A claim for costs against the Registrar of Titles arising from lodgement of a Notice of Action

Lee Nyong Pty Ltd & Anor v Di Blasi & Anor [2018] VSC 5 (15 January 2018) J. Forrest  J. 

But for one novel point this was a standard case of a caveator claiming an equitable interest pursuant to a charge being ordered to pay indemnity costs to a prior registered second mortgagee.  The caveat was voluntarily removed only after the mortgagee had commenced a s. 90(3) application.  The caveator was motivated by alleged fraudulent withdrawal of a previous caveat: if so, his Honour observed, the appropriate action was to notify the police and claim compensation from the Assurance Fund not maintain a position with no chance of success vis a vis mortgagees.

The novel point was that costs were also sought against the Registrar of Titles, the facts relevant to this point being:

• before the second mortgage was lodged for registration the caveator had caveated based on a charge but due, the caveator alleged, to forgery in a notice of withdrawal this caveat had been withdrawn;
• after registration of a second mortgage the caveator re-caveated and the Registrar of Titles lodged a Notice of Action relating to the allegation, based only on the caveator’s assertion, of forgery.  The Notice was purportedly an exercise of power under the Transfer of Land Act s. 106(1)(f) enabling the Registrar to “take any other step necessary to protect the operation, effectiveness and integrity of the Register, including, but not limited to, the making of a notation on a folio of the Register”.  The Registrar stated that the Notice did not prevent the lodgement or registration of any dealings and would be removed when he considered appropriate;
• the Registrar subsequently refused to remove this Notice unless in substance the caveator either consented or failed to enjoin registration of a transfer;
• part of the relief sought in the caveat removal proceeding was that the Registrar withdraw the Notice and pay costs;
• once the caveat was removed the Registrar removed the Notice.

His Honour observed:

1. A Notice of Action had no statutory force. It is not a creature of statute and simply indicates that the Registrar has concerns about a particular transaction.
2. The Registrar argued that he had a discretion to refuse to register dealings where registration may cause detriment to the public, or may result in a claim for indemnity under s. 110(1). The Notice was a reasonable initial response but eventually the principles associated with priority, indefeasibility, and bona fide purchasers should have prevailed.  His Honour had reservations as to whether proper consideration was given to the plaintiffs’ request for the removal of the Notice.
3. However costs would not be ordered against the Registrar: the sole cause of s. 90(3) application was not the Registrar’s Notice but rather the caveator’s failure to remove the second caveat, whereby “this whole debacle would have been avoided”.