By Russell Cocks, Solicitor
Published April 2018, First published in the Law Institute Journal
I have used Donald Rumsfeld’s phrase ‘unknown unknowns’ once before, to describe the obligations of owner-builders, and it seemed appropriate at the time. But perhaps the epitome of ‘unknown unknowns’ is the Notice of Action.
This is a document that the Registrar of Titles registers on a certificate of title if the Registrar is concerned that some inappropriate action has, or might, occur in relation to the certificate of title. The legislative basis for the Notice is said to be s 106(1)(f) Transfer of Land Act which provides that the Registrar ‘may 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’.
Very little is known about these Notices and the Registrar does not appear to have published any guidelines relating to when a Notice will be registered and, perhaps more importantly, when it will be removed. The same can be said for a Registrar’s caveat (formerly known as a Queen’s caveat) authorised under s 106(1)(a)(iii) that authorises such a caveat ‘for the prevention of any fraud or improper dealing’.
The case of Lee Nyong Pty Ltd & Anor v Di Blasi & Anor  VSC 5 considered a Notice of Action in the context of a dispute between parties relating to which party should pay the costs of the proceedings, on what basis those costs should be calculated and whether the Registrar might have a liability in relation to those costs. There had been an allegation made that a withdrawal of caveat that had been recorded on the Register was a forgery and this allegation was apparently the basis for the Registrar’s concern. The possibility of a forged document tainting the Register would justifiably cause the Registrar concern but the case highlights that the consequence of a Notice of Action in practical terms is that ‘all bets are off’.
In the course of the judgment the court stated that ‘A Notice of Action has no statutory force. It is not a creature of statute and simply indicates that the Registrar has concerns about a particular transaction’. The Registrar ‘described a Notice of Action as an “administrative dealing” that allows [the Registrar] to monitor dealings affecting land to ensure that only those dealings which are appropriate are registered’. Further, he stated that such a notice ‘does not prevent the lodgement or registration of any dealings’.
However, it is hard to imagine that a person expecting to obtain registration of ownership or security in a title will proceed in the face of a Notice of Action or Registrar’s caveat. Unfortunately, there does not appear to be any procedure for ascertaining when, if ever, the Registrar will remove a Notice of Action or a Registrar’s caveat. Indeed, the Registrar advised the court that the Notice of Action ‘is removed at a time I consider appropriate’. It is this uncertainty and lack of direction that causes difficulties for practitioners at the coalface seeking to explain to clients, who are generally innocent third parties, that no guidance can be given in relation to when the dispute may be resolved, if ever.
It appears that the Registrar takes the view that a party who needs to lodge a dealing for registration after a Notice of Action or Registrar’s caveat has been registered on title should simply do so and hope that the Notice of Action or Registrar’s caveat will be withdrawn. This is akin to a risk management protocol of crossing your fingers. The Registrar needs to develop guidelines that establish a procedure that allows these innocent third parties to have some guidance as to when the Notice or caveat will be withdrawn and on what terms. If this requires the Registrar to participate in the settlement process and even attend a settlement so that some certainty can be given to incoming registered interests then that should be a cost that the Registrar bears in exercising vigilance over the Register and avoiding claims on the Assurance Fund.
How such scenarios will be handled in the electronic environment is a mystery for another day. Expecting the Registrar to become a party to a PEXA settlement, and pay the PEXA fee, seems like a bridge too far.
- Notice of Action and Registrar’s caveats are mysteries.
- Both are authorised by s 106(1) Transfer of Land Act.
- Guidance should be provided by the Registrar.