#7146 - Compensation (Assurance Fund) Problem - Property B

Due to the loss arising by [how it arose], ... may seek to claim from the assurance fund.

What losses may ... claim for?

Such claims may be made where a loss is suffered by:

1. Bringing land under the Torrens system or creation of a folio (TLA s 110(1)(a))

2. A legal practitioner’s failure to disclose a defect in title in a legal practitioner’s certificate (TLA s 110(1)(aa))

3. Amendments to the register: s 110(1)(b)

   • fraud may fall under this

     • if the claimant’s failure to establish a mortgage was unenforceable was due to a sufficiently serious defect in the manner of conducting the proceeding, such defect might constitute an intervening act that severs the chain of causation between registration of the mortgage and the claimant’s loss (obiter in Solak v Registrar of Titles)

       • Alternatively, the defect could arguably constitute “neglect” within the meaning of s110(3)(a) (Solak v Registrar)

4. Error, omission or misdescription in the register: s 110(1)(c)

   • Fraud may fall under this (see notes directly above)

5. The making of a payment on the faith of a recording in the register , causing loss or damage: s 110(1)(d)

6. the loss or destruction of any document lodged at the Titles Office (TLA s 110(e))

7. Mistakes made by the Registrar or his officers: s 110(1)(f)

   • Does not extend to a misdescription of the boundaries of the property (unless by conversion)

8. An exercise of the Registrar’s powers: s 110(1)(g)

Proof of loss

A decision against the claimant under which he/she suffers loss is proof that a loss has occurred; the Registrar will be unable to argue that the loss did not occur simply because perhaps it could have been avoided: Solak v Registrar of Titles.

• The Registrar cannot undo loss by showing in a subsequent proceeding that, as between the Registrar and the plaintiff, the mortgage is unenforceable (Solak v Registrar of Titles)

Claims may not be made where the loss is occasioned by:

1. Breach of trust of any kind (TLA s 109(2)(a))

   • So if ... lost money due to an in personam action for breach of trust is not covered

2. The inclusion of the same land in two or more Crown grants: TLA s 109(2)(b)

3. Misdescription of boundaries, unless the person liable is dead, absconded, bankrupt or has been adjudged unable to pay by a sheriff: TLA s 109(2)(c)

4. Registration of a plan of subdivision, unless the loss is due to an act or omission of the Registrar or any officer after the date of certification: TLA s 109(2)(d)

5. Registration of a subdivision plan where consent was given or a request made without lawful authority on behalf of a person to register the plan: TLA s 109(2)(e)

ARGUABLY cannot claim for loss due to:

1. Any in personam action : the cause of loss is the action itself, not the register

2. Paramount interest: the unregistered interest, not the register, is the cause of the loss

3. Inconsistent legislation: the passing of other legislation, not the register, is the cause of loss

How is a claim brought?

... has the option of:

1. Taking action directly against the Registrar, even if remedies have not been exhausted against the primary wrongdoer: TLA s 110(2)

2. Settling the claim administratively without the need for court proceedings: TLA s 111. However, the Registrar may refuse to settle the claim, necessitating court action: in practice this is very likely.

... should be aware before deciding to proceed that:

1. if judgment is given in favour of the Registrar or he/she discontinues the claim or is nonsuited, he/she will be liable to pay the Registrar’s full costs (unless a court orders otherwise): TLA s 110(5).

2. The Registrar may recover from the person actually responsible for the loss if an amount is paid out of the assurance fund: TLA s 109(3). [So if a family member is responsible they may be liable]

3. The action itself will cost a lot of money and legal costs are not usually recoverable: TLA s 110(3)(b)

What amount can ... claim and for what?

Under TLA s 110(4), the amount that can be claimed is limited to the value of the interest at the time the loss was caused.

1. It is unlikely you can claim for a shortfall between the property value and the amount owing on a mortgage secured to the land

2. Cannot claim for the costs of legal proceedings without consent of the Registrar, except costs awarded against the Registrar where he/she is a party: TLA s 110(3)(b)

   • It is very unlikely costs will be awarded against the Registrar, even where the Registrar is castigated by the court for acting unreasonably in defending the proceeding (see, eg, Solak v Registrar of Titles)

Will any limitations apply to prevent ... claiming?

1. TLA s 110(3)(a) states that no indemnity will be payable if:

   • the claimant, his legal practitioner, conveyancer or agent caused or substantially contributed to the loss by fraud, neglect or wilful default

   • the claimant derived title as a volunteer from a person who or whose legal practitioner, conveyancer or agent caused or substantially contributed to the loss by fraud, neglect or wilful default

• If there is a suggestion of fraud, neglect or wilful default the onus is on the claimant to disprove it (per the section).

• ‘Neglect’ within the meaning of s 110(3)(a) “includes a failure to take reasonable care for one’s...