The Real Property Act Assurance Fund – A handy addition for any litigator’s toolkit

Back in 2015, the nephew had been representing your client’s daughter in Family Court proceedings.    Your client’s daughter was in need of financial assistance, following her relationship breakdown.   The nephew offered to help your client’s daughter by organising finance for her.   Your client was told her home could be put up as security for her daughter’s loan.

The nephew arranged the loan and came to see your client to sign some mortgage documents.  Your client signed whatever documents were put in front of her by the nephew, thinking that she was helping her daughter.

Months after signing the mortgage documents, your client received a notice of default.   The notice of default refers to a loan of $120,000 and interest, charging rates between 42% and 150% per annum.   When questioned, the nephew downplayed the significance of the notice of default, saying that it was mistake.

Several months later, your client received notice of court proceedings.  The mortgagee who issued the notice of default was seeking an order for possession of your client’s property.   Your client and her daughter contacted the nephew.  The nephew said that he would look into the matter.   He assured your client that she had nothing to be concerned about.

Several more months passed by and your client then received a knock on the door at her home.  It was a sheriff’s officer coming to tell your client that she was being evicted from her home.  The mortgagee had obtained an order for possession.

Your client’s property was sold by the mortgagee to an arms-length purchaser in 2017 for fair market value.  The mortgagee has recovered its debt, but your client is left without a home and she is forced to move in with her daughter.

Your client later discovered that her nephew had forged her signature on loan documents and even forged an affidavit filed in the possession proceedings.  Instead of your client mortgaging her property to secure a loan to her daughter, the mortgage secures a loan to a fraudster who is associated with your client’s nephew and who never serviced the loan.  

The new owner of your client’s property is a bona fide purchaser who has paid fair market value for the property.

There is no prospect of recovering money from the fraudster who has long gone.  Your client has no prospect of recovering any money from her nephew either.  He is a bankrupt, has ceased to practise as a lawyer and he is about to be sentenced to a term of imprisonment.

You consider the possibility of making a PI claim against the law firm where your client’s nephew was working, in the hope that Law Claims will respond to the claim.   But you understand the prospects of the insurer responding to the claim are poor, not least because the policy does not respond where a solicitor has engaged in fraudulent conduct.

You also consider the possibility of making a claim against the Fidelity Fund, but you know that claims to the Fidelity Fund require a claimant to demonstrate that there is no reasonable prospect of recovering their loss elsewhere, and you are unsure if your client has exhausted all possible avenues.

In these circumstances, one option you might consider is the Real Property Act Assurance Fund.

The Assurance Fund is a scheme established under Part 18 of the Real Property Act 1886 (SA) to compensate individuals who suffer loss due to errors or omissions in the land titles system.

It is a fund that is designed to provide financial redress to individuals who, through no fault of their own, experience a loss through the operation of the Torrens Title System, such as fraudulent transactions or administrative errors.

Before any proceedings are commenced, an eligible claimant can make an application to the Registrar-General seeking compensation pursuant to s 210 of the Act.    An application must be supported by an affidavit or declaration.

If the Registrar-General admits a compensation claim that exceeds the sum of $20,000, the State Treasurer is authorised to pay monies out of the Assurance Fund upon receiving a warrant signed by the Governor of South Australia and counter-signed by the Attorney-General.

Absent the Registrar-General accepting an application for compensation under s 210, a claimant may institute proceedings against the Registrar-General as the nominal defendant, pursuant to s 208 of the Act.

The limitation period to bring a claim for compensation under Part 18 of the Act is much greater than conventional claims in contract or tort.   Your client was the victim of a fraud perpetrated in 2015, nearly a decade ago.  Pursuant to s 215 of the Act, a claimant has 20 years to make an application for compensation and/or to bring an action seeking compensation.

The story of the client who lost her home because of the fraudulent actions of her nephew is, of course, a true story.   It has a happy ending as well.  The client was successful in making a claim for compensation from the Assurance Fund.

The client is compensated by receiving a cash sum equivalent to the current market value of her former home.  Not only has your client been restored back to the position she would have been in, had the fraud not occurred, she has avoided costly legal proceedings as well.

The next time you have a client who has suffered a loss through the operation of the Torrens Title System, you should consider whether there are grounds for making a claim against the Assurance Fund, pursuant to Part 18 of the Real Property Act.

Picture this.  It is 2023.  A new client comes to see you.   She is on the Centrelink Age Pension.  She tells you that she lost her home as a result of fraud on the part of her nephew, who was a lawyer, some 8 years earlier, in 2015.

The Real Property Act Assurance Fund – a handy addition for any litigator’s toolkit

Potential pitfalls when settling disputes without a written deed

Mr Koon Wong (the Applicant) commenced proceedings against the bankrupt estate of his estranged daughter, Ms Mei Wong, relating to a property that he and Ms Wong owned as tenants in common in NSW.   Ms Wong’s trustee in bankruptcy (the Trustee) defended the proceedings.

On 29 July 2021, the Applicant’s solicitor sent a letter to the Trustee proposing to settle on the following terms (the Offer):

the property be sold as soon as possible under the instruction of the Applicant;

the Trustee be paid from the net proceeds of sale a sum estimated to be approximately $220,000; and

the balance of the net proceeds of sale be paid to the Applicant.

On 2 August 2021 the solicitor for the Trustee responded, accepting the Offer and paraphrasing the terms of the Offer as follows:

the property is to be sold as soon as possible under the Applicant’s instructions;

the amount of $220,000 will be paid to the Bankrupt Estate from the net proceeds of sale; and

the balance of the net proceeds of sale will be retained by the Applicant.

The Trustee’s solicitor also stated that a draft deed of settlement would “be sent to you for review shortly” (the Draft Settlement Deed), even though the Offer had been silent about a deed.

 On 3 August 2021, the Trustee’s solicitor sent the Draft Settlement Deed to the Applicant’s solicitor, which not only included the terms referred to above, but also added additional terms, such as that the property would be transferred in its entirety to the Applicant, a requirement that the Applicant indemnify the Trustee against any taxes payable on the transfer, and full releases.   Of particular significance was the fact that the Trustee’s acceptance of the Offer was not made conditional upon the parties executing a deed.   Further, when the Draft Settlement Deed was provided, the Trustee’s solicitor had expressly invited the Applicant’s solicitor to advise of any changes that he was instructed to request. 

The Applicant rejected the Draft Settlement Deed and by email dated 11 August 2021 the Applicant’s solicitor asserted that the Draft Settlement Deed constituted a counter offer which the Applicant did not accept.  The Applicant’s solicitor went one step further and stated that the Applicant’ Offer was no longer open for acceptance.  Unsurprisingly, the Trustee did not accept that the Offer was capable of being withdrawn and maintained that a binding agreement had been concluded, when the Trustee’s solicitor had accepted the Offer on 2 August 2021.

At paragraphs 27 – 39 of the judgment, the Court restated the principles governing whether parties have entered into a binding and enforceable agreement, including by noting that:

the law is not concerned with parties’ subjective intentions, or what they may have subjectively thought had been agreed;

the law is only concerned with ascertaining the objective intention of the parties, which is determined by reference to what a reasonable person would have understood from the other party’s words and conduct;

in determining whether a contract has been formed, it is not necessary to identify a precise offer or acceptance, nor a precise time at which an offer or acceptance can be identified;

rather, the question is to be answered by asking what a reasonable person in the position of the parties would think as to whether there was a concluded bargain; and

whether a communication accepts the terms of an offer without modification, or instead varies its terms, is a question of construction.

The Court found that a binding agreement was formed when the Trustee accepted the Offer on 2 August 2021, even though in its response the Trustee had made reference to a draft deed of settlement that would be provided separately.

The Court determined that an agreement had been formed for the following reasons:

The first and third terms of the Offer were accepted by the Trustee without qualification. The acceptance of the second term included a difference that was not material (i.e. a fixed sum of $220,000, rather than an “approximate” sum of $220,000) and did not change the substance of the agreement. The Court considered the reasonable person would not view the difference as introducing a new term which would result in a counter offer.

The Offer was expressed as operating as a Calderbank letter, meaning that the Applicant intended to rely on the Offer on the question of costs, if it was not accepted.  This ran counter to a submission made by the Applicant at the hearing that the Offer was conditional upon him obtaining consent from third parties.

The Trustee’s acceptance of the Offer was not made conditional upon the parties entering into the Draft Settlement Deed in the terms propounded by the Trustee.   The Draft Settlement Deed did not materially vary the terms of the agreement and simply addressed matters that sought to give effect to, or were otherwise incidental to, the agreed terms.

The Court found that as the Applicant had rejected the Draft Settlement Deed, when it was presented on 3 August 2021, the parties were left with a binding agreement that was recorded by the exchange of emails dated 29 July and 2 August 2021.

The case demonstrates the importance of stating an offer in definitive terms and that if a party wishes to make acceptance of a settlement offer conditional upon the execution of a formal deed or agreement, this should be made clear from the beginning.

Otherwise, parties may find themselves immediately bound by an agreement without having agreed to additional terms in formal documentation.

In the recent case of Wong v Wong [2022] FCA 78, the Federal Court of Australia has recently re-visited a question that occasionally arises when settling disputes, namely, whether a binding contract can be formed upon the acceptance of an offer where the offeree then proposes additional terms in a draft deed of settlement.

Director Identification Numbers | Make sure you rise above the DIN and get registered

From 1 November 2021, directors of Australian companies are required to apply for and verify their identity under the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth), which introduces reforms to Part 9.1A of the Corporations Act 2001 (Cth).

Applications are now open for a Director Identification Number (DIN). Below we outline what directors need to know about DINs and the application process.   

Why have Director Identification Numbers?

The DIN regime is a first of its kind in Australia and has been established in an effort to suppress both illegal phoenix activities and fraud through the tracing of company directors over time. The Australian Business Registry Services (ABRS) is responsible for the implementation and processing of DINs, whilst ASIC will enforce related breaches. Through this single source of business data, ABRS will be able to: 

•	prevent use of fraudulent identities;

•	monitor directors’ association with companies over time; and

•	ascertain directors’ involvement in phoenixing or unlawful activities.

What is a Director Identification Number?

A DIN is a permanent and individual 15-digit identifier provided to a director or someone who intends to become a director of a registered Australian company and who has verified their identity with the ABRS. Directors are required to apply for their own DIN, which directors will keep indefinitely. 

Who is required to hold a Director Identification Number?

If a person is a director or alternate director of a: 

•	registered Australian body that is a body corporate; or

•	registered foreign company that is a body corporate, 

under the Corporations Act, they are required to apply for a DIN. The requirement does not apply for shadow or de facto directors and the regime is relevant to both foreign and domestic directors of registered Australian companies. 

Both existing and new directors are required to apply for a DIN in accordance with the dates outlined below.

Date of directorship on or before 31 October 2021	- apply by 20 November 2022

Date of directorship between 1 November 2021 and 4 April 2022 - apply within 28 days of appointment

Date of directorship from 5 April 2022 - apply before appointment

1.	Persons who were directors on or prior to 31 October 2021, have 12 months to register;

2.	However, directors appointed between 1 November 2021 and 4 April 2022 (i.e. newly appointed directors) will have only 28 days from the date of their appointment to register; and

3.	Newly appointed directors from 5 April 2022 will be required to register before the date of their appointment.

The simplest way to apply for a DIN is online via the ABRS website www.abrs.gov.au/director-identification-number/apply-director-identification-number The online process requires that directors have a myGovID account (not to be confused with myGov). 

The myGovID app enables directors to prove their identity and the myGovID can be set up here www.mygovid.gov.au/

To apply for a DIN, the following documents are required for verification of identity:

•	Residential address held by the Australian Taxation Office; and

•	Information from two documents to verify their identity, for example an Australian passport, birth certificate, or driver’s licence.

The application process and timeframes for foreign resident directors remains the same as Australian resident directors. However, to complete an online application, the foreign director is required to lodge a paper application to verify their identity and provide a:

•	Certified copy of one primary document, for example a birth certificate or foreign passport; and

•	Certified copy of one secondary documents, for example a driver’s licence.

These documents can be certified by a notary public or staff at an Australian embassy, high commission, or consulate in the presence of the foreign director.

Once the identity has been verified in myGovID, the application process can be completed online through ABRS www.abrs.gov.au/director-identification-number/apply-director-identification-number

Once a DIN has been received, directors need to provide their DIN to the person responsible for holding company records for each ASIC registered entity in which the director is appointed. Directors must also inform any other companies to whom they are appointed in the future.  Presently, there is no requirement to provide DINs directly to ASIC, however, this will likely change, possibly by September 2023.

Causing an offence or failing to meet obligations under the DIN regime, may give rise to an infringement notice which may lead to civil penalties and/or criminal charges (1 year imprisonment). These offences include intentionally applying for multiple DINs and intentionally using false information in an application for a DIN.

All Australian companies are required to ensure that directors (and alternate directors) are aware of their requirements and obligations under the regime.

Although the deadline for current directors is 20 November 2022, we recommend that directors begin collating the required personal information and commence the application process now, while this announcement is fresh in their minds.

ABRS Website: www.abrs.gov.au/director-identification-number/apply-director-identification-number

Article written with the assistance of Molly Richardson, GDLP Student

Australia’s Director Identification Number Regime - What do directors need to do to meet their obligations?

Australia’s Director Identification Number Regime | What do I need to do to meet obligations?

After graduating, Tom was an Associate to Justice Richard White and Justice David Bleby in the Supreme Court of South Australia for 18 months in 2005 and 2006.

Tom has practised for 20 years, almost exclusively in commercial litigation and dispute resolution.

Prior to joining our firm in 2017, he had worked at Fisher Jefferies (now Dentons) and Iles Selley Lawyers, becoming a partner of that firm in 2016.

Tom is versatile in a broad range of litigation matters, ranging from property and trust disputes to defamation and insolvency matters, and almost everything in between.

He regularly receives referrals from, or is asked to act for, individual members of the legal profession and law firms alike.  From time to time, Tom receives instructions from Law Claims to defend claims made against legal practitioners.

Tom is regarded by clients and professional counterparts alike as a calm and perceptive lawyer, possessing a keen eye for detail, whilst being pragmatic and commercial in resolving disputes.

Tom Evans is a graduate of Flinders University and was admitted to practice in South Australia and the High Court in 2004.

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Tom Evans

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Methodical & Perceptive

Tom Evans is a graduate of Flinders University and was admitted to practice in South Australia and the High Court in 2004.

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