Hillpalm Pty Ltd v Heaven's Door Pty Ltd

[2003] HCATrans 369

[2003] HCATrans 369

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S377 of 2002

B e t w e e n -

HILLPALM PTY LIMITED

Applicant

and

HEAVEN’S DOOR PTY LIMITED

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 16 SEPTEMBER 2003, AT 2.08 PM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR P.R. McGUIRE, for the applicant.  (instructed by Bolster & Co)

MR T.F. ROBERTSON, SC:   May it please the Court, I appear with MS L.M. BYRNE for the respondent.  (instructed by Woolf Associates)

GLEESON CJ:   There has been a flurry of affidavits in this matter.  Is there any objection to any of them?

MR JACKSON:   We have no objection to the other side’s affidavits, your Honour.

MR ROBERTSON:   We do not think theirs is relevant, your Honour, but we do not take any ‑ ‑ ‑

GLEESON CJ:   We have read the affidavits.  Yes, Mr Jackson.

MR JACKSON:   Thank you, your Honours.

MR ROBERTSON:   …..require the deponent for cross‑examination.

MR JACKSON:   Your Honours, the issue in the case can be stated in various ways, but in the end it is whether a condition of subdivisional approval never complied with requiring the creation of an easement means the later registered proprietors are entitled to enforce or be subject to the burden of such an easement.

May I move to the very basic facts with a view to demonstrating it is an appropriate vehicle.  The facts are very simple.  A piece of land with a frontage to a road was subdivided by the owner into two blocks.  The front block, which was lot 2, had the road frontage; the rear block, lot 1, did not.  The approval to subdivide contained provision for there to be a right of way over the front block to the rear block.  Your Honours will see that at page 9, paragraph 29 of the primary judge’s reasons.

GLEESON CJ:   If it had not contained that, would there have been an easement of necessity anyway?

MR JACKSON:   There may have been, your Honour, but of course these days it would be section 88K of the Conveyancing Act, which is the provision which allows people to get an easement in the appropriate circumstances but requires the payment of compensation.  The question whether there would be an easement of necessity of course involves an examination of the question of necessity in the particular area.

Could I say in relation to the approval for subdivision, your Honours will see at page 9, paragraph 29 that the approval is there set out and it was subject to compliance with two conditions.  One was condition (a):

Provision of a constructed right of carriageway from Clothiers Creek Road.

Then there was a description of what it was required to be.  Your Honours will notice that condition (a) contemplated two things.  First, there was to be a right of carriageway over the front allotment and, secondly, the carriageway was to be constructed as there provided for with the minimum width.  The right of way was not to be a public road; rather it was to be a private right of access.  The subdivisional approval did not itself create such a right; instead it required the creation of one.

Such a right is created inter partes by an easement and with some exceptions provided for by section 42 of the Real Property Act – your Honours will see that provision at page 79 of the book.  To prevail against later proprietors, easements must be registered.  There are two possible modes of creation of an easement.  They are summarised by the primary judge at page 23 in paragraphs 87 through to 91.  One of them is that there can be the creation of an easement by registration of a plan of subdivision where the registration is itself to create the easement.  That is provided for, as your Honours will see, from paragraph 88 by the provisions of section 88B of the Conveyancing Act.  I can go to the provision if necessary, but it did not happen in this case.

The second method is referred to in paragraphs 89 and 90, where it is indicated that there is a proposed easement at some stage in the future.  That is referred to in paragraphs 89 and 90 and that was what was followed.  Your Honours will see a reference to regulation 52A of the Conveyancing Regulations.  Your Honours do not have that in the book, but can I give your Honours copies of it.  I think the page is flagged in the bundle of references I have given your Honours.  What your Honours will see is in the left page, page 390, regulation 52A(2) and 52A(3).

GLEESON CJ:   Did the evidence disclose how it came about that this did not happen?

MR JACKSON:   Your Honour, only to this extent.  I went to page 9 before at paragraph 29.  Your Honours will then see that there was some discussion about the location of a new road and in the event, your Honours will see in paragraph 31 a temporary kind of arrangement was made, but in the end what happened was that the easement was neither created nor registered. 

What happened then appears from paragraph 32 at page 10, namely, that the local authority permitted the subdivision to go ahead, notwithstanding the fact that the easement had not been created.  Whilst there have been some further subdivisions of the land, we are a later registered proprietor of the part of lot 2, including the part over which the proposed easement would run.

GLEESON CJ:   Did the evidence show how it came about that your client took title to the land without finding out about this?

MR JACKSON:   What emerged was that we, being a company – there have been various owners of it – were aware of the fact through agents that the title to the land said on it, “Proposed right of way”.  There had been various discussions at various times of course between owners, but in the result the position is simply that all that a title search would reveal was that there was a proposed right of way over the land.

Your Honours, could I just turn then to what, in our submission, were the errors in the judgment in the Court of Appeal.  The principal judgment is that of Justice Meagher at page 42.  Leaving aside introductory matters, the relevant parts of the judgment are paragraphs 10 through to 14.  If I could start really with the end of it in paragraph 14, your Honours will see that his Honour refers to a notion of the Environmental Planning and Assessment Act provisions taking “precedence over the system of registration of titles regulated by the Real Property Act”. 

Could we say in relation to that that leaves out of account, in our submission, the fact that the nature of the condition which was provided for by the approval may – and in this case was – one which contemplates not this application, to use the modern word favoured by legislative drafters, on the provisions, but rather the application of the Real Property Act provisions.  What was required to be created was a right of way and the right of way was one which is created pursuant to the provisions of the Real Property Act. 

Could we in that regard compare what was said by his Honour there with what was said by members of this Court in South‑Eastern Drainage Board v The Savings Bank of South Australia (1939) 62 CLR 603, where it was held that the statutory drainage charge, expressed by the legislation to be a first charge, prevailed over a subsequent registered mortgage. Could I take your Honours very briefly to some passages in the reasons where the issue is dealt with. At page 617, first of all, Chief Justice Latham in the first paragraph, your Honours will see where he sets out in the first sentence the nature of the argument and then goes on at about the fifth or sixth line to say:

The charge is created quite independently of registration . . . The charge is not created by or dependent upon the existence of any instrument.

He goes on to say the same thing in a few more sentences.  At page 622 Justice Starke at about point 4 on the page, after the reference to a number of sections by number, says:

But the charges in the present case are created by and take their force and effect from the statutes creating them.  They are not in the form required by the Real Property Act . . . 

Charges are created which depend for their efficacy upon the provisions of the South‑Eastern Drainage Acts . . . The charges do not depend upon registration nor upon the execution or entry of any instrument.  They are complete and effective by reason of the provisions of the Acts creating them.

Two further brief references:  Justice Dixon at page 629, the third line, he sets out:

From these provisions the following matters clearly appear . . . 

(3)  The first charge is vested in the commissioner by force of the statute, and no instrument creates it.

That goes down for about another seven or eight lines.  To the same effect, Justice Evatt, about halfway down page 633.  Here in this case the right of way is something which, in our submission, of its very nature is contemplated will be registered in order to be a right of way which exists beyond the immediate owners will be one which would need to be registered.

The second thing about Justice Meagher’s reasons, if I could come back to page 42, is that the long series of cases to which his Honour refers in paragraph 13 is, with respect, a little difficult to identify.  The two cases to which his Honour referred in paragraph 13 – I do not think I need to go to them in detail but they are in the bundle I gave your Honours – deal with entitlements to use land for a particular purpose.

GUMMOW J:   The phrase “in rem” in line 2 of paragraph 13 is question‑begging, is it not?  That is what we have to decide.

MR JACKSON:   Yes, your Honour.  It is right to say in one sense that it creates a right in rem but it is a limited right in rem.  For example, if I own land and get subdivisional approval for it and sell the land without it being effected, then the owner who buys from me has the benefit of that approval.  It does not follow, however, that if an easement is never created, that any person who buys part of the land is subject to it.

The other matter to which I would wish to refer your Honours is that if one goes to what was said additionally by Justice Hodgson at page 44, paragraph 23, if one goes first there in what he said, the two cases there referred to deal with a statutory provision which created a statutory fee simple in relevant authorities in drainage reserves without there being particular provision for registration, but the nature of the beast so created, in our submission, was one that one would expect to prevail.

The next thing in relation to Justice Hodgson, if one goes back to paragraph 19 at page 43, is that your Honours will see in the first four lines that he refers to the position of the use of land.  That is, that if there is permission to use land for one purpose or another – and inferentially, I suppose, not to use it for others – then subsequent owners are bound by that.  But he then goes on in the next sentence and following to carry that over to the position of subdivision.  In our submission, the analogy is one that is not correct.

Your Honours, could I come then to the question whether this is a matter in which special leave should be granted if the Court is of the view that the issue is sufficiently arguable.  The consequences, first of all, of the decision have been adverted to in some commentaries.  Your Honours will see in our bundle of materials, or in the book of materials, first of all in item 6, an article by Mr Radan, “Indefeasibility and Overriding Statutes”, this case is discussed and your Honours will see particularly on the second page of it, page 67, if I could go to the heading, “Ramifications of the ruling”, your Honours will see – I will not read it out but the passage commences under that heading and goes through to the column immediately to the right to about six or seven lines from the bottom of that page after the reference to the position of auctions.

Also on the next page your Honours will see a heading, “Reflections on Hillpalm”.  Could we refer to what is immediately following that heading and that goes about halfway through the next column, and also to the article which follows behind the next tab by Mr Butt.  Could I say in relation to this article that in a later ‑ ‑ ‑

GUMMOW J:   Professor Butt these days.

MR JACKSON:   I am sorry, your Honour, Professor Butt.  In relation to what the professor said, in a later article he said there are a couple of factual errors but do not affect the theme of what he is saying.  Your Honours will see that at the penultimate and last paragraphs on page 88 and going through to the end of the article on the next page.

GUMMOW J:   The trouble with the commentary, if it is troubled, is that the commentators do not explain what construction they would give sections 123 and 124 of the Environmental Act.  How does one read them?

MR JACKSON:   Your Honour, it works, in our submission ‑ ‑ ‑

GUMMOW J:   How does one read them with section 42, I suppose?

MR JACKSON:   One has a situation where section 122 – if I could just to those for a moment, it is clear enough of course that section 122 first of all, by the definitions and in particular by 122(b)(iii) means that a reference to a condition is included in the definition “a reference to . . . this Act” and then “a breach of this Act”.  One sees then section 123(1) which allows any person to bring a proceeding “for an order to remedy or restrain a breach of this Act”. 

A question arises, first of all, whether the person in the position of the applicant is a person who is in breach of this Act, because the breach of the Act required as a condition of subdivision that there be creation of an easement.  It does not follow, in our submission, that a later purchaser is someone who is in breach of the Act when what was required to be created was something that would not survive registration under the later Act.

GUMMOW J:   What is the condition?  What is the life of the condition?

MR JACKSON:   The life of the condition, your Honour, is one that prevails against the persons really who are registered proprietors.  I put it in a slightly elusive form because I mentioned the case before where someone may become the owner with the benefit of the condition, but its life really depends on its nature.  If its nature involves the creation of an easement, it lasts against the subsequent proprietors only to the extent that the easement otherwise would.  It may be that there are some cases where there has been an easement created in form – and I mean by an appropriate form of easement – but not registered, in which case one might have some of the exception provisions applying under section 42.  Apart from that, it would not.

The second aspect, your Honours, of section 123(1) is that if one is speaking of granting a remedy or something to restrain a breach of the Act, then there would have to be, in a case when indefeasibility applied, in our

submission, every reason for saying if it was a technical breach, then a remedy would not be granted as against the subsequent owner, bearing in mind of course the existence of section 88K of the Conveyancing Act allowing easements to be granted, but of course one has to pay.  Your Honours, those are our submissions.

GLEESON CJ:   Thank you, Mr Jackson.  Yes, Mr Robertson.

MR ROBERTSON:   To answer your Honour Justice Gummow’s question, the Miscellaneous Acts (Planning) Repeal and Amendment Act 1979 provides for the longevity of consents granted under the former Local Government Acts 1919.  Can I just hand up the provision and take your Honours to it.  It is clause 7 of Schedule 3 of that Act.

GUMMOW J:   Was this referred to in the Court of Appeal?

MR ROBERTSON:   Inferentially only, your Honour, not expressly, but it was certainly before the Court of Appeal, as it is before this Court.  It is clause 7(1):

Any consent, approval or permission granted in respect of an application made under a former planning instrument, and in force immediately before the appointed day –

that is 1 September 1980, the date of commencement of the Environmental Act –

shall, subject to subclause (2), continue in full force and effect subject to –

(a)  the operation of any provision of that instrument or any term or condition of that consent, approval or permission governing or relating to the currency, duration or continuing legal effect of that consent –

there was no such condition or term –

(b)  the operation of any condition (other than that referred to in paragraph (a)), restriction or limitation, subject to which that consent, approval or permission was granted.

There was such a condition and that was to construct a right of way.

GUMMOW J:   Construct when?  Where do we find the actual text of the condition?

MR ROBERTSON:   The condition itself is set out at – I have just a small bundle of documents which I will come to in a moment which are incorporated in the bundle.

GLEESON CJ:   Is it page 9, paragraph 29?

MR ROBERTSON:   Yes, but the original consent is at page 2 of this bundle.  If your Honours just turn to page 2, you will see – and this is quite important – that the application for development consent was not for subdivision alone; the application was for subdivision and construction of the access road.  So, in granting consent to that application, the consent itself above and beyond any condition to which the consent was subject required the construction of the road.  It was part of the works for which the applicant applied.  Then your Honours can see condition a) is:

Provision of a constructed right of carriageway ‑ ‑ ‑

GUMMOW J:   This is in 1977.

MR ROBERTSON:   Correct, under the Local Government Act.

GUMMOW J:   To be constructed when; within a reasonable time?

MR ROBERTSON:   Your Honour, those questions were raised at trial and his Honour made certain findings going to discretion, but there was no suggestion that there was any time limitation as a matter of construction of the condition.

GUMMOW J:   Why would there not be?

MR ROBERTSON:   Can I take your Honours to page 3.

GUMMOW J:   This is a condition attached to an approval which has to be given in order to permit a subdivision to be achieved and registered under the Real Property Act, does it not?

MR ROBERTSON:   Yes, it was a development approval, not a subdivision approval, but the use of the land for which the approval was granted was subdivision.  There were two approval processes.  There was a subsequent approval process with which the Court is not concerned, but certainly it was a condition precedent to getting that subsequent subdivision approval.  Once the subdivision approval was given, the deposited plan could be registered.  That is set out at page 3.  In green we have the proposed right of way, in yellow my client’s land. 

GUMMOW J:   If the subdivision is achieved without the council ensuring that the condition has been complied with, why does the ultimate burden of that pass on to someone down the line?

MR ROBERTSON:   Again, your Honour, because the process of approving the subdivision is a separate statutory process to granting of a development consent.  The condition remained unperformed.  The granting of the subdivision did not involve the creation of a public road.  It was not to create a public road, which is done by way of dedication, an indication on the deposited plan.  Rather, they selected the second course, which Mr Jackson has referred to under clause 52A of the Conveyancing Regulations, which was to indicate on the deposited plan that it was proposed at some time in the future to grant or dedicate the right of carriageway.  But the condition itself did not disappear, and we respectfully submit that is evident from the transitional provisions, that the development consent itself is not exhausted once a subdivision approval is given.

GUMMOW J:   It depends on its terms surely?

MR ROBERTSON:   It may do, your Honour, but the subdivision approval is given under a separate division of the Local Government Act to the development approval.  They are two different statutory approval systems.  The development approval may have conditions on it which survive the actual marketing of the lots, and frequently do. 

The effect of my learned friend’s argument, if it is correct, would mean that someone could transfer title the day after a subdivision approval had been given and effectively strip the development consent of any conditions which would require creation of easements, rights of carriageway, dedication of land either for public purposes or for private purposes, and so on and so forth, conditions which are, on the assumption we make, valid conditions but would not survive the registration of title.  The reason why there is a difference is because the development consent operates on public rights.  The subdivision approval is given as part and parcel of the process of creating a marketable title.

GUMMOW J:   Are there cases in the Environment Court in New South Wales which incorporate into 124 notions of delay and laches?

MR ROBERTSON:   Yes.  That was argued before the trial judge.  The questions of discretion were decided by his Honour Justice Sheahan initially at page 7, paragraph 19.  Your Honours can see that the question of delay was raised at paragraph 19.1 and then other questions of discretion, the non‑enforceability of the condition by council.  His Honour then decided discretion at page 28, paragraphs 106, 107 and 108.  His Honour decided at 107 that:

The respondent –

that is the applicant here –

had notice of the burden of that condition, and of its import, and, to the extent necessary to implement it, cannot defeat it through the operation of the RPA, or by reliance upon the existence of a potential access . . . The solicitors acting for the company understood that the directors did their own due diligence, warned them of the risks, and got Tagget –

who was the controlling mind of the company –

to “sign off” the warning . . . 

The matters submitted in support of exercising the court’s discretion not to grant relief . . . are not sufficient to outweigh the public and private interests –

This was after his Honour made a finding on the previous page, 27, that the applicant for special leave had notice of the condition, and indeed the controlling mind of the company – this is paragraph 102 – reconstructed the access track in the location of the proposed easement.  He was in fact the former owner of my client’s land.

GUMMOW J:   Was the council a party to this litigation?

MR ROBERTSON:   It was not.  It was on notice of it.

GUMMOW J:   Prima facie, it is for the council to enforce these consents.

MR ROBERTSON:   I beg your Honour’s pardon?

GUMMOW J:   Prima facie, one would have thought it was for the council, not to rely on a system of private enforcement under 123 and 124.

MR ROBERTSON:   Like section 52 of the Trade Practices Act, it is one of those provisions that any person can enforce and frequently is enforced by private owners.  In this case the non‑enforcement of the condition would not have come to council’s attention because there had been a road in the location of the proposed easement, which was traffic for the purpose of gaining access to my client’s property for 20 years, as the evidence established, until it was blocked up by the applicant for special leave.  It was at that point that a question arose as to title and as to the obligations under the original development consent.

The gravamen of our submission is that this is not an indefeasibility case as such.  The granting of the development consent did not itself create a property right or a proprietary right.  Once the development consent condition had been performed, a property right would be created.  That right would be registered and it would fall to be considered in accordance with the priorities expressed in section 42.  It would itself achieve indefeasibility of title.  There is no conflict as such between an order by a court enforcing a condition of development consent requiring the creation of a property interest and section 42 of the Real Property Act, the indefeasibility provision.

So far as the question of overriding statutes are concerned, that has been well settled by this Court in a number of decisions.  There really is no generalia specialibus argument here.  The findings of fact that might support my learned friend’s contentions really were not made by his Honour the trial judge.  Your Honours, I need to hand up if I could three copies of Professor Butt’s subsequent article in the Australian Law Journal where he corrected some errors of fact in his previous article.

If I could just take your Honours to the title diagram of the applicant for special leave, it is at page 5 of the coloured bundle of plans that I have handed up.  The green is the road in question, yellow is my client’s land and orange is the applicant’s land.  If you go to page 5, you will see there is “(B)” next to the green.  Turn the page to page 6, that is explained in the bottom left‑hand corner, “(B) PROPOSED RIGHT OF CARRIAGEWAY”, and there is a reference to another deposited plan.  At the top of the page where the main diagram is, above the green road there is a notation, “SEE DIAGRAM C”.  Diagram C is on the right‑hand bottom corner of page 6, showing more clearly the right of carriageway with the reference (B) in the centre of it.

DP261183 referred to in the notation (B) is at page 7.  On that again we have marked in green the location of the proposed right of way.  Page 8 is the survey of it, where it is shown again in green as a proposed right of carriageway 10 wide.  A careful conveyancer, having seen the reference to “PROPOSED RIGHT OF CARRIAGEWAY” on the title diagram to the applicant for special leave’s title and knowing the provisions of clause 52A of the Conveyancing Regulations, which is now, as your Honours will see from the first page in this bundle, is the same provision, is in clause 25 of the current Conveyancing (General) Regulation, would have been aware that there was an intention to either grant or reserve that land as a right of way.

That would have been obvious to any person looking at the shape of my client’s lot and the handle at the northern end of it, which was plainly designed for the purpose of giving road access to the land.  The careful conveyancer would then have gone to the previous deposited plan, again noted on the title diagram, and seen the survey of it and the date, which was 1980, two years after the deposited plan which created my client’s lot.  In those circumstances, we respectfully submit that this is not a proper vehicle for testing a question ‑ ‑ ‑

GUMMOW J:   If he had found out, would that have founded a proper requisition on title?

MR ROBERTSON:   Yes.

GUMMOW J:   On title?

MR ROBERTSON:   Yes.

GUMMOW J:   Not just conveyance.

MR ROBERTSON:   No.  We have set out some of the common requisitions at pages 64 to 65 of the special leave book requesting awareness of notice or requirement of any public or local authority or adjoining owner affecting the land.  Is the vendor aware of any right of way or other easement affecting the property not discoverable on search?  Is there any currently applicable development approval or consent to the use of the premises?  Those are three common requisitions on title.  So this is not a case where the careful conveyancer would have lacked for notice.

GUMMOW J:   So do you say this is an “estate or interest” within the meaning of 42?

MR ROBERTSON:   No, not yet – well, it is now.

GUMMOW J:   Even though it goes to title.

MR ROBERTSON:   It is now, but those are the requisitions which are ordinarily sought in the course of conveyancing practice.

GUMMOW J:   Yes, but not all of them are properly considered as requisitions as to title.  Mr Moses would tell us if he were here, I am sure.

MR ROBERTSON:   It is not an appropriate vehicle because it does not raise a clash of one unregistered interest against registered interests.  The overriding rights issue has been settled by the Court and the facts do not disclose any lack of notice or any inability on the part of those advising the applicant for special leave to ascertain the real position in relation to the consent.  There are no questions raised in the Court of Appeal as to the

expiry of the consent, its abandonment or any question of construction relating to an implication of timeliness concerning the condition, condition 1.

GUMMOW J:   That is just a matter of construction, is it not?  It is the first question really.

MR ROBERTSON:   It is a matter of construction and it was an argument which was initially put at trial but was abandoned in the Court of Appeal.

GLEESON CJ:   May we take it that the only grounds of appeal that were argued in the Court of Appeal were 4(c) and 4(d) on pages 33 and 34?  They seem to be the only grounds that are dealt with in the reasons.

MR ROBERTSON:   Yes.  Grounds (a) and (b) were expressly abandoned.

GLEESON CJ:   And 1, 2 and 3?

MR ROBERTSON:   Yes, they were each expressly abandoned.  If it please the Court.

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, may I say three things in reply to my learned friend.  A careful conveyancer, the expression used once or twice by my learned friend, would, in our submission, adopt the course referred to by Mr Moses in his affidavit at page 72, paragraphs 10, 11 and 12.  I will not read them out but we would invite your Honours to read those.

The second thing is this.  Our learned friend referred to there being some missing findings of fact, but this is a case of the utmost simplicity.  In the end the basic facts are incapable really of dispute.  The third thing is this, that our learned friend drew a distinction on a number of occasions between development on the one hand and the approval on the other.  What happened here can be seen, if one goes to page 8 commencing at paragraph 25.  There was the application for development consent – certainly one can call it that – but it was an application for approval of the subdivision.

One sees then that there was the approval of that in paragraph 29 and then one goes on to paragraph 32 where there is the approval of the linen plan of subdivision, notwithstanding the absence of the consent.  Our submission is that this is a case of considerable importance meriting the decision of the Court.

GLEESON CJ:   In this matter there will be a grant of special leave to appeal.  You might like to have another look at the notice of appeal, Mr Jackson.

MR JACKSON:   I will, your Honour.

AT 2.49 PM THE MATTER WAS CONCLUDED