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HWL Ebsworth Partner Gary Newton and Law Clerk Khushaal Vyas discuss the recent NSW Supreme Court decision in Guirgis v JEA Developments Pty Ltd where the Court found that either the Licensed Conveyancer had displayed reckless disregard for the obligations she owed as someone in her position or, failed to meet the standard of care that was to be expected of a reasonably competent Licenced Conveyancer.
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Gary will present the Conveyancing and Property Law Update at the Property Law Roundup Seminar on Friday, 29 March in Sydney. He previously presented on New Leases, Significant Leasing Reforms, Developments and Trends at the Critical Leasing Updates, Drafting and Negotiation Conference.
In Brief
The case of Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164 provides an important lesson to licenced conveyancers of the possible consequences that they may face by improperly supporting a caveat application where they fail to take reasonable steps to inform themselves of the information and evidence supporting the application.
In this case, the Court found that a caveat lodged by the licenced conveyancer (the Conveyancer) has absolutely no merit and no evidence supporting the claims in the application. The Conveyancer was called before the court where it was held that she had failed to meet her obligations as a licenced conveyancer and fell far below the standard of care owed by a reasonable person in her position. She escaped further disciplinary action by subjecting herself to certain undertakings.
Factual Background
On 15 December 2018, Mr Guirgis (the Purchaser) entered into a contract to purchase a property with settlement due to occur on 25 February 2019. The Purchaser was involved in a Family Court dispute with his wife, Mrs Guirgis. On 11 February 2019, Mrs Guirgis lodged a caveat through JEA Developments Pty Ltd (the Caveator); a company in which she was the sole director. The caveat specified that the claimed interest in land was by virtue of a loan agreement. The caveat was lodged electronically and signed by the Conveyancer which certified that to the best of the Conveyancer’s knowledge, the Caveator had a good and valid claim to the property in question.
It was conceded in proceedings by the Caveator that she had lodged the caveat as a negotiation tactic in the lead up to a Family Court hearing which also was due to occur on 25 February 2019. It was later revealed that the Conveyancer had not sought any further information about the alleged loan agreement from the Caveator, nor whether the agreement was oral or in writing. Furthermore, it was found that the Conveyancer did not answer the Purchaser’s request for information regarding the loan agreement claimed in the caveat. Consequently, the Court became increasingly concerned with the Conveyancer’s conduct and called her to the hearing.
Judgment
The Court took particular exception with the Conveyancer having signed that she “to the best of her knowledge” identified that there was a good and valid claim by the Caveator. The Court emphasised that the expression “to the best of the knowledge” of the Conveyancer provided a representation that the Conveyancer had a suitable level of knowledge about how an interest in the land had arisen and had taken reasonable steps to inform themselves of the relevant facts to gain an informed opinion.
It was clear on the evidence that the Conveyancer had no such information and had taken no steps to come to an informed view. The Court concluded that either the Conveyancer displayed reckless disregard for the obligations she owed as a licenced conveyancer or failed to meet the standard of care that is to be expected of a reasonably competent licenced conveyancer.
The Court considered referring the Conveyancer to Fair Trading for disciplinary action but ultimately were satisfied that because the Conveyancer demonstrated an understanding of her error and provided an undertaking to undergo further training and education, such action was not necessary.
Lessons
In its concluding remarks, the Court emphasised that with the NSW conveyancing system shifting to a completely electronic platform, “the role of conveyancers, solicitors…as persons qualified to prepare and lodge caveats becomes all the more important”. This is because ordinary members of the public are no longer able to lodge a caveat without the assistance of a ‘subscriber’ who in most cases will be a licenced conveyancer or solicitor. The purpose of these subscribers is to ensure court resources are not expended on the removal of completely unmeritorious caveats. Furthermore, such applications create unnecessary financial and commercial burdens on both purchasers and caveators.
This case therefore demonstrates that, under a modernised electronic conveyancing system, the validation provided by solicitors and licenced conveyancers is taken very seriously. Accordingly, solicitors and licenced conveyancers should be sure to take reasonable steps to understand the information and evidence that may support a caveat application before lodgement or risk facing disciplinary action.
HWL Ebsworth Partner Gary Newton is an accredited specialist in property law since 1994 and has a built broad property practice since 1983. Gary advises on a variety of real estate transactions including retail leasing and commercial leasing, both for landlords and tenants, property acquisitions, property developments and sales including residential, commercial, retail and industrial, buying property in Australia, strata, community and neighborhood title law, property joint ventures, due diligence, finance and structuring, partitions, environment and planning; and general property advice. Gary has been named in Best Lawyers™ Australia for Leasing Law and Real Property Law. Gary has also been recognised in the Recommended Tier of the ‘Leading Property & Real Estate Lawyers’ for the 2018 edition of Doyle’s Guide. In 2016, Gary was listed as a recommended lawyer in Real Estate by the Asia Pacific Legal 500.
He has been recognised in the Asialaw Leading Lawyers Guide (2017) as Leading Lawyer in Construction & Real Estate and has been selected for inclusion in the Asialaw Profiles Legal Directory (2017 & 2018) for Real Estate. He was also awarded in 2016 a Lexology Client Choice Award for his excellence in client service in the area of Real Estate. Gary is a member of the Law Society Property Law Committee and is the current Chairman of the Australia Property Law Group of the Law Council of Australia, General Practice Section. Gary has published 8 books on property law including 2 books in 2017. Gary is one of the authors of the LexisNexis Butterworths NSW Conveyancing Service (loose leaf). Gary is a regular speaker at Property Law Conferences. For the Real Estate Institute of NSW Gary presents a regular webinar programme for commercial real estate agents. Contact Gary at gnewton@hwle.com.au or connect via LinkedIn. You can also connect with HWL Ebsworth via LinkedIn and Twitter
Khushaal Vyas is a Research Clerk at Baker McKenzie. He is a final year undergraduate Arts/Law student at the University of New South Wales where he was President of the UNSW Law Society and was a finalist for Australian Law Student of the Year 2017 & 2018. Connect with Khushaal via LinkedIn.
