registrar-General will take no point on sub-s (1). Rather the issue on that cross-claim will be on sub-s (2): whether in the circumstances the loss or damage is payable either because Perpetual is the architect of its own misfortune or because the blame should be sheeted home to Mr Miller, a solicitor insured. The concession did not expressly refer to the claim of the plaintiffs, but the trial proceeded as if it did. 51 The broad view which I take of entitlement under ss 120 and 129 of the Act is shown by my judgment in Challenger Managed Investment Ltd v Direct Money Corporation Pty Ltd at 461. When ss 120 and 129 of the Act are read together, as they should be, it is quite clear that the plaintiffs and Perpetual Trustees Victoria are entitled to damages under those provisions if they prove relevant loss or damage and the Registrar-General does not succeed in proving any of the defences under ss 129(2)(a) and (b) of the Act. 52 In my opinion s 129(2)(a) of the Act operates where the act or omission to which it refers arises through fault in some sense. A completely literal approach would subvert the whole scheme of compensation for which ss 120 and 129 of the Act provide, as it would be the usual case that some act or omission by a registered proprietor could be shown to be a cause of the loss or damage. The Registrar-General did not argue for the completely literal or strict approach. The Registrar-General accepted that fault must be involved but did not accept that fault is to be equated with contributory negligence. On the facts it is obvious that s 129(2)(a) of the Act could not apply to the plaintiffs, regardless of whether or not it requires fault. 53 In my opinion the conduct of a servant or agent acting within authority is relevant to the determination of "the claimant's share in the responsibility for the damage" in s 9(1)(b) of the Act. This view is supported by discussion in Daniels (formerly practising as Deloitte Haskins & Sells) v Anderson (1995) 37 NSWLR 438 at 569 per Clarke and Sheller JJA; however the extensive discussion and opinions expressed in Scott v Davis (2000) 204 CLR 333 mean that the principles on which the contributory negligence of an agent can be attributed to a principal cannot be regarded as clear. Although my decision does not turn on it, I am inclined to the view that the act of a servant or other agent acting within authority should be regarded as "any act or omission by that person" within the meaning of s 129(2)(a) of the Act: the ordinary approach in statutory construction is that a reference to conduct of a person includes conduct by an agent acting within authority, and that approach is probably appropriate here as there is nothing to exclude it. Speaking of an agent means little without some further statement establishing what authority the agent had. 54 The Registrar-General sought to rely on s 129(2)(a) of the Act to defeat the claim of Perpetual Trustees Victoria against him. Perpetual Trustees Victoria's method of operation was that it was, pursuant to elaborate trust documents, the custodian of funds which could be lent out on secured loans in defined circumstances. Perpetual Trustees Victoria established relationships with other parties pursuant to a document which served as a charter regulating the conduct of the parties and their specific rights and responsibilities in the business or method of operation. Perpetual Trustees Victoria made advances, including the relevant advances, only on having a request for an advance, supported by a written certification of facts, referred to as a SCAT, which showed that an advance was appropriate. In effect, Perpetual Trustees Victoria put itself in the hands of First Title Secure and Interstar and made advances only when those parties certified that advances were appropriate. This was done in a complex context of obligations and protections including insurance. I am unable to see any way in which it could be said that in making the advance Perpetual Trustees Victoria was not taking reasonable care for the protection of its own interests, unless it were in some way shown that either First Title Secure or Interstar was not a suitable person to entrust with responsibility; and there is no indication of any such thing. In my opinion Perpetual Trustees Victoria's loss or damage was not a consequence of any fault-related act or omission by Perpetual Trustees Victoria itself. 55 The Registrar-General contended that the chain of organisations which dealt with the application for the mortgage loan and further advance, and in effect caused the forged documents to be presented to Perpetual Trustees Victoria, should be identified with Perpetual Trustees Victoria and that any act or omission of those organisations should be taken to be an act or omission of Perpetual Trustees Victoria for the purposes of s 129(2)(a) and its reference to "any act or omission by that person". These organisations were of course not employees and they acted within a carefully constructed array of contractual relationships in which, although there was high definition of what they were to do, there was no overt indication that they were to act as agents of Perpetual Trustees Victoria in dealing with applicants for loans, in preparing loans, organising supporting documents which Perpetual Trustees Victoria would act on and making all decisions and evaluations which it was necessary to make in the course of doing so. 56 The structure of the documents under which Perpetual Trustees Victoria, Interstar, First Title Secure and others operated do not, so far as their formal language goes, confer any agency authority on Interstar or First Title Secure. The actual business method, operation or scheme is not based on agency; loan applications are received through mortgage originators or financial planners, reviewed by Interstar and later, in a more particular sense, by First Title Secure. A loan application is presented to Perpetual Trustees Victoria only when the application is completely ready for that approach and Interstar or First Title Secure has certified that the application is in order. On behalf of the Registrar-General and Mr Miller it was submitted that, when the business method, operation or scheme was viewed as a whole, the relationships among those involved in the business were in fact relationships of agency even though they may have been described as something different in the documents which regulated the business and the parties' relationships with each other, and Interstar, First Title Secure and GNI carried out their functions in the interests of and on behalf of Perpetual Trustees Victoria. I was not shown any provision of any document which bore this out. 57 In my opinion there is no ground upon which these organisations can be identified with Perpetual Trustees Victoria as "that person" within the meaning of s 129(2)(a) of the Act. 58 In the argument of Mr Miller, based on contributory negligence of Perpetual Trustees Victoria and apportionment under s 9 of the Law Reform (Miscellaneous Provisions) Act 1965, it was contended that apportionment affecting Perpetual Trustees Victoria should take place on the basis that Perpetual Trustees Victoria is responsible for fault of its agents; and that fault of some or all of a chain of organisations the actions of which led to Perpetual Trustees Victoria making the advances to Mr Pan comes into consideration when determining the extent of the claimant's responsibility for the damage or loss. It is only by bringing into account the fault of agents that a claim to apportionment can come into consideration. 59 The Registrar-General and Mr Miller relied on much the same matters of fact to support the alleged contributory negligence of Perpetual Trustees Victoria (in Mr Miller's case) and in arguing that, at least to some extent, the loss or damage was a consequence of an act or omission by Perpetual Trustees Victoria within the meaning of s 129(2)(a) (in the case of the Registrar-General). There were submissions on behalf of Mr Miller (and not on behalf of the Registrar-General) on whether an apportionment of responsibility is required by the words "to the extent to which" with which s 129(2)(a) of the Act opens. Section 129(2)(b) opens with the same words, but there they are readily attributable to the possibility that the indemnity given by a professional indemnity insurer may not be complete, because the policy has an excess or a limit on the amount insured. I do not favour the view that s 129(2)(a) requires apportionment based on deciding the extent to which the loss or damage was a consequence of any act or omission by the person claiming compensation and the extent to which the loss or damage was a consequence of any act or omission by some other person or a consequence of something else: loss or damage is a consequence of an act or omission either wholly or not at all, whether or not other causes also operate, and it is unlikely that the legislature set about creating a new apportionment regime without in some way stating the principle or basis to be applied, as other apportionment legislation does. 60 The Registrar-General contended that the plaintiffs have incurred no loss or damage, as the Registrar-General supported the plaintiffs' principal claim asserting that the mortgage has no effect. If the plaintiffs' principal claim failed and the plaintiffs were able to show any relevant loss or damage, the only obstacle to their claim against the Registrar-General would be the defence under s 129(2)(b). 61 Under s 129(2)(b) of the Act, the Registrar-General alleges that Mr Miller was negligent in applying for the new Certificate of Title, obtaining it and delivering it to Mr Pan. The Registrar-General alleges that Mr Miller has liability in negligence to the plaintiffs and to Perpetual Trustees Victoria and that whether for one or both, the loss or damage is compensable under the indemnity given to Mr Miller by his professional indemnity insurer, in the insurance policy which it was compulsory for solicitors to have. I determine elsewhere in these reasons that Mr Miller was negligent in breach of duty to the plaintiffs, but did not have a duty of care to Perpetual Trustees Victoria. 62 Mr Miller's professional indemnity insurance policy for 2005-2006 ("the policy"), issued by LawCover Insurance Pty Ltd ("the insurer") is in evidence. On its face, the policy insures Mr Miller against claims such as those now made by the plaintiffs and Perpetual Trustees Victoria for a maximum amount of $1,500,000 any one claim, an amount which I have no reason to think could possibly be exceeded. By cl 20 of the policy, the insurer may reject fraudulent claims for indemnity. Clause 21 is 'We will not indemnify you under this Policy when the claim arises from many dishonest or fraudulent acts or omissions of the principal to principal or of a corporate firm whether directly or indirectly'. Clause 26 is 'We will not cancel or avoid your policy'. 63 A letter from the insurer to Mr Miller dated 8 January 2007 advises Mr Miller that: Based upon the facts and circumstances known to me … you are entitled to indemnity for this claim, subject to the terms and conditions of your 2005/206 Professional Indemnity Insurance Policy and subject to your firm's excess. I note the excess for your firm is $5,000. The letter goes on to say that the grant of indemnity is subject to a reservation of rights under cl 21 of the policy. The letter goes on to deal with arrangements for conducting the defence of the proceedings. 64 The burden lies on the Registrar-General to prove that Mr Miller was entitled to indemnity; this is not a light task as it involves proving facts which show the absence of any ground upon which the insurer could effectively deny liability under the policy. It is not clear to me whether some right to reject Mr Miller's claim or withhold indemnity which may come into existence in the future is relevant to the question posed by s 129(2)(b)(ii) of the Act. Section 129(2)(b)(ii) is concerned with whether the loss or damage "is compensable". The word "is" may mean that the court may only consider facts in existence at the time of its decision in determining whether the loss or damage is compensable. I need not dwell on this because of the terms of cl 26 of the policy, and because, on the evidence, it is extremely improbable that any grounds exist upon which the insurer might be entitled to deny liability or repudiate Mr Miller's insurance; there is no ground for supposing that Mr Miller might have participated in or been knowingly involved in Mr Pan's fraud. Mr Miller's evidence, which I accept, shows that he was innocent of any fraudulent intent and was a victim of deception by Mr Pan. 65 Counsel for the Registrar-General obtained from Mr Miller in cross-examination evidence rebutting the grounds on which it can be seen that the insurer might possibly invoke rights under the reservation of rights and cl 21; Mr Miller's evidence on these subjects was not disputed by any party and I have no doubt that it should be accepted. The information Mr Miller furnished to the insurer was not shown to be inaccurate or unsatisfactory. Deciding the issue on the probabilities and on the evidence before me, I find that the loss or damage claimed against Mr Miller is compensable under an indemnity given by a professional indemnity insurer and the fact in s 129(2)(b)(ii) of the Act exists. Of course it is also necessary for reliance on that defence to make out negligence and other facts in s 129(2)(b)(i) of the Act; I deal with that elsewhere. 66 If the defence in s 129(2)(b) of the Act is available to the Registrar-General, it is available only to the extent to which the loss or damage is compensable under the indemnity. The letter from the insurer to Mr Miller relating to the granting of indemnity says that there is an excess of $5,000; the policy is blank at Item 4 of the Schedule relating to the excess. If there is in fact an excess, the Registrar-General is not protected by this defence in s 129(2)(b) of the Act to the extent of the excess. If it should appear, on further consideration of quantum, that Mr Miller has liabilities which exceed $1,500,000 the Registrar-General will not be protected by the defence in s 129(2)(b) of the Act to the extent that that sum is exceeded. I do not expect this. Claims against Mr Miller. 67 Mr Miller gave evidence on affidavit and orally in the proceedings. Cross-examination did not raise any basis for challenging his credit, and I find that he gave evidence with sincerity and according to the best of his recollection. There are minor inconsistencies. There are, for example, some anomalies between Mr Miller's evidence about the date on which he first had contact with Mr Pan and the dates on which he prepared documents and the evidence of Mrs Donald about the dates on which she witnessed documents including the Statutory Declaration in support of the Application for New Certificate of Title prepared by Mr Miller. 68 Mr Miller's evidence was that his involvement with Mr Pan began "on or about 1 April 2005". He received a telephone call from a person named Michael who worked at Easy Home Loan Solutions, a firm which had an office in the same building as Mr Miller's office. Mr Miller had been introduced to Michael and his colleague Rebecca Shi by an accountant with whom Mr Miller had once shared an office. Michael and Ms Shi had earlier referred conveyancing work to Mr Miller and had discussed other small business with him such as a traffic matter for a friend. 69 Mr Miller's evidence is that on or about 1 April 2005, Michael told him: We have a client here who is in a bit of trouble. He needed a title deed for the settlement of a mortgage, and they cannot find it. Settlement is urgent. What can you do to help? Mr Miller replied that he had done such work before and could help the client. 70 A man who Mr Miller came to know as Mr Pan then came to Mr Miller's office and introduced himself as "Joey". According to Mr Miller, Mr Pan had a white file with him. During the course of the interview, although not at first, Mr Miller says Mr Pan showed him some documents from that file; however Mr Miller did not look through the file himself. Mr Miller says he did see that the file contained a letter from First Title, a company he had come across many times before in his practice. In the course of their conversation Mr Pan said that the stage that had been reached was: We've got to get the documents back to the lender and we just need a title deed to settle. He also said to the effect that he was not the borrower but was "helping these people out", that the borrowers were busy and could not speak English: they were Indonesian, he knew them and spoke their language. 71 Mr Miller gave evidence that, seeing a First Title letterhead and familiar type of letter on the file confirmed, in his mind, that the loan application had reached the stage Mr Pan said it had and indicated, in his mind, that there had been an approval process and that the file probably contained the loan agreement, mortgage and other documents needed to process the loan. Mr Miller believed that the loan application would only have reached First Title if there had at least been preliminary approval for a mortgage loan. Mr Miller asked Mr Pan for some things which were needed to prepare the Statutory Declaration in support of the Application for a New Certificate of Title and asked for a rate notice; Mr Pan produced a rate notice and a reminder notice for the property. In answer to Mr Miller, Mr Pan said that he was sure that the owners had never had a mortgage on the property before; he indicated the exact names and title reference by taking a mortgage document (which may not have been executed) out of the file and showing it to Mr Miller. Mr Miller said that he would try to do the work as quickly as he could and: If the people cannot come in, you will have to take the Stat Dec and the application to sign, and they will have to do it in front of a Justice of the Peace. Mr Pan left. Mr Miller made some enquiries about Registrar-General's practice and prepared a form of Statutory Declaration in the names of the plaintiffs, with certified copies of the original rate notice and reminder notice. Mr Miller's evidence is that he did this on the same day that he first met Mr Pan, which he gives as 1 April 2005. He called Mr Pan later that same day and informed him that the documentation was ready for collection and Mr Pan collected the Application for a New Certificate of Title, the Statutory Declaration and the original rate notices from him and Mr Pan returned the Application for a New Certificate of Title and the Statutory Declaration later on the same day. According to Mr Miller, the Application for a New Certificate of Title had been witnessed by Mr Pan and the Statutory Declaration had been witnessed by Mrs Donald, Justice of the Peace. 72 On the next business day, Mr Miller went to the Land Titles Office, lodged the Application for a New Certificate of Title, the Statutory Declaration and supporting letter and obtained a new Certificate of Title, issued forthwith. He telephoned Mr Pan and told him that the new Certificate of Title was available for collection. Mr Pan attended his office on or about 5 April 2005 and Mr Miller gave Mr Pan the new Certificate of Title and his Memorandum of Fees and tax invoice. Mr Pan paid the account that same day. 73 In his affidavit, Mr Miller said: I did not at any stage suspect or consider that Joey Pan might not have had the authority of the registered proprietors to act for them in relation to the obtaining of the new certificate of title. From my knowledge of the mortgage and loan process the documents that I saw were consistent with earlier steps in the loan and mortgage process having been satisfied including verification and identification of who the borrowers were. 74 Duty of Care and Economic Loss. General principles relating to duty of care stated in ss 5B and 5C of the Civil Liability Act 2002 ("the Civil Liability Act") operate on both the claim that Mr Miller had a duty of care to the plaintiffs, and the claim that Mr Miller had a duty of care to Perpetual Trustees Victoria. I have not observed that giving effect to ss 5B and 5C requires any departure from considerations which would arise under the general law. When it falls to be decided whether the law imposes a duty of care against a risk of economic loss, the path to decision established by judicial authority is not a clear path and there are not clearly stated rules or tests to apply: nor is there a clear order of importance of matters which should receive consideration; and it is difficult to know whether some matters are conclusive or are required to be weighed with other considerations. A decision recognising the existence of a duty of care leads to further decisions on the standard or scope of the duty of care and on whether breach of the duty of care has caused the plaintiff's loss. 75 The concepts and processes of reasoning employed in making these decisions and determining questions about the existence, standard, scope and breach of a duty of care are not highly defined or susceptible of rigorous expositions; although the answers often present themselves as if they were obvious. At each stage and in whole, the process is not one of formal reasoning; a logician can demonstrate inadequacies in the concepts, terms and processes of reasoning at every stage. The basal concept of reasonableness is itself not capable of clear exegesis: and is said to be difficult to translate into other languages. The process gives some form to the deployment of judicial wisdom by the courts. The judicial wisdom deployed is not that of individual judges, who should conform their views to the state of judicial authority and opinion at the time of decision. The process is not under the control of any one judge among many. This is the process which brought negligence law into existence and developed it over several centuries. It is a process by which a human institution reaches a decision, and it is not a design for a machine. As I said in Sutherland Shire Council v Becker (2006) 150 LGERA 184 at [60]: There is no generalisation which can express the basis upon which the Courts will hold that a duty of care exists: this is a situation which is to be recognised, not rightly understood as a problem with an available solution. Compare Avenhouse v Hornsby Shire Council (1998) 44 NSWLR 1 at 8; 104 LGERA 355 at 362 (Priestley JA). 76 For an understanding of the law of negligence in Australia at the present time, the judgment of the High Court of Australia in Sullivan v Moody (2001) 207 CLR 562 is important. All members of the Court who heard that appeal joined in the judgment and spoke with one voice, a rare event, and made a general statement of the approach to be taken in deciding whether a duty of care exists. The Court gave consideration to many, although not all of the factors which have been treated as receiving consideration. Sullivan v Moody related to alleged shock, distress, psychiatric injury and consequential losses caused by investigations into the plaintiffs' conduct by persons who had statutory duties under public law to make such investigations. There is no corresponding unanimous treatment of the law of negligence and the finding of a duty of care with respect to economic loss. 77 The process by which the High Court's view of the use to be made of the concept of proximity altered appears from the references in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at [18] . As there appears, the High Court no longer sees proximity as the conceptual determinant of the categories of cases in which a duty of care exists. The reasons given in Woolcock Street Investments for rejecting the claim that there was a duty of care against economic loss have the authority of a joint judgment of a majority of the High Court; an unusual degree of concurrence in negligence law. The facts in Woolcock Street Investments have no useful analogy with those in the present case. Perpetual Trustees Victoria is in no sense the successor to someone who at any time was owed a contractual duty by Mr Miller and no detailed contractual relations between Mr Miller and any relevant person marked out the area of his responsibility. The High Court's treatment of proximity, and the general principles of law established by the Court in Woolcock Street Investments are significant when determining whether a duty of care existed in the present case. 78 In Woolcock Street Investments extensive consideration was given to the basis upon which Bryan v Maloney (1995) 182 CLR 609 was decided. Much depended on which of the facts were treated as important, how the facts were characterised, and whether Bryan v Maloney established law only for building dwelling houses. Observations in Woolcock Street Investments at [17]-[18] show that the reason or the principal reason why the majority of the Court did not follow Bryan v Maloney and apply it was that the earlier decision depended upon a view about the significance of proximity which had been departed from by later decisions. Those later decisions (at footnote 80) show how comprehensive has been the rejection of treating proximity as the conceptual determinant and unifying theme of the categories of cases in which the Common Law recognises the existence of a duty of care. Sullivan v Moody has greatly limited the use which may be made of expositions of the law, even in relatively recent times, which address the existence of a duty of care in terms of an issue of proximity. Their Honours' observations did not end the use of the expression "proximity" but did end its use as a formula for determining whether a duty of care exists. McHugh J did not join in these observations but extensively stated his own adherence to his treatment of the subject in Perre v Apand Pty Ltd (1999) 198 CLR 180 at 547. 79 The leading judgment in Woolcock Street Investments does not state whether or how the plaintiff's loss was determined to have been reasonably foreseeable; there is certainly no suggestion, in the various references to foreseeability throughout the judgment, that foreseeability was not important, but there was no exposition of foreseeability in that case. 80 The leading judgment in Woolcock Street Investments treated fully the significance of vulnerability and its operation in that case: see [19] onwards, particularly [23] and [31]. There is no suggestion that vulnerability is a test or the only test to which claims that there is a duty of care in respect of foreseeable economic loss are subjected. In Woolcock Street Investments, vulnerability was no more than one important requirement; the leading judgment also referred to "notions of assumption of responsibility and known reliance" at [24]. Their Honours' view of vulnerability appears from [23]: 23. Since Caltex Oil, and most notably in Perre v Apand Pty Ltd (1999) 198 CLR 180, the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. "Vulnerability", in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, "vulnerability" is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant (Stapleton, "Comparative Economic Loss; Lessons from Case-Law-Focused 'Middle Theory'", UCLA Law Review, vol 50 (2002) 531, at pp 558-559). So, in Perre , the plaintiffs could do nothing to protect themselves from the economic consequences to them of the defendant's negligence in sowing a crop which caused the quarantining of the plaintiff's land. In Hill v Van Erp (1997) 188 CLR 159, the intended beneficiary depended entirely upon the solicitor performing the client's retainer properly and the beneficiary could do nothing to ensure that this was done. But in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (Reg) (1997) 188 CLR 241, the financier could itself have made inquiries about the financial position of the company to which it was to lend money, rather than depend upon the auditor's certification of the accounts of the company. 81 Their Honours also said at [24]: It is not necessary in this case, however, to attempt to identify or articulate the breadth of any general proposition about the importance of vulnerability. This case can be decided without doing so. And it was. The disposition at [31]-[32] turns on the determination that there was, in the circumstances, no vulnerability and no duty of care. The light that the leading judgment throws on the concept of vulnerability is not derived from any articulation of general propositions, but from the illustration furnished by its treatment at [31]-[32] and from the Court's consideration of whether the plaintiff could have protected itself against the economic loss and what could have been done to cast on the defendants the burden of the economic consequences of their negligence, if any. Attention was focused on the latest opportunity to obtain contractual protection against the defendant's negligence. The leading judgment also examined at [31] the opportunities for investigation of the defect and what such investigations might have revealed. 82 It can be known from Woolcock Street Investments that vulnerability, or its absence, is a matter on which the existence of a duty of care with respect to economic loss may turn. It can also be known that assumption of responsibility and known reliance may also be important, although they were not in that particular case. 83 Their Honours' reference at [23] to Esanda Finance Corporation v Peat Marwick Hungerfords (1997) 188 CLR 241 is striking in that the concept of proximity was prominent in the reasoning in Esanda and the concept of vulnerability was, to my reading, not articulated; yet the decision in Esanda fully supports the observations in Woolcock Street Investments at [23]. In Esanda vulnerability was referred to only by Toohey and Gaudron JJ at 264: they in turn referred to Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 551. Vulnerability does not appear to have been treated, in any judgment, as part of any determinative test. 84 In my understanding, enquiry whether there is a duty of care opens with consideration of case law and decisions of courts whose authority is binding or whose reasoning is persuasive; if such decisions establish that the duty of care exists or does not exist in the fact situation under consideration, or in some situation of fact which gives a useful analogy, the enquiry is answered by reliance on judicial precedent. This is the classic method by which negligence law has reached its present state; accumulated judicial experience has had much more influence than formal reasoning. The absence of relevantly analogous authority does not mean that the enquiry is ended. Judicial statements in general terms and distant analogies may still have some influence. 85 The next consideration is reasonable foreseeability – whether the Court should treat it as reasonably foreseeable, to the defendant whose duty of care is under consideration, that the defendant's negligence would cause economic loss to a person in the position of the plaintiff. In the context of personal injury and property damage, this has been spoken of as "the undemanding test of foreseeability". In Sullivan v Moody at [42], foreseeability was spoken of as "being a real and not far-fetched possibility." Economic loss can occur in many ways, by paths of causation which can be short and obvious or relatively obscure, and can take many forms; far more, I would think, than the many forms which personal injury and property damage can take. The economic loss to which foreseeability relates is not generalised but relates relatively closely to the kind of economic loss which is alleged in the proceedings. 86 I said in Seltsam Pty Ltd v McNeill [2006] NSWCA 158 at [31]: There have been expressions of less than complete satisfaction with Mason J's test of foreseeability; see Tame v State of New South Wales (2002) 211 CLR 317 at 351-357 [96-108] (McHugh J) and at 429 [331] (Callinan J). As the judgment of Mason J. was concurred in by Stephen and Aickin JJ it is authoritative, notwithstanding the view expressed by Wilson J. at 52 - 53; and see Murphy J. at 49. The judgment of Mason J. remains authoritative: Julia Farr Services Inc v Hayes [2003] NSWCA 37, 25 NSWCCR 138 at [2] and [3] (Spigelman CJ). 87 There may be some significance in the form of words used by the High Court in Sullivan v Moody, which does not directly cite these words used by Mason J in Wyong Shire Council v Shirt (1980) 146 CLR 40 at 48: "A risk which is not far-fetched or fanciful is real and therefore foreseeable". In Sullivan v Moody at [42] this was recast without acknowledgement as: "foreseeable, in the sense of being a real and not far-fetched possibility". As recast, the search is for the real so as to eliminate the far-fetched possibility, not for the far-fetched or fanciful so as to identify the real by failure of the search. The later formulation gives greater stress to the need for reality than the earlier. If there is anything to choose between the two passages it should be observed that Mason J was dealing with foreseeability in the slightly different context of breach of duty, and that the observation in Sullivan v Moody has the authority of a recent and unanimous decision of the High Court about the existence of a duty of care, not about its breach. Mason J's formulation in Wyong Shire Council v Shirt has become a classic source in Australian law: in my respectful view reference to it should now give way to reference to Sullivan v Moody. 88 The question of foreseeability in the context of the existence of a duty of care is considered upon a higher level of abstraction than foreseeability in the context of breach of duty of care, which Mason J dealt with. The observations of Glass JA in the Court of Appeal of New South Wales in Shirt v Wyong Shire Council [1978] 1 NSWLR 631 at 639 illustrate the difficulties of foreseeability and its susceptibility to different interpretations: " The existence or non-existence of a duty owed by the defendant council to the plaintiff is considered upon a higher level of abstraction" (scil. than the breach question). Although Shirt v Wyong Shire Council was not disposed of on the reasons of the Court of Appeal, the judgment of Glass JA commands great respect and the passage at 639 should command at least as much respect as the more famous sentence at 641 of the same judgment referring to "the undemanding test of foreseeability which has now become received doctrine in the law of negligence". 89 A mark, in a way, of the undemanding character of the test of reasonable foreseeability is the rarity of judicial decisions in which claims of reasonable foreseeability have been rejected. Ready perception of foreseeability of risk of loss was one of the means which sustained the long-continued and far-ranging extension of negligence law, which began, for English and Australian law, with Donoghue v Stevenson [1932] AC 562, made a marked advance with Hedley Byrne & Co. Ltd v Heller & Partners Ltd [1964] AC 465 and appears now to have ended. 90 More is required for attributing a duty of care to guard against economic loss than a decision on reasonable foreseeability of loss. If there is no reasonable foreseeability of loss, the enquiry stops. If there is, the enquiry proceeds to an array of considerations of which it cannot be said that authority shows in what order they are important or which of them are categorically important so as to be necessary for or so as to exclude a conclusion that there is a duty of care. 91 One important consideration is the impact which imposition of a duty of care would have upon the legal rights and remedies which otherwise exist under the general law. This element was spoken of in the judgment of the High Court in Sullivan v Moody at [42] in this passage: The fact that it is foreseeable, in the sense of being a real and not far-fetched possibility, that a careless act or omission on the part of one person may cause harm to another does not mean that the first person is subject to a legal liability to compensate the second by way of damages for negligence if there is such carelessness, and harm results. If it were otherwise, at least two consequences would follow. First, the law would subject citizens to an intolerable burden of potential liability, and constrain their freedom of action in a gross manner. Secondly, the tort of negligence would subvert many other principles of law, and statutory provisions, which strike a balance of rights and obligations, duties and freedoms. A defendant will only be liable, in negligence, for failure to take reasonable care to prevent a certain kind of foreseeable harm to a plaintiff, in circumstances where the law imposes a duty to take such care. Negligence law does not exist to tear or greatly alter the general fabric of relationships and obligations. Considerations which arise in the present case include the considerations of indeterminacy associated with Ultramares Corporation v Touche (1931) 174 NE 441 at 444 and the needs to avoid imposing burdens which could not be sustained and to avoid conferring rights on a class which was excessively extensive or did not have ascertainable limits. 92 No decision of the High Court of Australia, or any other court, authoritatively establishes that a solicitor, acting in the circumstances in which Mr Miller acted, incurs a duty of care to the registered proprietors of the land for which he obtains a new Certificate of Title; or to persons who lend money on the security of the new Certificate of Title. A consideration adverse to imposing a duty of care on Mr Miller is that, as the law now stands, a solicitor in general has no duty of care to persons with whom the solicitor's clients are dealing, in non-contentious business and also in litigation. Exceptions are rare and relate to representations or undertakings made or given by the solicitor. The cases are discussed in Jackson & Powell on Professional Liability (6th ed, 2007) ch 11. I was not referred to any case law which supports the existence of a duty of care of a solicitor to a non-client in any way like the position in which Mr Miller stood to Perpetual Trustees Victoria. 93 Hawkins v Clayton (1988) 164 CLR 539 deals with the tort liability of a solicitor to a person who is not his client. In that case the view prevailed that there was a duty of care with respect to economic loss in the circumstances. The majority was narrow and reasons supporting the majority view were diverse. All justices, except for Brennan J, who was a member of the majority, discussed the question in terms of proximity; see 555. I cannot see any real analogy between the facts in that case and those in the present case. 94 Hill v Van Erp (1997) 188 CLR 159 also deals with the tort liability of a solicitor to a person who was not his client for economic loss, and presents a distant analogy with the relationship between Mr Miller and Perpetual Trustees Victoria (and between Mr Miller and the plaintiffs). The analogy is distant; the solicitor in Hill v Van Erp, for example, actually had a retainer. In Hill v Van Erp, the plaintiff, who was the beneficiary of a will, was held to have the benefit of a duty of care, owed by the solicitor instructed to prepare the will containing a testamentary disposition for the benefit of the plaintiff, where that solicitor failed to see to due attestation. A strength of the analogy is that the plaintiffs did not have a contractual relationship with the solicitor, but were at risk of loss in situations which were foreseeable to the solicitor if the solicitor did not conduct business as his retainer obliged him to do (or in this case, as the retainer which he thought he had obliged him to do). A majority of the Justices departed from use of the concept of proximity. Notwithstanding Dawson J's treatment of the subject in terms of proximity, his Honour's discussion shows that some factors, which are present here, were considered important. It can be said in the present case, as Dawson J did at 180, that: In the first place, to impose liability upon the solicitor in such a situation is not to raise the prospect of indeterminate liability … Secondly, no question of competitive advantage arises … Thirdly, the recognition of a duty of care would not supplant or supplement remedies available in other areas and would not disturb any general body of rules constituting a coherent body of law. Notwithstanding the diversity and extensive terms of the reasons in Hill v Van Erp, that decision is now part of the general law and makes it difficult to see anomaly in imposing on a solicitor a duty of care to persons from whom he does not have a retainer in situations in which risk to them is foreseeable to the solicitor. In this general sense, Hill v Van Erp supports the case for a duty of care of Mr Miller. 95 These decisions do not increase a solicitor's responsibility in the sense of extending the range of things the solicitor should do: they extend the class of persons to whom the solicitor owes a duty of care, but require only the careful performance of work which the solicitor already owed the client a duty to do. 96 If Mr Miller had in fact had instructions from the plaintiffs to obtain a new Certificate of Title for them, I do not consider that he would have come under a duty of care to persons such as Perpetual Trustees Victoria who were proposing to make a mortgage advance, or to other persons who later dealt with the land. But of course he would not have been negligent in accepting the identity of his clients if it was their true identity. 97 In determining whether Mr Miller owed a duty of care to the plaintiffs and Perpetual Trustees Victoria it is also important to consider and appraise the control which it was open to him to exercise and the control which he in fact exercised over the situation and events in which the risk of economic loss existed. The degree to which control exists may vary from complete control over a situation and its outcomes, downwards through many degrees of opportunity to take or abstain from action which will or may influence the outcome. It is for the Court to decide whether to impose liability having regard to the degree of control which exists. Related to control is consideration whether a duty of care would impose on the defendant a responsibility to control or influence the criminal or unlawful conduct of others. That a duty of care would require control over the criminal conduct of others is an obstacle, but not a barrier, to deciding that there is a duty of care; it is not usual that a duty of care should extend so far, but according to the nature of the risk it may. 98 Also important is the vulnerability of the plaintiff to economic loss through the defendant's negligence. "Vulnerability" is a relatively new expression in negligence law, although the concept which it expresses is not. Vulnerability cannot in my understanding be expounded in a full and clear way; it is to be understood from decisions of authority which state its importance or refer to it. The concept of vulnerability may be a means of recognising a policy element underlying negligence law: imposing liability to pay damages can be supposed to increase care in the community and to reduce the occurrence of losses, but if people have no opportunity to act for their own protection, negligence law cannot be shaped to increase their vigilance and to protect them from risk by so doing. If damages are available too readily, people will tend to take less care of their own interests. To the extent that people can look after their own interests, they should. Both this policy and the concept of vulnerability appear to have some relation to the opportunity for intermediate inspection referred to, in the case of supply of goods, by Brett MR in Heaven v Pender (1883) 11 QBD 503 at 510, in the course of what appears to be the first attempt at a comprehensive statement of negligence law. This passage was treated as important by Lord Atkin in Donoghue v Stevenson: see 581. What Brett MR said was long regarded as too wide; but it might now, I think, be regarded as not wide enough. The absence of opportunities for intermediate inspection and the opaque character of the drink bottle were treated as significant in each majority and minority judgment in Donoghue v Stevenson. I do not think that vulnerability is a new concern. 99 Other elements sometimes encountered are reliance by the defendant on the plaintiff, and undertaking by the plaintiff of responsibility to the defendant. Neither of these elements is present in this case. Mr Miller made no representation to Perpetual Trustees Victoria, he did not communicate with that company, the company did not rely on him and was not aware of his activity or of his having any part in the events. Other considerations present themselves, for example in cases involving conduct within an area regulated by statute or forming part of public administration; I need not address them here. 100 Duty to the plaintiffs. Where a solicitor acts for the registered proprietor of land under a contractual retainer, as Mr Miller thought he was acting, implied contractual duties deprive the question of whether there is a concurrent duty to the registered proprietors under tort law of some of its importance. There can, in my opinion, be no doubt about the existence of a duty of care under tort law where a solicitor conducts legal business on behalf of or in the interests of a person who is unable to enter into a contract of retainer because of some disability or incapacity. Mr Miller thought he had a contract of retainer but did not; and he thought that the legal business he did was done in the interest of the plaintiffs. In all respects, except that they did not know what Mr Miller was doing, the plaintiffs and their interests stood to be affected by negligence of Mr Miller as much as and perhaps even more than they would have been affected had Mr Miller actually had a retainer from the plaintiffs. 101 The weaknesses and vulnerability of the plaintiffs' situation was related to the weakness of Mr Miller's situation in that he accepted that Mr Pan had authority from the plaintiffs. The plaintiffs' vulnerability to an event or loss such as the one which in fact occurred was very high; indeed I cannot see how it could be any higher, as the plaintiffs had no means of preventing Mr Pan from getting his hands on a new Certificate of Title and no means of knowing that he was doing so, and the ordinary measure available to a registered proprietor of seeing that his own Certificate of Title is in a safe place could not protect the plaintiffs. 102 The control which Mr Miller had over the risk that the plaintiffs would incur economic loss in the way which they did was not complete, because if Mr Miller had refused to act, Mr Pan could have gone elsewhere. Although Mr Miller's control was not complete it was real and it was effective inasmuch as he did not exercise it. No economic burden or risk worked against his exercising the degree of control that was available to him by taking some measure to ascertain, independently of Mr Pan, whether or not the registered proprietors were actually involved. Mr Miller could have attempted to reach the plaintiffs, independently of Mr Pan, by telephone or by letter; or by asking Mr Pan to arrange for them to come in and see him; or by independently asking them to come in and see him. The risk of loss was great and the burden on Mr Miller of exercising a degree of control would have been slight. It was clear and known to Mr Miller that the plaintiffs were the registered proprietors, and the scale of the risk of loss which imposing a duty of care would protect them against is not indeterminate but relates to the value of their property. There is no risk of creating liability to a wide or unascertained class or liability in unascertained amounts. In these circumstances, I have no difficulty in accepting the concession that Mr Miller was under a duty of care to the plaintiffs. 103 Breach of duty: negligent conduct of Mr Miller. It should have been obvious to a reasonable person practising as a solicitor in 2005 that there were risks of identity fraud associated with applications for new Certificates of Title. The risk is inherently obvious: and it had been realised in recent experience and publications. For a prominent example, an Article by Matthew Bransgrove entitled "Mortgage Law: What can solicitors do to reduce mortgage fraud?" in the Law Society Journal, November 2004, dealt with the prevalence of identity theft with vivid examples and many practical suggestions for cautionary conduct. 104 There were several circumstances, to which Mr Miller referred, which could be seen as indications of regularity, and there was no positive indication that Mr Pan did not really represent the registered proprietors or was engaged in fraud. Nor was there any indication that the signatures on the documents were false. The fact that Mr Pan was referred to Mr Miller by Michael, a person Mr Miller knew in a business context, was, at least to some degree, an indication of regularity; however Michael gave very little information, and did not indicate the name of the client or refer to the fact that the man who was to attend Mr Miller was not the client but was someone who was purportedly helping the clients. Mr Pan's having a file and producing documents from it, including rate notices, a form of mortgage and a letter on a First Title letterhead, which were consistent with what he had told Mr Miller, also had some effect of confirming the apparent regularity of what was taking place. Possession of rate notices specific to the property is I suppose some indication that the bearer has some connection with the property. Everything that Mr Miller knew and saw depended on the sincerity of Mr Pan. 105 The indications of regularity which Mr Miller had were very slight. They did not go to the central question of whether Mr Pan really had authority from the plaintiffs to obtain a new duplicate Certificate of Title, to bring documents to Mr Miller for that purpose and to receive the new Certificate of Title from Mr Miller. In the claim form he submitted to the insurer, Mr Miller explained: When I saw the First Title documents, I assumed that everything was in order because the lender would have required a 100 point check, and other verification. Mr Miller also referred to the verification to be performed by the person witnessing the Application for a New Certificate of Title and taking the Statutory Declaration in support of the Application for a new Certificate of Title. Seeing that there was a file with documents about a loan in it including a letter on a First Title letterhead, and supposing that First Title would not have given a loan approval without doing, or without someone else doing a 100 Point identity check did nothing to confirm that Mr Pan had the authority he claimed to have: he could have fraudulently diverted a loan approval which the plaintiffs had genuinely obtained. If the documents apparently signed by the plaintiffs had any influence, that influence again depended on Mr Pan being genuine. 106 For a solicitor, handling the title documents of a client or of a supposed client calls for vigilance. Possession of a Certificate of Title is charged with economic significance: loans are made on their mere deposit, even without writing. Mr Pan did not bring a title document to Mr Miller, yet Mr Miller did not even ask Mr Pan to produce a written authority to collect the new Certificate of Title. There was not a shred of confirmation of authority, not a line of writing nor a voice on the telephone. When Mr Pan came to Mr Miller, completely unknown to him, with only the briefest of introductions from Michael and with nothing of substance to indicate that he was a person to be trusted, the reasonable course for Mr Miller as a solicitor would have been to establish why the clients were not attending to their own business about their loan and their lost Certificate of Title, who they were and where they were: a reasonable solicitor would have wanted to see the clients and would have wanted them to establish their identities, or would have got a much better story than Mr Pan gave as to why they were not consulting a solicitor themselves. A reasonable solicitor would have seen the new Certificate of Title into their hands, or with their written authority would have seen it into the hands of someone who was likely to have been an appropriate recipient, such as a bank, finance house or another solicitor. It is possible for a careful solicitor to be deceived, but Mr Miller did not act with appropriate care, and if he had, it is very improbable that Mr Joey Pan would have got his hands on a new Certificate of Title. 107 In my finding, on any available view of the standard of care or scope of duty, Mr Miller did not conform to a reasonable standard for the professional work of a solicitor in accepting that Mr Pan actually had the authority of the registered proprietors to give instructions to obtain a new duplicate Certificate of Title, and to receive the new Certificate of Title when it was issued. Mr Miller put himself entirely in the hands of Mr Pan, and everything Mr Miller did depended on Mr Pan being sincere and actually being what he purported to be; Mr Miller had, for practical purposes, no knowledge whatever of whether Mr Pan was worthy of his trust and the positive indications which I have already referred to are of very slight weight in relation to the importance of the way in which a duplicate Certificate of Title can be used and the mischief it can cause in the wrong hands. Apart from recent experience of frauds involving wrongly obtained duplicate Certificate of Titles, referred to in publications accessible to solicitors, the need for a solicitor to consider fully what he is doing and obtain appropriate authority when handling Certificates of Title is quite obvious. 108 In my finding Mr Miller acted in breach of his duty of care to the plaintiffs. 109 The provisions of ss 5D and 5E of the Civil Liability Act apply in relation to deciding causation. Determination of causation of the plaintiffs' loss by negligence of Mr Miller is, in my opinion, simple and obvious and beyond any need for exposition. 110 Senior counsel for Mr Miller contended to the effect that I should apply the proportionate liability provisions in Pt 4 of the Civil Liability Act and that the effect of s 35(1) of the Civil Liability Act is that Mr Miller's liability is limited to an amount determined by having regard to the extent of Mr Miller's responsibility for the plaintiffs' loss. Senior counsel for Mr Miller nominated several persons as concurrent wrongdoers; it is in my opinion plain that Mr Pan is a concurrent wrongdoer for the purpose of Pt 4 of the Civil Liability Act. Persons (whom the submissions did not clearly identify) involved in considering and approving the loan application which led to Perpetual Trustees Victoria making an advance to Mr Pan are not, in my opinion, concurrent wrongdoers because they owed no duty of care to the plaintiffs; submissions did not develop the basis on which such persons might be liable. It was also contended that Mrs Donald was a concurrent wrongdoer but, as I have determined elsewhere, she did not breach her duty of care. 111 The plaintiffs' claim against Mr Miller is a claim for economic loss within the terms of s 34(1)(a) of the Civil Liability Act. In my opinion, Mr Pan and Mr Miller are concurrent wrongdoers within the meaning of s 34(2) of the Civil Liability Act. Submissions did not develop the basis on which, as s 34(2) of the Civil Liability Act impliedly requires, Mr Pan incurred tort liability to the plaintiffs; in my opinion he did so, if on no other basis, because he owed a duty of care to the plaintiffs and his intentional actions were in breach of it. Mr Pan has not been joined as a party to the proceedings but that fact does not affect the operation of s 35 of the Civil Liability Act; see s 35(4). Part 4 presents the paradox that, having regard to s 34A of the Civil Liability Act, Mr Pan's liability is not limited because his actions were intended; see s 34A(1)(a); but Mr Miller's liability is limited because his actions were not intended. 112 Section 35(1) of the Civil Liability Act provides: 35 Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and (b) the court may give judgment against the defendant for not more than that amount. 113 In the application of s 35(1), and apposing the responsibility of Mr Miller for the loss with the responsibility of Mr Pan, the extent of Mr Miller's responsibility for the loss is altogether overwhelmed by Mr Pan's responsibility for the loss. Mr Pan acted deceitfully in pursuit of a large monetary advantage which he gained; Mr Miller was deceived and conducted an apparently small piece of professional work in a way which fell short of appropriate skill. I consider it just, having regard to the extent of his responsibility, that Mr Miller's liability be limited to 10 per cent of the plaintiffs' loss. 114 Duty to Perpetual Trustees Victoria. It is a separate and different question whether Mr Miller owed a duty of care to Perpetual Trustees Victoria. Perpetual Trustees Victoria would not have made the advances it made to Mr Pan, the first advance two days after Mr Miller delivered the new Certificate of Title to Mr Pan and the second advance several weeks later, if Mr Miller had not obtained a new Certificate of Title on instructions from Mr Pan. What is under consideration is not Mr Miller's duty of care to an indeterminate class of persons who might deal with the property in the future, but Mr Miller's duty and liability to persons who were directly and immediately affected by his bringing a new Certificate of Title into existence and giving the new Certificate of Title to Mr Pan, without the actual authority of the registered proprietors. When Mr Pan first saw Mr Miller he had with him a file (which Mr Miller did not inspect, but some documents from which he saw) which Mr Pan told him related to the loan application which was well advanced and settlement of which was only delayed because the Certificate of Title had been lost. There in fact was a well-advanced loan application, and although it had not reached Perpetual Trustees Victoria it was in a highly concrete state and required little more than the new Certificate of Title and the routine completion of several documents before it could be put forward in a condition to which Perpetual Trustees Victoria would rapidly respond. Mr Miller did not know the identity of the proposed mortgagee, but he knew of First Title and he knew, as was the fact, that First Title was involved and that there were highly concrete proposals to get a mortgage advance from a mortgagee. This disposes of difficulties of indefiniteness associated with Ultramares. 115 Reverting to Sullivan v Moody, there is no difficulty in confining the class of persons to whom Mr Miller's duty was owed to reasonable limits, that is, to an intending mortgagee of whose existence he knew. Such a duty of care would contribute significantly to the effective operation of the system of land titles and of using Torrens land as security for loans. Extending the class of persons to whom Mr Miller owed a duty of care to include an intending mortgagee does not bring with it an alteration or extension of what Mr Miller's duty to the plaintiffs required him to do. 116 Mr Miller's opportunity to exercise control was clear. In my respectful view, the judgment of Ipp JA in Graham v Hall [2006] NSWCA 208 states considerations and illustrates the process for deciding the significance of the criminal conduct of others as a subject of control under a duty of care, at the present time and with the assistance now available from decisions of the High Court. Adverting to Perry v Apand, considered by Ipp J at [46] in Graham v Hall, there is no difficulty in recognising the prospective economic interest of Perpetual Trustees Victoria in the security property as an interest which it is appropriate for legal rules to protect. The risk created by Mr Miller's conduct was the risk that Mr Miller's conduct might enable some other person to cause loss to the plaintiffs by criminal conduct; specifically by fraud: see Sullivan v Moody at [50], cited by Ipp JA in Graham v Hall at [43]. The significance of criminal conduct in determining whether there has in fact been a breach of duty of care is addressed in Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; and by Ipp JA at [64]. Passages from Modbury which Ipp JA cites show that a duty of care may extend to protecting the person to whom the duty is owed from the criminal behaviour of third parties. 117 While it may be possible, it is quite difficult to register false dealings under the Torrens system if one does not have possession of the duplicate Certificate of Title, and much practice in dealing with Torrens land revolves around obtaining and keeping custody of the duplicate Certificate of Title, notwithstanding the higher significance of the register folio. Obtaining a duplicate Certificate of Title and looking after it is at the centre of the professional responsibility of solicitors handling conveyancing business under the Torrens system. Avoidance of fraudulent and other criminal activity involving land titles is a central concern of conveyancing practice. The vulnerability of non-lawyers who own land or lend money on land to fraudulent and other criminal behaviour is a large part of the reason why they put their affairs in the hands of legal professionals. Overcoming potential fraud and criminality is prominent among the considerations affecting the conduct of solicitors, and the criminality of the behaviour protected against is not, in my judgment, a reason for not imposing a duty of care on Mr Miller. 118 There is no element of reliance by Perpetual Trustees Victoria on Mr Miller. There is no reason to find that Perpetual Trustees Victoria knew of Mr Miller's existence, or knew of the steps taken by him to obtain a new Certificate of Title. Perpetual Trustees Victoria relied entirely on material from other sources, including the document referred to as SCAT although not in fact produced by a solicitor. 119 In my opinion the elaborate structure which in fact regulated approaches to Perpetual Trustees Victoria for mortgage loans is not part of the reasonable foresight that should be attributed to Mr Miller. In reasonable foresight the mortgagee should be thought of as looking about for its own protection in reasonable ways. An identity check, which in the operation of Perpetual Trustees Victoria was to be made by the mortgage originator, who was to sight photographic identification, is, in the exercise of reasonable foreseeability, made by the mortgagee itself. 120 To a reasonable solicitor in Mr Miller's position it was foreseeable that there would in future be a mortgagee who would lend money on mortgage secured on the land in the new Certificate of Title. It is necessary to address whether it was reasonably foreseeable that a future mortgage was at risk of economic loss if instructions to obtain a new Certificate of Title were negligently accepted from a person other than the registered proprietor and a new Certificate of Title was in fact delivered to a person other than the registered proprietor, without the authority of the registered proprietor. The mortgagee in this case was only at risk because of the stage the loan application had reached. The application had passed through all stages up to the point almost immediately before settlement without the mortgagee discovering that it was dealing with fraudsters. The mortgagee's protection, after failure of its own opportunities to find out who it was dealing with, therefore hung on the single thread of Mr Miller finding out who he was dealing with and not obtaining a new Certificate of Title for fraudsters. 121 In the foresight which Perpetual Trustee Victoria's case requires, Mr Miller was to see that the risk of economic loss was imposed on an organisation which lent out money as a business but had not found out for itself exactly who it was dealing with, or that it was being deceived: in a context where all the shortcomings alleged (correctly) against Mr Miller of not pursuing enquiries with enough rigour, not seeing and interviewing the borrowers and verifying their identities and not obtaining confirmation of Mr Pan's authority were shortcomings which the mortgagee itself had not avoided, at least not with any success. Finance houses can be supposed, in a reasonable foresight exercise, to perform systematic checks, such as the 100 Point identity check, and to examine several forms of identification before approving a loan application. The class of intending mortgagees which the reasonable foresight of Mr Miller was to protect is composed of intending mortgagees who have done these things, but have been deceived and have not found out for themselves the fraud which Mr Miller's foresight was to protect them against. 122 In the reasonable foresight of a solicitor in Mr Miller's position, much more would be done by the mortgagee to establish who the mortgagee was dealing with than merely seeing that the person it was dealing with had a Certificate of Title to the security property. It would not be in the reasonable contemplation of a solicitor in Mr Miller's position that the mortgagee depended on some conduct of the solicitor to govern its decision whether to advance money; in that reasonable contemplation the mortgagee would have made its own decision, on material suitable to it, and before Mr Miller was consulted, about whether the persons it was dealing with truly were the persons they claimed to be. Mortgagees who accurately ascertain for themselves who they are dealing with are not Mr Miller's concern: the foresight supposed of him is directed to those mortgagees who do not accurately ascertain who they are dealing with. Mr Miller is to have the foresight to protect those mortgagees whose foresight did not protect themselves, because they were deceived as he was or for some other reason. 123 Taking expressions from Sullivan v Moody at 576, it was not in my opinion a "real and not a far-fetched possibility" that a careless act or omission on the part of Mr Miller might cause harm to a mortgagee in this class. It was in my judgment a far-fetched possibility that there would be a mortgagee in that position, with a risk of economic loss, waiting only for Mr Miller to fail in much the same way as it itself had failed for the loss to mature into actuality. It would equate reasonable foreseeability with the limits of the imagination to decide that that risk fell within Mr Miller's reasonable foresight. 124 Mr Miller's thinking, as given by him in his evidence, was to the effect that the stage that the loan application had reached and the fact that settlement was imminent comforted him with the thought that the intending mortgagee would have carried out a 100 Point identity check and would have verified identification provided to it by the applicant. In so far as this may have operated to comfort Mr Miller with a sense that he was in some way relieved from making enquiries he would otherwise have made, I do not think that he was so relieved; but as an exercise of reasonable foresight of risks to future mortgagees I think the appreciation he actually made was much more reasonable than an appreciation in which he thought to himself "If they have got so close to settlement, and they have been the victims of deception, they are in need of care from me". That would be far-fetched and fanciful. I do not think that the law should impose a duty on Mr Miller on a supposition that that was foresight which it was reasonable for him to have. 125 Mr Miller gave this evidence in cross-examination: Q. And you would have contemplated in 2005 that had the Certificate of Title for a property got into the wrong hands, then there was a potential for loss either to a registered proprietor or to a lender or both. Correct? A. Yes. I do not see how it was possible for a solicitor in Mr Miller's position to give any other answer to this question. However reasonable foreseeability is a matter for the judgment of the Court, and is not a factual question to be determined upon evidence. 126 Claims that a person is vulnerable are made readily in the context of arguments in negligence law. The self-concept of vulnerability appears to be attractive to many. Submissions on vulnerability adverse to Perpetual Trustees Victoria dwelt on its need and opportunity to establish for itself that the person it lends money to has the identity claimed. The vulnerability question for Perpetual Trustees Victoria is quite different to the vulnerability question for the plaintiffs. A person who lends on a new Certificate of Title has opportunities to ascertain whether the borrower with whom it is dealing is really the person the person claims to be and really is the registered proprietor of the security property. The lender can make identity checks and call for the production of identifying materials such as passports, driving licences or other material. The lender can react to circumstances like the fact that it was approached with a new Certificate of Title of extremely recent date. The interval of time and the extended opportunity for enquiries before the second advance was made mean that it is even more difficult for Perpetual Trustees Victoria to show that Mr Miller owed it a duty of care with respect to the second advance than it is for the first advance. 127 The fact that Mr Miller in effect put the fraudulent Mr Pan in control of a new Certificate of Title is no more than a small part of the circumstances in which Perpetual Trustees Victoria was vulnerable to fraud, in view of the opportunities it had to find out for itself who it was in fact dealing with. The opportunity Perpetual Trustees Victoria had to make contractual arrangements for its own protection is well exemplified by the contractual arrangements it in fact made with Interstar, First Title, GNI and others involved in its business operation which meant that it only received applications which had already been approved and for which some other person involved had agreed to accept responsibility. Perpetual Trustees Victoria's insistence on credit insurance is another example of how it used and could use contractual arrangements to protect itself from loss. 128 So much for looking at vulnerability in the abstract; but in the actual circumstances in which Mr Miller acted, where, as he was told, consideration of the loan application had reached a late stage, and it was only late discovery that the Certificate of Title had been lost that was holding things up, the lender's vulnerability to loss, caused by negligence of Mr Miller, was higher than it would appear in the abstract. Still it would not be correct, in my opinion, to class Perpetual Trustees Victoria as vulnerable in the relevant sense to negligence on the part of Mr Miller. 129 I have considered this subject discursively, and it does not lend itself to expression in an orderly way, or in cogent terms. My conclusion is that Mr Miller did not owe a duty of care to Perpetual Trustees Victoria. 130 Conclusions on the claim and first Cross-claim. The plaintiffs have succeeded in showing that no money is charged on their land in favour of Perpetual Trustees Victoria. They have not incurred loss through the negligence of Mr Miller. If they had, they could recover 10 per cent of their damages from Mr Miller. The Registrar-General is not liable to the plaintiffs either because they have suffered no loss. If this were not correct, the Registrar General would not be liable because Mr Miller is insured and the Registrar-General has a defence under s 129(2(b) of the Act: but with the qualification that if there is an excess of $5000 on Mr Miller's policy the defence under s 129(2)(b) of the Act does not protect the Registrar-General to that extent. If losses exceeded the indemnity of $1,500,000 in the policy, which hardly seems likely, I would have to reconsider. Perpetual Trustees Victoria's losses are not recoverable from Mr Miller because he did not have a duty of care to Perpetual Trustees Victoria. Perpetual Trustees Victoria's losses are recoverable from the Registrar-General under ss 120 and 129 of the Act and the defences under s 129(2)(a) and (b) of the Act do not protect the Registrar-General. The amounts recoverable will be dealt with on further consideration. I do not expect the issues to be complicated: quantum may well be agreed among the parties. If there is a complex inquiry I may refer it to an Associate Judge or to a Referee. 131 Second cross-claim against the Justice of the Peace. In the second cross-claim, Mr Miller joined as a cross-defendant, Mrs Wendy Donald, the Justice of the Peace before whom the two persons fraudulently cooperating with Mr Pan, signed the mortgage and made and signed the Statutory Declaration which supported the Application for a new Certificate of Title, in the plaintiffs' names; on later occasions, Mrs Donald witnessed other documents which were falsely executed, by the same two people, in the names of the plaintiffs. For the purposes of this cross-claim I treated Graham v Hall as authoritatively establishing that a person in Mrs Donald's position may incur liability for economic loss negligently caused in exercising that function. There may be some grounds for distinction between the present case and Graham v Hall, but it is not necessary to explore them in these reasons. 132 Mr Miller's cross-claim against Mrs Donald seeks indemnity or contribution for any liability Mr Miller might be found to have to the plaintiffs and alleges negligence in signing as witness, or purportedly as witness, three documents on which signatures for the plaintiffs were forged. These documents were the Application for new Certificate of Title, which Mr Miller lodged on 4 April 2005, with that date on it, and a Statutory Declaration in the names of the plaintiffs, purportedly made on 1 April 2005; these two documents were given to Mr Miller by Mr Pan and were ultimately used to obtain the new Certificate of Title. The third document was the mortgage (with its Annexure "A") which was eventually dated 7 April 2005 and delivered to Perpetual Trustees Victoria, who registered it as security for the two advances it made to Mr Pan. 133 By s 117 of the Act, the Registrar-General is authorised to reject or refuse to act on a dealing unless there is a certificate, by the persons executing the dealing, that it is correct for the purposes of the Act: 117 Certificate of correctness (1) The Registrar-General may reject, or may refuse to accept or to take any action in relation to, any primary application, dealing or caveat unless it bears the following certificates: (a) a certificate (signed by or on behalf of each person by whom the dealing or caveat has been executed) to the effect that the application, dealing or caveat is correct for the purposes of this Act, and (b) a certificate (signed by each witness to the execution of the application, dealing or caveat) to the effect that: (i) the witness is personally acquainted with, or is otherwise satisfied as to the identity of, the person to whose execution of the application, dealing or caveat the witness is attesting, and (ii) the execution by that person of the application, dealing or caveat took place in the presence of the witness. (2) Any person who falsely or negligently certifies to the correctness of any such application, dealing or caveat shall incur therefor a penalty not exceeding 1 penalty unit. (3) Such penalty shall not prevent the person who may have sustained any damage or loss in consequence of error or mistake in any such certified application, dealing or caveat from recovering damages against the person who has certified the same. 134 The second cross-claim alleges that Mrs Donald owed the plaintiffs a duty to exercise reasonable care in performing the witnessing function and that she was negligent in: (i) failing to take reasonable steps to satisfy herself as to the identity of the persons signing statutory declaration and the mortgage; (ii) representing that she had witnessed signing the mortgage and the statutory declaration in her presence although she had failed to witness their signing. There is no evidence in support of Particular (ii). 135 It is also alleged that Mrs Donald falsely represented that either she was personally acquainted with the plaintiffs or that she was otherwise satisfied with their identity. It is further alleged that s117 of the Act creates a statutory duty, breach of which entitles the plaintiffs to recover damages. No submissions were made in support of a claim that s 117 of the Act itself gives rise to a cause of action. The terms of s 117(3) of the Act show that the legislature contemplated that a person who sustained damage or loss might have a cause of action, but the cause of action is not attributed to s 117 itself. 136 The mortgage has two pages and the certification, date and execution are on the second page of the mortgage headed "Annexure "A"". The column in which the signatures, purportedly of the plaintiffs appear, is headed "Certified correct for the purposes of the Real Property Act 1900 by the mortgagor". The column in which Mrs Donald signed as witness is headed "I certify that the person(s) signing opposite, with whom I am personally acquainted or as to whose identity I am otherwise satisfied, signed this document in my presence." 137 The Statutory Declaration in support of the Application for a new Certificate of Title is headed "Statutory Declaration". It opens and closes with formal statements: "We, Fatah Chandra and Adje Srikandi both of 23A Jellicoe Avenue, Kingsford in the State of New South Wales do solemnly declare as follows": and "And we make this declaration conscientiously believing the same to be true and by virtue of the Oaths Act 1900". 138 The attestation of the signatures is: Declared at: Sydney Before me: Wendy Donald JP Wendy Donald 107098 Justice of the Peace/ Solicitor 1/4/05 139 Mrs Donald has been a Justice of the Peace since 1994, and expressions she used in her evidence show that she is familiar with the tasks commonly performed by Justices of the Peace. A handbook for Justices of the Peace in NSW("the JP Handbook") was put in evidence. According to its terms, it was issued and circulated by the Director General of the New South Wales Attorney General's Department and there is a foreword from Bob Debus MP, then Attorney General. From internal references, it was probably in circulation before April 2005. It can be referred to to show what steps it was then reasonable for a Justice of the Peace to take before witnessing or attesting to signatures; and what it says on that subject should, in my finding, be obvious to a reasonable person. What it was reasonable for Mrs Donald to do was indicated by the words of attestation of the documents she witnessed. The JP Handbook says (at its p 11): Under no circumstances should a Justice of the Peace purport to take an affidavit, declaration or affirmation, or witness a signature unless he/she has personally met the deponent, declarant or signatory and the document is signed in his or her presence . The Justice of the Peace must sign the document after it has been signed by the deponent, declarant or signatory. 140 The case made in the cross-claim requires the law of negligence to go a little further and require the Justice of the Peace to take reasonable steps to establish that the person appearing before the Justice really is the person named in the document as the declarant. This is in substance what s 117 of the Act requires, and what Mrs Donald certified when she witnessed the signing of the mortgage. 141 The only direct evidence of what happened when the relevant documents were signed and witnessed was given by Mrs Donald herself. I regarded Mrs Donald as an impressive witness. She spoke calmly, even when confronted with claims that she had failed in her duty in significant ways, and she expressed herself clearly and moderately: although in her manner there were occasional edges of resentment and asperity at the way in which she had been treated by Mr Pan and his accomplices, and at cross-examination which ranged rather widely in suggesting enquiries and precautions she might have taken. I have confidence in her sincerity as a witness. 142 Mrs Donald's affidavit shows that she has known Mr Pan since 1991, when he was one of the directors of an abattoir company in Dorrigo which employed her as the office manager. As well as meeting Mr Pan and his wife Cheryl in the course of business, Mrs Donald met Mr and Mrs Pan socially and, according to her evidence, she got to know Mr and Mrs Pan quite well. Mrs Donald remained an employee of the abattoir company until she was retrenched in about February 1998. Mrs Donald gave evidence that, following her retrenchment, she moved to Chatswood, Sydney to work for the same company and stayed with Mr and Mrs Pan, in their house at Chatswood for a period of approximately six weeks According to Mrs Donald, she had a pleasant social relationship with Mr and Mrs Pan and often went out with them and their family for drinks or dinner. 143 Mrs Donald was employed part-time for about one year from late 1998. After that time, Mrs Donald had occasional and lessening social contact with Mr and Mrs Pan, ending altogether in about 2003 or 2004. 144 In Late March 2005, Mr Pan contacted Mrs Donald through another person Mrs Donald knew from the abattoir at Dorrigo. Mr Pan asked Mrs Donald to meet him for dinner to discuss a new business he was setting up selling loans, to receive commissions on them. Mr Pan and Mrs Donald made an arrangement that she and her husband would go to dinner with Mr Pan and they met him by appointment. The date Mrs Donald gives for this dinner is about 30 March 2005. Mrs Donald's evidence is that, on that date, Mr Pan was accompanied by two persons whom he introduced to Mrs Donald and her husband as "Fatah" and "Adje". 145 In oral evidence Mrs Donald said to the effect that, she had not expected Mr Pan to be accompanied by two other persons for dinner; that the persons introduced to her as "Fatah" and "Adje" had little or no English skills and that it was very difficult to carry on a conversation with them. While Mrs Donald had not expected Mr Pan to be accompanied by two other persons, she did not apparently consider it at all odd that Mr Pan invited two non-English speakers to dinner with her and her husband. (It should be remembered that they had long had social and dinner meetings). The main subject discussed at the dinner was Mr Pan's business proposition; according to Mrs Donald, "Fatah" and "Adje" took little part in this conversation. There was some conversation between Mrs Donald and her husband and "Fatah" and "Adje" was confined to pleasantries and Mr Pan was required to act as an interpreter. 146 During the course of the dinner, Mr Pan told Mrs Donald that he would like her to sign some documents for him. Mr Pan gave Mrs Donald an explanation to the effect that "Fatah" and "Adje" were looking to mortgage their home and that he was providing the loan they wanted. Mrs Donald's evidence is that Mr Pan said: Fatah and Adje are mortgaging their home to help their family back in Indonesia to rebuild their home after the tsunami. These papers relate to that. Would you please witness their signatures. 147 Mrs Donald was told that "Fatah" and "Adje" were mortgaging their property as a result of the tsunami in Indonesia because they were helping Mr Chandra's family rebuild. Mrs Donald presumed that Mr Pan was the broker who was going to organise finance for them, that he was working for "Fatah" and "Adje" and was helping them get a mortgage. 148 Mr Pan referred to about six documents that needed to be witnessed and he produced two copies of each document. Mrs Donald's evidence is that she did not read the documents fully but understood that one was a loan document and that some looked like solicitors' documents. The persons introduced to her as "Fatah" and "Adje" signed each document; until then, the documents had not been signed. Mrs McDonald signed each document as a witness. 149 A couple of days later, Mr Pan telephoned Mrs Donald and told her: One of the documents that we had at the dinner the other night we forgot to sign. Can we meet and have it signed. 150 Mrs Donald met Mr Pan by appointment; the man introduced to her as Fatah was with him. Mr Pan produced a document which he said was the one "We forgot to sign the other night" and asked Mrs Donald to witness it. The document had not then been signed; Mrs Donald saw Fatah sign the document and signed it herself as a witness. Mr Pan produced a copy of a rate notice and an electricity bill and asked her to sign them as well; however she declined to sign them as he did not have the originals for her to compare them against. 151 Later, Mr Pan telephoned Mrs Donald and asked her to sign more documents saying: "The ones from the dinner had been lost." Mrs Donald made an arrangement to meet him at a cafe near North Sydney station; at the meeting "Fatah" and "Adje" were with Mr Pan. Mr Pan produced some documents which looked similar to the ones which had been signed at the dinner; the documents had not then been signed. Mrs Donald saw "Fatah" and "Adje" sign the documents and then signed them herself as a witness. Mrs Donald placed a rubber-stamp which gave her name and JP number under her signature on the documents signed on this occasion. The mortgage and Statutory Declaration in evidence do not bear the rubber-stamp. 152 A few days later Mr Pan again asked Mrs Donald to sign some more papers but Mrs Donald was not available to do so. 153 Mrs Donald said in her evidence: I had no reason to suspect that Fatah and Adje were not really Fatah and Adje. They had been introduced to me by Joey by those names. I trusted Joey who had been my employer for a long period of time and also a friend. In my past dealings with Joey nothing arose which indicated to me that he could not be trusted or was dishonest. I was therefore satisfied as to the identity of Fatah and Adje at the time they signed the documents and I signed as witness. 154 Mrs Donald dealt with this subject again in this passage in cross-examination: Q. And just tell us what steps you took to satisfy yourself as to their identity? A. I believed they were who I was told they were by someone I had known and worked for and at that stage respected. And by this question and answer: Q. What I want to suggest to you is that the basis you have told us about was not sufficient for you to certify that you were satisfied about their identity? A. I was satisfied because of my previous relationship with Mr Pan. I had no reason to doubt who he said they were." 155 Cross-examination attempted to establish shortcomings in Mrs Donald's performance which went beyond particulars in the cross-claim. The persons making a declaration did not say that the contents of the declarations were true; the JP Handbook at p 22 states that this is part of the event of making a Statutory Declaration. There are grounds for one or two minor criticisms, but the matter which was significant, and the only matter which if negligent could be causative of loss, was acceptance of the two persons as having the identities claimed for them. 156 In my finding it is very clear that Mrs Donald had and acted on a reasonable basis for accepting that the two persons who signed the documents before her had the identities which it was asserted by Mr Pan that they had, and which by their behaviour they themselves purported to have. Mrs Donald accepted that these two persons had the identities claimed for them on the first occasion on which she met them; they were introduced to her, in a meeting which was partly a business meeting and partly a social meeting, by Mr Pan, whom she had known for about 14 years both in serious business contexts and in pleasant social circumstances where she had every opportunity to form a view about whether he could be relied on as an honest person. Mrs Donald had good reason to trust Mr Pan. It was in no way odd or strange that he should be accompanied by persons with little or no English for whom he had to interpret. 157 In submissions and during cross-examination of Mrs Donald a number of different measures she could have taken to verify or confirm the identities of these persons were suggested to her but her position was that she accepted that the two persons introduced to her as "Fatah" and "Adje" were the persons Mr Pan told her they were and the persons they, by their conduct, impliedly claimed to be. 158 Submissions and cross-examination did not reveal any circumstances which made it unreasonable or inappropriate for Mrs Donald to rely on Mr Pan, having regard to her earlier long knowledge of him. I would point to Mrs Donald's obtaining an introduction from someone whom she knew so well, and over so many years, and had such good reasons to trust as an examplar of reasonable behaviour on the part of a Justice of the Peace. 159 In my opinion there was no substance in the allegation that Mrs Donald had been negligent in accepting that the two persons introduced to her as "Fatah" and "Adje" had the identities which she was told they had. For the later events, in which one or both the same persons were brought back to her by Mr Pan and she again witnessed documents which they signed, her position is even stronger than for the first occasion; in any event nothing which I can regard as a circumstance arousing suspicion or any unusual need for her to make inquiry was put forward by evidence. I regarded the claim that Mrs Donald was negligent as lacking in substance, and at the conclusion of other oral submissions and without calling on her counsel for assistance I dismissed the second cross-claim with costs. The reasons which I have stated show why I did so. 160 My Orders are: Upon the claims of the plaintiffs in the Amended Statement of Claim: (1) Grant to the plaintiffs leave to amend the Statement of Claim (a) so as to add to claim 4 the words "and the sum of the plaintiffs' aggregate loss including the plaintiffs' costs on an indemnity basis of these proceedings." (b) So as to add to claim 5 the words "and the plaintiffs' consequent costs of and incidental to these proceedings." (2) Declare that no money is secured to the first defendant Perpetual Trustees Victoria Limited by Mortgage AB408089E (3) Give judgment for the second and third defendants. Upon the Cross-claim of Perpetual Trustees Victoria Limited (4) Give judgment for the cross-claimant Perpetual Trustees Victoria Limited against the first cross-defendant the Registrar-General of New South Wales for damages to be assessed. (5) Give judgment for the third cross-defendant Stephen Richard Miller. (6) Reserve further consideration of the assessment of damages On the proceedings generally: (7) Reserve all questions of Costs. (8) Appoint 3 September 2007 at 4.15 p.m. before Bryson AJ for directions on the conduct of further consideration. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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