39. Solicitors’ sigh of relief made permanent – Not liable for compensation under TLA s. 118. 

Comment.   Blog 24 dealt with Lanciana v Alderuccio [2019] VSC 198 which held that a solicitor lodging a caveat on behalf of a client was not liable for compensation under the Transfer of Land Act s. 118.  The Court of Appeal confirmed this in Lanciana v Alderuccio [2020] VSCA 152 (12 June 2020). 

The facts and relevant legislation were (for convenience largely copied from Blog 24) –

  • 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to the beneficial interest in both properties, and caveats lodged on behalf of Bloomingdale over both properties were withdrawn.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.
  • Section 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.
  • Moore J held that the solicitors were not “a person” lodging a caveat for the purposes of s. 118. The plaintiff applied for leave to appeal.

The Court of Appeal (Tate, Hargrave and Emerton JJA) refused leave to appeal holding –

  1. The reasoning of Moore J was correct. [10]
  2. Insofar as a caveat is lodged by an agent of a person claiming an interest in land, the agent stood in the shoes of that person. The act of lodging the caveat was the act of the principal. The acts of the respondents in lodging the caveats were the acts of Bloomingdale. [31]
  3. Section 118 was to be read in tandem with s. 89(1). The person “who lodged the caveat” was (s 89(1)) “Any person claiming any estate or interest in the land …”. [33]
  4. Authorities on “reasonable cause” under s. 118 were Edmonds v Donovan (2005) 12 VR 513, [2005] VSCA 27; New Galaxy Investments Pty Ltd v Tomson [2017] NSWCA 153 and (the subject of Blog 9) KB Corporate Pty Ltd v Sayfe [2017] VSC 623 [19] (Mukhtar AsJ). [36]
  5. The fact that ss. 89(1) and 118 used the words “any person” rather than “the caveator” was a function of the fact that both the “claiming” and the “lodging” preceded the “recording” of the caveat in s. 89(2). The opening phrase “[a]ny person lodging” in s. 118 was in the present tense because that was the point in time at which the question of “reasonable cause” was to be assessed, that is, when the person is about to lodge or is in the course of lodging the caveat and the caveat had not yet been recorded. [39]

Philip H. Barton

Owen Dixon Chambers West

21 July 2020

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