Date: Thu, 31 May 2007 09:56

From: Duncan Sheehan

Subject: Say-Dee in the High Court of Australia

Bear with me if this doesn't make much sense; I'm trying to come to at least an intelligible view. As I understood Say-Dee (paras 174-178) the cognition requirement in Australia for knowing assistance goes down to point 4 on the Baden Delvaux scale. The first limb of Barnes v Addy seems to creep in to those paras as well suggesting the cognition requirements for knowing receipt and assistance are the same. I have doubts about whether that can be right (certainly it isn't in England), but if it is then if one fits into the fraud exception, the other must and vice versa).

Secondly in an assistance case, you don't ever need to get hold of the assets necessarily, so there seems no reason to invoke any indefeasibility provisions; nobody's attacking anybody's title to anything. It's purely personal liability, and maybe therefore calling it constructive trusteeship is a little misleading. If knowing receipt is the same type of constructive trusteeship does the same not apply? Indeed if it is a personal unjust enrichment claim I can't see why indefeasibility matters at all. It will matter though if constructive trusteeship is seen as being contingent on taking some management responsibility for the asset. Once the proprietary claim is knocked out, the personal claim must be (unless the fraud exception applies, in which case neither is knocked out). It's a shame then that the HCA didn't produce any real argument as to what type of liability knowing receipt is. I'm especially fond of para 148 here; a better example of ducking the question I'd be hard pressed to find.

I wonder though if the CA in Say-Dee really were invoking "strict liability knowing receipt" (somebody has to think of a better name!). It was a proprietary claim - a real trust, albeit constructive - dependent already on being able to trace. There's some difficulty in that you're tracing information, but I have no particular difficulty with that. If that's right then if there's no claim to the land (because title's indefeasible) there can't be a claim to the proceeds of sale.

Am I seriously off-beam here?

Duncan

Dr Duncan Sheehan
Senior Lecturer in Law
Director of Research
Norwich Law School
University of East Anglia
Norwich NR4 7TJ
United Kingdom

-----Original Message-----
From: Neil Foster
Sent: Thursday, May 31, 2007 5:22 AM
Subject: RE: ODG: Say-Dee in the High Court of Australia

Dear Duncan

To take the relatively easy questions first:

1. can we register trust interests in some way under Torrens?

The answer is no, but there is a "parallel" system called the "caveat", which allows a person who claims to have an unregistered interest in Torrens system land to lodge a caveat on the Register. This will then prevent further dealings with the land until it is somehow resolved, which will then mean that either the current registered proprietor or a prospective purchaser may take the matter to court.

2. are there no rectification provisions?

Depends what you mean. There are provisions for correcting formal errors. But there is no general provision for administrative correction of the register. If someone claims they have an interest in land which is not reflected on the register they lodge a caveat (see above.)

As you say, there is a fund (called in NSW the Torrens Assurance Fund) which is meant to provide compensation to anyone who suffers a loss because of the operation of the indefeasibility provisions of the Act. So someone who finds that their land has been taken from them because a forged transfer was made, and the land was then sold to an innocent third party who has now become registered proprietor, can receive compensation.

A claim for "knowing assistance" would probably involve wrongdoing on the part of the registered proprietor which would usually (I imagine) be classified as "fraud" and hence amount to an exception to indefeasibility.

What if Mrs Elias and her daughters no longer had the land, but were prima facie liable for knowing receipt, would the indefeasibility provisions defeat the claim - we're clearly not asking for a proprietary right here, just a personal claim to account.

Suppose that Mrs Elias and daughters had "knowingly received" trust property in some way which did not involve active fraud (simple notice). Then they gave the property to someone else. Does this affect the ability of the person whose "trust property" it was (say, Say-Dee) to seek a personal accounting? Tentatively I will answer, no. But in fact of course the reason that proprietary remedies are significant is that often the land is the only fund of value around. Once the land is gone a personal claim may not be any use.

I guess the more interesting question is, if they sold the land and still held the funds, could the claim be taken against those funds? I need to think about that a bit more. Maybe those who know about "tracing" have a view?

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