Deguisa v Lynn

Case [2020] HCA 39

HIGH COURT OF AUSTRALIA

KIEFEL CJ,
GAGELER, KEANE, GORDON AND EDELMAN JJ

NICK DEGUISA & ANOR   APPELLANTS

AND

ANN LYNN & ORS  RESPONDENTS

Deguisa v Lynn

[2020] HCA 39

Date of Hearing: 2 September 2020
Date of Judgment: 4 November 2020

A4/2020

ORDER

1.Appeal allowed.

2. Set aside the orders of the Full Court of the Supreme Court of South Australia made on 5 September 2019 and 3 March 2020 and, in their place, order that:

(a) the appeal to that Court be allowed;

(b) paragraphs 1, 3, 4, 7 and 8 of the orders of the District Court of South Australia made on 29 August 2018 in matters DCCIV 1750 of 2016 and DCCIV 597 of 2018 be set aside and, in their place, it be ordered that:

(i)the balance of the plaintiffs' actions be dismissed; and

(ii)the plaintiffs pay the defendants' costs in both matters; and

(c) the respondents pay the appellants' costs in that Court.

3. The respondents pay the appellants' costs in this Court.

On appeal from the Supreme Court of South Australia

Representation

A L Tokley QC and H M Heuzenroeder for the appellants (instructed by Clarke Hemmerling Lawyers)

W J N Wells QC with R Ross-Smith for the respondents (instructed by Lindbloms Lawyers)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Deguisa v Lynn

Real property – Torrens system – Where appellants registered proprietors of land – Where appellants obtained planning approval to subdivide land and build two townhouses – Where present certificate of title for land referred to memorandum of encumbrance which prohibited erection of any buildings other than "a dwellinghouse" and prohibited "multiple dwellings" – Where back‑cover sheet of memorandum of encumbrance had typed statement indicating that encumbrance formed part of common building scheme – Where neither memorandum of encumbrance nor present certificate of title identified other lots benefited by restrictive covenants in memorandum of encumbrance – Where s 69 of Real Property Act 1886 (SA) provided title to land indefeasible subject to encumbrances and interests "notified" on original certificate of title of such land – Whether appellants were notified of restrictive covenants in memorandum of encumbrance in accordance with s 69.

Words and phrases – "cancelled certificate of title", "certificate of title", "common building scheme", "encumbrance", "memorandum of encumbrance", "notice", "notified", "notified on the certificate of title", "prudent conveyancer", "purpose of the Torrens system", "Register Book", "restrictive covenants", "search and inspection", "searches of the Register", "sufficiently notified", "title", "title by registration", "title of the registered proprietor", "Torrens system".  

Real Property Act 1886 (SA), ss 51B, 69.

  1. KIEFEL CJ, GAGELER, KEANE, GORDON AND EDELMAN JJ.   Robert Richard Torrens, a native of Cork in Ireland[1], by his vision, energy and tenacity, secured for his adoptive home, South Australia, the manifold benefits of the system of land title by registration which bears his name. The Torrens reform group was multidisciplinary, drew on international comparative law analysis…

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Deguisa v Lynn [2020] HCA 39
Case
[2020] HCA 39
Decision Date

CaseChat Overview and Summary

The High Court of Australia heard an appeal concerning registered proprietors of land, the appellants, who had obtained planning approval to subdivide their land and construct two townhouses. The dispute arose because the current certificate of title for the land referred to a memorandum of encumbrance that prohibited the erection of any buildings other than "a dwellinghouse" and also prohibited "multiple dwellings." While the back-cover sheet of the memorandum of encumbrance contained a typed statement indicating it formed part of a common building scheme, neither the memorandum nor the certificate of title identified other lots that benefited from the restrictive covenants within it.

The central legal issue before the High Court was whether the appellants were sufficiently notified of the restrictive covenants contained within the memorandum of encumbrance, in accordance with section 69 of the *Real Property Act 1886* (SA). This section provides that title to land is indefeasible, subject only to encumbrances and interests that are "notified" on the original certificate of title for that land. The court was required to determine what constitutes sufficient notification under this provision, particularly in the context of a common building scheme and the purpose of the Torrens system.

The High Court reasoned that a person dealing with a registered proprietor in reliance on the State's guarantee of title, as disclosed by the certificate of title, should not be put on inquiry beyond what is notified on that certificate. For a common building scheme to operate consistently with the *Real Property Act*, the benefit of any restrictive covenant must be notified on the certificate of title of the burdened land, or by express reference in a memorial on the certificate of title to other registered instruments containing that information. The court found that the present certificate of title for the land in question did not contain a memorial disclosing any registered instrument showing the other lots that were said to have the benefit of the restrictive covenants. Therefore, the appellants' contention that they were not sufficiently notified was accepted.

Consequently, the High Court allowed the appeal, setting aside the orders of the Full Court of the Supreme Court of South Australia and the District Court of South Australia. The High Court ordered that the respondents' actions be dismissed and that the respondents pay the appellants' costs in both the High Court and the courts below.

Orders

Orders of the court

1. Appeal allowed.

2. Set aside the orders of the Full Court of the Supreme Court of South Australia made on 5 September 2019 and 3 March 2020 and, in their place, order that:

(a) the appeal to that Court be allowed;

(b) paragraphs 1, 3, 4, 7 and 8 of the orders of the District Court of South Australia made on 29 August 2018 in matters DCCIV 1750 of 2016 and DCCIV 597 of 2018 be set aside and, in their place, it be ordered that:

(i) the balance of the plaintiffs' actions be dismissed; and

(ii) the plaintiffs pay the defendants' costs in both matters; and

(c) the respondents pay the appellants' costs in that Court.

3. The respondents pay the appellants' costs in this Court.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

KIEFEL CJ, GAGELER, KEANE, GORDON AND EDELMAN JJ
It is to be noted that s 51B applies only where the Registrar‑General is required by legislation to record relevant information electronically. The Registrar‑General was not required to record the cancelled grandparent certificate of title or associated plans and dockets electronically, no doubt for the good reason that they were no longer operative in relation to any land within the scope of the Act. Any equitable interest that might have been enforceable against subsequent purchasers of Lot 3 ceased to be enforceable upon the sale of Lot 3 in 1967 by Giulio and Franca Boin, before s 51B was introduced. Nothing in the provisions to which the respondents refer suggests any intention to revive interests that ceased to be enforceable against the land before their enactment. More importantly, nothing in s 51B suggests an intention on the part of the legislature to alter the operation of s 69 by the enactment of those provisions. In particular, nothing in any of those provisions gives any reason to think that s 69 has an operation in relation to the registration of title by entry upon the folio of the Register Book that is different from the registration of title by electronic means. Conclusion A person who seeks to deal with the registered proprietor in reliance on the State's guarantee of the title of the registered proprietor disclosed by the certificate of title in the Register Book (or its electronic equivalent) is not to be put on inquiry as to anything beyond that which is so notified. A common building scheme can operate consistently with the scheme of the Act in relation to the enforceability of the benefit of a restrictive covenant only if those rights are notified on the certificate of title of the burdened land, or by express reference in a memorial on the certificate of title to other registered instruments which contain that information. Anything less is inconsistent with the natural and ordinary meaning of the text of s 69 and the purpose of the Act. The present certificate of title to Lot 3 did not contain a memorial that disclosed any registered instrument showing the other lots said to have the benefit of the restrictive covenants. On that basis the appellants' principal contention must be accepted.Orders The appeal should be allowed and the orders of the Full Court of the Supreme Court should be set aside, and the appeal to that Court allowed. Paragraphs 1, 3, 4, 7 and 8 of the orders of the District Court of South Australia made on 29 August 2018 should be set aside, and in their place it should be ordered that the respondents' actions in the District Court should be dismissed. The respondents should pay the appellants' costs in this Court and in the courts below.

Ratio Decidendi

Legal Principle Established

Established by: KIEFEL CJ, GAGELER, KEANE, GORDON AND EDELMAN JJ

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