J A Westaway and Son P/L v Registrar General and Ors [1996] NSWSC 413 (6 September 1996)

J A WESTAWAY & SON PTY LTD V REGISTRAR GENERAL & ORS

2499/94

Thursday 15 August 1996

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG J

JUDGMENT

HIS HONOUR: These proceedings concern five parties and their involvement with a property at 5 Corella Street, Harbord. The pleadings are rather convoluted, but essentially the issues are as follows.

The late Con Maglaras and his wife Maire (the fourth defendant) had become registered proprietors of this land as joint tenants in May 1979 subject to a registered mortgage. By building contract (Housing Industry Association Edition 6) made 9 September 1985, the plaintiff and Mr and Mrs Maglaras agreed that the plaintiff would do substantial building work on the property. The contract contained what is now a usual clause giving the builder a charge over the land (clause 31 of p 28 of the agreed bundle of documents). On 9 October 1986, the plaintiff lodged caveat W558676 to protect that charge.

On 29 December 1988, a decree absolute was made dissolving the marriage of Mr and Mrs Maglaras.

In 1987, the third defendant, Andriana Armata, says that she became a de facto wife of Mr Maglaras. Some of the parties deny this allegation, but it appears from the evidence, which I will discuss later, that it is more likely than not that she was as she claimed.

Con Maglaras died on 21 November 1992 at 10 am. John Maglaras, a son of Con Maglaras, has commenced proceedings in the Probate Division No 104053 of 1995 in respect of the estate, but I do not consider that I need delve into those proceedings. The second defendant in these proceedings is actually called "The Estate of Constantine Maglaras", but needless to say, no-one appeared separately for that so-called entity before me. The third defendant was granted Letters of Administration of Con Maglaras' estate on 8 February 1994.

The fifth defendant is a solicitor, Mr Douglas Knaggs often called Doug Nash, who from time to time acted for Con Maglaras or the fourth defendant (the former wife) or the third defendant (the de facto wife). The only party I have not so far mentioned is the first defendant, who is the Registrar General responsible for the Torrens System Compensation Scheme.

The uncontradicted evidence shows that as at 14 September 1989, the title to the Harbord property was as follows:-

Registered Proprietors Con and Maire Maglaras

Mortgages & Charges Mortgage R194002 to National

Mutual Royal Savings Bank

Mortgage R586843 to National

Australia Bank.

Caveat W558676 by the plaintiff

(lodged 9 October 1986 noted as

lapsed 21 September 1989).

Withdrawal of Caveat Y481934

lodged 7 July 1989.

Caveat Y481935 by the plaintiff

lodged 6 July 1989.

Transfer Y152183 by Con and

Maire Maglaras to Con Maglaras

alleged to be "by order of

Family Court of Australia"

lodged 30 January 1989 consented

to by National Mutual Royal Bank

relodged 16 May 1989 and 2 June

1989. This document is referred

to in these reasons as Transfer 79.

The evidence then shows that, after that date, dealings were lodged against the title as follows:- Transfer Y614190 Con Maglaras to

Andriana Armata of a one-half

undivided share as tenant in

common (the consideration is

shown as $95,000) lodged 1989.

This dealing was registered on 21

May 1990. This document is

referred to in these reasons as

Transfer 90.

Caveat by plaintiff Y684098 re-

lodged 14 June 1990 registered

27 June 1990.

Caveat E148017 by fourth defendant

registered 20 February 1991.

Caveat I662214 by third defendant

claiming a one-half undivided

share other than the share

already registered in her name.

Transfer U230380 executed 28

February 1990 lodged 3 May 1994

but not registered. This document

is referred to in these reasons

as Transfer 85.

Caveat U335650 by the plaintiff

lodged 8 June 1994.

The plaintiff claims that it withdrew Caveat W558676 because of fraud engineered by Mr Knaggs. The statement of claim alleges that the plaintiff received a letter bearing date 12 August 1989 from Con Maglaras which said that there was a consent order of the Family Court of Australia which transferred the fourth defendant's share in the property to him. The plaintiff obtained legal advice and then consented to remove the caveat and replace it with a new caveat. The Registrar General registered the transfer from Con Maglaras and the fourth defendant to Con Maglaras on 6 July 1989 without lapsing caveat W558676.

Transfer 90 was lodged sometime in 1989. The Registrar General issued a lapsing notice under s 74J of the Real Property Act in respect of that caveat. Con Maglaras made a statutory declaration declaring that he had served the lapsing notice on the plaintiff on 24 August 1989. The evidence of Mr Zuur, the plaintiff's solicitor, was that the relevant letter was not received on 24 August, but rather on 7 September 1989. (As appears later, this is disputed). The plaintiff put that the statutory declaration of Con Maglaras was the factor which caused the Registrar General to lapse its caveat on 21 September 1989. The plaintiff says that this was fraud.

The plaintiff then says that if its equitable charge was lost because of Transfer 90 becoming registered, then it lost that equitable charge through the fraud. This particular point will not detain me long because Transfer 90 was not in fact registered until 21 May 1990. Any lapsing of the caveat would have taken place by 28 September 1989, even if the notice was not served until 7 September 1989 as claimed by the plaintiff. Accordingly, the deeper aspects of the case have to be examined.

I should add, before dealing with the facts in detail, that no party alleges that any document was forged. Accordingly, one can safely examine the title as it appears from the records kept by the Land Titles Office.

There is no doubt that the plaintiff did building work on the property. Con Maglaras thought that the work was substandard and that he should not pay for it. The evidence convinces me that the state of the property was such that anyone who visited it would immediately see that building work had been done on the premises which was only partly completed. The plaintiff issued a statement of claim out of the District Court on 24 March 1986 claiming breach of contract. Eventually this claim was heard by the District Court and on 22 November 1994, Acting Judge Kennedy-Smith found a verdict for the plaintiff against the estate of Con Maglaras represented by the present third and fourth defendants for $123,118 plus costs. It is quite clear that unless its charge is available against the property, there is little likelihood of the plaintiff receiving any part of its verdict.

With this background, I now turn to the pleadings. The final version of the statement of claim was filed on 14 February 1996. It alleges the building agreement, the debt, the charge given by the building agreement to secure the debt and the registration of a caveat to protect the charge. It then makes the following allegations (I will summarize the allegations by deploying the actual paragraph number used in the pleading: "the deceased", of course, means "Con Maglaras"):

10. In about August 1987 the fourth defendant and the

deceased entered into a deed under s 87 of the

Family Law Act.

11. After October 1987 the third defendant was a

director and shareholder of Maglaras Holdings

Pty Ltd ("the Company").

12. The fifth defendant was a director of the Company.

13. The deceased and the third defendant opened an

account in the name of the Company with the

ANZ Bank and entered into personal guarantees

to guarantee the debts of the Company. The

guarantee on the third defendant's part was

secured by a charge over her real property at

Coogee.

14. It was a term of the deed that the fourth defendant

transfer all her right title and interest in

Corella Street, Harbord, to the deceased.

15. The assent of the fourth defendant to that deed

was procured by fraud of the deceased.

16. Alternatively it was procured by undue

influence of the deceased.

17. The fifth defendant had an intimate knowledge

of the affairs of the Company.

18. In June 1988 the deceased, through his agent

the fifth defendant, procured the signature of

the fourth defendant to a transfer of her

interest in the Corella Street Harbord land

to the deceased.

20. In December 1988 the third defendant directed

the ANZ Bank to pay to the Company the proceeds

of sale of her Coogee property amounting to

about $113,000 in reduction of the Company's

debts.

21. In May 1989 the fifth defendant lodged Transfer

79 from the fourth defendant to the deceased

and an application for preparation of lapsing

notice of the plaintiff's caveat.

23. Notwithstanding the notice, the Registrar

General did not lapse the caveat.

24. On about 6 July 1989 the plaintiff lodged a

fresh caveat Y481935.

25. On 7 September 1989 the plaintiff received

a letter from the deceased representing that

the Family Court had made a consent order

transferring the fourth defendant's half share

in the land and serving a lapsing notice.

26. The representation was fraudulent.

27. On 13 September 1989 the fifth defendant lodged

a statutory declaration by the deceased

declaring that he had served a lapsing notice

on 24 August 1989.

28. The declaration was fraudulent.

29. The fraud was made to procure the lapsing of

the plaintiff's caveat.

30. The Registrar General recorded that 13 September

1989 was the last date on which a person could

apply to extend the caveat.

31. On 14 September 1989 the fifth defendant, as agent

for the deceased and the third defendant, caused

to be stamped the document purporting to be a

transfer of half the deceased's interest in the

Corella Street Harbord land to the third defendant

which was later lodged for registration and

given Dealing No Y614190 (ie Transfer 90).

32. In so far as it was expressed to be for valuable

consideration, Transfer 90 was fraudulent.

33. By reason of the lodgment of Transfer 90 the

plaintiff's interest under its original caveat

or any other caveat was defeated as to the extent

of the alleged interest of the third defendant.

34. The deceased died on 21 November 1992.

35. After the deceased's death, the fifth defendant,

as agent for the third defendant, lodged Transfer

85 for registration purporting to be a

transfer of the deceased's remaining one-half

interest to the third defendant.

36. No consideration was paid for Transfer 85.

37. By reason of the frauds alleged, the plaintiff

is liable to have its interest in the land

defeated.

38. The third defendant took whatever interest she

has in the land with notice of the plaintiff's

charge. Consequentially the plaintiff is

entitled to have dealings cancelled so as its

charge prevails, or alternatively, to have a

declaration that it has lost its interest in

the land by reason of fraud and have compensation

paid to it pursuant to s 126 of the Real Property

Act.

The defences of the third and fourth defendants are essentially non-admissions and denials. With a few exceptions, the defence of the fifth defendant is similar. The Registrar General again mainly says that he cannot know or admit most of what is in the statement of claim other than what is in his own Register. It is thus unnecessary to look at the terms of the defences.

The fourth defendant filed a cross claim against the Registrar General, the third defendant and the fifth defendant. She alleges that her assent to the transfer of her interest in 5 Corella Street, Harbord, was obtained through duress or fraud and that had the document not been signed and registered, as she was a joint tenant with Con Maglaras she would have obtained the whole property after his death. Accordingly, she seeks damages out of the assurance fund; alternatively setting aside dealings, an occupation fee against the third defendant, and damages against the fifth defendant.

The case commenced before me on 12 February 1996 and mainly as a result of long drawn-out cross examinations and disputes as to evidence, the evidence was not completed until just after 3 pm on the seventh hearing day, which was 9 April 1996. Counsel then addressed orally and some supplemented what they said in writing.

Mr Radojev and Mr Duncan of counsel appeared for the plaintiff. Mr Radojev cross examined, Mr Duncan made the submissions. Mr Duncan submitted that if the plaintiff can demonstrate that the third defendant was not a bona fide purchaser for value without notice when she took her interest, the plaintiff could have an order that the transfer be reversed. Mr Duncan put that the third defendant was not a purchaser for value, she was not bona fide and she always had notice.

This calls for an examination of the general facts.

Mr Maglaras and, to a degree the fourth defendant, were in the habit of acquiring run-down food shops, working them up and then reselling at a profit. Mr Maglaras may have had other business interests as well. The fifth defendant, for some of the time covered by the evidence in the instant case, was suspended from acting as a solicitor. He kept an office at 1/176 Liverpool Street, Darlinghurst. During this time he also acted as the manager of Mr Maglaras' companies. For a short time he stayed at Mr Maglaras' Harbord house as a boarder.

Maire Maglaras says that in the middle of 1987 the deceased rang her and said, "I'm in trouble and you are the only one that can help me. I found this solicitor, Doug Nash, who has told me that if you sign everything over to me, in six weeks I can then sign everything back over to you but in that six weeks I will declare myself bankrupt. In this way I save the businesses and the house and they cannot touch you or the kids." Maire Maglaras said she would think about it. However, the deceased continually told her that if she did not do as he had proposed, "We will both lose the house and everything we have worked for and the kids will be out on the street." Maire Maglaras then saw a solicitor with the firm of Staunton & Thompson and told him that she was prepared to go along with the proposal and the solicitor said that he would carry out the proposal if that was what she really wanted. She says that sometime afterwards she was told, "If you did not sign everything over to me, I will shoot you your solicitor and the kids." Maire Maglaras says that up to this point in time she was unsure as to whether she would go through with the arrangement but then gave the solicitor a definite instruction that she was willing to sign the deed her former husband was proposing. She says that in November 1987 she signed the deed which was to be a deed for the purpose of s 87(5) of the Family Law Act that she would transfer her interest in 5 Corella Street, Harbord to Con Maglaras, he would assume full responsibility for the mortgage, she would transfer to him the business at 47 Erskine Street Sydney and he would transfer to her a motor car. He also promised to keep her indemnified in respect of the District Court proceedings instituted by the plaintiff.

Pursuant to this deed, a transfer was drawn up and was signed by Maire Maglaras in the presence of her solicitor. Her solicitor, however, retained the transfer until his costs had been paid.

She signed the deed about 26 August 1987. She spoke to Con Maglaras in October 1987 when he told her that he was not going to transfer any property back to her. Despite this reneging by Con Maglaras, his former wife then entered into an agreement with her former husband that they would together renovate and work up another shop. Mrs Maglaras agreed that a previous affidavit made by her on 20 June 1994, a copy of which is exhibit TX80, although covering most of the same events as the affidavit read by her in the present proceedings, made no mention at all of any threat issued to her, her children or her solicitors. Furthermore, she says that she told her then solicitor, Mr Holmwood of this threat, but Mr Holmwood was not called as a witness. In view of these discrepancies and the general angry way in which Mrs Maglaras gave evidence, I could not be comfortably satisfied that the deed was signed by her under any duress or misrepresentation. Again, if this extraordinary story of the husband transferring back all the property to his wife after he became bankrupt was told to her solicitor as Mrs Maglaras would have me believe, it is rather strange that the solicitor did not give her advice to the effect that it would not be possible for the husband to do what he was promising. However it may be as Mr Duncan suggested in his closing address that Mrs Maglaras was confused and it was she who was to be the temporary warehouse of the property.

Accordingly, I must proceed on the basis that the fourth defendant did agree in accordance with the deed approved by the Family Court under s 87 of the Family Law Act to transfer half the Harbord house to her husband in consideration of the benefits she was to get under that deed.

However, I still need to deal with the two documents which Mrs Maglaras signed. The first of these is Transfer 79. This was signed by Mrs Maglaras in the presence of her then partner, Lynette Brayshaw.

Mrs Maglaras says that the deceased owned a business in Summer Hill and in 1988 he offered her the management of this business, a fish and chip shop. Lynette Brayshaw arranged some finance and the two ladies went into partnership. The agreement was that Ms Brayshaw and the fourth defendant would build up the business and then sell it and the ladies would share equally in a 50 per cent share of the profit from the sale and the deceased would take the other 50 per cent. Mrs Maglaras says that at the time Mr Knaggs was preparing documents in respect of the fish and chip shop. He did not explain documents and any transfer she may have signed at the time was signed in the belief that she was signing a document in connection with the fish and chip shop. She never ever intended to sign any transfer of the Harbord home. However, in cross examination by Mr Knaggs, Mrs Maglaras said she did sign a transfer and she knew it was still in her solicitor's office because Con Maglaras had not paid her solicitor's bill. She denied that she signed the second transfer under a misapprehension that it was a document to do with the fish and chip shop at Summer Hill. She said (T212), "I'm saying I don't remember signing this paper that you are giving me. I signed a lot of papers with you during the business at Summer Hill, where you used to rush in and say `Sign this' and then rush out again."

Mr Knaggs says that he said to Mrs Maglaras at her shop in Summer Hill, "Con has asked me to get you to sign a Real Property transfer of your half share in Corella Street following the Family Law agreement between you." He says that Mrs Maglaras simply replied, "I think I remember signing one of these before, but I don't know where it is now. I'll sign another one." She then signed the transfer in the presence of Lynette Brayshaw and Mr Knaggs.

It seems to me in all this I should accept Mr Knaggs' evidence.

Both Mr Fotis for Mrs Maglaras and Mr Radojev cross examined Mr Knaggs about Transfer 79 and its preparation, Mr Radojev's cross examination being the more detailed. Mr Radojev put to Mr Knaggs that the document contained some unusual features. First, the lodgment box was filled in by putting the address of Con Maglaras as "6" (not 5) Corella Street Harbord 2096 and then a telephone number 387 6016. Mr Knaggs said he could not remember whose telephone number it was (other evidence showed that that telephone number belonged to Ms Armata's mother (T85)). Mr Knaggs was asked about the form of the document, see T362 and following. He says (T363 and following) that he first obtained the transfer from Mr Maglaras and then went to Summer Hill and his recollection is that Con Maglaras was not with Mr Knaggs when the latter called at Summer Hill. He cannot remember whether there were any signatures on the document at that stage, or whether Ms Armata's signature as witness to Mr Maglaras' signature was on the document. He is sure, however, that Mrs Maglaras and Lynette Brayshaw both signed in Summer Hill.

Mr Knaggs was cross examined about some hatching out on the document, but as this hatching was initialled by Mrs Maglaras it matters very little. However, in one of the top boxes of the document the words "The interest of the transferee as joint tenants" has been taken out and the word "Whole" written in in handwriting. There does not appear to be Mrs Maglaras' initials against that alteration. Again, after the words "MAIRE MAGLARAS of 2/120 Warriewood Road Warriewood Shopkeeper" there have been typed in the words "and Constantinos MAGLARAS of 5 Corella Street HARBORD Shopkeeper." I would conclude just looking at the document that the words "and Constantinos MAGLARAS ... Shopkeeper" were typed in the document after it was initially created, but it is impossible to say whether that was before or after Mrs Maglaras signed it.

Mr Radojev, however, did establish that whatever else be the status of the document, Ms Brayshaw never witnessed Con Maglaras' signature. The signature of Con Maglaras is on the document twice, once as one of the transferors and the other as a transferee. The second is witnessed by Ms Armata. The first purports to be witnessed by Ms Brayshaw and it is completely clear that Mr Maglaras never signed the document in front of Ms Brayshaw.

Accordingly it is put that the document should not have been registered and was a fraud on the Registrar General to have the document registered with the false attestation of Con Maglaras' signature as transferor by Ms Brayshaw.

I do not consider that even if this were the case (and I must confess that it appears more likely than not) the registration of the document would be able to be reversed.

The first reason for this is that Con Maglaras obviously assented to the document in its final form and his signature was duly attested once by Ms Armata. There was no need for Ms Armata to sign the document twice as a witness, as long as she had certified that she had seen Mr Maglaras sign and it would appear that she did so. The second reason is that even if the document were altered, the whole intent was to vest the aliquot share held in the property by Mrs Maglaras into Mr Maglaras' name so that he would hold the whole property. This could have been done by Mrs Maglaras transferring her aliquot share as joint tenant to Con Maglaras, or it could have been done by Con and Maire Maglaras transferring their total interest to Con Maglaras. In either way, the intent would have been carried out to vest the whole of the fee simple in Con Maglaras.

It is quite clear that there is no personal equity to deregister a dealing merely because an irregular document has been registered: Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722, 739. Indeed, even the bare fact that a party has not assented to a transaction is insufficient: Vassos v State Bank of South Australia [1993] VicRp 74; [1993] 2 VR 316. There must either be the right of a person to apply in equity for relief or an action at common law for deceit or something similar: Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202, 222-3. As in the instant case, Maire Maglaras intended to bring about the result which the transfer secured, ie to vest the whole of the interest in 5 Corella Street Harbord in Con Maglaras, there is no warrant for her to complain that the transaction was affected by some irregular method.

Thus, despite the fact that the transfer may have been in order to get the title in Con Maglaras' name by by-passing the lien of Messrs Staunton & Thompson over the first transfer, and despite any irregularities there may have been or alterations made after Mrs Maglaras signed the transfer, in my view it was effective to vest in Con Maglaras the whole fee simple.

I now pass to Transfer 90. This document is a transfer from Con Maglaras to Andriana Armata of an undivided one-half share as tenant-in-common for a consideration of $95,000. As I have said earlier, the document was lodged for registration in 1989 and registered on 21 May 1990. It is dated under the signature of Con Maglaras 11 September 1989.

So far as Transfer 90 is concerned, both Con Maglaras' signature and Ms Armata's signature are witnessed by Mr Knaggs under his more recent name of Douglas Nash.

Mr Radojev cross examined Mr Knaggs and established that Mr Maglaras was actually in Condobolin on 11 September 1989. I accept that the transfer was not signed by Mr Maglaras in Mr Knaggs' presence on that day. Mr Radojev says that the significance of this was that Transfer 90 was all part of a scheme which was devised by Mr Knaggs. Mr Knaggs knew that there had been service on the plaintiff of a notice under s 74J to lapse its caveat. He knew that a statutory declaration had been lodged stating that the service of the lapsing notice had taken place on 24 August 1989 and that accordingly, any court order had to be lodged with the Registrar General before 13 September 1989. He had the transfer ready to be stamped and indeed it was stamped on 14 September 1989 and shortly after that lodged with the Registrar General. The date of lodgment of Transfer 90 is unclear.

Mr Radojev also put that Mr Knaggs knew that he had to hurry because the Registrar General only allowed two months to serve a lapsing notice which was to expire on 24 August and Mr Knaggs had signed on behalf of Mr Maglaras a request to the Registrar General on 7 September 1989 asking for an extension of filing of the appropriate statutory declaration to 12 September because Mr Maglaras was in Condobolin. Accordingly, Mr Knaggs had proceeded on behalf of Mr Maglaras in such a way as to lodge Transfer 90 immediately after the plaintiff's caveat had expired. Caveat W558676 lapsed on 21 September 1989. However, it will be remembered that because it was thought that that caveat had been withdrawn by Dealing Y481934 it was replaced by Caveat Y481935 on 6 July 1989. The Registrar General currently has a practice of "registering" caveats which I will consider in detail later. This caveat never became registered. There is no indication as to why Dealing Y481935 was not registered before 20 September, presumably it was because there was an existing caveat covering the same ground. On the latter day, there was a requisition made that the caveat no longer named the right registered proprietor as Con Maglaras was now the registered proprietor of the entire estate.

The prohibition in s 74H(4) is against the Registrar General from recording in the Register a dealing contrary to a caveat lodged under s 74F. Whilst the Registrar General has under s 74G a duty to record the caveat if he is satisfied that it is proper to do so, no particular magic is worked by the recording or registering of the caveat: it is the lodgment which is the significant thing. Under s 74 O, a second caveat should not be lodged after a caveat has lapsed or been withdrawn following a s 74J notice. However, that section has no application in the instant case because the Caveat Y481935 was lodged before the earlier caveat lapsed, or indeed, before the earlier notice was given.

The Registrar General's minute paper which is on page 83 of the agreed bundle, suggests that what happened was that the Registrar General took the view that when Caveat 481935 was uplifted to deal with the requisition that had been made on 20 September, it lost its priority and accordingly was not an impediment to the registration of Transfer 90.

It would seem that Caveat Y481935 was uplifted after 20 September for the purpose of amending the registered proprietors but was not relodged. The Registrar General appears to have treated it as having been withdrawn. The Land Titles Office standard form of requisition makes it clear that a document will be rejected unless it is uplifted and relodged with the requisition satisfied within two months of the making of the requisitions.

Section 36(1B) of the Real Property Act provides that a caveat is lodged only when the Registrar General has allotted it a distinctive reference under s 36(1A). That distinctive reference was allotted this document in the instant case. Section 36(6) provides that:

"A dealing that is lodged in registrable form

and is subsequently uplifted shall be deemed

not to be in registrable form until relodged

in the prescribed manner and in registrable

form."

However, a caveat never has to be in registrable form because it is never registered. As Isaacs, J said in Barry v Heider [1914] HCA 79; (1914) 19 CLR 197 at 219, "caveats are lodged, not registered." The lodgment took place at the point in time where the dealing was given the distinctive number Y481935. As from that moment it prevented the registration of any other dealing. Was the caveat then withdrawn by the action of uplifting it and not relodging it? Section 74M deals with withdrawals of caveats. There is a prescribed form of withdrawal of caveat, but the Act does not indicate that that form must be used.

It seems to me that if a caveat is uplifted in September 1989 and then is not relodged after a point of time the Registrar General would be entitled to regard a dealing as having been withdrawn. He may consider it prudent before taking that step to ask the question, but the fact that he has not asked the question does not, to my mind, mean that he would be unjustified in so acting.

Accordingly, the Registrar General might have been justified as at the date when he registered Transfer 90 to have assumed that the dealing was withdrawn. Unfortunately for him, he did not do so. Document 91 in the bundle is a computer folio search as at 5 June 1990. That shows that there were unregistered dealings being Caveats Y481935 and Y684098. I should add that Y684098 is another caveat which was lodged by the plaintiff, it would seem, sometime in October 1989 and then relodged on 14 June 1990.

Accordingly, at the date when Transfer 90 was registered, the title was still affected by a caveat which had been lodged prohibiting the registration of that dealing. The Registrar General has thus not complied with his statutory duty under s 74H(4) and any loss which the plaintiff has suffered through this registration can be dealt with under s 126 of the Act.

Another aspect of Transfer 90 which must be considered is that it is said to be in consideration of the payment of $95,000. It is clear that no such sum was ever paid by Ms Armata. However, it is also clear that either Mr Con Maglaras or his company obtained the benefit of at least $95,000 because of the use by Ms Armata of her property at Coogee for the benefit of Mr Maglaras' interests. Mr Radojev says that the property was actually used for the benefit of a company of which Ms Armata was a co-director and in which she had an equity so that the benefit was to the company and not to Con Maglaras.

It is thus necessary to trace what happened to that Coogee property.

The diary of the ANZ Bank Manager which was in evidence at p 195 of the agreed bundle, records this entry (which I have edited) for 1 October 1987:

"Con Maglaras called with Adriana Armatis to

finalise opening the account of Maglaras

Holdings Pty Limited.

...

In the circumstances, took a guarantee from

Maglaras and Armatis to Maglaras Holdings

supported by an S148 against the Abbott Street

Coogee property the extended value of

$93,200. ..."

The note on 10 October 1987 is that "Con Maglaras and Andrea Armata called today to executed an unlimited guarantee in favour of Maglaras Holdings Pty Ltd ...".

Ms Armata gave evidence that in mid-1988, Con Maglaras said to her, "My bank is going to take over my house at Harbord. ... If you put up your house for sale and give me the proceeds I will later on transfer my house to you." Ms Armata said that she would do this and thereupon arranged to auction her Coogee property which was unencumbered. She said that when the property was sold she retained $20,000, but gave all the rest to the ANZ Bank at Wynyard which she called "Con Maglaras' bank". She thought that the total proceeds of sale were about $190,000 nett.

Mr Devoy who was then the manager of the ANZ Bank at 8 Bridge Street Sydney says that he had control of the account of Maglaras Holdings Pty Ltd between 1987 and 1989. He can recall in December 1988 Andriana Armata was present with Con Maglaras in his office. She was in tears and said, "I'm upset about selling my house." Con Maglaras said, "I'm looking after Andrea, I'm transferring my house at Harbord to her."

The evidence was a little fuzzy as to whether it was $170,000 that was paid to the ANZ Bank on completion or whether this is the total of several amounts. The bank's records (agreed bundle p 204) show that settlement was effected on 21 December 1988 and the bank received $11,295.85. Ms Armata suggested when tackled with this that there were other moneys which she had advanced to Con Maglaras over the time she was living with him. She said that things were not done formally between them, that she had never insisted that the Harbord house was now hers because she had given her house up to Con Maglaras, but Con Maglaras had always assured her that because she had given up her house the Harbord house was hers.

It is clear from her own evidence that Ms Armata was a director of Maglaras Holdings from some time about September 1987 (T92). On 1 October 1987 she, together with Con Maglaras gave a guarantee to the bank for the debts of Maglaras Holdings Pty Ltd. She says that she thought this was a guarantee for the house, but she also said that she had a few doubts about being involved in the guarantee transaction and the sale of her Coogee house, "but when someone reassures you you just trust that person and when you are going to build a future with that person you trust that person what he tells you is true."

She said at T104-105 that she did not realize that she was a director of Maglaras Holdings. She was told by Con Maglaras that the company needed a secretary and said in a passage which really must be set out in full that Con Maglaras said to her, "A company always needs a secretary and it is just like having a dummy there doing nothing."

I think it is probably fairly right that Ms Armata put her future in Con Maglaras' hands and that she trusted him and agreed that she would sell her property at Coogee and make available for his use the proceeds. I also accept that she was told by Con Maglaras that the Harbord house would be hers because of what she had done with her Coogee property. However, there was never any formal recording of this transaction and there was certainly no legal obligation entered into by Con Maglaras. It may be that Con Maglaras would have been bound in conscience to atone for any detriment that Ms Armata may have suffered in going along with his proposal, but there was certainly nothing by way of even an equitable assignment of 5 Corella Street Harbord.

However, I do not accept Ms Armata's evidence that she was ignorant about the claim that the plaintiff had in respect of its building work. Ms Armata was living in the house at Harbord and she would have known because it is obvious to anybody that the building work was unfinished. She was living with Con Maglaras and it is very difficult to accept, and I do not accept, that she was ignorant of the disputes he was having with the building company. It may be that she left the actual arguments to Con Maglaras, but she would have been aware of them.

She endeavoured to say before me that she did not know anything about the District Court proceedings until after Con Maglaras' death and she had to swear an affidavit in the probate proceedings. She says that after swearing her affidavit of 10 September 1993 in those proceedings, Mr Knaggs said to her, "Westaways is a building company who Con has been having a fight with over home renovations. They have a caveat on the house and we will have to give them notice to get it off ...". This is the first she says that she knew about the plaintiff's claim

This could not be true.

At T82, Ms Armata acknowledged that in October 1990 she had received a piece of mail addressed to Con Maglaras about the dispute with the plaintiff and had opened it and telephoned Mr Knaggs at Mr Maglaras' suggestion. She actually read Mr Knaggs the letter. It is difficult for her to say that she did not have some notice of the litigation before Con Maglaras' death though she continued to assert that that was the case. It may be, however, that the detail did not impress itself on her mind. She was cross examined by Mr Radojev at T143 as to the obvious unfinished state of the house at Corella Street, Harbord when she was living there. She said that Con Maglaras never discussed it very much. He just said that it was a matter that he would like to deal with, and that whenever she tried to open up a conversation about the matter, he cut her off.

When Con Maglaras died, documents, which were probably prepared by Mr Knaggs, show that Mr Knaggs filed in the District Court proceedings brought by the present plaintiff an affidavit made by him on 11 December 1992. That affidavit said that after Con Maglaras' death, a lot of effort was put into seeking a substitute director of Maglaras Holdings Pty Ltd and it was only that day that Catrina Armata, Andriana Armata's sister was appointed. However, that affidavit also attaches a notice of assignment dated the same day as Con Maglaras' death, 21 November 1992, signed by Mr Knaggs as his attorney, purporting to assign the debt or chose in action allegedly due by the plaintiff to Maglaras Holdings Pty Ltd and on 11 December 1992 that company's seal was affixed by order of Andriana Armata with her sister Catrina signing as secretary. On 17 December 1992 Andriana Armata swore an affidavit in the District Court proceedings which has become exhibit PX76 in the present case. That affidavit contained annexures which set out minutes of meetings of directors of Maglaras Holdings Pty Ltd in December 1992 authorising Andriana Armata to apply to the court to amend the cross claim in the District Court proceedings.

I think probably in general it is true to say that Con Maglaras was the controlling figure and that Ms Armata contributed her money but had little say in what was going on. However, she is not an unintelligent woman and I consider that she would have had knowledge before Con Maglaras' death that there was a building dispute with the plaintiff. I cannot see anything in the material, however, to show that she would have known that there was an equitable charge.

It is abundantly clear accordingly from her own documents that by December 1992 Ms Armata had put herself in a position where she knew that there was litigation between the plaintiff and Con Maglaras which involved the building work at 5 Corella Street Harbord. She knew that there was a claim being made by the builder against Con Maglaras and she knew that there was a cross claim. It may well be that she left the details to Mr Knaggs and that she was prepared to sign whatever pieces of paper Mr Knaggs put in front of her, but those pieces of paper would have alerted anybody to that particular situation.

In the affidavit of assets and liabilities sworn by Ms Armata on 20 January 1993, a copy of which became PX74 in these proceedings, she listed as a contingent liability the balance claimed under a building contract by the plaintiff which she estimated at $100,000. Accordingly, she must have known by January 1993 of the claim.

She says, however, she did not know about the caveat and the plaintiff's claim to an equitable charge until later in 1993.

The significance of this is that Ms Armata swore on 10 September 1993 in the probate proceedings that in early 1990 Con Maglaras agreed to transfer to her his half share in the property "As settlement of an unsecured loan which I had made to him and his business Maglaras Shop Fittings; in full discharge of that loan." She then says a transfer was drawn up but she was aware that the transfer would not be able to be registered because of the refusal of the ANZ Bank which had taken over the obligations of the Royal Bank to produce the certificate of title. She asked Con Maglaras on many occasions to hand her back the transfer and he often said, "Don't worry, I will fix it up" or "What's the hurry we can't register it anyway at the moment."

She says that somewhere round about April 1993 she was straightening out the bedroom cupboard in the bedroom she shared with Con Maglaras at 5 Corella Street Harbord when she found the transfer because it fell onto the floor. She said it not only had been signed by Con Maglaras but it had also been stamped. It is dated 28 February 1990. This is Transfer 85 which was lodged as U230380 on 3 May 1994, but has not yet been registered. There is a Stamp Duties Office stamp on the document marked "Office of State Revenue (NSW Treasury) 1990/91 Stamp duty $1815-00 Chief Commissioner". There was no evidence as to when that stamp was put on the document. There are also two stamps marked "1990/91 Office of State Revenue Alteration noted" on the document. The document appears to have been witnessed by one S Casben 176 Liverpool Street Darlinghurst so far as Mr Maglaras' signature is concerned, and by Mr Nash so far as Ms Armata's signature is concerned.

It will not have gone unnoticed that what Ms Armata was saying was that the property at Harbord or rather the second half of the property in Harbord was being transferred to her for reasons other than the giving up by her of her Coogee home.

When cross examined about the amount paid to the bank, Ms Armata tended to agree that it might have been that she paid only the amount in the bank records and in addition, she had given Mr Maglaras various sums of money totalling about $170,000 or $190,000.

The inconsistency in accounts and the lack of corroborative detail in the contemporaneous records make it difficult to accept Ms Armata's evidence.

I have little doubt that somewhere between the $112,950 which passed to the bank on the sale of Ms Armata's Coogee property and probably an upper limit of $170,000 passed out of Ms Armata's hands for the benefit of Con Maglaras or his company. I have no doubt either that Mr Maglaras from time to time said that he would make things up to Ms Armata by providing an interest in the Harbord property. Mr Radojev spent considerable time cross examining Ms Armata to get her to embrace the position that she had not lent money to Con Maglaras but had provided it to Maglaras Holdings Pty Ltd, a company in which she was a director. She kept countering these questions by insisting that she was only a dummy or secretary. I tend to think that she believed this. Whether the money passed from herself to Con Maglaras and then from Con Maglaras to the company or whether she passed the money directly to the company at either the express or implied request of Con Maglaras is not at all clear. She did not understand fully what was happening, and Con Maglaras is no longer with us. Furthermore, no adequate records were kept.

Whichever way one looks at it, it is clear that Ms Armata did provide financial assistance for the benefit of Con Maglaras and he made it clear that he was at least morally bound to repay her by transferring to her an interest in the Harbord property. I do not consider that there was any binding legal contract between the parties that Con Maglaras would convey the Harbord property or an interest in it, but it may very well be that there was an enforceable equitable obligation on him to do so.

Accordingly, when one looks at the alleged consideration for the transfer document 90 and sees $95,000, one must conclude that this was not a fully accurate statement of the consideration. The real consideration was partial satisfaction of the obligation to make it up to Ms Armata for her financial assistance for and on behalf of Con Maglaras.

Such consideration would at law have been good consideration which would have supported a contract. However, one does not need consideration to support a transfer which was registered such as Transfer 90. As long as such a transfer secures registration, it will confer an indefeasible interest; see Bogdanovic v Koteff (1988) 12 NSWLR 472.

The next matter to consider is whether there is any personal equity in the plaintiff which would enable it to have Ms Armata hold her interest subject to its equity.

I have already examined the facts and shown that despite her protests, Ms Armata must have known at least about the claim of the plaintiff very shortly after Con Maglaras' death. Did, however, she know at the time when she registered her transfer?

In my view, the inescapable conclusion is that Ms Armata must have known about the dispute with the plaintiff when she moved into the Harbord property during 1988. The state of the house as disclosed in the exhibits, would tell anybody that there were some "problems with the builder". There was obviously unfinished work. The photographs PX71 show walls that are unfinished and plastered without being painted, holes in the wall with scribbled notes from one tradesman to another, unfinished roofs with blue plastic keeping the weather out, and it would be impossible for anybody dwelling in the house not to realize that there was some "trouble with the builder". Moreover, Ms Armata was present in 5 Corella Street Harbord as mistress of the house. It is almost inconceivable that a mistress of the house would not very quickly find out why it was that she was living in these uncomfortable and unfinished premises. There also appears to have been a very good communication between Con Maglaras and Ms Armata, and as I say, it is difficult to accept, and I do not accept, that she was not aware that there was a problem between the plaintiff as the builder and Con Maglaras.

A personal equity for the purpose of attacking a registered proprietor's title means that the plaintiff must have an action at law in deceit or some claim before a Court of Equity for relief: Grgic v ANZ Banking Group Ltd (supra) at pp 222-3. If a person takes with notice of an unregistered interest, then that may be equitable fraud which would entitle the plaintiff to have its equity recognized in priority to the defendant's legal title.

There are various situations where notice of a physical problem will induce a Court of Equity to consider that there must be notice of the underlying rights. Thus in Scholes v Blunt [1916] NSWStRp 84; (1916) 17 SR (NSW) 36, a purchaser who saw a track on the ground over the land he was about to purchase and saw the defendant drive across it to a neighbouring property had constructive notice by those physical facts that the defendant claimed a right of way. However, it is far more difficult when what the plaintiff is claiming is an equitable charge by virtue of a building agreement.

Although lawyers practising in the Equity Division or the Building and Construction List at least over the last ten years have become aware that it is common to include a charging clause in a building contract, I do not consider that the stage has yet been reached when the average member of the public considers that there are equitable charges in building contracts or even appreciates what an equitable charge is. It does not seem to me that I can conclude that merely because a person knows about incomplete building work and there may be a dispute between an owner and a builder that she therefore has notice that there is an equitable charge over the land in favour of the builder so that if she takes a conveyance, she will take in equitable fraud.

The other attack that is made on Transfer 90 is that it was made by the fraud of Mr Knaggs, the fifth defendant. Thus it is claimed that it never achieved indefeasible status. It must be remembered that when one is talking of the exceptions to indefeasibility under s 42 of the Real Property Act, "fraud" means actual common law fraud and not equitable fraud such as taking with notice.

What Mr Knaggs is supposed to have done as the agent of Ms Armata, is deliberately to have ensured that a false statutory declaration as to the time of service of the lapsing notice of the plaintiff's caveat was lodged with the Registrar General. He then is alleged to have made sure that the lapsing process was in train and lodged the dealing being Transfer 90 at the moment when there was no effective caveat stopping the registration of the transfer.

An allegation of actual fraud is a very serious matter and it is one that a Judge should not find proved unless he or she is comfortably satisfied that the conduct was fraudulent. I must confess that I cannot see how Ms Armata, by her agent, Mr Knaggs, was fraudulent in having Transfer 90 registered. However, as I have said, the transfer was lodged in 1989 and not registered until 21 May 1990. Any activity of Mr Knaggs as Ms Armata's agent which may have induced registration had been exhausted prior to May 1990.

However, it is argued that even though the Registrar General's error may have been the last link in the chain of causation, what had really happened was that Mr Knaggs was always fully aware of what Mr Maglaras was doing and Ms Armata having left to Mr Knaggs to get the transfer to her registered, she is bound by his actions. Mr Knaggs knew at all material times of the claim between the plaintiff and Con Maglaras. The plaintiff says that Mr Knaggs must have known about the earlier transfer from Maire Maglaras to Con Maglaras which was held by Staunton & Thompson pending payment of their costs, but I do not consider there is sufficient for me to find that this was so as a fact. However, Mr Knaggs knew of the claim by the plaintiff. He knew of the caveat which the plaintiff had lodged and he was closely connected with Con Maglaras' affairs, either as his business agent or as his solicitor. Mr Knaggs then manoeuvred the situation where the caveat of the plaintiff lapsed which was the causa causans of the transfer being able to attain registration.

The cases which have discussed fraud under ss 42 and 43 of the Real Property Act are mainly forgery cases on the one hand, or cases which say that equitable fraud is insufficient on the other. There are very few cases in between, though there are a series of cases commencing with Australian Guarantee Corp Ltd v De Jager [1984] VicRp 40; [1984] VR 483 and National Commercial Banking Corp of Australia Ltd v Hedley (1984) 3 BPR 9477, where it is said that if a person makes a false statement or gives a false certificate which induces the Registrar General to register a document, then that registration has been obtained through fraud. See also Beatty v ANZ Banking Group Ltd [1995] VicRp 57; [1995] 2 VR 301. This principle, however, only applies where the person who tenders the document for registration knows about the false certificate because it is axiomatic under the Act that the fraud must be the fraud of the person seeking registration: Assets Co v Mere Roihi [1905] AC 176, 210.

I do not consider that anything Mr Knaggs did in the instant case amounted to common law fraud. He may have been acutely aware of the procedures of the Real Property Act and he may have so manoeuvred things that Ms Armata and Con Maglaras got the benefit of the "system". There was no forgery, there was no false certificate. The dealing was proffered for registration without any dishonesty. If there was any misconduct it was with the manipulation of the caveat system. This, however, is not to my mind, fraud under s 42 of the Real Property Act. I say this even putting to one side that there was plenty of time in which the plaintiff could have obtained an injunction to prevent registration had it so moved.

Accordingly, in my view Transfer 90 conferred on Ms Armata an indefeasible interest as to a moiety on the property as tenant-in-common with Con Maglaras. The plaintiff's equitable charge in respect of that moiety has lapsed and the plaintiff's remedy is against the Registrar General under s 126 of the Real Property Act.

I now pass to Transfer 85. This transfer is in a far different plight. First it is not registered. Secondly, there is suspicion as to its execution. It purports to be signed by Con Maglaras in the presence of one S Casben of 176 Liverpool Street Darlinghurst. That address is Mr Knaggs' address. Mr Knaggs says that Mr Casben was another tenant of that property. Mr Radojev questioned Mr Knaggs as to who "S Casben" was and he could not even remember S Casben's first name.

There were some aspects of Mr Knaggs' evidence about S Casben witnessing Transfer 85 which were quite unconvincing. Mr Knaggs said that he had S Casben witness Mr Maglaras' signature because he thought "It was better to have somebody independent in case there was any allegation made it hadn't been properly signed" (T323). However, Mr Knaggs did not seem to take any steps at all to make sure that he would be able to produce S Casben as a witness if the document were challenged. There was evidence that he had made some efforts to find S Casben in 1994, but one would have thought that if S Casben was being used as an independent witness, someone would have taken a note as to his full name address and occupation.

Mr Knaggs was then cross examined (T327) as to why he had witnessed Mr Maglaras' signature on the earlier Transfer 90. Again, it was he who witnessed Ms Armata's signature rather than an independent person, though perhaps this is not as significant as the witnessing of Mr Maglaras' signature.

There was some cross examination of Mr Knaggs and other witnesses in an endeavour to have it shown that Mr Knaggs had held himself out as Con Maglaras' solicitor. The significance of this was that at one stage Mr Knaggs had been suspended from being a solicitor, and presumably to affect his credit, it was being suggested that during the period of suspension he had so held himself out. I really cannot see what, apart from possible effect of credit of Mr Knaggs, this had to do with the case. It is clear that the bank manager's notes refer to Mr Knaggs as a solicitor, but I do not believe that, on the whole of the evidence, he did hold himself out to anybody as a solicitor in the period he was under suspension. People may have assumed it, but I do not consider that Mr Knaggs represented himself as a solicitor during this period.

Again, the evidence about the stamping of the document is what might be called a little fuzzy. It should have been simplicity itself to have produced the receipt for stamping which would have been issued by the Stamp Duties Office at the time when the duty was paid, or have at least attempted to subpoena the Commissioner of Stamp Duties' records as to when the duty was paid. Normally, stamp duty on a document is impressed with a mark that shows the date when the duty was paid and if the duty is paid outside the two month period, there is sometimes a mark which shows that a fine has been paid, or alternatively, has been remitted. There is merely a stamp in the instant case of a financial year. No-one explained the significance of this stamp. I remarked on this at the time, but the evidence did not improve.

However, whilst I have some suspicion about the document, there is insufficient material for me to conclude that it is anything other than what it purports to be, namely, a transfer signed by Con Maglaras. There is no suggestion that the signature is a forgery.

As I have said, Ms Armata found the document behind a wardrobe in the bedroom she shared with Con Maglaras after Con Maglaras died. It is clear that at no stage prior to his death did he agree to hand the document over to her because for one thing he thought it was a waste of time because the bank which had a mortgage over the property would never agree to the registration of the document.

Accordingly, at no time prior to Con Maglaras' death was there ever a semblance of a completed gift by the handing over of Transfer 85 and a certificate of title. The certificate of title was with the bank in any event.

Thus, we have the situation where prior to Mr Maglaras' death he had signed Transfer 85 but had not delivered it or handed it over to Ms Armata. If the document had been a deed (which of course it isn't, vide s 36(11) of the Real Property Act), there would have been no delivery so the deed would neve have taken effect. Unless there is a trust, or a perfect gift, or an underlying contract upon which someone can sue, it seems to me that a transfer which is signed by a registered proprietor but not handed over before the transferor dies, is a useless piece of paper. Indeed, even if the transfer had been handed over with the certificate of title, it itself would not be capable of being registered so as to transfer the title, though there may have been a claim in equity for registration.

In McVey v Denis (1984) 55 ALR 201, the Court of Appeal had to deal with a situation where on 13 June 1974 there had been a decree nisi for dissolution of marriage and a transfer had been handed over because of a settlement of property from the husband to the wife. This was held by the wife's solicitors on the understanding that it was on loan until the decree was made absolute. The wife died before the decree could become absolute. However, in a way that was unclear to the court, the transfer became registered. The Court of Appeal set aside the registration of the transfer. Hutley, JA said at p 205, "There is a further objection to the validity of the effectiveness of the registration. At the time it took place, Mrs McVey was dead. At common law, a person dead at the time of the execution of a deed could take no benefit under it: In re Corbishley's Trusts (1880) 14 Ch D 846; Re Tilt; Lampet v Kennedy (1896) 74 LT 163. Registration created an interest which was in the name of Mrs McVey in the same way as a registered forged dealing can create an indefeasible title ... . As there have been no dealings with the title since registration, the appellant is entitled to have the instrument treated as void and the register rectified in exactly the same way as any other voidable transfer can be set aside. It is exactly as though this was a deed which came into force after Mrs McVey's death. On this ground, also, the appellant is entitled to have the transfer to Mrs McVey set aside." Glass, JA agreed with that judgment. Priestley, JA also said that the registration of a transfer after Mrs McVey's death could not affect the position in equity between her husband and herself.

If a transfer or other dealing is in favour of a transferee who dies before registration, the transfer cannot be used to alter the register. The transfer or its underlying agreement may be the basis of an application by the executor to procure a fresh transfer or to the court to make a vesting order, but the document itself cannot compel the Registrar General to confer a benefit on the transferee. I think this follows from McVey's case. Likewise, when a transferor dies before registration, my view is that the transfer ceases to be effective to operate as a command to the Registrar General to alter the register. It may be that the Registrar General will register the document without knowing and there may be an indefeasible title and no-one who can upset that indefeasible title by personal action, but the document of itself cannot have that effect. Again, it may be that the document is part of a case which will show that there is a perfect gift, or a trust, or a contract, but again the document itself will not alone be sufficient to consummate the gift, trust or contract.

In the instant case, as I have earlier related, Transfer 85 was executed before death but the transferor made it clear that because the bank was not going to agree to its registration, he was going to hold it back. It was never unconditionally delivered to Ms Armata before Con Maglaras' death. Her finding it in the joint bedroom after death is not sufficient warrant to give it any greater efficacy than it had at the date of Con Maglaras' death. The document in my view has ceased to be an instrument which could cause the Registrar General to alter the register.

I believe that what I have said is sufficient to dispose of this case. Customarily, I subdivide my reasons for judgments into categories identified by counsel. I have not done that in the instant case because of the multitude of parties. I should now turn to the submissions of counsel, deal with any points that I have not covered, and then deal with the reasons I made certain evidentiary rulings during the course of the trial. I made these rulings at the trial but said I would give my reasons later.

Before dealing with these matters in detail, I should make one general comment. As I said earlier, Mr Radojev led Mr Duncan for the plaintiff. Mr Radojev conducted virtually all the cross examination and Mr Duncan made all the submissions. Unfortunately, there were quite a number of occasions where a submission made by Mr Duncan was not made the subject of a question put by Mr Radojev to the witness against whom an allegation was made, in most cases this witness being Mr Knaggs. It is a matter of common fairness, and enshrined in the rule in Browne v Dunn (1893) 6 R 67, that if an allegation is not put to a witness it cannot later be said in submissions that the Judge should find the allegation proved. In some of the submissions Mr Duncan made, I merely have to reject the submissions because of the rule in Browne v Dunn and I have just shortly indicated that in the following discussion.

Mr Duncan submitted that any further registration of a transfer at this stage would be with notice of the plaintiff's equitable charge. He submitted that on any view of the evidence, Ms Armata got notice of the charge shortly after Con Maglaras died, and that was before she found Transfer 85.

As to the second undivided share in the Harbord property, Mr Duncan submits that the plaintiff has demonstrated that Ms Armata when she took Transfer 90 was not a bona fide purchaser for value without notice. As to Transfer 90, he put that assuming Transfer 79 from the fourth defendant to the deceased was not taken by duress, Transfer 90 was not an "instrument" within the meaning of the Real Property Act. This was because Con Maglaras' signature was not witnessed by Ms Brayshaw as was the statement purportedly made on the document. I have already discussed this matter and discarded the submission.

Mr Duncan put that Ms Armata was not a witness of truth. He referred to various passages of the transcript and compared Ms Armata's story at pp 80, 143, 166 and 167 to the evidence given by Mr Kintominas, barrister, which was contrary in some respects. I accept the evidence of Mr Kintominas and I find as I indicated earlier, that Ms Armata was not completely truthful. Mr Duncan, then however, takes the bigger step of saying that I can infer that because of this Ms Armata was lying generally to defeat the plaintiff's claim. I doubt whether I can take that step or if I can, it should be as large as Mr Duncan would have it.

Mr Duncan then put that the Ms Armata was not bona fide because she was part of a conspiracy hatched by the deceased and the fifth defendant to defeat creditors. He points to para 32.2 of the fifth defendant's defence. This part of the defence was directed to Transfer 85 and the consideration for that dealing. In his defence Mr Knaggs said that "The reason that the consideration was in the identical sum, was whilst prior to signing [Transfer 90], the deceased had promised [Ms Armata] that he would transfer to her the whole of 5 Corella Street Harbord, the bank or its predecessor the National Mutual Royal Bank with whom it merged, refused to agree to such a transfer being made subject to its mortgage and thereupon releasing Con Maglaras' as mortgagor; whereupon the deceased and the second defendant arranged to make the transfer of the deceased's total interest in 5 Corella Street Harbord by two separate transfers each of one-half of his interest."

Although I do not consider the evidence bears out para 36.2 of the fifth defendant's defence, I cannot see how the passage assists the plaintiff. Mr Duncan submits it was fraud on the ANZ Bank deliberately to concoct a transaction because the bank would not release Mr Maglaras from his mortgage, but even if it were, it would be completely irrelevant as the only relevant fraud for the purpose of s 42 is fraud against the plaintiff. The fact that a person may have intended to defraud a third person does not matter even if somebody else has suffered indirectly: Munro v Stuart [1924] NSWStRp 54; (1924) 41 SR (NSW) 203, 205.

Mr Duncan then put, "What happened was that sometime early in 1989, Knaggs and Maglaras determined that they would obtain the transfer at a time when it was inevitable that Westaway would win the building case. They thus quarantined the only asset by taking the Harbord property out of Maglaras' name. Mrs Maglaras' first version of the scheme was for her to get the property then Maglaras would go bankrupt and the property would be retransferred. Your Honour should accept Mrs Maglaras on this.

There was, however, the problem with the caveat. Timing became critical."

Even if this were so, it does not seem to me for the present purposes, that there is fraud under the Real Property Act. Again, it does not seem to me, for the reasons I have given, that I need to be concerned overmuch about the question of consideration because, if the document attains indefeasible status, whether there has been consideration or not, other interests will lose priority.

Mr Duncan then said that Mr Devoy, the bank manager's evidence, was clearly to the effect that Ms Armata had signed the guarantee of Maglaras Holdings in full knowledge of what she was doing. Ms Armata denies this, but Mr Duncan says I should accept Mr Devoy, which I do. Mr Duncan then said that this affects Ms Armata's credibility generally, and I agree with this submission. Mr Duncan then puts that Ms Armata's money just discharged Maglaras Holdings' debt and the surplus

moneys were whittled away for the company's purposes. I think I've already dealt with this above. Mr Duncan submits that Transfer 85 is, whilst not a forgery, a document that has not been properly witnessed because the likelihood is that the signature "S Casben" is in fact the signature of Mr Knaggs. This allegation was not put to Mr Knaggs and I would reject it under the rule in Browne v Dunn.

Mr Barrett, for the Registrar General, put that the only

source of liability to the fund could be the fraud of Mr Maglaras. As I have indicated earlier, I do not agree with this submission because the registering of the transfer Mr Maglaras to Ms Armata, Transfer 90, whilst the caveat had been lodged to prevent it, would be another route to the fund. Mr Barrett then put that there is no doubt at all that anyone who signed Transfers 79, 85 or 90 did so knowing and intending that they wished to transfer the land to the transferee. Even if there was some defect in execution, nothing that was registered was to the contrary of the intention of the makers of the document.

Mr Barrett suggests that I should disregard Mrs Maglaras' evidence of duress as unbelievable. I do not need to go into this as I have discarded the case on duress. He says that Jager's case is distinguishable, and for the reasons I have given above, I agree. Mr Barrett put that when Mr Zuur, the plaintiff's solicitor uplifted the caveat the plaintiff lost priority. He then put that the fresh caveat permitted the transfer to Ms Armata. He put that even if it did, the plaintiff could not say that it suffered loss through not being served with a lapsing notice because it decided not to do anything about the lapsed caveat but instead lodged a new caveat.

Mr Barrett put that s 126 of the Real Property Act is not to provide an insurance against the acts of people who were still in existence and whose transactions could be reversed. If Transfer 90 to Ms Armata should not have been registered then she should be ordered to retransfer the land and there was no damage caused to the fund.

I would agree that this is the case as McVey v Denis itself shows. It would only be if Ms Armata had charged her interest in some way which would take in priority to the plaintiff that the plaintiff would say that there was a deprivation.

Mr Ogborne for Ms Armata put that she herself was guilty of no fraud and the only fraud that could be imputed to her would be the fraud of Mr Maglaras or Mr Knaggs, but there was no reason in law even if there was fraud by either of those gentlemen, which Mr Ogborne urged I should not find. He said that any fraud must be a fraud against the plaintiff and that fraud against the ANZ Bank was not sufficient. I have already indicated my acceptance of that proposition.

I do not consider, for the reasons which I have already set out, that Ms Armata was as guiltless as she says. I do not accept all her evidence. Whilst I do accept that the main actors were Mr Maglaras and Mr Knaggs, I do not consider that Ms Armata allowed all these things to go on while she was living virtually as the de facto wife of Con Maglaras without her knowledge.

Mr Fotis, for Mrs Maglaras, said that Mr Knaggs' evidence which went contrary to Mrs Maglaras' evidence should not be accepted as to the circumstances of the signing of the Transfer 90. I have already dealt with that proposition. Mr Fotis submits that the motive for Transfer 79 was to avoid Mr Maglaras having to pay Mrs Maglaras' legal fees. If this is so, and is more likely than not to be so on the balance of probabilities, then there is merely a fraud against Staunton & Thompson, not against the plaintiff. He then put that registration of Transfer 79 deprived Mrs Maglaras of an interest in the whole estate as she was a joint tenant and would have succeeded to the whole of the property because she in fact survived Mr Maglaras. However, having disposed of the defence of duress against Mrs Maglaras, she meant to sign the transfer; in any event the compromise of the Family Court proceedings and the Family Court's order under s 87 of the Family Law Act was an end to the matter so far as she was concerned. It may well also have severed the joint tenancy in any event; see Public Trustee v Grivas [1974] 2 NSWLR 316.

I now pass to Mr Knaggs' submissions. Most of the submissions Mr Knaggs made I have already dealt with above.

Mr Knaggs correctly said that the submissions made against him were to do with two matters, namely (a) the question as to whether he had committed any fraud within the meaning of the Real Property Act; and (b) the cross claim of Maire Maglaras against him with respect to duress. As to the first, he submitted, correctly in my view, that many of the aspects of the address of Mr Duncan against him were matters where there could be no finding against Mr Knaggs in view of the rule in Browne v Dunn.

I do not think that I need stay to deal with these submissions in detail because on my review of the facts in the general discussion it is clear that I could not find that Mr Knaggs was guilty of any fraud in the Real Property Act sense, nor could I find he used any duress on Mrs Maglaras.

Not surprisingly, Mr Knaggs also went into bat for Ms Armata and said that she should in general be accepted. He dismissed Mr Kintominas' evidence as being equivocal. He said that it was quite clear that the consideration of $95,000 was based on the Valuer General's valuation of the whole property of $190,000 which was accepted for stamp duty purposes. He also says that there is no dispute that Ms Armata paid $112,000 to the bank and made up the rest of the $190,000 to Con Maglaras in other payments. I do not accept this for the reasons that I have already given, though I do accept that probably somewhere about $170,000 passed out of Ms Armata's hands into the control of Con Maglaras or one of his companies.

One matter that I have not dealt with in detail because it is not one on which my mind has been able to reach a firm conclusion is the question as to whether the lapsing notice was in fact served at Howard Avenue Dee Why on 24 August 1989. It is part of Mr Duncan's conspiracy theory that it was not so served. However, Mr Knaggs gave evidence that he did have the notice served on that day and was in the car outside the premises when it was served. He says he was surprised that no action was taken and denies that he fudged the date of service at all. The main plank of the plaintiff's platform as to service on a later date was some notes made by Mr Zuur. There is some difficulty in accepting that he did make the notes on the day he said he did and why he would have made them in any event. As I say, I have some doubt about this. In view of the fact that it does not matter as things have turned out, I do not consider that I should make any finding. I need to say something about the matter in case it be thought I had overlooked it.

Putting all these thoughts together, I should deal with the issues as raised on the pleadings and make my final decision on each of them.

The plaintiff claimed as against the first defendant that it had lost its interest by reason of the fraud of the deceased or the defendants or some of them. I find that this is not so. I find that it may well have been that the first defendant's action in registering Transfer 90 whilst there was still a caveat lodged but unregistered, was a breach of his duty under the Real Property Act. However, this is not pleaded and the fact that the plaintiff has a remedy against Andriana Armata would mean that this, in any event, would only be a claim that would be effective to the extent to which the plaintiff cannot succeed against Ms Armata and recover its money. The plaintiff then seeks certain declarations that various dealings are not sufficient or that a lapsing of a caveat was procured by fraud. These are really requests for declarations "along the way" and should not be made. There is a claim to reinstate caveats etc and to cancel the two Transfers 79 and 90. There is no real purpose in restoring the caveats. The facts as I have found them don't permit the cancellation of Transfer 79. I do not consider that I should cancel the registration of Transfer 90, but there should be a declaration that the registered proprietor holds her interest taken as a result of that transfer subject to the equitable charge of the plaintiff.

There should be an order as prayed to restrain recording in the Register Transfer 85.

The plaintiff claims against the third defendant, Ms Armata, various declarations, but I do not think that any order should be made other than that she holds her interest in the property subject to the plaintiff's equitable charge.

As against Maire Maglaras, the plaintiff seeks a declaration she remains the registered proprietor, but this cannot be given on the facts as I have found them.

As against Mr Knaggs, a declaration is sought that in the circumstances he was the person upon whose application the transferee Andriana Armata was registered. This declaration could not be made as it is just a staging-post in the procedure. No order is really sought other than damages under s 126 of the Real Property Act against Mr Knaggs and this order should not be made for the reasons I have already given.

The first cross claim is brought by Maire Maglaras against the Registrar General, Ms Armata and Mr Knaggs. On the facts as I have found them, this must be dismissed.

So far as costs are concerned, the matter is a rather complicated one and I should allow costs to be argued when short minutes are brought in. Basically the plaintiff has succeeded against Ms Armata so that she should pay the plaintiff's costs of the suit. Whether there should be a Bullock or a Sanderson order in respect of costs which the plaintiff has to pay other parties is a matter which can be debated. As to the Registrar General, the plaintiff failed on the only matter it pleaded. However, it established some type of claim which would hold good if the claim against Ms Armata did not prove fruitful. I think the plaintiff needs to pay the Registrar General's costs but I am open to hear argument.

As to Mrs Maglaras, the plaintiff failed against her. In one sense it was not seeking any order against Mrs Maglaras, it was trying to have her restored to the Register to make its position stronger. Indeed, Mr Knaggs commented on many occasions throughout the proceedings, with some justification, that there was a bond of affinity between the plaintiff and Mrs Maglaras. I do not consider that there should be any costs as between the plaintiff and Mrs Maglaras. Mrs Maglaras, must, however, pay the costs of her failed cross claim.

Mr Knaggs succeeded and so his costs should be paid in respect of the claim by the plaintiff and in respect of the cross claim by Mrs Maglaras.

Some attention will have to be given when the short minutes are composed as to the amount that is secured under the equitable lien. It will be remembered that clause 31 of the building agreement on page 28 of the bundle, says, "The Owner hereby charges the parcel of land on which or on part of which the Works are to be erected with the due payment to the Builder of all moneys that are or may become payable to the Builder by virtue of this Agreement or otherwise arising out of the carrying out of the Works." That obviously covers the amount found to be due by Judge Kennedy-Smith in the District Court. It is doubtful, however, whether it covers the costs of these proceedings. It is true that in some of the caveat cases involving building agreements substitute security, if permitted to be given, has been given to cover not only the debt but also costs; see for instance Gibson v Co-Ordinated Building Services Pty Ltd (1989) 4 BPR 9630. However, these cases were usually decided on the basis that whilst the builder appeared only to have a claim for a security in respect of the works and not the costs, it was conscionable when the owner was taking the benefit of a substituted security rule that the owner secure the costs as well.

In cases where statutory authorities move to enforce charges to secure rates etc, the usual order is that the costs of enforcing the charge are also secured; see Sutherland Shire Council v Glendon Court Ltd (1934} 12 LGR 20 and Metropolitan Water Sewerage and Drainage Board v Aston Investments Pty Ltd (1978) 4 BPR 9728. See also Fisher & Lightwood on Mortgages Australian ed [40.4]. Again, this is a matter which can be argued when the short minutes are brought in.

Hopefully, the parties will be able to arrange for the sale of the Harbord property without further intervention of the court. It may be that the property would sell for more if the building work was completed, but unless there is agreement, I cannot see how this state of affairs can be brought about. If the parties cannot agree to sell privately, then the orders that were made in the Aston Investments case which are set out at p 9731 of Vol 4 of Butterworths Property Reports, would appear to be the type of order which should be made.

This, I think, only leaves the matter of evidence. There were two applications which I dealt with at the hearing and said that I would give reasons when I gave my final judgment. These were -

A. Mr Fotis' application to cross examine Mr Knaggs; and

B. Mr Knaggs' submissions that he should not be the subject of cross examination.

As to the first matter, s 38(1) of the Evidence Act 1995 provides that a party who called a witness may, with the leave of the court, question the witness as though the party were cross examining the witness about (a) evidence given by the witness that is unfavourable to the party; or (b) a matter of which the witness may reasonably be supposed to have knowledge and about which it appears to the court the witness is not, in examination in chief, making a genuine attempt to give evidence; or (c) whether the witness, has at any time, made a prior inconsistent statement.

The way in which evidence was given in this case was peculiar. I asked each lawyer in turn what evidence that person was reading in his case. Mr Fotis only read his own client's affidavit of 10 August 1995 which is affidavit FA9 before closing his case. However, after Mr Knaggs had read some material, Mr Fotis asked for leave to reopen and read affidavit FA15 by Mr Knaggs of 10 August 1994. All that happened on the first day. On day 6 Mr Knaggs submitted that there was no case against him and he was not bound to give evidence. However, I ruled that he was bound to give evidence. Mr Fotis then sought and was given leave to supplement the affidavit evidence by obtaining details as to the background to Transfer 85 and Mr Knaggs' role as an adviser to the deceased. In addition Mr Fotis had read an affidavit of Mr Knaggs of 21 September 1993, a copy of which was in the agreed bundle.

Mr Knaggs and Mr Fotis' client, Mrs Maglaras, were in directly opposing interests. Mr Fotis needed to establish some of the details about the transaction which were only known to Mr Knaggs and that is why he elected to call him.

Before September 1995, there could only be cross examination by the counsel who called a witness if the witness was declared hostile. The Australian Law Reform Commission, when preparing the report which led to the Evidence Act, recommended easing the requirements before parties could cross examine their own witness; see Sutherland's Annotated NSW Evidence Act (LBC Sydney 1996) p 71. The real question is how far the relaxation has gone and how the court should exercise its discretion under the section in the current circumstances.

Section 38(6) provides that without limiting the matters which the court may take into account when considering an application under s 38, the court is to take into account (a) whether the party gave notice at the earliest opportunity of the intention to seek leave; and (b) the matters on which and the extent to which the witness has been or is likely to be questioned by another party.

I took into account when exercising my discretion that the plaintiff and the fourth defendant were in very similar plight. The plaintiff was well able to cross examine Mr Knaggs about all the things which the fourth defendant would want to cross examine him. Indeed, I would not have allowed two cross examinations on the one subject matter by counsel in the same interest. Again, there was no information before me to show that Mr Fotis had given Mr Knaggs any previous indication of his intention to cross examine. Indeed, the way the fourth defendant's case was presented gave more the flavour that the decision to read Mr Knaggs' affidavits in the fourth defendant's case was either an afterthought or alternatively, a thought that had been had, discarded and then acted upon again.

Despite the lowering of the barrier against cross examining one's own witness, it must not be thought that this is something that is likely to be permitted in every case. A lawyer who calls a witness who he or she knows is likely to be in an opposing camp has to make a conscious choice. If the witness shows by the way he or she gives evidence that there is some malice or hostility which is likely to affect the acceptance of the evidence, then it may well be appropriate to grant leave to cross examine to the person who called the witness. That did not happen in the instant case: Mr Knaggs gave his evidence in a disinterested way.

Accordingly, I declined leave to cross examine.

The other matter goes to Mr Knaggs' liability to be cross examined. Under s 27 of the Evidence Act 1995, a party may question any witness except as provided by the Act. Accordingly, it is expected that every witness whose affidavit is read is liable to be cross examined. Of course that is subject to a number of matters including the power of the court under s 11 to control its proceedings, and on occasions, the fact that in an interlocutory hearing time may not permit there to be full or any cross examination. This latter proposition was established, if it were not beforehand, by the Full Family Court in Re C & C (1995) 20 Fam LR 24 especially at p 32. It goes without saying that in the Federal sphere an Act almost identical to the NSW Evidence Act applies. Despite these special situations, generally there is a right to cross examine every witness.

Mr Knaggs took the view that he was not a person who called the evidence. He deliberately took the decision not to read any of his evidence. Why then should he be cross examined merely because one of the defendants whose interests are very similar to the plaintiff sets him up by reading one of his affidavits in that party's case?

In the instant case, Mr Fotis had, as he submitted, a bona fide reason for reading the affidavits of Mr Knaggs. He needed to put in evidence background facts with respect to the transaction and Mr Knaggs was the only living person who could do this.

Accordingly, it seemed to me that Mr Knaggs had been called for a bona fide reason and not merely because of a desire of counsel to gain some tactical advantage. The general rule under s 27 of the Evidence Act applied and accordingly I should require Mr Knaggs to be cross examined on his affidavits. Upon this ruling Mr Knaggs went into the witness box and gave his evidence and was cross examined for about a day.

Accordingly, for these reasons I made the rulings I made at the trial.

Because of what I have said above, the matter will stand over for short minutes of order to be brought in by the plaintiff. This will necessitate, I am sure, some deep thought on behalf of the lawyers for all parties. It may also take some court time to consider. I will provisionally have the matter listed for Thursday 29 August 1996 at 9.30 am. However, if before 22 August 1996 arrangements are made with my Associate, if all counsel agree, some other day may be selected in lieu. If any counsel considers the matter is likely to take more than half an hour, then again my Associate should be so informed.

J A WESTAWAY & SON PTY LTD V REGISTRAR GENERAL & ORS

2499/94

Friday 6 September 1996

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG J

JUDGMENT

HIS HONOUR: On 27 May 1994, the plaintiff filed a summons seeking an order that the first defendant, the Registrar General cancel the recording of Dealing No Y614190 which he had registered. That dealing was a transfer from the late Con Maglaras to the third defendant, Andriana Armata (sometimes called Andrea Armata) of a one-half undivided share as tenant in common of property situate at 5 Corella Street, Harbord. This document is referred to in these reasons as Transfer 90. It also sought an order that its Caveat Y481935 be registered. Pleadings were ordered, and on 30 August 1994, the plaintiff filed a statement of claim seeking a declaration that the plaintiff had lost its interest in the subject land by reason of the fraud of the late Con Maglaras or one of the defendants in these proceedings with an order that the Registrar General pay the plaintiff damages and costs out of the assurance fund. The plaintiff also sought declarations as to the validity of various dealings with the relevant land and damages against various of the defendants. The pleadings are rather convoluted, but essentially the issues are as follows.

The late Con Maglaras and his wife Maire (the fourth defendant) had become registered proprietors of this land as joint tenants in May 1979 subject to a registered mortgage. By building contract (Housing Industry Association Edition 6) made 9 September 1985, the plaintiff and Mr and Mrs Maglaras agreed that the plaintiff would do substantial building work on the property. The contract contained what is now a usual clause giving the builder a charge over the land (clause 31 of p 28 of the agreed bundle of documents). On 9 October 1986, the plaintiff lodged caveat W558676 to protect that charge.

On 29 December 1988, a decree absolute was made dissolving the marriage of Mr and Mrs Maglaras.

In 1987, the third defendant, Andriana Armata, says that she became a de facto wife of Mr Maglaras. Some of the parties deny this allegation, but it appears from the evidence, which I will discuss later, that it is more likely than not that she was as she claimed.

Con Maglaras died on 21 November 1992 at 10 am. John Maglaras, a son of Con Maglaras, has commenced proceedings in the Probate Division No 104053 of 1995 in respect of the estate, but I do not consider that I need delve into those proceedings. The second defendant in these proceedings is actually called "The Estate of Constantine Maglaras", but needless to say, no-one appeared separately for that so-called entity before me. The third defendant was granted Letters of Administration of Con Maglaras' estate on 8 February 1994.

The fifth defendant is a solicitor, Mr Douglas Knaggs often called Doug Nash, who from time to time acted for Con Maglaras or the fourth defendant (the former wife) or the third defendant (the de facto wife).

The uncontradicted evidence shows that as at 14 September 1989, the title to the Harbord property (Folio Identifier 5/20134) was as follows:-

Registered Proprietors: Con and Maire Maglaras

Mortgages & Charges: Mortgage R194002 to National

Mutual Royal Savings Bank

Mortgage R586843 to National

Australia Bank.

Caveat W558676 by the plaintiff

(lodged 9 October 1986 noted as

lapsed 21 September 1989).

Withdrawal of Caveat Y481934

lodged 7 July 1989.

Caveat Y481935 by the plaintiff

lodged 6 July 1989.

Transfer Y152183 by Con and

Maire Maglaras to Con Maglaras

alleged to be "by order of

Family Court of Australia"

lodged 30 January 1989 consented

to by National Mutual Royal Bank

relodged 16 May 1989 and 2 June

1989. This document is referred

to in these reasons as Transfer 79.

The evidence then shows that, after that date, dealings were lodged against the title as follows:-

Transfer Y614190 Con Maglaras to

Andriana Armata of a one-half

undivided share as tenant in

common (the consideration is

shown as $95,000) lodged 1989.

This dealing was registered on 21

May 1990. This is Transfer 90.

Caveat by plaintiff Y684098 re-

lodged 14 June 1990 registered

27 June 1990.

Caveat E148017 by fourth defendant

registered 20 February 19

Caveat I662214 by third defendant

claiming a one-half undivided

share other than the share

already registered in her name.

Transfer U230380 executed 28

February 1990 lodged 3 May 1994

but not registered. This document

is referred to in these reasons

as Transfer 85.

Caveat U335650 by the plaintiff

lodged 8 June 1994.

The plaintiff claims that it withdrew Caveat W558676 because of fraud engineered by Mr Knaggs. The statement of claim alleges that the plaintiff received a letter bearing date 12 August 1989 from Con Maglaras which said that there was a consent order of the Family Court of Australia which transferred the fourth defendant's share in the property to him. The plaintiff obtained legal advice and then consented to remove the caveat and replace it with a new caveat. The Registrar General registered the transfer from Con Maglaras and the fourth defendant to Con Maglaras on 6 July 1989 without lapsing caveat W558676.

Transfer 90 was lodged sometime in 1989. The Registrar General issued a lapsing notice under s 74J of the Real Property Act in respect of that caveat. Con Maglaras made a statutory declaration declaring that he had served the lapsing notice on the plaintiff on 24 August 1989. The evidence of Mr Zuur, the plaintiff's solicitor, was that the relevant letter was not received on 24 August, but rather on 7 September 1989. (As appears later, this is disputed). The plaintiff put that the statutory declaration of Con Maglaras was the factor which caused the Registrar General to lapse its caveat on 21 September 1989. The plaintiff says that this was fraud.

The plaintiff then says that if its equitable charge was lost because of Transfer 90 becoming registered, then it lost that equitable charge through the fraud. This particular point will not detain me long because Transfer 90 was not in fact registered until 21 May 1990. Any lapsing of the caveat would have taken place by 28 September 1989, even if the notice was not served until 7 September 1989 as claimed by the plaintiff. Accordingly, the deeper aspects of the case have to be examined.

I should add, before dealing with the facts in detail, that no party alleges that any document was forged. Accordingly, one can safely examine the title as it appears from the records kept by the Land Titles Office.

There is no doubt that the plaintiff did building work on the property. Con Maglaras thought that the work was substandard and that he should not pay for it. The evidence convinces me that the state of the property was such that anyone who visited it would immediately see that building work had been done on the premises which was only partly completed. The plaintiff issued a statement of claim out of the District Court on 24 March 1986 claiming breach of contract. The proceedings were numbered 12929 of 1986. Eventually this claim was heard by the District Court and on 22 November 1994, Acting Judge Kennedy-Smith found a verdict for the plaintiff against the estate of Con Maglaras represented by the present third and fourth defendants for $123,118 plus costs. It is quite clear that unless its charge is available against the property, there is little likelihood of the plaintiff receiving any part of its verdict.

With this background, I now turn to the pleadings. The final version of the statement of claim was filed on 14 February 1996. It alleges the building agreement, the debt, the charge given by the building agreement to secure the debt and the registration of a caveat to protect the charge. It then makes the following allegations (I will summarize the allegations by deploying the actual paragraph number used in the pleading: "the deceased", of course, means "Con Maglaras"):

10. In about August 1987 the fourth defendant and the

deceased entered into a deed under s 87 of the

Family Law Act.

11. After October 1987 the third defendant was a

director and shareholder of Maglaras Holdings

Pty Ltd ("the Company").

12. The fifth defendant was a director of the Company.

13. The deceased and the third defendant opened an

account in the name of the Company with the

ANZ Bank and entered into personal guarantees

to guarantee the debts of the Company. The

guarantee on the third defendant's part was

secured by a charge over her real property at

Coogee.

14. It was a term of the deed that the fourth defendant

transfer all her right title and interest in

Corella Street, Harbord, to the deceased.

15. The assent of the fourth defendant to that deed

was procured by fraud of the deceased.

16. Alternatively it was procured by undue

influence of the deceased.

17. The fifth defendant had an intimate knowledge

of the affairs of the Company.

18. In June 1988 the deceased, through his agent

the fifth defendant, procured the signature of

the fourth defendant to a transfer of her

interest in the Corella Street Harbord land

to the deceased.

20. In December 1988 the third defendant directed

the ANZ Bank to pay to the Company the proceeds

of sale of her Coogee property amounting to

about $113,000 in reduction of the Company's

debts.

21. In May 1989 the fifth defendant lodged Transfer

79 from the fourth defendant to the deceased

and an application for preparation of lapsing

notice of the plaintiff's caveat.

23. Notwithstanding the notice, the Registrar

General did not lapse the caveat.

24. On about 6 July 1989 the plaintiff lodged a

fresh caveat Y481935.

25. On 7 September 1989 the plaintiff received

a letter from the deceased representing that

the Family Court had made a consent order

transferring the fourth defendant's half share

in the land and serving a lapsing notice.

26. The representation was fraudulent.

27. On 13 September 1989 the fifth defendant lodged

a statutory declaration by the deceased

declaring that he had served a lapsing notice

on 24 August 1989.

28. The declaration was fraudulent.

29. The fraud was made to procure the lapsing of

the plaintiff's caveat.

30. The Registrar General recorded that 13 September

1989 was the last date on which a person could

apply to extend the caveat.

31. On 14 September 1989 the fifth defendant, as agent

for the deceased and the third defendant, caused

to be stamped the document purporting to be a

transfer of half the deceased's interest in the

Corella Street Harbord land to the third defendant

which was later lodged for registration and

given Dealing No Y614190 (ie Transfer 90).

32. In so far as it was expressed to be for valuable

consideration, Transfer 90 was fraudulent.

33. By reason of the lodgment of Transfer 90 the

plaintiff's interest under its original caveat

or any other caveat was defeated as to the extent

of the alleged interest of the third defendant.

34. The deceased died on 21 November 1992.

35. After the deceased's death, the fifth defendant,

as agent for the third defendant, lodged Transfer

85 for registration purporting to be a

transfer of the deceased's remaining one-half

interest to the third defendant.

36. No consideration was paid for Transfer 85.

37. By reason of the frauds alleged, the plaintiff

is liable to have its interest in the land

defeated.

38. The third defendant took whatever interest she

has in the land with notice of the plaintiff's

charge. Consequentially the plaintiff is

entitled to have dealings cancelled so as its

charge prevails, or alternatively, to have a

declaration that it has lost its interest in

the land by reason of fraud and have compensation

paid to it pursuant to s 126 of the Real Property

Act.

The defences of the third and fourth defendants are essentially non-admissions and denials. With a few exceptions, the defence of the fifth defendant is similar. The Registrar General again mainly says that he cannot know or admit most of what is in the statement of claim other than what is in his own Register. It is thus unnecessary to look at the terms of the defences.

The fourth defendant filed a cross claim against the Registrar General, the third defendant and the fifth defendant. She alleges that her assent to the transfer of her interest in 5 Corella Street, Harbord, was obtained through duress or fraud and that had the document not been signed and registered, as she was a joint tenant with Con Maglaras she would have obtained the whole property after his death. Accordingly, she seeks damages out of the assurance fund; alternatively setting aside dealings, an occupation fee against the third defendant, and damages against the fifth defendant.

The case commenced before me on 12 February 1996 and mainly as a result of long drawn-out cross examinations and disputes as to evidence, the evidence was not completed until just after 3 pm on the seventh hearing day, which was 9 April 1996. Counsel then addressed orally and some supplemented what they said in writing.

I delivered a reserved judgment on 15 August 1996 and stood the matter over for short minutes of order. On 29 August 1996 all counsel put to me that there were some unsatisfactory features about the reasons I had delivered and that there were some internal inconsistencies in the reasoning. By consent, I agreed to withdraw those reasons and to revise the reasons and redeliver them. When reconsidering the matter I can see why some perplexity was caused by the original form of the reasons because I had not completely exposed my reasoning on notice. These revised reasons deal with that matter fully, remove other passages which were objected to by counsel for some of the defendants and restate some of the propositions in more understandable form.

Mr Radojev and Mr Duncan of counsel appeared for the plaintiff. Mr Radojev cross examined, Mr Duncan made the submissions. Mr Duncan submitted that if the plaintiff can demonstrate that the third defendant was not a bona fide purchaser for value without notice when she took her interest, the plaintiff could have an order that the transfer be reversed. Mr Duncan put that the third defendant was not a purchaser for value, she was not bona fide and she always had notice.

This calls for an examination of the general facts.

Mr Maglaras and, to a degree the fourth defendant, were in the habit of acquiring run-down food shops, working them up and then reselling at a profit. Mr Maglaras may have had other business interests as well. The fifth defendant, for some of the time covered by the evidence in the instant case, would appear to have been suspended from acting as a solicitor. He informed me from the bar table that the Court of Appeal later declared his suspension to be invalid. Nonetheless he appeared at the time to be a person in that category. He kept an office at 1/176 Liverpool Street, Darlinghurst. During this time he also acted as the manager of Mr Maglaras' companies. For a short time he stayed at Mr Maglaras' Harbord house as a boarder.

Maire Maglaras says that in the middle of 1987 the deceased rang her and said, "I'm in trouble and you are the only one that can help me. I found this solicitor, Doug Nash, who has told me that if you sign everything over to me, in six weeks I can then sign everything back over to you but in that six weeks I will declare myself bankrupt. In this way I save the businesses and the house and they cannot touch you or the kids." Maire Maglaras said she would think about it. However, the deceased continually told her that if she did not do as he had proposed, "We will both lose the house and everything we have worked for and the kids will be out on the street." Maire Maglaras then saw a solicitor with the firm of Staunton & Thompson and told him that she was prepared to go along with the proposal and the solicitor said that he would carry out the proposal if that was what she really wanted. She says that sometime afterwards she was told, "If you did not sign everything over to me, I will shoot you your solicitor and the kids." Maire Maglaras says that up to this point in time she was unsure as to whether she would go through with the arrangement but then gave the solicitor a definite instruction that she was willing to sign the deed her former husband was proposing. She says that in November 1987 she signed the deed which was to be a deed for the purpose of s 87(5) of the Family Law Act that she would transfer her interest in 5 Corella Street, Harbord to Con Maglaras, he would assume full responsibility for the mortgage, she would transfer to him the business at 47 Erskine Street Sydney and he would transfer to her a motor car. He also promised to keep her indemnified in respect of the District Court proceedings instituted by the plaintiff.

Pursuant to this deed, a transfer was drawn up and was signed by Maire Maglaras in the presence of her solicitor. Her solicitor, however, retained the transfer until his costs had been paid.

She signed the deed about 26 August 1987. She spoke to Con Maglaras in October 1987 when he told her that he was not going to transfer any property back to her. Despite this reneging by Con Maglaras, his former wife then entered into an agreement with her former husband that they would together renovate and work up another shop. Mrs Maglaras agreed that a previous affidavit made by her on 20 June 1994, a copy of which is exhibit TX80, although covering most of the same events as the affidavit read by her in the present proceedings, made no mention at all of any threat issued to her, her children or her solicitors. Furthermore, she says that she told her then solicitor, Mr Holmwood of this threat, but Mr Holmwood was not called as a witness. In view of these discrepancies and the general angry way in which Mrs Maglaras gave evidence, I could not be comfortably satisfied that the deed was signed by her under any duress or misrepresentation. Again, if this extraordinary story of the husband transferring back all the property to his wife after he became bankrupt was told to her solicitor as Mrs Maglaras would have me believe, it is rather strange that the solicitor did not give her advice to the effect that it would not be possible for the husband to do what he was promising. However it may be as Mr Duncan suggested in his closing address that Mrs Maglaras was confused and it was she who was to be the temporary warehouse of the property.

Accordingly, I must proceed on the basis that the fourth defendant did agree in accordance with the deed approved by the Family Court under s 87 of the Family Law Act to transfer half the Harbord house to her husband in consideration of the benefits she was to get under that deed.

However, I still need to deal with the two documents which Mrs Maglaras signed. The first of these is Transfer 79. This was signed by Mrs Maglaras in the presence of her then partner, Lynette Brayshaw.

Mrs Maglaras says that the deceased owned a business in Summer Hill and in 1988 he offered her the management of this business, a fish and chip shop. Lynette Brayshaw arranged some finance and the two ladies went into partnership. The agreement was that Ms Brayshaw and the fourth defendant would build up the business and then sell it and the ladies would share equally in a 50 per cent share of the profit from the sale and the deceased would take the other 50 per cent. Mrs Maglaras says that at the time Mr Knaggs was preparing documents in respect of the fish and chip shop. He did not explain documents and any transfer she may have signed at the time was signed in the belief that she was signing a document in connection with the fish and chip shop. She never ever intended to sign any transfer of the Harbord home. However, in cross examination by Mr Knaggs, Mrs Maglaras said she did sign a transfer and she knew it was still in her solicitor's office because Con Maglaras had not paid her solicitor's bill. She denied that she signed the second transfer under a misapprehension that it was a document to do with the fish and chip shop at Summer Hill. She said (T212), "I'm saying I don't remember signing this paper that you are giving me. I signed a lot of papers with you during the business at Summer Hill, where you used to rush in and say `Sign this' and then rush out again."

Mr Knaggs says that he said to Mrs Maglaras at her shop in Summer Hill, "Con has asked me to get you to sign a Real Property transfer of your half share in Corella Street following the Family Law agreement between you." He says that Mrs Maglaras simply replied, "I think I remember signing one of these before, but I don't know where it is now. I'll sign another one." She then signed the transfer in the presence of Lynette Brayshaw and Mr Knaggs.

It seems to me in all this I should accept Mr Knaggs' evidence.

Both Mr Fotis for Mrs Maglaras and Mr Radojev cross examined Mr Knaggs about Transfer 79 and its preparation, Mr Radojev's cross examination being the more detailed. Mr Radojev put to Mr Knaggs that the document contained some unusual features. First, the lodgment box was filled in by putting the address of Con Maglaras as "6" (not 5) Corella Street Harbord 2096 and then a telephone number 387 6016. Mr Knaggs said he could not remember whose telephone number it was (other evidence showed that that telephone number belonged to Ms Armata's mother (T85)). Mr Knaggs was asked about the form of the document, see T362 and following. He says (T363 and following) that he first obtained the transfer from Mr Maglaras and then went to Summer Hill and his recollection is that Con Maglaras was not with Mr Knaggs when the latter called at Summer Hill. He cannot remember whether there were any signatures on the document at that stage, or whether Ms Armata's signature as witness to Mr Maglaras' signature was on the document. He is sure, however, that Mrs Maglaras and Lynette Brayshaw both signed in Summer Hill.

Mr Knaggs was cross examined about some hatching out on the document, but as this hatching was initialled by Mrs Maglaras it matters very little. However, in one of the top boxes of the document the words "The interest of the transferee as joint tenants" has been taken out and the word "Whole" written in in handwriting. There does not appear to be Mrs Maglaras' initials against that alteration. Again, after the words "MAIRE MAGLARAS of 2/120 Warriewood Road Warriewood Shopkeeper" there have been typed in the words "and Constantinos MAGLARAS of 5 Corella Street HARBORD Shopkeeper." I would conclude just looking at the document that the words "and Constantinos MAGLARAS ... Shopkeeper" were typed in the document after it was initially created, but it is impossible to say whether that was before or after Mrs Maglaras signed it.

Mr Radojev, however, did establish that whatever else be the status of the document, Ms Brayshaw never witnessed Con Maglaras' signature. The signature of Con Maglaras is on the document twice, once as one of the transferors and the other as a transferee. The second is witnessed by Ms Armata. The first purports to be witnessed by Ms Brayshaw and it is completely clear that Mr Maglaras never signed the document in front of Ms Brayshaw.

Accordingly it is put that the document should not have been registered and was a fraud on the Registrar General to have the document registered with the false attestation of Con Maglaras' signature as transferor by Ms Brayshaw.

I do not consider that even if this were the case (and I must confess that it appears more likely than not) the registration of the document would be able to be reversed.

The first reason for this is that Con Maglaras obviously assented to the document in its final form and his signature was duly attested once by Ms Armata. There was no need for Ms Armata to sign the document twice as a witness, as long as she had certified that she had seen Mr Maglaras sign and it would appear that she did so. The second reason is that even if the document were altered, the whole intent was to vest the aliquot share held in the property by Mrs Maglaras into Mr Maglaras' name so that he would hold the whole property. This could have been done by Mrs Maglaras transferring her aliquot share as joint tenant to Con Maglaras, or it could have been done by Con and Maire Maglaras transferring their total interest to Con Maglaras. In either way, the intent would have been carried out to vest the whole of the fee simple in Con Maglaras.

It is quite clear that there is no personal equity to deregister a dealing merely because an irregular document has been registered: Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722, 739. Indeed, even the bare fact that a party has not assented to a transaction is insufficient: Vassos v State Bank of South Australia [1993] VicRp 74; [1993] 2 VR 316. There must either be the right of a person to apply in equity for relief or an action at common law for deceit or something similar: Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202, 222-3. As in the instant case, Maire Maglaras intended to bring about the result which the transfer secured, ie to vest the whole of the interest in 5 Corella Street Harbord in Con Maglaras, there is no warrant for her to complain that the transaction was affected by some irregular method.

Thus, despite the fact that the transfer may have been in order to get the title in Con Maglaras' name by by-passing the lien of Messrs Staunton & Thompson over the first transfer, and despite any irregularities there may have been or alterations made after Mrs Maglaras signed the transfer, in my view it was effective to vest in Con Maglaras the whole fee simple.

I now pass to Transfer 90. This document is a transfer from Con Maglaras to Andriana Armata of an undivided one-half share as tenant-in-common for a consideration of $95,000. As I have said earlier, the document was lodged for registration in 1989 and registered on 21 May 1990. It is dated under the signature of Con Maglaras 11 September 1989.

So far as Transfer 90 is concerned, both Con Maglaras' signature and Ms Armata's signature are witnessed by Mr Knaggs under his more recent name of Douglas Nash.

Mr Radojev cross examined Mr Knaggs and established that Mr Maglaras was actually in Condobolin on 11 September 1989. I accept that the transfer was not signed by Mr Maglaras in Mr Knaggs' presence on that day. Mr Radojev says that the significance of this was that Transfer 90 was all part of a scheme which was devised by Mr Knaggs. Mr Knaggs knew that there had been service on the plaintiff of a notice under s 74J to lapse its caveat. He knew that a statutory declaration had been lodged stating that the service of the lapsing notice had taken place on 24 August 1989 and that accordingly, any court order had to be lodged with the Registrar General before 13 September 1989. He had the transfer ready to be stamped and indeed it was stamped on 14 September 1989 and shortly after that lodged with the Registrar General. The date of lodgment of Transfer 90 is unclear.

Mr Radojev also put that Mr Knaggs knew that he had to hurry because the Registrar General only allowed two months to serve a lapsing notice which was to expire on 24 August and Mr Knaggs had signed on behalf of Mr Maglaras a request to the Registrar General on 7 September 1989 asking for an extension of filing of the appropriate statutory declaration to 12 September because Mr Maglaras was in Condobolin. Accordingly, Mr Knaggs had proceeded on behalf of Mr Maglaras in such a way as to lodge Transfer 90 immediately after the plaintiff's caveat had expired. Caveat W558676 lapsed on 21 September 1989. However, it will be remembered that because it was thought that that caveat had been withdrawn by Dealing Y481934 it was replaced by Caveat Y481935 on 6 July 1989. The Registrar General currently has a practice of "registering" caveats which I will consider in detail later. This caveat never became registered. There is no indication as to why Dealing Y481935 was not registered before 20 September, presumably it was because there was an existing caveat covering the same ground. On the latter day, there was a requisition made that the caveat no longer named the right registered proprietor as Con Maglaras was now the registered proprietor of the entire estate.

The prohibition in s 74H(4) is against the Registrar General from recording in the Register a dealing contrary to a caveat lodged under s 74F. Whilst the Registrar General has under s 74G a duty to record the caveat if he is satisfied that it is proper to do so, no particular magic is worked by the recording or registering of the caveat: it is the lodgment which is the significant thing. Under s 74 O, a second caveat should not be lodged after a caveat has lapsed or been withdrawn following a s 74J notice. However, that section has no application in the instant case because the Caveat Y481935 was lodged before the earlier caveat lapsed, or indeed, before the earlier notice was given.

The Registrar General's minute paper which is on page 83 of the agreed bundle, suggests that what happened was that the Registrar General took the view that when Caveat 481935 was uplifted to deal with the requisition that had been made on 20 September, it lost its priority and accordingly was not an impediment to the registration of Transfer 90.

It would seem that Caveat Y481935 was uplifted after 20 September for the purpose of amending the registered proprietors but was not relodged. The Registrar General appears to have treated it as having been withdrawn. The Land Titles Office standard form of requisition makes it clear that a document will be rejected unless it is uplifted and relodged with the requisition satisfied within two months of the making of the requisitions.

Section 36(1B) of the Real Property Act provides that a caveat is lodged only when the Registrar General has allotted it a distinctive reference under s 36(1A). That distinctive reference was allotted this document in the instant case. Section 36(6) provides that:

"A dealing that is lodged in registrable form

and is subsequently uplifted shall be deemed

not to be in registrable form until relodged

in the prescribed manner and in registrable

form."

However, a caveat never has to be in registrable form because it is never registered. As Isaacs, J said in Barry v Heider [1914] HCA 79; (1914) 19 CLR 197 at 219, "caveats are lodged, not registered." The lodgment took place at the point in time where the dealing was given the distinctive number Y481935. As from that moment it prevented the registration of any other dealing. Was the caveat then withdrawn by the action of uplifting it and not relodging it? Section 74M deals with withdrawals of caveats. There is a prescribed form of withdrawal of caveat, but the Act does not indicate that that form must be used.

It seems to me that if a caveat is uplifted in September 1989 and then is not relodged after a point of time the Registrar General would be entitled to regard a dealing as having been withdrawn. He may consider it prudent before taking that step to ask the question, but the fact that he has not asked the question does not, to my mind, mean that he would be unjustified in so acting.

Accordingly, the Registrar General might have been justified as at the date when he registered Transfer 90 to have assumed that the dealing was withdrawn. Unfortunately for him, he did not do so. Document 91 in the bundle is a computer folio search as at 5 June 1990. That shows that there were unregistered dealings being Caveats Y481935 and Y684098. I should add that Y684098 is another caveat which was lodged by the plaintiff, it would seem, sometime in October 1989 and then relodged on 14 June 1990.

Accordingly, at the date when Transfer 90 was registered, the title was still affected by a caveat which had been lodged prohibiting the registration of that dealing. It would thus appear that the Registrar General did not comply with his statutory duty under s 74H(4) and any loss which the plaintiff has suffered through this registration might be dealt with under s 126 of the Act. However this is not the cause of action under which the Registrar General is sued.

Another aspect of Transfer 90 which must be considered is that it is said to be in consideration of the payment of $95,000. It is clear that no such sum was ever paid by Ms Armata. However, it is also clear that either Mr Con Maglaras or his company obtained the benefit of at least $95,000 because of the use by Ms Armata of her property at Coogee for the benefit of Mr Maglaras' interests. Mr Radojev says that the property was actually used for the benefit of a company of which Ms Armata was a co-director and in which she had an equity so that the benefit was to the company and not to Con Maglaras.

It is thus necessary to trace what happened to that Coogee property.

The diary of the ANZ Bank Manager which was in evidence at p 195 of the agreed bundle, records this entry (which I have edited) for 1 October 1987:

"Con Maglaras called with Adriana Armatis to

finalise opening the account of Maglaras

Holdings Pty Limited.

...

In the circumstances, took a guarantee from

Maglaras and Armatis to Maglaras Holdings

supported by an S148 against the Abbott Street

Coogee property the extended value of

$93,200. ..."

The note on 10 October 1987 is that "Con Maglaras and Andrea Armata called today to executed an unlimited guarantee in favour of Maglaras Holdings Pty Ltd ...".

Ms Armata gave evidence that in mid-1988, Con Maglaras said to her, "My bank is going to take over my house at Harbord. ... If you put up your house for sale and give me the proceeds I will later on transfer my house to you." Ms Armata said that she would do this and thereupon arranged to auction her Coogee property which was unencumbered. She said that when the property was sold she retained $20,000, but gave all the rest to the ANZ Bank at Wynyard which she called "Con Maglaras' bank". She thought that the total proceeds of sale were about $190,000 nett.

Mr Devoy who was then the manager of the ANZ Bank at 8 Bridge Street Sydney says that he had control of the account of Maglaras Holdings Pty Ltd between 1987 and 1989. He can recall in December 1988 Andriana Armata was present with Con Maglaras in his office. She was in tears and said, "I'm upset about selling my house." Con Maglaras said, "I'm looking after Andrea, I'm transferring my house at Harbord to her."

The evidence was a little fuzzy as to whether it was $170,000 that was paid to the ANZ Bank on completion or whether this is the total of several amounts. The bank's records (agreed bundle p 204) show that settlement was effected on 21 December 1988 and the bank received $11,295.85. Ms Armata suggested when tackled with this that there were other moneys which she had advanced to Con Maglaras over the time she was living with him. She said that things were not done formally between them, that she had never insisted that the Harbord house was now hers because she had given her house up to Con Maglaras, but Con Maglaras had always assured her that because she had given up her house the Harbord house was hers.

It is clear from her own evidence that Ms Armata was a director of Maglaras Holdings from some time about September 1987 (T92). On 1 October 1987 she, together with Con Maglaras gave a guarantee to the bank for the debts of Maglaras Holdings Pty Ltd. She says that she thought this was a guarantee for the house, but she also said that she had a few doubts about being involved in the guarantee transaction and the sale of her Coogee house, "but when someone reassures you you just trust that person and when you are going to build a future with that person you trust that person what he tells you is true."

She said at T104-105 that she did not realize that she was a director of Maglaras Holdings. She was told by Con Maglaras that the company needed a secretary and said in a passage which really must be set out in full that Con Maglaras said to her, "A company always needs a secretary and it is just like having a dummy there doing nothing."

I think it is probably fairly right that Ms Armata put her future in Con Maglaras' hands and that she trusted him and agreed that she would sell her property at Coogee and make available for his use the proceeds. I also accept that she was told by Con Maglaras that the Harbord house would be hers because of what she had done with her Coogee property. However, there was never any formal recording of this transaction and there was certainly no legal obligation entered into by Con Maglaras. It may be that Con Maglaras would have been bound in conscience to atone for any detriment that Ms Armata may have suffered in going along with his proposal, but there was certainly nothing by way of even an equitable assignment of 5 Corella Street Harbord.

However, I do not accept Ms Armata's evidence that she was ignorant about the claim that the plaintiff had in respect of its building work. Ms Armata was living in the house at Harbord and she would have known because it is obvious to anybody that the building work was unfinished. She was living with Con Maglaras and it is very difficult to accept, and I do not accept, that she was ignorant of the disputes he was having with the building company. It may be that she left the actual arguments to Con Maglaras, but she would have been aware of them.

She endeavoured to say before me that she did not know anything about the District Court proceedings until after Con Maglaras' death and she had to swear an affidavit in the probate proceedings. She says that after swearing her affidavit of 10 September 1993 in those proceedings, Mr Knaggs said to her, "Westaways is a building company who Con has been having a fight with over home renovations. They have a caveat on the house and we will have to give them notice to get it off ...". This is the first she says that she knew about the plaintiff's claim

This could not be true.

At T82, Ms Armata acknowledged that in October 1990 she had received a piece of mail addressed to Con Maglaras about the dispute with the plaintiff and had opened it and telephoned Mr Knaggs at Mr Maglaras' suggestion. She actually read Mr Knaggs the letter. It is difficult for her to say that she did not have some notice of the litigation before Con Maglaras' death though she continued to assert that that was the case. It may be, however, that the detail did not impress itself on her mind. She was cross examined by Mr Radojev at T143 as to the obvious unfinished state of the house at Corella Street, Harbord when she was living there. She said that Con Maglaras never discussed it very much. He just said that it was a matter that he would like to deal with, and that whenever she tried to open up a conversation about the matter, he cut her off.

When Con Maglaras died, documents, which were probably prepared by Mr Knaggs, show that Mr Knaggs filed in the District Court proceedings brought by the present plaintiff an affidavit made by him on 11 December 1992. That affidavit said that after Con Maglaras' death, a lot of effort was put into seeking a substitute director of Maglaras Holdings Pty Ltd and it was only that day that Catrina Armata, Andriana Armata's sister was appointed. However, that affidavit also attaches a notice of assignment dated the same day as Con Maglaras' death, 21 November 1992, signed by Mr Knaggs as his attorney, purporting to assign the debt or chose in action allegedly due by the plaintiff to Maglaras Holdings Pty Ltd and on 11 December 1992 that company's seal was affixed by order of Andriana Armata with her sister Catrina signing as secretary. On 17 December 1992 Andriana Armata swore an affidavit in the District Court proceedings which has become exhibit PX76 in the present case. That affidavit contained annexures which set out minutes of meetings of directors of Maglaras Holdings Pty Ltd in December 1992 authorising Andriana Armata to apply to the court to amend the cross claim in the District Court proceedings.

I think probably in general it is true to say that Con Maglaras was the controlling figure and that Ms Armata contributed her money, but had little say in what was going on. However, she is not an unintelligent woman and I consider that she would have had knowledge before Con Maglaras' death that there was a building dispute with the plaintiff. I cannot see anything in the material, however, to show that she would have had actual notice that there was an equitable charge.

Ms Armata says that she did not know about the caveat and the plaintiff's claim to an equitable charge until relatively late in 1993. I do not accept this.

It is abundantly clear accordingly from her own documents that by December 1992 Ms Armata had put herself in a position where she knew that there was litigation between the plaintiff and Con Maglaras which involved the building work at 5 Corella Street Harbord. She knew that there was a claim being made by the builder against Con Maglaras and she knew that there was a cross claim. It may well be that she left the details to Mr Knaggs and that she was prepared to sign whatever pieces of paper Mr Knaggs put in front of her, but those pieces of paper would have alerted anybody to that particular situation.

In the affidavit of assets and liabilities sworn by Ms Armata on 20 January 1993, a copy of which became PX74 in these proceedings, she listed as a contingent liability the balance claimed under a building contract by the plaintiff which she estimated at $100,000. Accordingly, she must have known by January 1993 of the claim.

The significance of this is that Ms Armata swore on 10 September 1993 in the probate proceedings that in early 1990 Con Maglaras agreed to transfer to her his half share in the property "As settlement of an unsecured loan which I had made to him and his business Maglaras Shop Fittings; in full discharge of that loan." She then says a transfer was drawn up but she was aware that the transfer would not be able to be registered because of the refusal of the ANZ Bank which had taken over the obligations of the Royal Bank to produce the certificate of title. She asked Con Maglaras on many occasions to hand her back the transfer and he often said, "Don't worry, I will fix it up" or "What's the hurry we can't register it anyway at the moment."

She says that somewhere round about April 1993 she was straightening out the bedroom cupboard in the bedroom she shared with Con Maglaras at 5 Corella Street Harbord when she found the transfer because it fell onto the floor. She said it not only had been signed by Con Maglaras but it had also been stamped. It is dated 28 February 1990. This is Transfer 85 which was lodged as U230380 on 3 May 1994, but has not yet been registered. There is a Stamp Duties Office stamp on the document marked "Office of State Revenue (NSW Treasury) 1990/91 Stamp duty $1815-00 Chief Commissioner". There was no evidence as to when that stamp was put on the document. There are also two stamps marked "1990/91 Office of State Revenue Alteration noted" on the document. The document appears to have been witnessed by one S Casben 176 Liverpool Street Darlinghurst so far as Mr Maglaras' signature is concerned, and by Mr Nash so far as Ms Armata's signature is concerned.

It will not have gone unnoticed that what Ms Armata was saying was that the property at Harbord or rather the second half of the property in Harbord was being transferred to her for reasons other than the giving up by her of her Coogee home.

When cross examined about the amount paid to the bank, Ms Armata tended to agree that it might have been that she paid only the amount in the bank records and in addition, she had given Mr Maglaras various sums of money totalling about $170,000 or $190,000.

The inconsistency in accounts and the lack of corroborative detail in the contemporaneous records make it difficult to accept Ms Armata's evidence.

I have little doubt that somewhere between the $112,950 which passed to the bank on the sale of Ms Armata's Coogee property and probably an upper limit of $170,000 passed out of Ms Armata's hands for the benefit of Con Maglaras or his company. I have no doubt either that Mr Maglaras from time to time said that he would make things up to Ms Armata by providing an interest in the Harbord property. Mr Radojev spent considerable time cross examining Ms Armata to get her to embrace the position that she had not lent money to Con Maglaras but had provided it to Maglaras Holdings Pty Ltd, a company in which she was a director. She kept countering these questions by insisting that she was only a dummy or secretary. I tend to think that she believed this. Whether the money passed from herself to Con Maglaras and then from Con Maglaras to the company or whether she passed the money directly to the company at either the express or implied request of Con Maglaras is not at all clear. She did not understand fully what was happening, and Con Maglaras is no longer with us. Furthermore, no adequate records were kept.

Whichever way one looks at it, it is clear that Ms Armata did provide financial assistance for the benefit of Con Maglaras and he made it clear that he was at least morally bound to repay her by transferring to her an interest in the Harbord property. I do not consider that there was any binding legal contract between the parties that Con Maglaras would convey the Harbord property or an interest in it, but it may very well be that there was an enforceable equitable obligation on him to do so.

Accordingly, when one looks at the alleged consideration for the transfer document 90 and sees $95,000, one must conclude that this was not a fully accurate statement of the consideration. The real consideration was partial satisfaction of the obligation to make it up to Ms Armata for her financial assistance for and on behalf of Con Maglaras.

Such consideration would at law have been good consideration which would have supported a contract. However, one does not need consideration to support a transfer which was registered such as Transfer 90. As long as such a transfer secures registration, it will confer an indefeasible interest; see Bogdanovic v Koteff (1988) 12 NSWLR 472.

The next attack that is made on Transfer 90 is that it was made by the fraud of Mr Knaggs, the fifth defendant. Thus it is claimed that it never achieved indefeasible status.

What Mr Knaggs is supposed to have done as the agent of Ms Armata, is deliberately to have ensured that a false statutory declaration as to the time of service of the lapsing notice of the plaintiff's caveat was lodged with the Registrar General. He then is alleged to have made sure that the lapsing process was in train and lodged the dealing being Transfer 90 at the moment when there was no effective caveat stopping the registration of the transfer.

An allegation of actual fraud is a very serious matter and it is one that a Judge should not find proved unless he or she is comfortably satisfied that the conduct was fraudulent. I must confess that I cannot see how Ms Armata, by her agent, Mr Knaggs, was fraudulent in having Transfer 90 registered. However, as I have said, the transfer was lodged in 1989 and not registered until 21 May 1990. Any activity of Mr Knaggs as Ms Armata's agent which may have induced registration had been exhausted prior to May 1990.

However, it is argued that even though the Registrar General's error may have been the last link in the chain of causation, what had really happened was that Mr Knaggs was always fully aware of what Mr Maglaras was doing and Ms Armata having left to Mr Knaggs to get the transfer to her registered, she is bound by his actions. Mr Knaggs knew at all material times of the claim between the plaintiff and Con Maglaras. The plaintiff says that Mr Knaggs must have known about the earlier transfer from Maire Maglaras to Con Maglaras which was held by Staunton & Thompson pending payment of their costs, but I do not consider there is sufficient for me to find that this was so as a fact. However, Mr Knaggs knew of the claim by the plaintiff. He knew of the caveat which the plaintiff had lodged and he was closely connected with Con Maglaras' affairs, either as his business agent or as his solicitor. Mr Knaggs then manoeuvred the situation where the caveat of the plaintiff lapsed which was the causa causans of the transfer being able to attain registration.

The cases which have discussed fraud under ss 42 and 43 of the Real Property Act are mainly forgery cases on the one hand, or cases which say that equitable fraud is insufficient on the other. There are very few cases in between, though there are a series of cases commencing with Australian Guarantee Corp Ltd v De Jager [1984] VicRp 40; [1984] VR 483 and National Commercial Banking Corp of Australia Ltd v Hedley (1984) 3 BPR 9477, where it is said that if a person makes a false statement or gives a false certificate which induces the Registrar General to register a document, then that registration has been obtained through fraud. See also Beatty v ANZ Banking Group Ltd [1995] VicRp 57; [1995] 2 VR 301. This principle, however, only applies where the person who tenders the document for registration knows about the false certificate because it is axiomatic under the Act that the fraud must be the fraud of the person seeking registration: Assets Co v Mere Roihi [1905] AC 176, 210.

I do not consider that anything Mr Knaggs did in the instant case amounted to common law fraud. He may have been acutely aware of the procedures of the Real Property Act and he may have so manoeuvred things that Ms Armata and Con Maglaras got the benefit of the "system". There was no forgery, there was no false certificate. The dealing was proffered for registration without any dishonesty. If there was any misconduct it was with the manipulation of the caveat system. This, however, is not to my mind, fraud under s 42 of the Real Property Act. I say this even putting to one side that there was plenty of time in which the plaintiff could have obtained an injunction to prevent registration had it so moved.

I must next turn my attention to the question of constructive notice. It is clear on the authorities that when the Real Property Act, ss 42 and 43, speak of fraud, the sections are referring to actual common law fraud and not equitable fraud such as taking with notice; see eg Assets Co v Mere Roihi supra at 210 and Stuart v Kingston [1923] HCA 17; (1923) 32 CLR 309, 329.

Thus any constructive notice on the part of Ms Armata cannot be relevant when considering whether she has obtained a good title as to a moiety of the land by virtue of the registration of Transfer 90. It may be relevant however, when considering whether she is able to be attacked under the exception that is recognized in all the leading cases that the registered proprietor holds subject to personal equities; see eg Frazer v Walker [1967] 1 AC 569, 585.

I have already examined the facts and shown that despite her protests, Ms Armata must have known at least about the claim of the plaintiff very shortly after Con Maglaras' death. Did, however, she know at the time when she registered her transfer?

In my view, the inescapable conclusion is that Ms Armata must have known about the dispute with the plaintiff when she moved into the Harbord property during 1988. The state of the house as disclosed in the exhibits, would tell anybody that there were some "problems with the builder". There was obviously unfinished work. The photographs PX71 show walls that are unfinished and plastered without being painted, holes in the wall with scribbled notes from one tradesman to another, unfinished roofs with blue plastic keeping the weather out, and it would be impossible for anybody dwelling in the house not to realize that there was some "trouble with the builder". Moreover, Ms Armata was present in 5 Corella Street Harbord as mistress of the house. It is almost inconceivable that a mistress of the house would not very quickly find out why it was that she was living in these uncomfortable and unfinished premises. There also appears to have been very good communication between Con Maglaras and Ms Armata, and as I say, it is difficult to accept, and I do not accept, that she was not aware that there was a problem between the plaintiff as the builder and Con Maglaras.

There are various situations where notice of a physical problem will induce a Court of Equity to consider that there must be notice of the underlying rights. Thus in Scholes v Blunt [1916] NSWStRp 84; (1916) 17 SR (NSW) 36, a purchaser who saw a track on the ground over the land he was about to purchase and saw the defendant drive across it to a neighbouring property had constructive notice by those physical facts that the defendant claimed a right of way. However, it is far more difficult when what the plaintiff is claiming is an equitable charge by virtue of a building agreement.

Although lawyers practising in the Equity Division or the Building and Construction List at least over the last ten years have become aware that it is common to include a charging clause in a building contract, I do not consider that the stage has yet been reached when the average member of the public considers that there are equitable charges in building contracts or even appreciates what an equitable charge is. It does not seem to me that I can conclude that merely because a person knows about incomplete building work and there may be a dispute between an owner and a builder that she therefore has notice that there is an equitable charge over the land in favour of the builder so that if she takes a conveyance, she will take in equitable fraud.

However, the words "merely because" in the above paragraph are significant. It may be that other facts can be added to what I have already noted to constitute constructive notice.

It must be remembered that Ms Armata was acquiring an interest in land from Con Maglaras. She says that the reason for this acquisition was to compensate her for her loss of the Coogee property. She is really, if that is to be believed (and for present purposes I will assume it, though see above), she is to be treated as a purchaser.

A prudent purchaser would make enquiries if it saw that there were caveats on the title claiming that there was an equitable charge over the property. It may be that a prudent purchaser would, when the caveat had lapsed under s 74J, cease to make enquiries. However, in the instant case, Mr Knaggs who was acting for Con Maglaras as well as Ms Armata, knew the circumstances in which the caveat had lapsed. He knew, or ought to have known, that the plaintiff was not resiling from the position that it had an equitable charge over the property. The knowledge of Mr Knaggs in the same transaction would be knowledge of Ms Armata by virtue of the general law as to notice now embodied in s 164 of the Conveyancing Act 1919.

A person is fixed with constructive notice of what she may find if she had made the reasonable enquiries that a prudent person would have made in the circumstances including the material which would have been disclosed pursuing reasonable consequential enquiries. Where there is a caveat on the title, this normally should lead a purchaser to make enquiries; see for instance Mills v Renwick [1901] NSWStRp 84; (1901) 1 SR (NSW) (Eq) 173 and Drulroad Pty Ltd v Kipson (1992) 5 BPR 11878, 11884.

Had Ms Armata made the enquiries she would have found out about the plaintiff's claim under an equitable charge. It should be noted that this is a claim under an equitable charge, that is, a contractual right for a charge in equity rather than an equitable lien which is what is imposed by the court as a remedy when the court considers it necessary to do so to prevent unconscionable behaviour, see Shirlaw v Taylor [1991] FCA 415; (1991) 31 FCR 222, 230-1.

Accordingly, in my view Ms Armata did have constructive notice of the equitable charge when she registered Transfer 90.

Does this amount to a "personal equity" within the meaning of the term in the authorities?

In Grgic v ANZ Banking Group Ltd (supra) at 222-223, Powell, JA, after considering the authorities, said "I am of the view that the expressions `personal equity' and `right in personam' encompass only known legal causes of action or equitable causes of action, albeit that the relevant conduct which may be relied upon to establish `a personal equity' or `right in personam' extends to include conduct not only of the registered proprietor but also on those for whose conduct he is responsible ... ".

The analysis of what is a personal equity really begins with the dissenting judgment of Mahoney, JA in Logue v Shoalhaven SC [1979] 1 NSWLR 537, 563. His Honour there said that as it was established that a registered proprietor was protected against the effect of mere notice, a personal equity must be something more. That something more was at least some variety of equitable fraud.

His Honour built on that in Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32, 45-49.

In Garofano v Reliance Finance Corp Ltd (1992) 5 BPR 11941, 11945, Meagher, JA said of personal equity, "I cannot see what that expression is meant to cover except known legal causes of action (for example, deceit) and known equitable causes of action (for example, undue influence) ..." Mahoney, JA at 11942 agreed with those words.

Under the Old System Title, had Ms Armata taken her conveyance with constructive notice of the equitable charge, she would have taken subject to the equitable charge because the equities were not equal so the legal estate did not prevail. The plaintiff may in equity have compelled her to grant it a charge equivalent to that which she disregarded when she took her legal interest. However, as a "personal equity" cannot be contrary to the policy of the Act and as a person may acquire a registered title after notice, this sort of equitable action is not sufficient to qualify as a "personal equity". What is required is some action in deceit or an action in equitable fraud such as setting aside something for undue influence.

The personal equity exception thus cannot assist the plaintiff.

Accordingly, in my view Transfer 90 conferred on Ms Armata an indefeasible interest as to a moiety on the property as tenant-in-common with Con Maglaras. The plaintiff's equitable charge in respect of that moiety has lapsed.

I now pass to Transfer 85. This transfer is in a far different plight. First it is not registered. Secondly, there is suspicion as to its execution. It purports to be signed by Con Maglaras in the presence of one S Casben of 176 Liverpool Street Darlinghurst. That address is Mr Knaggs' address. Mr Knaggs says that Mr Casben was another tenant of that property. Mr Radojev questioned Mr Knaggs as to who "S Casben" was and he could not even remember S Casben's first name.

There were some aspects of Mr Knaggs' evidence about S Casben witnessing Transfer 85 which were quite unconvincing. Mr Knaggs said that he had S Casben witness Mr Maglaras' signature because he thought "It was better to have somebody independent in case there was any allegation made it hadn't been properly signed" (T323). However, Mr Knaggs did not seem to take any steps at all to make sure that he would be able to produce S Casben as a witness if the document were challenged. There was evidence that he had made some efforts to find S Casben in 1994, but one would have thought that if S Casben was being used as an independent witness, someone would have taken a note as to his full name address and occupation.

Mr Knaggs was then cross examined (T327) as to why he had witnessed Mr Maglaras' signature on the earlier Transfer 90. Again, it was he who witnessed Ms Armata's signature rather than an independent person, though perhaps this is not as significant as the witnessing of Mr Maglaras' signature.

There was some cross examination of Mr Knaggs and other witnesses in an endeavour to have it shown that Mr Knaggs had held himself out as Con Maglaras' solicitor. The significance of this was that at one stage Mr Knaggs had been suspended from being a solicitor, and presumably to affect his credit, it was being suggested that during the period of suspension he had so held himself out. I really cannot see what, apart from possible effect of credit of Mr Knaggs, this had to do with the case. It is clear that the bank manager's notes refer to Mr Knaggs as a solicitor, but I do not believe that, on the whole of the evidence, he did hold himself out to anybody as a solicitor in the period he was under suspension. People may have assumed it, but I do not consider that Mr Knaggs represented himself as a solicitor during this period.

Again, the evidence about the stamping of the document is what might be called a little fuzzy. It should have been simplicity itself to have produced the receipt for stamping which would have been issued by the Stamp Duties Office at the time when the duty was paid, or have at least attempted to subpoena the Commissioner of Stamp Duties' records as to when the duty was paid. Normally, stamp duty on a document is impressed with a mark that shows the date when the duty was paid and if the duty is paid outside the two month period, there is sometimes a mark which shows that a fine has been paid, or alternatively, has been remitted. There is merely a stamp in the instant case of a financial year. No-one explained the significance of this stamp. I remarked on this at the time, but the evidence did not improve.

However, whilst I have some suspicion about the document, there is insufficient material for me to conclude that it is anything other than what it purports to be, namely, a transfer signed by Con Maglaras. There is no suggestion that the signature is a forgery.

As I have said, Ms Armata found the document behind a wardrobe in the bedroom she shared with Con Maglaras after Con Maglaras died. It is clear that at no stage prior to his death did he agree to hand the document over to her because for one thing he thought it was a waste of time because the bank which had a mortgage over the property would never agree to the registration of the document.

Accordingly, at no time prior to Con Maglaras' death was there ever a semblance of a completed gift by the handing over of Transfer 85 and a certificate of title. The certificate of title was with the bank in any event.

Thus, we have the situation where prior to Mr Maglaras' death he had signed Transfer 85 but had not delivered it or handed it over to Ms Armata. If the document had been a deed (which of course it isn't, vide s 36(11) of the Real Property Act), there would have been no delivery so the deed would neve have taken effect. Unless there is a trust, or a perfect gift, or an underlying contract upon which someone can sue, it seems to me that a transfer which is signed by a registered proprietor but not handed over before the transferor dies, is a useless piece of paper. Indeed, even if the transfer had been handed over with the certificate of title, it itself would not be capable of being registered so as to transfer the title, though there may have been a claim in equity for registration.

In McVey v Denis (1984) 55 ALR 201, the Court of Appeal had to deal with a situation where on 13 June 1974 there had been a decree nisi for dissolution of marriage and a transfer had been handed over because of a settlement of property from the husband to the wife. This was held by the wife's solicitors on the understanding that it was on loan until the decree was made absolute. The wife died before the decree could become absolute. However, in a way that was unclear to the court, the transfer became registered. The Court of Appeal set aside the registration of the transfer. Hutley, JA said at p 205, "There is a further objection to the validity of the effectiveness of the registration. At the time it took place, Mrs McVey was dead. At common law, a person dead at the time of the execution of a deed could take no benefit under it: In re Corbishley's Trusts (1880) 14 Ch D 846; Re Tilt; Lampet v Kennedy (1896) 74 LT 163. Registration created an interest which was in the name of Mrs McVey in the same way as a registered forged dealing can create an indefeasible title ... . As there have been no dealings with the title since registration, the appellant is entitled to have the instrument treated as void and the register rectified in exactly the same way as any other voidable transfer can be set aside. It is exactly as though this was a deed which came into force after Mrs McVey's death. On this ground, also, the appellant is entitled to have the transfer to Mrs McVey set aside." Glass, JA agreed with that judgment. Priestley, JA also said that the registration of a transfer after Mrs McVey's death could not affect the position in equity between her husband and herself.

If a transfer or other dealing is in favour of a transferee who dies before registration, the transfer cannot be used to alter the register. The transfer or its underlying agreement may be the basis of an application by the executor to procure a fresh transfer or to the court to make a vesting order, but the document itself cannot compel the Registrar General to confer a benefit on the transferee. I think this follows from McVey's case. Likewise, when a transferor dies before registration, my view is that the transfer ceases to be effective to operate as a command to the Registrar General to alter the register. It may be that the Registrar General will register the document without knowing and there may be an indefeasible title and no-one who can upset that indefeasible title by personal action, but the document of itself cannot have that effect. Again, it may be that the document is part of a case which will show that there is a perfect gift, or a trust, or a contract, but again the document itself will not alone be sufficient to consummate the gift, trust or contract.

In the instant case, as I have earlier related, Transfer 85 was executed before death but the transferor made it clear that because the bank was not going to agree to its registration, he was going to hold it back. It was never unconditionally delivered to Ms Armata before Con Maglaras' death. Her finding it in the joint bedroom after death is not sufficient warrant to give it any greater efficacy than it had at the date of Con Maglaras' death. The document in my view has ceased to be an instrument which could cause the Registrar General to alter the register.

I believe that what I have said is sufficient to dispose of this case. Customarily, I subdivide my reasons for judgments into categories identified by counsel. I have not done that in the instant case because of the multitude of parties. I should now turn to the submissions of counsel, deal with any points that I have not covered, and then deal with the reasons I made certain evidentiary rulings during the course of the trial. I made these rulings at the trial but said I would give my reasons later.

Before dealing with these matters in detail, I should make one general comment. As I said earlier, Mr Radojev led Mr Duncan for the plaintiff. Mr Radojev conducted virtually all the cross examination and Mr Duncan made all the submissions. Unfortunately, there were quite a number of occasions where a submission made by Mr Duncan was not made the subject of a question put by Mr Radojev to the witness against whom an allegation was made, in most cases this witness being Mr Knaggs. It is a matter of common fairness, and enshrined in the rule in Browne v Dunn (1893) 6 R 67, that if an allegation is not put to a witness it cannot later be said in submissions that the Judge should find the allegation proved. In some of the submissions Mr Duncan made, I merely have to reject the submissions because of the rule in Browne v Dunn and I have just shortly indicated that in the following discussion.

Mr Duncan submitted that any further registration of a transfer at this stage would be with notice of the plaintiff's equitable charge. He submitted that on any view of the evidence, Ms Armata got notice of the charge shortly after Con Maglaras died, and that was before she found Transfer 85.

As to the second undivided share in the Harbord property, Mr Duncan submits that the plaintiff has demonstrated that Ms Armata when she took Transfer 90 was not a bona fide purchaser for value without notice. As to Transfer 90, he put that assuming Transfer 79 from the fourth defendant to the deceased was not taken by duress, Transfer 90 was not an "instrument" within the meaning of the Real Property Act. This was because Con Maglaras' signature was not witnessed by Ms Brayshaw as was the statement purportedly made on the document. I have already discussed this matter and discarded the submission.

Mr Duncan put that Ms Armata was not a witness of truth. He referred to various passages of the transcript and compared Ms Armata's story at pp 80, 143, 166 and 167 to the evidence given by Mr Kintominas, barrister, which was contrary in some respects. I accept the evidence of Mr Kintominas and I find as I indicated earlier, that Ms Armata was not completely truthful. Mr Duncan, then however, takes the bigger step of saying that I can infer that because of this Ms Armata was lying generally to defeat the plaintiff's claim. I doubt whether I can take that step or if I can, it should be as large as Mr Duncan would have it.

Mr Duncan then put that the Ms Armata was not bona fide because she was part of a conspiracy hatched by the deceased and the fifth defendant to defeat creditors. He points to para 32.2 of the fifth defendant's defence. This part of the defence was directed to Transfer 85 and the consideration for that dealing. In his defence Mr Knaggs said that "The reason that the consideration was in the identical sum, was whilst prior to signing [Transfer 90], the deceased had promised [Ms Armata] that he would transfer to her the whole of 5 Corella Street Harbord, the bank or its predecessor the National Mutual Royal Bank with whom it merged, refused to agree to such a transfer being made subject to its mortgage and thereupon releasing Con Maglaras' as mortgagor; whereupon the deceased and the second defendant arranged to make the transfer of the deceased's total interest in 5 Corella Street Harbord by two separate transfers each of one-half of his interest."

Although I do not consider the evidence bears out para 36.2 of the fifth defendant's defence, I cannot see how the passage assists the plaintiff. Mr Duncan submits it was fraud on the ANZ Bank deliberately to concoct a transaction because the bank would not release Mr Maglaras from his mortgage, but even if it were, it would be completely irrelevant as the only relevant fraud for the purpose of s 42 is fraud against the plaintiff. The fact that a person may have intended to defraud a third person does not matter even if somebody else has suffered indirectly: Munro v Stuart [1924] NSWStRp 54; (1924) 41 SR (NSW) 203, 205.

Mr Duncan then put, "What happened was that sometime early in 1989, Knaggs and Maglaras determined that they would obtain the transfer at a time when it was inevitable that Westaway would win the building case. They thus quarantined the only asset by taking the Harbord property out of Maglaras' name. Mrs Maglaras' first version of the scheme was for her to get the property then Maglaras would go bankrupt and the property would be retransferred. Your Honour should accept Mrs Maglaras on this.

There was, however, the problem with the caveat. Timing became critical."

Even if this were so, it does not seem to me for the present purposes, that there is fraud under the Real Property Act. Again, it does not seem to me, for the reasons I have given, that I need to be concerned overmuch about the question of consideration because, if the document attains indefeasible status, whether there has been consideration or not, other interests will lose priority.

Mr Duncan then said that Mr Devoy, the bank manager's evidence, was clearly to the effect that Ms Armata had signed the guarantee of Maglaras Holdings in full knowledge of what she was doing. Ms Armata denies this, but Mr Duncan says I should accept Mr Devoy, which I do. Mr Duncan then said that this affects Ms Armata's credibility generally, and I agree with this submission. Mr Duncan then puts that Ms Armata's money just discharged Maglaras Holdings' debt and the surplus

moneys were whittled away for the company's purposes. I think I've already dealt with this above. Mr Duncan submits that Transfer 85 is, whilst not a forgery, a document that has not been properly witnessed because the likelihood is that the signature "S Casben" is in fact the signature of Mr Knaggs. This allegation was not put to Mr Knaggs and I would reject it under the rule in Browne v Dunn.

Mr Barrett, for the Registrar General, put that the only

source of liability to the fund could be the fraud of Mr Maglaras. As I have indicated earlier, I do not agree with this submission because the registering of the transfer Mr Maglaras to Ms Armata, Transfer 90, whilst the caveat had been lodged to prevent it, would be another route to the fund. Mr Barrett then put that there is no doubt at all that anyone who signed Transfers 79, 85 or 90 did so knowing and intending that they wished to transfer the land to the transferee. Even if there was some defect in execution, nothing that was registered was to the contrary of the intention of the makers of the document.

Mr Barrett suggests that I should disregard Mrs Maglaras' evidence of duress as unbelievable. I do not need to go into this as I have discarded the case on duress. He says that Jager's case is distinguishable, and for the reasons I have given above, I agree. Mr Barrett put that when Mr Zuur, the plaintiff's solicitor uplifted the caveat the plaintiff lost priority. He then put that the fresh caveat permitted the transfer to Ms Armata. He put that even if it did, the plaintiff could not say that it suffered loss through not being served with a lapsing notice because it decided not to do anything about the lapsed caveat but instead lodged a new caveat.

Mr Barrett put that s 126 of the Real Property Act is not to provide an insurance against the acts of people who were still in existence and whose transactions could be reversed. If Transfer 90 to Ms Armata should not have been registered then she should be ordered to retransfer the land and there was no damage caused to the fund.

I would agree that this is the case as McVey v Denis itself shows. It would only be if Ms Armata had charged her interest in some way which would take in priority to the plaintiff that the plaintiff would say that there was a deprivation.

Mr Ogborne for Ms Armata put that she herself was guilty of no fraud and the only fraud that could be imputed to her would be the fraud of Mr Maglaras or Mr Knaggs, but there was no reason in law even if there was fraud by either of those gentlemen, which Mr Ogborne urged I should not find. He said that any fraud must be a fraud against the plaintiff and that fraud against the ANZ Bank was not sufficient. I have already indicated my acceptance of that proposition.

I do not consider, for the reasons which I have already set out, that Ms Armata was as guiltless as she says. I do not accept all her evidence. Whilst I do accept that the main actors were Mr Maglaras and Mr Knaggs, I do not consider that Ms Armata allowed all these things to go on while she was living virtually as the de facto wife of Con Maglaras without her knowledge.

Mr Fotis, for Mrs Maglaras, said that Mr Knaggs' evidence which went contrary to Mrs Maglaras' evidence should not be accepted as to the circumstances of the signing of the Transfer 90. I have already dealt with that proposition. Mr Fotis submits that the motive for Transfer 79 was to avoid Mr Maglaras having to pay Mrs Maglaras' legal fees. If this is so, and is more likely than not to be so on the balance of probabilities, then there is merely a fraud against Staunton & Thompson, not against the plaintiff. He then put that registration of Transfer 79 deprived Mrs Maglaras of an interest in the whole estate as she was a joint tenant and would have succeeded to the whole of the property because she in fact survived Mr Maglaras. However, having disposed of the defence of duress against Mrs Maglaras, she meant to sign the transfer; in any event the compromise of the Family Court proceedings and the Family Court's order under s 87 of the Family Law Act was an end to the matter so far as she was concerned. It may well also have severed the joint tenancy in any event; see Public Trustee v Grivas [1974] 2 NSWLR 316.

I now pass to Mr Knaggs' submissions. Most of the submissions Mr Knaggs made I have already dealt with above.

Mr Knaggs correctly said that the submissions made against him were to do with two matters, namely (a) the question as to whether he had committed any fraud within the meaning of the Real Property Act; and (b) the cross claim of Maire Maglaras against him with respect to duress. As to the first, he submitted, correctly in my view, that many of the aspects of the address of Mr Duncan against him were matters where there could be no finding against Mr Knaggs in view of the rule in Browne v Dunn.

I do not think that I need stay to deal with these submissions in detail because on my review of the facts in the general discussion it is clear that I could not find that Mr Knaggs was guilty of any fraud in the Real Property Act sense, nor could I find he used any duress on Mrs Maglaras.

Not surprisingly, Mr Knaggs also went into bat for Ms Armata and said that she should in general be accepted. He dismissed Mr Kintominas' evidence as being equivocal. He said that it was quite clear that the consideration of $95,000 was based on the Valuer General's valuation of the whole property of $190,000 which was accepted for stamp duty purposes. He also says that there is no dispute that Ms Armata paid $112,000 to the bank and made up the rest of the $190,000 to Con Maglaras in other payments. I do not accept this for the reasons that I have already given, though I do accept that probably somewhere about $170,000 passed out of Ms Armata's hands into the control of Con Maglaras or one of his companies.

One matter that I have not dealt with in detail because it is not one on which my mind has been able to reach a firm conclusion is the question as to whether the lapsing notice was in fact served at Howard Avenue Dee Why on 24 August 1989. It is part of Mr Duncan's conspiracy theory that it was not so served. However, Mr Knaggs gave evidence that he did have the notice served on that day and was in the car outside the premises when it was served. He says he was surprised that no action was taken and denies that he fudged the date of service at all. The main plank of the plaintiff's platform as to service on a later date was some notes made by Mr Zuur. There is some difficulty in accepting that he did make the notes on the day he said he did and why he would have made them in any event. As I say, I have some doubt about this. In view of the fact that it does not matter as things have turned out, I do not consider that I should make any finding. I need to say something about the matter in case it be thought I had overlooked it.

This, I think, only leaves the matter of evidence. There were two applications which I dealt with at the hearing and said that I would give reasons when I gave my final judgment. These were -

A. Mr Fotis' application to cross examine Mr Knaggs; and

B. Mr Knaggs' submissions that he should not be the subject of cross examination.

As to the first matter, s 38(1) of the Evidence Act 1995 provides that a party who called a witness may, with the leave of the court, question the witness as though the party were cross examining the witness about (a) evidence given by the witness that is unfavourable to the party; or (b) a matter of which the witness may reasonably be supposed to have knowledge and about which it appears to the court the witness is not, in examination in chief, making a genuine attempt to give evidence; or (c) whether the witness, has at any time, made a prior inconsistent statement.

The way in which evidence was given in this case was peculiar. I asked each lawyer in turn what evidence that person was reading in his case. Mr Fotis only read his own client's affidavit of 10 August 1995 which is affidavit FA9 before closing his case. However, after Mr Knaggs had read some material, Mr Fotis asked for leave to reopen and read affidavit FA15 by Mr Knaggs of 10 August 1994. All that happened on the first day. On day 6 Mr Knaggs submitted that there was no case against him and he was not bound to give evidence. However, I ruled that he was bound to give evidence. Mr Fotis then sought and was given leave to supplement the affidavit evidence by obtaining details as to the background to Transfer 85 and Mr Knaggs' role as an adviser to the deceased. In addition Mr Fotis had read an affidavit of Mr Knaggs of 21 September 1993, a copy of which was in the agreed bundle.

Mr Knaggs and Mr Fotis' client, Mrs Maglaras, were in directly opposing interests. Mr Fotis needed to establish some of the details about the transaction which were only known to Mr Knaggs and that is why he elected to call him.

Before September 1995, there could only be cross examination by the counsel who called a witness if the witness was declared hostile. The Australian Law Reform Commission, when preparing the report which led to the Evidence Act, recommended easing the requirements before parties could cross examine their own witness; see Sutherland's Annotated NSW Evidence Act (LBC Sydney 1996) p 71. The real question is how far the relaxation has gone and how the court should exercise its discretion under the section in the current circumstances.

Section 38(6) provides that without limiting the matters which the court may take into account when considering an application under s 38, the court is to take into account (a) whether the party gave notice at the earliest opportunity of the intention to seek leave; and (b) the matters on which and the extent to which the witness has been or is likely to be questioned by another party.

I took into account when exercising my discretion that the plaintiff and the fourth defendant were in very similar plight. The plaintiff was well able to cross examine Mr Knaggs about all the things which the fourth defendant would want to cross examine him. Indeed, I would not have allowed two cross examinations on the one subject matter by counsel in the same interest. Again, there was no information before me to show that Mr Fotis had given Mr Knaggs any previous indication of his intention to cross examine. Indeed, the way the fourth defendant's case was presented gave more the flavour that the decision to read Mr Knaggs' affidavits in the fourth defendant's case was either an afterthought or alternatively, a thought that had been had, discarded and then acted upon again.

Despite the lowering of the barrier against cross examining one's own witness, it must not be thought that this is something that is likely to be permitted in every case. A lawyer who calls a witness who he or she knows is likely to be in an opposing camp has to make a conscious choice. If the witness shows by the way he or she gives evidence that there is some malice or hostility which is likely to affect the acceptance of the evidence, then it may well be appropriate to grant leave to cross examine to the person who called the witness. That did not happen in the instant case: Mr Knaggs gave his evidence in a disinterested way.

Accordingly, I declined leave to cross examine.

The other matter goes to Mr Knaggs' liability to be cross examined. Under s 27 of the Evidence Act 1995, a party may question any witness except as provided by the Act. Accordingly, it is expected that every witness whose affidavit is read is liable to be cross examined. Of course that is subject to a number of matters including the power of the court under s 11 to control its proceedings, and on occasions, the fact that in an interlocutory hearing time may not permit there to be full or any cross examination. This latter proposition was established, if it were not beforehand, by the Full Family Court in Re C & C (1995) 20 Fam LR 24 especially at p 32. It goes without saying that in the Federal sphere an Act almost identical to the NSW Evidence Act applies. Despite these special situations, generally there is a right to cross examine every witness.

Mr Knaggs took the view that he was not a person who called the evidence. He deliberately took the decision not to read any of his evidence. Why then should he be cross examined merely because one of the defendants whose interests are very similar to the plaintiff sets him up by reading one of his affidavits in that party's case?

In the instant case, Mr Fotis had, as he submitted, a bona fide reason for reading the affidavits of Mr Knaggs. He needed to put in evidence background facts with respect to the transaction and Mr Knaggs was the only living person who could do this.

Accordingly, it seemed to me that Mr Knaggs had been called for a bona fide reason and not merely because of a desire of counsel to gain some tactical advantage. The general rule under s 27 of the Evidence Act applied and accordingly I should require Mr Knaggs to be cross examined on his affidavits. Upon this ruling Mr Knaggs went into the witness box and gave his evidence and was cross examined for about a day.

Accordingly, for these reasons I made the rulings I made at the trial.

Putting all these thoughts together, I should deal with the issues as raised on the pleadings and make my final decision on each of them.

The plaintiff claimed as against the first defendant that it had lost its interest by reason of the fraud of the deceased or the defendants or some of them. I find that this is not so. It may be that the first defendant's action in registering Transfer 90 whilst there was still a caveat lodged but unregistered, was a breach of his duty under the Real Property Act. However, this is not pleaded and the fact that the plaintiff has a remedy against Andriana Armata as to the second moiety would mean that this, in any event, would only be a claim that would be effective to the extent to which the plaintiff cannot succeed against Ms Armata and recover its money. The plaintiff then seeks certain declarations that various dealings are not sufficient or that a lapsing of a caveat was procured by fraud. These are really requests for declarations "along the way" and should not be made. There is a claim to reinstate caveats etc and to cancel the two Transfers 79 and 90. There is no real purpose in restoring the caveats. The facts as I have found them do not permit the cancellation of Transfer 79. I do not order the cancellation of the registration of Transfer 90. However I will declare that Transfer 85 is not now capable of registration.

The plaintiff claims against the third defendant, Ms Armata, various declarations, but I do not think that any order should be made other than that she holds the one-half interest in the property in her capacity as administratrix of Con Maglaras subject to the plaintiff's equitable charge.

As against Maire Maglaras, the plaintiff seeks a declaration she remains the registered proprietor, but this cannot be given on the facts as I have found them.

As against Mr Knaggs, a declaration is sought that in the circumstances he was the person upon whose application the transferee Andriana Armata was registered. This declaration could not be made as it is just a staging-post in the procedure. No order is really sought other than damages under s 126 of the Real Property Act against Mr Knaggs and this order should not be made for the reasons I have already given.

The first cross claim is brought by Maire Maglaras against the Registrar General, Ms Armata and Mr Knaggs. On the facts as I have found them, this must be dismissed.

As to costs, the plaintiff has failed against the Registrar General and so should pay his costs. As against Ms Armata, the plaintiff has failed on the major part of the claim but has succeeded to some extent in so far as Ms Armata holds an interest in the Harbord property as administratrix of Con Maglaras' estate. I have considered the various permutations and combinations, but I believe the fairest order I can make is that both Ms Armata and the plaintiff should pay their own costs of the case between the plaintiff and Ms Armata. The plaintiff failed against Mrs Maglaras. In one sense it was not seeking any order against Mrs Maglaras, it was trying to have her restored to the Register to make its position stronger. Indeed, Mr Knaggs commented on many occasions throughout the proceedings, with some justification, that there was a bond of affinity between the plaintiff and Mrs Maglaras. I do not consider that there should be any costs as between the plaintiff and Mrs Maglaras. Mrs Maglaras must, however, pay the costs of her failed cross claim.

Mr Knaggs succeeded and so his costs should be paid in respect of the claim by the plaintiff and in respect of the cross claim by Mrs Maglaras.

Accordingly the orders I make are as follows:-

1. Declare that Transfer U230380 lodged with the Registrar General on 3 May 1994 in respect of the land comprised in Folio Identifier 5/20134 is no longer effective to enable the Registrar General to register the third defendant as proprietor of a second one-half undivided share as tenant-in-common in that land.

2. Declare that the property 5 Corella Street Harbord being the land comprised in Folio Identifier 5/20134 is held as tenants-in-common in equal shares between the third defendant in her own right and the third defendant as administratrix of the estate of the late Constantinos Maglaras.

3. Declare that the interest of Constantinos Maglaras (but not the interest held by Andriana Armata personally) is encumbered by an equitable charge in favour of the plaintiff to secure moneys owing to the plaintiff under District Court judgment obtained in action 12929 of 1986.

4. Order that the plaintiff's claim otherwise be dismissed.

5. Order that the cross claim of the fourth defendant be dismissed.

5. Order that the fourth defendant/cross claimant pay the costs of the cross defendants of the cross claim.

6. Order that the third defendant pay her own costs of the proceedings.

7. Otherwise order that the plaintiff pay the defendants' costs of the proceedings.

8. Liberty to apply.

9. Order that the exhibits be returned after 28 days provided that if an appeal is lodged by any party the exhibits are to remain with the court until disposal of the appeal.