Campbell & Anor v McGrath

[2007] HCATrans 67

[2007] HCATrans 067

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S257 of 2006

B e t w e e n -

LEONARD JOSEPH CAMPBELL

First Applicant

MARGARET ANNE CAMPBELL

Second Applicant

and

EDWARD BRUCE McGRATH

First Respondent

MARGARET JOHN McGRATH

Second Respondent

Application for special leave to appeal

GUMMOW J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 9 FEBRUARY 2007, AT 2.35 PM

Copyright in the High Court of Australia

MR J.M. IRELAND, QC:   Your Honours, in that matter I appear with my learned friend, MR H.P.T. BEVAN, on behalf of the applicants.  (instructed by Trisleys)

MR B.A. COLES, QC:   May it please your Honours, I appear with my learned friend, MRS B. DeBUSE, for the respondents.  (instructed by Armstrongs)

GUMMOW J:   Yes, Mr Ireland.

MR IRELAND:   Your Honour, this case raises, we would submit, a matter of general principle concerning the application of the doctrine of Wheeldon v Burrows to Torrens title land.  The facts are relatively straightforward, as your Honours will have seen.  The applicants and the respondents have owned two contiguous blocks of land.

GUMMOW J:   What was the foundation of this order at page 35:

that the Defendants execute an instrument in registrable form for the purposes of the Real Property Act 1900 granting to the Plaintiffs a right of carriageway ‑ ‑ ‑

MR IRELAND:   That is in the trial judge’s decision. Once it was acknowledged that the equitable rights were defined and existed, then the remedy was an order, we would have thought, pursuant to section 46 of the Real Property Act that they sign such an assurance.  I do not think there was ever any complaint about the form of the relief.

GUMMOW J:   I am not surprised.  Yes, go on.

MR IRELAND:   That is my answer to your Honour’s query.  So your Honours have the facts.  After 15 years of tolerating the applicants using the driveway in question, the respondents withdrew their consent and hence the litigation was generated.  As your Honours see, the applicants succeeded at trial before Justice Barrett, the essence of that reasoning being that the doctrine of Wheeldon v Burrows with respect to implied easements was not incompatible with section 42 of the Real Property Act (NSW), and the position was reversed in the New South Wales Court of Appeal, the leading judgment being delivered by Justice Tobias.

Because of the terms of section 42 of the Act which was typical within the Torrens schema, it was necessary for the applicants to bring themselves within the exception to indefeasibility which recognises personal equities or sometimes expressed actions in personam against the registered proprietor.

The Court of appeal resolved the case on the basis that, although all of the necessary conditions for the Wheeldon v Burrows implication existed, the registered proprietors were protected by section 42. At application book page 44, line 28, Justice Tobias acknowledged the significance of the case where he said:

For the first time in a Torrens title jurisdiction, this appeal raises the question of whether such an easement also creates rights in personam or a personal equity enforceable by the registered proprietor of the putative dominant tenement against the registered proprietor of the putative servient tenement where each has acquired title by contemporaneous transfers from the common owner –

and accordingly, the Court of Appeal gave attention to what Justice ‑ ‑ ‑

GUMMOW J:   This is a case of cross‑rights between B and C by reason of a dealing they both had with A?

MR IRELAND:   Simultaneous dealings with A.  The original case in England was Aldridge v Wright, your Honour, which has been applied here.  The Court of Appeal then found it necessary, of course, to resolve this question, to give attention to what it described at application book 62 as the jurisprudential basis of Wheeldon v Burrows.  At application book 64, commencing at paragraph 70 in the judgment ‑ ‑ ‑

GUMMOW J:   I thought that had all been cleared up by Lord Wilberforce in England, had it not, in fairly recent times?

MR IRELAND:   There was a –not in that recent times it was Lord Wilberforce, your Honour, but certainly post-war.  What Justice Tobias says we, with the greatest respect, find difficult to follow.  His Honour says that as Justice Handley had said in Wilcox v Richardson – the extract is at application book 64 - that the rule in Wheeldon v Burrows was based on what was described as presumed common intention of the parties.  Justice Handley had said that the rule in Wheeldon v Burrows was no special rule of the law of conveyancing but just an illustration in particular circumstances of the ordinary rules governing implications in contracts, but we do respectfully submit that ‑ ‑ ‑

GUMMOW J:   How does the law of privity fit in in a contractual framework here?

MR IRELAND:   Your Honour, the relevant parties to the contract where the Wheeldon v Burrows implication has been assessed are the vendor and the purchaser in a simple case, ie, does the conveyance imply rights in favour of the purchaser over land reserved by the vendor?  That is the typical and simple case.  The tripartite case, which is this case, complicates it in analysis in some degree, and what had been said in the English case to which I referred, Aldridge, was that the simultaneous sale to two separate purchasers carries with it the necessary circumstances – coupled with the usual implications as to the easement, it is continuous and apparent and all of those requirements, which are given in this case – is that each of the purchasers should be treated as taking with the correlative benefit and burden of the original easement arrangement which the vendor had created.

As your Honour suggests, the overlay of analysis of privity becomes more complicated there but it is, according to the English authority, the simultaneity of the two conveyances that attracts those circumstances, so that if, for example, the vendor sells to a first purchaser, and then some time later to a second, there is no occasion for the doctrine to operate.

We would say the principle of implication of terms in written contracts involves the court searching for what is unexpressed between the parties in the contract, and the familiar test of the officious bystander amounts to this; one looks at the written contract and concludes that what the parties have left unexpressed must have been their common intention.  At application book 65 Justice Tobias refers to the remarks of Justice Mason in Codelfa to illustrate what Justice Tobias calls “The difference between a presumed intention and an inferred actual intention”, and this is at the centre of what we would say is the error in reasoning.  The passage from Codelfa from Justice Mason, as his Honour then was, is reproduced at 66 in the application book.  In that passage Justice Mason was drawing a distinction between the implication of terms in a contract where intention is presumed and in the case of rectification where the search is for the parties’ actual intention.

We would submit, with the greatest respect, the cases are very different.  In the case of the search for the implication of a term, the intention is presumed because it is unexpressed.  In the case of rectification, the parties have expressed and recorded their contract in particular terms, but that expression “typically by mistake” is at odds with their actual intention.  So the order for rectification in those circumstances operates to replace what is expressed by the parties as their intention in light of the finding as to what was actually intended by them, and of course rectification is a remedy ordered only in a clear and unusual case.

So that this dichotomy that Justice Tobias erects in this case between presumed intention and actual intention seems to be the illogical child of a distinction drawn by Justice Mason in Codelfa with respect to different subject matter.  We put the point simply that when one looks at a contract or a conveyance and reaches a conclusion of an implication, there is no material distinction to be made there with reference to a mechanism, a presumption or imputation, and yet it is that distinction which decides this case ultimately against my clients.

It is a case of course where the trial judge and the Court of Appeal have differed, so there is already on a respectable platform a judicial opinion in favour of what we are putting to the Court.  It is a case where the facts do not mess up the case or involve the Court in any extended time in factual analysis.  The simple point is ‑ ‑ ‑

CRENNAN J:   But whether it is presumed or imputed, your main point is, is it not, that the contemporaneous transfers were sufficient for those purposes?

MR IRELAND:   Yes, it is, your Honour.

CRENNAN J:   That is the point of disagreement between you?

MR IRELAND:   That is so.

CRENNAN J:   Because of the limited nature of the exception to indefeasibility in section 42. You would equally have known the content of section 42, both parties?

MR IRELAND:   Your Honour, to say that the parties have not intended a transaction because of an assumed awareness of section 42, we would say – which is put against us on the other side – is misplaced. Just as a registered proprietor can be affected by today’s dealings, the knowledge of section 42 does not inhibit it to the court’s conclusion about those personal equities. A registered proprietor makes an arrangement today about the land. There is no question of any transfer of the land. That registered proprietor is bound by the equitable consequences of what he does. That is the easy situation.

The situation where the relevant conduct is antecedent, which matches this case, the best analogy we can think of is a case of a resulting trust. Somebody pays for the land, it goes into the name of the registered proprietor and nobody contends that he can assert section 42 to avoid the consequences of the resulting trust. So that in those circumstances and equally here, it is not a question of unconscientious behaviour. It is simply the consequences of the act that occurred upon the taking of the interest. So we say the key finding in this case is that there must be unconscientious conduct as well as the Wheeldon v Burrows circumstances is misguided, as the trial judge found.

GUMMOW J:   The proposition that a person may not derogate from grant which seems to underlie all this, on one view it gives rise to an implication of law really.

MR IRELAND:   Yes, your Honour.

GUMMOW J: If you are in the realm of implication of law, I cannot see how you can avoid section 42.

MR IRELAND:   Your Honour, that is not the way the Court of Appeal decided this case.

GUMMOW J:   I know that.

MR IRELAND:   That would be a debatable question, one might imagine.

GUMMOW J:   I know that.

MR IRELAND:   Your Honour has already said recently in ‑ ‑ ‑

GUMMOW J:   The question is whether their decision was right or wrong as to the matter of conclusion.

MR IRELAND:   In the result.

GUMMOW J:   The result, yes.

MR IRELAND:   I accept that.

GUMMOW J:   Should we get involved in it.

MR IRELAND: I accept that, your Honour. What they have said here, which no doubt courts will continue to say unless this Court entertains the question, is that you cannot have a personal equity within the enshrined exception of section 42 without unconscientious behaviour, full stop. That is what the case decides. That is the point we come here to challenge.

Your Honours, I just mention - it is in our submissions in reply if those reached you because they were separately filed last week when the case was suddenly listed at a week’s notice - there is some Canadian authority in our favour.  Also, the majority in the Court of Appeal of Queensland have said there is no incompatibility between the Wheeldon v Burrows doctrine and section 42 equivalent, which is section 185 in the Queensland Act. So it is a matter on which judicial minds have fluctuated and we say that it really does present a reasonably neat vehicle to have a

look at this question which is a significant one.  Those are our submissions, if your Honours please.

GUMMOW J:   Thank you, Mr Ireland.  We do not need to call on you, Mr Coles.

Whilst not necessarily endorsing the totality of the reasoning of the Court of Appeal, as to the result reached we are not satisfied that there are sufficient prospects of success in displacing that result to warrant a grant of special leave in this case.  Special leave is refused with costs.

AT 2.49 PM THE MATTER WAS CONCLUDED