1. In Lanciana v Alderuccio  VSCA 152, the Court of Appeal in a joint judgment (Tate, Hargrave and Emerton JJA) considered the circumstances in which it may be appropriate to order that a solicitor pay compensation under section 118 of the Transfer of Land Act 1958 in respect of a caveat lodged on behalf of a client without reasonable cause.
2. The appellants brought a claim against the lawyers for the caveator, rather than the caveator itself, for compensation for losses sustained by reason of the lodgement of the caveat.
3. Section 118 of the Transfer of Land Act, 1958, provides:
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 a court deems just and orders.
4. At the original trial, the Court posed a preliminary question for determination in the proceeding, as follows:
Whether, assuming that the allegations contained in the further amended statement of claim are true, the [respondents] are ‘a person’ lodging a caveat with the Registrar for the purposes of s 118 of the Transfer of Land Act 1958 (Vic), or whether the [applicant] is confined to seeking compensation from the party identified as the caveator in the relevant caveats.
5. The trial judge concluded that the respondents were not a person lodging a caveat with the Registrar for the purposes of s118 of the TLA.
6. The central contest between the parties was whether the words ‘[a]ny person lodging’ in s 118 of the Act bear their literal meaning and give rise to a purely factual question as to who in fact lodged the caveat at issue, as the applicant contends; or whether, as the respondents contend, the words ‘[a]ny person lodging’ in s 118 should be construed in the context of the Act as a whole and s 89 in particular, so that ‘any person lodging’ a caveat is to be interpreted in light of the phrase ‘[a]ny person claiming any estate or interest in land’ in s 89(1).
7. In a joint judgment, the Court of Appeal noted (at paragraph 12) that the Trial Judge had found:
… the critical words in s 118 — ‘[a]ny person lodging’ — naturally invited the question, ‘who lodges the caveat?’. The judge found a clear and unambiguous answer to that question in s 89(1) of the Act: ‘Any person claiming any estate or interest in the land … ’. The judge did not accept the applicant’s submission that the Act should be construed on the premise that ss 89(1) and 118 play independent roles, as this ignored the fact that ‘[a]ny person lodging’ a caveat is a statutory concept which has been a feature of the statutory framework since the Real Property Act 1862. Moreover, the fact that s 89(1) expressly authorises a person to lodge a caveat by ‘his agent’ strengthens the conclusion that an agent who lodges a caveat is not ‘any person’ lodging a caveat in his or her own right; the act of lodging is the act of the principal.
8. The Court of Appeal then set out the arguments of both parties, and (at paragraph 31) concluded:
… s 89(1) … confers a right on a person who claims to have an interest in land to lodge a caveat to protect the asserted interest and to do so either directly or by his or her agent. The right is conferred on the person claiming the interest, whether or not the interest is ultimately established. Insofar as the caveat is lodged by an agent of the person claiming the interest, the agent, according to the well-established principles of the law of agency, stands in the shoes of the person claiming the interest. The act of lodging the caveat is the act of the principal, that is, the person claiming the interest in the land.
9. The Court of Appeal then concluded (at paragraph 32):
… It is clear, therefore, that the respondents lodged the caveats as agents for Bloomingdale. In these circumstances, the acts of the respondents in lodging the caveats were the acts of Bloomingdale and the judge correctly so found in answering the first limb of the preliminary question. Bloomingdale lodged the caveats within the meaning of s 118.
10. Among other matters considered by the Court of Appeal, they concluded:
(At paragraph 33) Accordingly, ‘any person lodging’ a caveat is a statutory concept, not simply a question of fact. The identity of a person ‘lodging’ a caveat is ascertained by reference to the exercise of the entitlement conferred by s 89(1). As the judge held, the answer to the question, ‘who lodged the caveat?’ is provided clearly and unambiguously by s 89(1): ‘Any person claiming any estate or interest in the land … ’.
(At paragraph 34) We also agree with the judge that the proposition, that s 118 involves a factual enquiry about the person who lodged the caveat, proceeds from the false premise that s 89(1) does not provide an answer to the question and fails to appreciate that lodgement involves a statutory concept that can only be understood by reference to the requirements governing eligibility for lodging under the Act.
(At paragraph 35) … the primary task of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of the statute as a whole.
(At paragraph 40) In our view, the judge’s construction accords with the requirement to construe the provisions of a statute in a manner that is consistent with the language and purpose of all of the provisions of the statute. It focusses on the language of ss 89(1) and 118 and how those provisions operate together, having regard to the words chosen by the legislature. It accords with authority emphasising the primacy of the text in statutory construction.
11. It seems relatively clear that lawyers should be advising clients about whether the client has a caveatable interest and to refuse to lodge a caveat on a client’s behalf in circumstances where there is no caveatable interest.
12. However, if the lawyer does lodge a caveat on behalf of a client in circumstances where there is no reasonable basis for doing so, it is the client who is claiming the caveatable interest, not the lawyer, and so it is the client who will be liable to pay any compensation under s 118 of the Transfer of Land Act, 1958.
Hayden Starke Chambers
See the original Melbourne Property Law Blog post here