Deguisa v Lynn

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.