Hanag Investments Pty Ltd v Stratco Properties Pty Ltd - [2011] SASC 120

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
HANAG INVESTMENTS PTY LTD v STRATCO PROPERTIES PTY LTD
[2011] SASC 120
Judgment of The Honourable Justice Kourakis
19 May 2011
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - INJUNCTIONS TO PRESERVE STATUS QUO AND PROPERTY PENDING DETERMINATION OF RIGHTS
Interlocutory injunction - plaintiff and defendant adjoining land owners - whether prima facie case - whether arguable defendant bound by notation of easement on Certificate of Title - where balance of convenience lies.
Held: plaintiff has prima facie case - arguable that defendant bound by notation on Certificate of Title - balance of convenience lies with granting injunction.

REAL PROPERTY - TORRENS TITLE - INDEFEASIBILITY OF TITLE - EXCEPTIONS TO INDEFEASIBILITY - NOTIFICATION ON CERTIFICATE OF TITLE
Effect of provisions of Real Property Act 1886 - whether entry or endorsement on certificate of title must include description of easement to achieve indefeasibility.
Held: entry or endorsement on certificate of title need only refer to the instrument creating the easement to achieve indefeasibility.
Real Property Act 1886 (SA) s 3, s 37, s 48, s 49, s 51, s 51B, s 69, s 81, s 82, s 83, s 84, referred to.
Australian Broadcasting Corporation v O'Neill (2003) 227 CLR 57, applied.
Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1970-1971) 124 CLR 73, considered.

HANAG INVESTMENTS PTY LTD v STRATCO PROPERTIES PTY LTD
[2011] SASC 120
Civil: Application

KOURAKIS J: The plaintiff and defendant are adjoining land owners. This is the plaintiff’s application for an interlocutory order enjoining the defendant from proceeding with building work on that part of its land over which the plaintiff claims an easement.
The plaintiff’s land fronts the eastern verge of South Road at Clovelly Park. It is about twenty-five metres wide and it extends about sixty-three metres to the east. I will refer to it as the Hanag land. The eastern boundary of the Hanag land is the western boundary of the defendant’s land. The defendant’s land is also about 25 metres wide and extends about 160 metres further to the east where it fronts the western verge of Denis Street. I will refer to the defendant’s land as the Stratco land.
An electronic register search of the Certificate of Title for the Hanag land refers to an easement over certain land marked D on a diagram of the Stratco land which forms part of the Certificate of Title. The notation of the easement includes a reference to a Transfer Document numbered 3956708. It is the land marked D on which the defendant proposes to build and indeed has commenced building. The Hanag Certificate of Title also records a right of way over another part of the Stratco land marked with the letter E on the accompanying diagram and again refers to the same transfer document.
A search copy of the Stratco land is endorsed that it is subject to an easement over that part of its land marked D on the diagram accompanying the Hanag Certificate of Title.[1] The easement, however, is not in favour of the Hanag land but refers to an easement in favour of the Minister for Infrastructure. A different transfer document, numbered 3956707, is noted. The Stratco land is, however, endorsed with a right of way over the land marked E on the diagram accompanying the Hanag Certificate of Title.[2] The notation refers to the transfer numbered 3956708.
[1] On the Stratco Certificate of Title that part of the land is marked A.
[2] On the Stratco Certificate of Title that land is marked with the letter B.
It is common ground that the electronic searches with which I have been provided are to be treated as the Certificate of Title[3] and that the defendant’s duplicate Certificate of Title refers to the easement with no less particularity than is revealed by the electronic search.
[3] Real Property Act 1886, s 51B.
The transfer numbered 3956708 is a registered transfer and gives both a drainage easement and a right of way over the land marked D in the following terms:
RESERVING NEVERTHELESS TO ITSELF … a free and unrestricted Right and Liberty from time to time and at all times hereafter to break the surface of, dig, open up and use the said piece marked B for the purpose of laying down, fixing taking up repairing relaying or examining pipes therein and of using and maintaining such pipes and for such purposes as appurtenant as aforesaid DO HEREBY FURTHER RESERVE a free and unrestricted Right and Liberty of entry egress and regress from time to time and at all times hereafter for itself … and its Agents Servants and Workmen with or without vehicles laden or unladen in through over across and along the said piece of land marked B
I approach this application in accordance with the principle set out in Australian Broadcasting Corporation v O’Neill: [4]
The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:
“The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.”
By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:
“How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.” (Citations omitted.)
[4] Australian Broadcasting Corporation v O’Neill (2003) 227 CLR 57 at [65].
The primary claim made by the plaintiff is that the notation of the registered transfer document on the defendant’s Certificate of Title binds the defendant as the registered proprietor of the Stratco land.
It is necessary to refer to a number of the provisions of the Real Property Act 1886 (the Act):
Section 3 includes the following definition of certificate of title:
certificate shall mean a certificate of title issued under any of the Real Property Acts, or any grant from the Crown issued after the passing of the Real Property Act No. 15 of 1857 and before the commencement of the Real Property (Witnessing and Land Grants) Amendment Act 1995, and shall extend to and include all plans and entries thereon
Section 37 of the Act provides that land is brought under its provisions by issuing a certificate of title.
Section 48 of the Act provides that the certificate shall be in two parts: the original is filed in the Register Book and the duplicate returned to the registered proprietor.
Section 49 of the Act provides that each original certificate shall constitute a separate folium of the Register Book and that the Registrar-General shall record on it all memorials affecting the land.
Section 51 requires every memorial to state the nature of the instrument to which it relates and to refer to that instrument by number or symbol.
Section 81 provides that a certificate of title may contain a statement to the effect it has an appurtenant easement or that it is subject to any right of way or other easement.
Section 82 requires that such a statement must fully, truly and accurately describe the easement or, alternatively, refer to the registered instrument creating the easement.
Section 83 provides that a registered proprietor is only bound by right of way mentioned and set forth in the certificate.
Section 84 provides that a subsequent registered proprietor of servient land, taking the land bona fide for valuable consideration, is not bound by an easement unless it shall be entered on the original and duplicate certificate of title.
Section 69 provides:
69—Title of registered proprietor indefeasible, except in cases of—
The title of every registered proprietor of land shall, subject to such encumbrances, liens, estates, or interests as may be notified on the original certificate of such land, be absolute and indefeasible, subject only to the following qualifications:
(d)Omission of easement
where a right-of-way or other easement not barred or avoided by the provisions of the Rights-of-Way Act 1881, or of this Act, has been omitted or mis-described in any certificate, or other instrument of title: In which case such right-of-way or other easement shall prevail, but subject to the provisions of the said Rights-of-Way Act 1881 and of this Act;
In Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd,[5] Barwick J held that under the equivalent section of the Real Property Act 1900-1965 (NSW) the phrase “the nature of the instrument” in s 51 of the Act refers to the form of the instrument, transfer, mortgage, lease etc., and not to the property interest it grants.[6]
[5] Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1970-1971) 124 CLR 73.
[6] Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1970-1971) 124 CLR 73 at 77.
In my view, the effect of the provisions to which I have referred, and in particular to s 51 and s 82 of the Act, is that an instrument creating an easement is entered onto both the certificate of title and the duplicate certificate of title if there is an entry or endorsement that the land comprised in the certificate is subject to the instrument creating the easement which is claimed. The relevant entry is an entry of the memorial, pursuant to s 49 of the Act, referring to the instrument creating the right as required by s 51 of the Act. The facility allowed by s 82 of the Act of referring to the registered instrument creating the easement applies that general scheme to easements.
In this case, it is therefore most certainly arguable that the Stratco Certificate of Title, produced on the electronic search, has recorded on it a memorial affecting the land comprised in it. The memorial records the registered instrument which in fact creates the easements to which the Stratco land is subject. It is most certainly arguable that the failure to state that the rights so created extend beyond the land marked E, and include a drainage easement and a more extensive right of way over the land marked D, can properly be described as a mis-description. Even if it is an omission it is very arguably saved by s 69(d) of the Act because the memorial of the instrument creating it is nonetheless properly recorded on the Stratco Certificate of Title.
Accordingly, I find that there is a prima facie case that the plaintiff is entitled to the relief which it seeks. It is, therefore, not necessary to make an assessment of the alternative grounds on which the plaintiff puts its right to the relief it claims.
I turn to the balance of convenience. If the plaintiff is granted the interlocutory injunction it seeks, the defendant’s building work and consequently its proposed trading activities on the site will be delayed. Plainly enough if that is so it will incur unnecessary expense. If, on the other hand, the defendant is not enjoined from proceeding with its work there will not be any immediate effect on the use by the plaintiff of the Hanag land. However, arguably, a permanent structure over that part of the Stratco land said to be subject to the easement, will significantly affect the extent to which the Hanag land can be redeveloped. It may significantly affect the use of that land in the future by reducing the scope for the right of way and by requiring part of the Hanag land itself to accommodate drainage works rather than making use of the easement.
However, if, at trial, the plaintiff succeeds in its claim that the Stratco land is subject to its registered easement then its case for a final injunction will be a strong one. Property rights are generally highly regarded and strongly protected by the law. An injunction is the primary relief. If, in the exercise of its discretion, this court ultimately determines that damages are an insufficient remedy, and that injunctive relief should be granted because of the proprietary nature of the plaintiff’s interest, then it is unlikely that the cost and expense of removing the defendant’s structure will significantly alter the balance in favour of that conclusion. The defendant has, at least since purchase, known that its title is affected by the identifiable registered instrument which creates the easements. Moreover, at least since 28 July 2010, the defendant has been aware of the nature of the claim that the land was subject to an easement in favour of the Hanag land. If the defendant proceeds with the building work it will do so in the face of all the material that is now placed before the court. In short, the defendant will have made a deliberate decision to proceed with its construction in the knowledge of the rights contained in the instrument noted on its Certificate of Title.
Accordingly if the position is, that, as matters presently stand, the plaintiff would be entitled to injunctive relief to have the concrete pads removed and to enjoin any further work, it is unlikely that the defendant’s informed decision to take its chances by proceeding with the building programme would change that result. This is not therefore a case where the refusal of interlocutory relief would effectively resolve the controversy. Indeed, it is, in my view, so unlikely to do so that I have considered refusing the application for that reason alone.
However, I think it best to return to consider the balance of competing considerations. The damage suffered by the plaintiff, if I were to refuse its application, and if it were to fail, on discretionary grounds, to obtain a final injunction would be difficult but not impossible to estimate. The same can be said of the damages suffered by the defendant which the plaintiff has undertaken to pay if a court were ultimately to find that the easement is not binding.
The plaintiff’s delay in bringing these proceedings is, in my view, not long. The action was brought not long after the commencement of the building work. I would not overburden the holder of a proprietary interest with an obligation to anticipate the ultimate result of building plans.
The significance of the delay is further reduced by the defendant’s own awareness of the existence of the instrument under which the plaintiff claims and the explicit information about that easement in the letter from SA Water dated 28 July 2010.
In my view, the decision of the Minister for Infrastructure to give up his easement is an irrelevant consideration. The Minister’s decision is no doubt informed by the public’s need, or, more accurately, lack of need, for infrastructure over the Stratco land and his public duty not to unnecessarily or capriciously obstruct development. The plaintiff, on the other hand, is entitled to cling to its proprietary rights and consequential economic interest as an appurtenant land owner.
Ultimately, I have decided to grant the interlocutory relief sought because of my assessment of the relative strength of the plaintiff’s claim and the proprietary nature of its interest.