24. Solicitors breathe a sigh of relief! – Compensation claim under TLA s. 118 – Whether solicitor who lodged caveat liable – Scope of “Any person lodging … any caveat”.

Lanciana v Alderuccio [2019] VSC 198 (28 March 2019), Moore J.

The facts and relevant legislation were –

  • The plaintiff and Bloomingdale Holdings Pty Ltd (Bloomingdale) were equal unitholders in two trusts. The sole shareholder and director of Bloomingdale was Antonio Gangemi.
  • In 2001–2 the trustee of one trust purchased a property and the trustee of the other trust purchased another property.
  • A dispute arose between the plaintiff and Gangemi concerning their business dealings and rights in respect of both properties. The defendants acted as solicitors for Bloomingdale and Gangemi.
  • In 2003 the dispute was settled by an agreement whereby Gangemi’s and Bloomingdale’s interests in both properties would be transferred to the plaintiff or his entities. This transfer to the plaintiff occurred, on which he became solely entitled to the beneficial interest in both properties, and caveats lodged on behalf of Bloomingdale over both properties were withdrawn.
  • However, on 29 March 2005, the defendants as “Alderuccio Solicitors” lodged caveats over both properties on behalf of Bloomingdale as caveator, claiming an equitable estate in fee simple pursuant to a deed of trust dated 25 February 2002 between Bloomingdale and both trustees. The caveats identified “Alderuccio Solicitors” as the address for service of notice and were signed by an “agent being a Current Practitioner under the Legal Practice Act 1996”.
  • The plaintiff alleged that these 2005 caveats caused it loss and damage.
  • The TLA s. 118 provided that –
    “Any person lodging with the Registrar without reasonable cause any caveat under this Act shall be liable to make to any person who sustains damage thereby such compensation as the Court deems just and orders”.
  • The plaintiff sued the defendants alleging that when the 2005 caveats were lodged they knew or ought to have known that Bloomingdale did not have a caveatable interest and could not reasonably have held an honest belief based on reasonable grounds that it had a caveatable interest capable of supporting any caveats.
  • The court heard a preliminary question including whether, assuming the foregoing facts, the defendants were “a person” lodging a caveat for the purposes of s. 118.

His Honour –

1.    Held that the defendants were not such “a person”.  The case contains much statutory analysis going back to the 19th century and reference to cases for this conclusion which it is unnecessary to set out. [5]

2.   Approved the summary of applicable principles under s. 118 in KB Corporate Pty Ltd. v Sayfe and Anor (see Blog No. 9) –

(a)  the applicant must show the caveator had no caveatable interest;

(b)  the applicant must show the caveator did not have an honest belief based on reasonable grounds that a caveatable interest existed;

(c)  the test is partially subjective and partially objective;

(d)  the subjective component requires an examination of the caveator’s belief and whether it was honestly held;

(e)  it is objective in that it requires that the belief is held on reasonable grounds;

(f)   it is a fallacy is to think that the absence of a caveatable interest at the time when the caveat was lodged establishes that the caveator did not have a reasonable basis for a belief that it was entitled to lodge a caveat; and

(g)  legal advice that the caveator was entitled to lodge the caveat may be of considerable significance in determining whether the claimant has established that the caveat was lodged without reasonable cause, but the content and accuracy of the legal advice must be evaluated with all other relevant circumstances. [80]

3.    Held that “Any person” in s. 118 –

(a)  was capable of covering someone who lodged a caveat without any authority. [82]

(b)  may cover: someone named as executor who had not yet taken out probate where the unregistered interest which could the subject of a caveat was part of the estate and was threatened, or; someone seeking a guardianship order in respect of an incapable person who had such an unregistered interest. [64], [82]

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