SOMEONE LODGED A CAVEAT ON THE TITLE OF MY PROPERTY. CAN I SUE THEIR LAWYER FOR COMPENSATION?
The above question was considered in the recent Court of Appeal case of Lanciana v Alderuccio  VSCA 152. In this case, Tate, Hargrave and Emerton JJA considered the circumstances where it may be appropriate that an order be made by the Court, that a solicitor pay compensation in respect of a caveat lodged on behalf of a client without reasonable cause.
The facts are as follows.
The Plaintiff and Bloomingdale Holdings Pty Ltd (“Bloomingdale”) were equal unitholder in two trusts. Mr. Antonio Gangemi was the sole director and shareholder of Bloomingdale. Between 2001 and 2002, the trustee of one of the trusts purchased a property and the trustee of the other trust purchased another separate property.
Following the purchase of the properties, a dispute arose between the Plaintiff and Mr. Gangemi relating to their business dealings and their respective rights between the two properties. The Plaintiff and Mr. Gangemi eventually came to an agreement whereby Mr. Gangemi and Bloomingdale’s interest in both properties would be transferred to the Plaintiff. The basis of the agreement was that once the properties were transferred to the Plaintiff, the Plaintiff would become solely entitled to the beneficial interest of both properties and the caveats that were lodged on behalf of Bloomingdale would be withdrawn.
However, in 2005, Alderuccio Solicitors (“Alderuccio”) lodged a caveat over both properties on behalf of Bloomingdale as caveator. The grounds for lodging the caveat were that Bloomingdale claimed an equitable estate in fee simple pursuant to a Deed of Trust in 2002 between Bloomingdale and the two trustees.
Alderuccio signed the caveat as “agent being a Current Practitioner under the Legal Practice Act 1986”. The Plaintiff alleged that the caveat lodged by Alderuccio on behalf of Bloomingdale caused it loss and damage because the properties were not developed, and they incurred costs because of legal proceedings that had been commenced. The Plaintiff sued Alderuccio alleging that when they lodged the caveat they knew, or they ought to have known that Bloomingdale did not have a caveatable interest and that they could not have had an honest belief based on reasonable grounds that Bloomingdale had a caveatable interest capable of supporting any caveats.
The trial judge determined that Alderuccio was not “a person” lodging a caveat for the purpose of section 118 of the Transfer of Land Act 1958 (Vic) (“the TLA”) and that the Plaintiff was only able to seek compensation from Bloomingdale.
Section 118 of the TLA states “any person lodging with the Registrar without reasonable cause any caveat under this Act shall be liable to make to any person who sustains damage thereby such compensation as a court deems just and orders.”
The Plaintiff made an application to the Court of Appeal seeking leave to appeal. The Court of Appeal refused leave to appeal stating that the decision by the trial judge was correct. The Court considered Section 89(1) of the TLA and made the following argument: “The caveator is named as Bloomingdale and the interest in the land that is described on the caveats is Bloomingdale’s asserted interest. This accords with the requirements of s 89(1), which confers a right on a person who claims to have an interest in land to lodge a caveat to protect the asserted interest and to do so either directly or by his or her agent. The right is conferred on the person claiming the interest, whether or not the interest is ultimately established. Insofar as the caveat is lodged by an agent of the person claiming the interest, the agent, according to the well-established principles of the law of agency, stands in the shoes of the person claiming the interest. The act of lodging the caveat is the act of the principal, that is, the person claiming the interest in the land.”
Therefore, the Court found that Alderuccio was acting on behalf of Bloomingdale and lodging the caveat was Bloomingdale’s act of claiming an interest in the land.
The key takeaway from this case is that when solicitors lodge a caveat as an agent for a client, it is the client who is lodging the caveat and not the solicitor. Any loss or damage suffered because of lodging the caveat should be directed to the client who is primarily liable for compensation under Section 118 of the TLA.
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