The rights of $2 companies

A new(ish) Charter judgment has just appeared on Austlii that might have addressed some interesting questions about the interaction of Victoria’s Torrens Title system and the Charter’s unique right to property. Alas, Bank of Cyprus Australia Limited v The Registrar of Titles [2008] VSC 327 proves to be yet another example of the Supreme Court uncritically batting away a Charter issue – one raised proactively by a public authority – by relying on an unnecessary gap in the Charter’s protection of human rights, on this occasion the exclusion of corporations from protection.

The facts involve the forced sale of 333-335 Sydney Road Brunswick, better known as The Greek Bar Tavern, and the subject of multiple judgments of late. On 25th June 2006, a month before the Charter became law, the property’s owner, Marywell Investments, was placed in liquidation and the liquidator has spent the following two years trying to sell the property. Standing in his way is the man behind Marywell (and the continuing occupier of the The Greek), George Velissaris, who has been trying to do everything he can to stop the sale. This included placing caveats on the property alleging that Marywell had leased or sold the property to him or others, which the liquidator got struck off citing the uncommercial nature of such transactions. That allowed the property to finally be sold at auction in March this year, however that sale was further frustrated by fresh caveats. One, lodged by Velissarus on behalf of his daughter,  led to a ban on him and his family from lodging further caveats and an order for him to pay the liquidator’s legal costs. But the focus has now moved to a $2 corporation, ‘Sydney Road 333′, which lodged a caveat claiming to have been sold the property by a third party late last year. Unsurprisingly, that caveat was also struck off.

The present case involves two bystanders who became caught up in these events. The plaintiff, the Bank of Cyprus, was the finacier for the auction purchase, which was cleared to go ahead after the last caveat was struck off. On a Thursday in June, it forwarded the money to the purchaser in exchange for the mortgage document but, held up by a ‘requisition’ it fatefully delayed registering the documentation until the following Monday. In the meantime, on the Friday, a director of  Sydney Road 333 lodged an appeal against the removal of its caveat. As a result, the defendant, the Registrar of Titltes , to refuse to register the bank’s documents, exercising a long-established discretion described by the High Court in the following terms:

[T]he Registrar is not an automaton; he has a high and responsible public duty to discharge, and he has an obligation to see that the purpose of the Act is neither destroyed nor prejudicially affected. He has the right and the duty to preserve his entries and records from confusion, and to prevent the intrusion of anything calculated to obscure or mislead, or even to impede the ordinary and practical working of his department. He has also in certain cases a necessary discretion, though forms are complied with, to act so as not by undue haste or too facile compliance with any application to do what appears to him may be a wrong to another person, or bring a claim upon the assurance fund.

In particular, the Registrar cited the danger that the registration of the bank’s documents, which trigger the indefeasibility of the bank’s mortgage, might defeat any claim that Sydney Road 333 was able to establish in its appeal.

Interestingly, the Registrar relied on the Charter in taking this approach, although the nature of its reliance isn’t revealed in this judgment. This is quite noteworthy as an instance where a public authority proactively raised the Charter as guiding, perhaps limiting, its pre-existing discretion. While it’s possible that the Registrar’s argument was about the interpretation of the Transfer of Land Act 1958, it is  more likely that the argument was based on the combination of these two Charter sections:

20 A person must not be deprived of his or her property other than in accordance with law.

38(1) Subject to this section, it is unlawful for a public authority to act in a way that is incompatible with a human right or, in making a decision, to fail to give proper consideration to a relevant human right.

The Registrar, by altering the register, is a body that is uniquely capable of depriving someone of property (via the operation of Torrens Title indefeasibility.) Arguably, doing so in circumstances when a properly notified contrary claim is the subject of legal proceedings could be regarded as doing such a deprivation ‘other than in accordance with law.’ (It might also be seen as limiting the claimant’s right to have the civil dispute determined by a fair trial.) There’s no similar risk for the Bank and auction purchaser, as their interests are protected in the (likely) event that Sydney Road 333’s appeal failed. So, arguably, the Registrar’s exercise of its discretion is confined by the conduct mandate to prevent it from facilitating an indefeasible registration in these circumstances. It’s an interesting and novel application of the Charter’s conduct mandate in a private law setting.

Alas, the merits of the Registrar’s approach (whatever it was) were never addressed. Justice Whelan wrote:

I accept the submission of the bank that, given that the only person whose property could possibly be affected is not a human being, the Registrar’s submissions concerning the Charter were misconceived (see s.6(1) and s.6(3) of the Charter of Human Rights and Responsibilities Act 2006).

The relevant Charter section is this one:

6(1) Only persons have human rights. All persons have the human rights set out
in Part 2.

Note Corporations do not have human rights.

Justice Whelan’s reference to s. 6(3) of the Charter (preserving any functions the Charter imposes that fall outside of s. 6(2)) itself appears misconceived, and was probably meant to be a reference to Charter s. 3, which defines ‘person’ to mean ‘a human being.’ Whelan’s point is that ‘Sydney Road 333′ isn’t a human being, so the Registrar isn’t obliged bythe conduct mandate to avoid infringing its human rights.

I dislike the blanket exclusion of corporations from the Charter for a number of reasons. First, the usual justification for this exclusion (which also appears in the ACT and proposed Tas and WA Acts) is that corporations already have lots of power and therefore might use any rights they were given to abuse others. I regard this argument as a showing a  lack of faith in the robustness to human rights law against misuse and abuse. Indeed, I believe it is just a thinly disguised attack on corporations, which sets poorly with the repeated claim that human rights law is there to protect the popular and unpopular alike.

Second, the specific case that is used to back this argument is the Supreme Court of Canada’s striking down of that country’s tobacco advertising laws in 1995 as inconsistent with their freedom of expression. Not only do I believe that that particular case was correctly decided (and, indeed, that the human rights community’s dislike of the case flows from the fodder it gives to the anti-Charter movement, rather than any legal analysis), but, if the Supreme Court did reach the wrong result, it has nothing to do with the fact that tobacco is sold by corporations. (Indeed, SARC raised the freedom of speech argument when querying Victoria’s tobacco advertising laws, because the occupiers of premises that sell tobacco products – and hence are subject to point-of-sale restrictions – are not necessarily corporations .) Rather, any critique of the case should be directed at the scope of freedom of speech and, perhaps, the need for a wider public health exception. An argument for a ‘commercial’ or ‘corporate’ exception goes too far, notably covering much of the media (as the Underbelly case sadly showed) and therefore denying Victorians the right to freedom of the press.

Most importantly, the argument against corporations as potential ‘predators’ or ‘abusers’ of human rights completely ignores the variety of different corproations out there and the potential for corproations to be the victims of both state action and action by more powerful corporations. Not all corporations are Big Tobacco. The present case is a clear counter-example. ‘ Sydney Road 333′ is a company claiming to be in dispute with a large bank and a state-backed liquidator, with no assets of its own other than its limited liability. Such a company has the same potential to be victimised as any human being. It isn’t asking to be freed from government regulation, but rather the opportunity to pursue its claimed property rights in court like anyone else. I simply cannot see the reasoned argument – as opposed to an emotive, politicised one – for denying such corporations (or indeed any corporations) the rights to due process contained in Charter sections 20 through 27.

Moreover, as I argued in relation to the Underbelly case, it strikes me as simplisitic to draw a sharp distinction between corporations and humans when it comes to human rights. While the domestic legal system draws heavily on the fiction that a corporation is different to the people who own it or work for it, human rights law is all about substance. Sydney Road 333 is transparently a vehicle for some regular humans to pursue their grievance about the sale of The Greek Bar Tavern. That the use of such a vehicle may well involve some underhandness (e.g. to side-step orders barring people from lodging caveats and to avoid indemnity claims), that shouldn’t on its own be enough to completely deny human rights in this situation. After all, human beings are capable of similarly underhand behaviour and don’t lose their rights.

In addition, I think the exclusion of corporations has the potential to cut across the human rights culture demonstated by the Registrar when (or if) it formulated a new approach to lodgment when proceedings were pending (doubtless for its own reasons but nevertheless apparently founded on a plausible Charter argument.) The effect of this case seems to be that the Registrar – and all other public authorities – should have two policies: one for cases involving human beings, one for cases involving corporations. In the former, bank claims must be deferred until proceedings are over; in the latter, the bank’s prior or stronger claim gets precedence. I doubt that such split rules will be easy to implement and I suspect that the need to do so may lead public authorities to downplaying the impact of the Charter on their statutory discretions.

In this case, Whelan J overturned the Registrar’s discretion, arguing that the appeal was irregular – breaching a waivable rule requiring corporate proceedings to be lodged by lawyers -  that its new approach gave advantages to defeated, appealing caveators over undefeated caveators (who are typically required to lodge sureties) and disadvantaged the bank (which couldn’t exercise procedural rights that flowed from a completed registration, presumably handy in this difficult flawed transaction.) Doubtless that’s a decision of some merit. But it’s also a victory for banks and liquidators over property owners. Presumably not quite the outcome the drafters of Charter s. 6(1) had in mind.