Hungry Jack's Pty Ltd v The Trust Company (Australia) Ltd [No 2] - [2020] WASC 427

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   HUNGRY JACK'S PTY LTD -v- THE TRUST COMPANY (AUSTRALIA) LTD [No 2] [2020] WASC 427
CORAM:   TOTTLE J
HEARD:   ON THE PAPERS
DELIVERED          :   25 NOVEMBER 2020
FILE NO/S:   CIV 3129 of 2016
BETWEEN:   HUNGRY JACK'S PTY LTD
First Plaintiff
SELDEN PTY LTD
Second Plaintiff
AND
THE TRUST COMPANY (AUSTRALIA) LTD
First Defendant
CLASSIC SWAN PTY LTD AS TRUSTEE FOR IANNANTUONI FAMILY TRUST
CELESTINO MARIO IANNANTUONI
GIUSEPPINA ANTONIETTA WETTER
Second Defendants

Catchwords:

Practice and procedure - Late application to amend defence - Opposed amendments disclose no reasonable cause of defence - No cogent explanation for lateness of application - Application refused

Adverse possession - possessory interest in adjoining land not transferred by operation of s 41 of Property Law Act 1969 (WA)

Legislation:

Property Law Act 1928 (Vic) (repealed), s 62
Property Law Act 1969 (WA), s 41
Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B, O 21 r 5(2)

Result:

First defendant's application dismissed

Category: B

Representation:

Counsel:

First Plaintiff	:	No appearance
Second Plaintiff	:	No appearance
First Defendant	:	No appearance
Second Defendants	:	No appearance

Solicitors:

First Plaintiff	:	HWL Ebsworth Lawyers
Second Plaintiff	:	HWL Ebsworth Lawyers
First Defendant	:	K J Levy
Second Defendants	:	No appearance

Case(s) referred to in decision(s):

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Bassanelli v Rowsell (Unreported, WASC, Library No 690, 1 & 17 October 1969)
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125
Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431
Hay Property Group Ltd v Goddard (Unreported, WASC, Library No 950432, 18 August 1995)
Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296
Kimberley Downs Pty Ltd v The State of Western Australia (Unreported, WASC, Library No 6414, 25 August 1986)
Kirk v Sutherland [1949] VLR 33
Re Johnson [2000] 2 Qd R 502
Riley v Penttila [1974] VR 547
Samsung C&T Corporation v Loots [2016] WASC 330
Shaw v Garbutt (1996) 7 BPR 14,816
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2014] WASC 406

TOTTLE J:

Introduction

In this adverse possession action the first defendant (TrustCo) has applied for leave to amend its defence.[1] The plaintiffs (Selden and Hungry Jack's) oppose the grant of leave to the amendments proposed to pars 20 and 21 of the defence but do not oppose other amendments.
[1] TrustCo seeks leave to amend its pleading entitled 'the First Defendant's Further Re-Amended Substituted Defence and Counterclaim'.
TrustCo is the owner of the Dog Swamp Shopping Centre located in Perth's northern suburb of Yokine. Immediately to the south of the shopping centre, contiguous with its southern boundary, is a Hungry Jack's fast food outlet with a drive through facility.
The primary issue concerns the ownership of the land on which a significant area of the drive through facility is located. The plaintiffs, which are related companies in the common ownership of Competitive Foods Australia Pty Ltd, claim that one or other of them has acquired possessory title to this land. TrustCo holds the documentary title.
A trial of preliminary issues commenced on 23 March 2020. As a consequence of the COVID-19 pandemic the trial was adjourned after opening addresses had been given. The trial has been listed to resume in 2021.

Procedural background

On 19 March 2020 TrustCo filed a 'Further Re-Amended Substituted Defence and Counterclaim'. TrustCo contended that this pleading was filed pursuant to leave granted by an order made on 10 March 2020. Orders 2 and 3 of the order of 10 March 2020 provided:
(2)The plaintiffs file and serve a re-amended writ of summons and second further re-amended substituted statement of claim, identifying with specificity the precise extent of the plaintiffs' claim in respect of the retaining wall to the north of the land over which they claim adverse possession, by 4 pm on 13 March 2020.
(3)The defendants file and serve any further re-amended substituted defence by 9.00 am on 19 March 2020.
These orders were made to resolve a dispute that had arisen between the parties in the course of preparing the 'Papers for the Judge'. This dispute concerned the precise extent of the land over which adverse possession was claimed. There is a concrete wall that runs along the northern boundary of the claimed land, and the specific issue was whether the northern most limit of the claimed land ran along the north side or the south side of that wall. It was with the intention of resolving this dispute (in a practical and cost effective manner) that order 2 was made. Parenthetically, I record that the plaintiffs maintained that the writ and statement of claim in the then current iterations were clear as to the boundaries of the land being claimed. In any event, the re-amended writ of summons and second further re‑amended substituted statement of claim[2] filed in accordance with order 2, leave no room for doubt - the plaintiffs' case is that the claimed land extends to the northern most edge of the northern wall.
[2] I will refer to the second further re-amended substituted statement of claim as the 'statement of claim'.
TrustCo maintains that the plaintiffs' amended pleading identified an issue that had not been exposed previously. The issue concerned a very thin elongated area of land on which the northern wall was built. In TrustCo's written submissions it referred to the area as a '6 cm wide stretch of land'. Although it does not appear clearly from the evidence 'the stretch' appears to be 20 to 25 metres in length running along the line of the northern wall. It is of no practical significance because the area is so small that it is incapable of any relevant independent use. In its pleadings TrustCo has referred to this area as the 'Northern Sliver', which is an apt description.
TrustCo erroneously construed order 3 of the 10 March 2020 orders as granting it leave to amend its defence generally. On the basis of that erroneous construction, the Further Re-Amended Substituted Defence and Counterclaim contained amendments which were not consequential on the amendments contained in the second further re‑amended substituted statement of claim.
The plaintiffs objected to the amendments. I heard the plaintiffs' objections on 9 April 2020. I disallowed the amendments but granted leave to TrustCo to make a further application to amend its defence and counterclaim. Directions were given for the filing of a minute of the proposed amended pleading, submissions and an affidavit in support. TrustCo did not adhere to the directions.[3] On 6 May 2019, however, TrustCo filed a 'minute of first defendant's second further re‑amended substituted defence and counterclaim'. It is the amendments in that minute that are the subject of the application.
[3] TrustCo was required to file and serve any application to further amend its pleading together with an affidavit in support and an outline of written submissions by 23 April 2020. A minute of the second further re-amended substituted defence and counterclaim was filed on 6 May 2020 but submissions were not filed and served until 14 May 2020.
In support of its application for leave TrustCo relies on an affidavit sworn by its solicitor, Ms Katja Levy, on 7 April 2020. The plaintiffs object to a number of paragraphs in that affidavit. The paragraphs to which objection is taken are of limited moment and it is unnecessary to rule on the objections. In opposition to the application the plaintiffs rely on two affidavits: the first sworn by Mr Christopher Hood on 3 June 2020 and the second sworn by Ms Alina Andres on 3 June 2020.

The factual background

The Dog Swamp Hungry Jack's outlet has been in operation in its current location since about 1971. It is located over two parcels of land. In broad terms, the restaurant building and part of the drive through is situated on land that Hungry Jack's has possessed either with the consent of the owner of the freehold or with the consent of the lessor of the land. From time to time Selden has either been the owner of the freehold or held a lease of this land. In the statement of claim the plaintiffs refer to this land as 'the Leased Land'.
It is common ground that on 26 June 2002 Selden, as lessor, and Hungry Jack's, as lessee, entered into a lease of the Leased Land, (the Selden lease). The term of the lease was 12 years and two days, commencing on 30 June 2002. Competitive Foods Australia Pty Ltd was a party to the lease as guarantor of Hungry Jack's obligations. It appears from the provisions of the Selden lease generally that it was based on a template for use in relation to other franchised fast food outlets located not only in Western Australia but also in other States. TrustCo relies on various provisions of the Selden lease to which I refer in more detail later in these reasons.
On 1 July 2002 Selden transferred the Leased Land to Westpac Funds Management Ltd (Westpac).
A significant portion of the drive through and associated infrastructure is located on land to the east of the Leased Land. It is this land which is the subject of the adverse possession claim. In the statement of claim this land is referred to as 'the Disputed Land'.
In July 2002 Foodland Ltd was the registered proprietor of the Disputed Land. It transferred the Disputed Land to Westpac on 19 December 2003.

The impugned amendments

In pars 10 to 22 of the statement of claim the plaintiffs plead facts relating to Hungry Jack's possession and use of the Leased Land from 1971 to July 2019. In pars 23 to 36 of the statement of claim the plaintiffs plead the facts on which adverse possession of the Disputed Land is claimed.
The plaintiffs' pleas in relation to the Leased Land include the following:
20.From 26 June 2002 until 1 July 2002, [Hungry Jack's] continued to lease the Leased Land from [Selden] in terms of a written lease dated 26 June 2002 which was for a term of 12 years and 2 days with two 5 year options to renew (the Selden lease) but which applied as between the Plaintiffs for the period 26 June 2002 to 1 July 2002.
21.[Hungry Jack's] continued to lease the Leased Land from Westpac Funds Management Ltd (Westpac) pursuant to the terms of the Selden lease, for the period of Westpac's ownership of the Leased Land, being 1 July 2002 to 12 February 2009.
In pars 20 and 21 of its proposed amended defence TrustCo pleads to pars 20 and 21 of the statement of claim as follows:
20.TrustCo:
(a)admits that the Selden Lease commenced on 30 June 2002 for a term of 12 years, admits that it operated as between plaintiffs in the period on or about 26 June to 1 July 2002, and denies ~~makes no admission as to~~ any prior lease;
(b)says that from on or about 26 June 2002 Selden agreed that Hungry Jack's may and must use and maintain a drive-through on the Disputed Land and the Northern Sliver: Selden Lease cll. 1.1 'Permitted Use', 8.4, 13.3(a) & 13.8;
(c)says that such provision did not grant enforceable rights over the Disputed Land or the Northern Sliver whilst Selden did not own the such land [sic], but specifically contemplated that Westpac (as successor in title to the drive-through) would have such obligations and rights; and
(d)otherwise does not admit paragraph 20.
21.TrustCo:
(a)admits that Westpac became registered proprietor of the Leased Land on 1 July 2002 and transferred proprietorship of the Leased Land to Selden in accordance with the applicable provisions of the TLA on 17 April 2009;
(b)says that by transferring title of the Leased Land to Westpac, encumbered by the agreement pleaded at paragraph 20 herein and without reservation, Selden conveyed whatever interest it held in the Disputed Land and the Northern Sliver to Westpac (whether accrued or unaccrued): PLAs 41;
(c)says that Selden thereby ceased to be in any possession of, and alienated any interest in, the Leased Land, the Disputed Land and the Northern Sliver to Westpac from at least 1 July 2002;
(d)says Westpac, by the Selden Lease, granted a licence or permission to Hungry Jack's to operate a drive-through on the Disputed Land, although during the period Westpac was not the registered proprietor of the Disputed Land, such licence was not effectual;
(e)says that from 19 December 2003, when Westpac became the proprietor of the Disputed Land and the Northern Sliver as pleaded in paragraph 61A herein, the grant of licence or permission was effectual until 17 April 2009, when Westpac sold the Leased Land as pleaded at paragraph 6 herein, and
(f)otherwise does not admit ~~denies~~ paragraph 21.
TrustCo described par 20(b) as stating the effect of the Selden lease and par 20(c) as stating two self-evident conclusions. It referred to these two paragraphs as 'the drive-through plea'. TrustCo described subpars 21(b) to (e) as pleading the effect of the Selden lease and referred to it as 'the transfer plea'.

Applicable principles

A party may amend its pleading with leave of the court.[4] The power to allow an amendment is to be exercised so as best to ensure the attainment of the goals stated in O 1 r 4A (the elimination of delay beyond that reasonably required for the fair and just determination of the issues bona fide in contention) and the case management objects identified in O 1 r 4B(1) (in short - the just, efficient and timely determination of business using resources proportionate to the value and complexity of the subject matter of the dispute).[5]
[4] Rules of the Supreme Court 1971 (WA), O 21 r 5(2).
[5] See Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 [51]; Sino Iron Pty Ltd v Mineralogy Pty Ltd [2014] WASC 406 [32]; Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431 [30]; Samsung C&T Corporation v Loots [2016] WASC 330 [62].
The considerations identified in Aon Risk Services Australia Ltd v Australian National University[6] inform the exercise of the discretionary power to allow or refuse an amendment to a pleading under O 21 r 5(2).
[6] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175.
In Hightime Investments Pty Ltd v Lungan [No 2], Beech J (as his Honour then was) summarised the relevant principles in Aon as follows:[7]
[7] Hightime Investments Pty Ltd v Lungan [No 2] [52].
(a)the effect of an amendment on the court and on other litigants is relevant;
(b)there is no right to amend to introduce an arguable case and it is wrong to say that only in extreme circumstances would a party be shut out from litigating an arguable case;
(c)justice requires that parties have a proper opportunity to plead their case but limits may be placed on repleading when delay and cost are taken into account;
(d)a just resolution does not mean that a party will always be permitted to raise any arguable case at any point in the proceedings, on payment of costs, even indemnity costs;
(e)the inevitable strains of litigation must be taken into account in weighing the adverse consequences of delay - this applies to natural persons and other litigants;
(f)the nature and importance of the amendment to the party amending must be taken into account;
(g)attention must be given to the extent of the delay, and the costs associated with it, the prejudice which might reasonably be assumed to follow from it and any prejudice that is shown;
(h)the point in the litigation relative to the trial may be an important consideration;
(i)where a discretion is sought to be exercised in favour of a party an explanation will be called for;
(j)the point can be reached where a party has had a sufficient opportunity to put its case.
An amending party should explain any substantial delay in making the amendment.[8]
[8] Hightime Investments Pty Ltd v Lungan [No 2] [54].
Subject to the considerations to which I have referred in the preceding paragraphs, the discretion to disallow a proposed amendment to a defence on the grounds that it discloses no reasonable cause of defence should be exercised with great care and only if the plea is so clearly untenable that it cannot possibly succeed.[9]
[9] General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 128 - 130; Kimberley Downs Pty Ltd v The State of Western Australia (Unreported, WASC, Library No 6414, 25 August 1986).

The parties' submissions: an overview

The parties filed lengthy written submissions. In the following overview I will refer to the primary arguments advanced in the submissions. TrustCo's substantive submissions on the merits of the impugned amendments were made in its reply submissions. For that reason I will refer first to the plaintiffs' submissions.

Plaintiffs' submissions

In broad terms the plaintiffs' submissions were as follows:
(a)The terms of the Selden lease referred to in the drive through defence did not support the pleaded allegations and the reliance for the purposes of the transfer plea on s 41 of the Property Law Act 1969 (WA) (the PLA)) did not disclose a reasonably arguable defence. The plaintiffs argued that TrustCo's reliance on s 41 of the PLA was contrary to authority established by the Victorian decision of Kirk v Sutherland.[10]
(b)The impugned amendments suffered from confused and deficient expression which meant they were embarrassing. In summary, the contentions concerned: the use of the expression 'may and must' in par 20(b); the apparent contradiction between a provision that obliged Hungry Jack's to use the drive through but did not grant enforceable rights; an alleged imprecision in the expression 'drive-through'; and an alleged uncertainty in the use of the expressions 'whatever interest' and 'accrued or unaccrued' in par 21(b).
(c)The amendments have been proposed and pursued in a manner that infringes case management principles. In particular, they were made late with no adequate explanation of the delay and in such a way that raised a question over the bona fides of the application and, if allowed, they would cause prejudice to the plaintiffs.

TrustCo's submissions

[10] Kirk v Sutherland [1949] VLR 33, 36.

TrustCo developed its submission as to the merits of the drive through and transfer pleas by reference to the following contentions:
(a)It accepts that the decision in Kirk v Sutherland is authority for the proposition that s 62 of the Property Law Act 1928 (Vic) (repealed) (the equivalent to s 41 of the PLA) did not operate in such a way that a transfer of an interest in registered proprietorship carried with it all associated rights in any adverse possessory interest held by the transferor of the registered proprietorship. TrustCo says that it makes a different point. Rather than attempt a summary, I will set out the paragraphs of TrustCo's written submissions in which its case is explained:[11]
[11] First Defendant's Submissions in Reply filed 23 June 2020.
19.However, TrustCo does not rely on the narrow point rejected in Kirk. It makes a different point.
20.It is this: Selden, Hungry Jacks [sic] and Westpac were involved in a commercial transaction, comprising at least a lease in contemplation of the continuing operation of a Hungry Jacks [sic] fast food outlet, a transfer of at least the Lease Land to Westpac (who was also contemplated to become the registered proprietor of the Disputed Land and the balance of Lot 18) and, it appears likely, a contract for sale of land (now unavailable). The question is, in the context of the anticipated acquisition of the Leased Land and the Disputed Land by Westpac, what was (objective) intended?
21."Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. Unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties … intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'".
22.There is material in that regard, since Westpac was involved in a mandatory public disclosure process explaining the rationale and commercial purpose of its acquisition of restaurant sites and shopping centres as part of the development of a managed fund. That material is discovered and in the tender bundle.
23.TrustCo contends that, in the context (and in any event), the most rational construction of that commercial construction (and, indeed, only rational construction) is that the result to be expected and effected was that Westpac was to become the proprietor of the whole of the situs, Selden was to alienate all of its interests and Hungry Jack's was to continue as a bare tenant, with Westpac as its incoming landlord, to replace in all respects Selden and having proprietorship over the whole of the premises which were used to conduct the restaurant including, expressly, the 'drive‑through'.
24.Whether the parties subjectively understood each mechanism by which that result would be effected is not decisive. What is relevant to the approved method of construction is that the commercial object be discerned from the relevant instruments and any relevant surrounding materials, and the express terms (to the extent that they can be identified) be construed in light of the discerned commercial object.
25.Here, where the sale contract is absent, the objective commercial intent and legal effect, and thereby effect, falls to be understood from the actually available instruments and materials. That is what TrustCo has pleaded.
...
32.To hold, as Kirk does, that a transfer of proprietorship over does not - ipso facto - carry with it all possessory interests or titles arguably associated with the transferred title is not a holding that the statute has nothing to say in a transaction which concerned land where the parties agreed that 'another title' was to be dealt with by the leasehold, as concerned a future landlord who is yet to become the registered proprietor.
33.Moreover, that is not TrustCo's case. Here, rather, there is the contemplation of Selden (the undoubted transfer roar of the registered proprietorship of the Leased Land, to Which Any Argued Adverse Possessory Interest Is a Pertinent), Westpac (the indubitable transferee of the Leased Land and contemplated to become the registered proprietor of Lot 18, including the Disputed Land those bracket and the uncontested lessee (Hungary Jack's), provision in the Selden Lease that the 'drive-through' may be and shall be maintained (as pleaded at defence 20). That drive through is substantially on the Disputed Land.
(b)The 'mandatory public disclosure process' to which reference was made in par 22 of TrustCo's written submissions appears to have included various business records (including Product Disclosure Statements) published by Westpac in its capacity as the responsible entity of the Westpac Family Restaurants Property Trust (the Trust). Those business records contained statements to the effect that in July 2002 the Trust acquired 36 family restaurants fitted out as Hungry Jack's or KFC outlets (including the Dog Swamp Hungry Jack's outlet) from Competitive Foods Australia Pty Ltd.
(c)The essential point made by TrustCo was that in 2002 there was a transaction to which Selden, Hungry Jack's and Westpac were parties and, on an objective assessment, it is to be inferred that as part of this transaction the parties intended that Selden's possessory title to the Disputed Land (if it had one) would be transferred to Westpac because without such a transfer Westpac could not fulfil its obligations to permit Hungry Jack's to maintain a drive through on the Disputed Land. This was said to be the contemplation of the parties because at the date of the Selden lease was entered into the drive through was on the Disputed Land.
(d)TrustCo argued that the transfer defence could not be characterised as one that was 'so clearly untenable that it cannot possibly succeed' for the purposes of the General Steel Industries Inc v Commissioner for Railways (NSW)[12] test.
[12] General Steel Industries Inc v Commissioner for Railways (NSW), 130.

Consideration

No reasonable cause of defence

Relevantly for the purposes of this application, TrustCo's case starts with the propositions pleaded in par 20(b) and (c) that 'Selden and Hungry Jack's agreed that Hungry Jack's may and must use and maintain a drive-through on the Disputed Land' and that 'such provision ... specifically contemplated that Westpac (as successor in title to the drive through) would have such obligations and rights'. As noted earlier, TrustCo asserts these propositions state the effect of the Selden lease. In this respect TrustCo relies on cl 1.1, cl 8.4, cl 13.3(a) and cl 13.8.
Clause 1.1 of the Selden lease contained the following definitions of the expressions 'Permitted Use' and 'Premises':
'Permitted Use' means the use to which the Lessee must put the Premises being a drive‑in and/or take‑away restaurant and/or restaurant operated under franchise arrangements with the Franchisor.
'Premises' means the whole of the land described in Item 1 of the Reference Schedule and includes the Lessor's Structural Improvements, the Lessor's Fixtures and Fittings, all the Services to or in the Premises and any alterations, improvements or modifications made to the Premises from time to time (but does not include the Lessee's Fixtures and Fittings).
(Item 1 of the Reference Schedule described the Leased Land)
Clause 8.4 of the Selden Lease provided:
8.4Maintenance of Landscaped and Other Areas
Without limiting clauses 8.1 and 8.2, the Lessee will at its own cost and expense:
(a)keep and maintain at all times all lawns, shrubs, plants and gardens comprised in the Premises, neat, tidy, weeded, well trimmed and pruned; and
(b)keep and maintain in good and substantial repair, order and condition all paved or bituminised walkways, driveways or car park areas comprised in the Premises.
(Clauses 8.1 and 8.2 govern the lessee's obligations in respect of repair and maintenance and impose extensive obligations on the lessee in those respects.)
Clause 13 of the Selden Lease contained, among others, the following subclauses:
13.1Permitted Use
The Lessee must not use the Premises or permit the same to be used otherwise than for the Permitted Use.
13.3Signs
(a)The Lessee is entitled to erect signs in and on the Premises identifying the Lessee and the business name or names under which the Lessee's business is conducted and the lessee's usual drive through and menu signs and in addition the Lessee shall be entitled to erect a pylon sign on any part or parts of the boundaries or verges of the Premises and to run all necessary services from the Premises through to the sign, provided that all signs must have the prior written approval of all relevant Authorities and, if necessary, the Franchisor, and must comply with the relevant by‑laws of all relevant Authorities. Any damage or disturbance to any improvement on the Premises in the course of erection of the pylon sign and the installation of services thereto shall be made good by the Lessee to the reasonable satisfaction of the Lessor.
(b)The Lessee forthwith must remove all such signs, advertisements, names and notices referred to in paragraph (a) from the Premises upon the expiration or sooner determination of the Lease. Any damage or disturbance of any improvement on the Premises in the course of the removal of all such signs, advertisements, names or notices referred to in paragraph (a) shall be made good by the Lessee to the reasonable satisfaction of the Lessor.
13.8Public Address System and 'Drive Through'
The Lessor acknowledges that the Lessee proposes to operate, inter alia, a 'drive through' take‑away food service on the Premises and that for the purposes thereof the Lessee may erect and install upon the Premises canopies and a public address system including microphones, speakers and ancillary equipment and a menu board and directional signs to facilitate the operation of the 'drive through' take‑away food service and the Lessee may replace or relocate the public address system or any part thereof and the menu board and directional signs and the canopies within the Premises as and so often as is necessary. The Lessee will obtain all necessary approvals from all relevant Authorities and, if necessary, from the Franchisor, for the installation upon the Premises of any item installed in accordance with this clause and, on the Final Expiry Date or earlier termination of this Lease, all such work (excluding the Lessee's Fixtures and Fittings) will become the property of the Lessor.
It may be observed that the provisions on which TrustCo pleads reliance are concerned with activities to be undertaken on the Premises. The term 'Premises' is defined by the title particulars of the land identified in the statement of claim as the Leased Land. Neither the definition of 'Premises' nor any the other provision relied on by TrustCo refers to the land which is identified in the statement of claim as the Disputed Land. Further, none of these provisions refer to Westpac.
The first difficulty with the plea in pars 20(b) and (c) is that the principles of contractual construction as summarised by the Court of Appeal in Black Box Control Pty Ltd v Terravision Pty Ltd[13] are not sufficiently flexible for the provisions relied on by TrustCo to be construed as TrustCo has pleaded. The text presents two difficulties for TrustCo's construction.
(a)The defined term 'Premises' is unambiguous and susceptible of meaning only the land, the title particulars of which are stated, that is, the Leased Land. The language used in the definition of 'Premises' and in the provisions in which the definition is included, is not capable of being construed as if Premises included the Disputed Land or that the lease conferred any rights on the lessee over any land other than the land which was the subject of the lease.
(b)The provisions of the Selden lease on which TrustCo pleads reliance do not make any reference to Westpac. There is no textual warrant to be found in the Selden lease for the plea that the lease 'specifically contemplated that Westpac (as successor in title to the drive-through) would have such obligations and rights'. No other facts capable of supporting that allegation are pleaded. Clause 23 of the Selden lease contains a reference to Westpac but that is not relied on by TrustCo either in its pleading or in its submissions. I explain later why, even had it been relied on, cl 23 would provide no assistance to TrustCo.
[13] Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 [42] (Newnes & Murphy JJA & Beech J).
The second difficulty with TrustCo's construction argument arises from its attempts to overcome the obstacle presented by the text of the lease for its pleaded case.
TrustCo contends that when construing the Selden lease regard must be had to two matters. First, that, as a matter of fact, in mid-2002 the drive through was partially on the Disputed Land. Second, regard must be had to 'the anticipated acquisition of the Leased Land and the Disputed Land by Westpac'. On the basis of these facts it argues that the only rational construction of the lease is that it created an (implied) licence in Hungry Jack's favour over the Disputed Land which was to bind Westpac when it acquired ownership of the Disputed Land.
In my view, however, even when regard is had to the fact the drive through was on the Disputed Land, the construction for which TrustCo contends is so removed from the text of the Selden lease that it is a construction that is not open. The fact the drive-through was on the Disputed Land points to the existence of a disconformity between the terms of the lease, which conferred no rights on Hungry Jack's over the Disputed Land, on the one hand, and the common intention of the parties (as contended for by TrustCo) that Hungry Jack's (as lessee) was to enjoy enforceable rights over the Disputed Land (but only when Westpac acquired ownership of that land), on the other hand. In different circumstances the disconformity might have founded a claim for rectification. It is, however, a disconformity that cannot be rationalised by the process of contractual construction.
Further, as I have observed TrustCo does not plead any facts which are capable of sustaining the allegation that it was anticipated that Westpac would acquire the Disputed Land. Nor does TrustCo plead any facts that sustain the allegation that Westpac by the Selden lease granted a licence or permission to Hungry Jack's to operate a drive through on the Disputed Land.
The only reference to Westpac in the Selden lease is to be found in cl 23. It provided:
23.Acknowledgements
23.1Responsible Entity
Westpac Funds Management Limited ACN 085 352 405 ('the Responsible Entity') is the responsible entity of the Trust.
23.2Limitation of Responsible Entity's Liability
(a)The Responsible Entity enters into this deed only in its capacity as responsible entity and trustee of the Trust and in no other capacity. A liability of the Responsibility Entity arising under or in connection with this deed is limited to the amount the Responsible Entity actually receives in the exercise of its right of indemnity from the property of the Trust. This limitation of the Responsible Entity's liability applies despite any other provision of this deed and extends to all liabilities and obligations of the Responsible Entity in any way connected with any representation, warranty, conduct, omission, agreement or transaction related to this deed.
(b)The parties other than the Responsible Entity may not sue the Responsible Entity in any capacity other than as the responsible entity and trustee of the Trust, including seeking the appointment of a receiver (except in relation to property of the Trust), a liquidator, an administrator or any similar person to the Responsible Entity or prove in any liquidation, administration or arrangement of or affecting the Responsible Entity (except in relation to property of the Trust).
(c)The provisions of this clause 23 shall not apply to any obligation or liability of the Responsible Entity to the extent that it is not satisfied because under the Trust Deed or by operation of law there is a reduction in the extent of the Responsible Entity's indemnification out of the assets of the Trust, as a result of the Responsible Entity's fraud, negligence or breach of trust.
(d)The Responsible Entity is not obliged to do or refrain from doing anything under this deed (including incur any liability) unless the Responsible Entity's liability is limited in the same manner as set out in paragraphs (a) to (c) of this clause 23.
23.3Override
This clause 23 applies despite any other provision of this Deed or any principle of equity or law to the contrary.
The Selden lease contains no definition of the 'Trust' to which reference is made in cl 23.1 although there is a reference to the Premises being held on trust for the Trust in cl 26.6. Clause 26.6 conferred a first right of refusal on the lessee. The lease appears to contain no other reference to the 'Responsible Entity'. Nor is there any provision that provides an explanation of why cl 23 has been included in the Selden lease. By its express terms cl 23 limits any liability Westpac might incur by entering the deed but the clause has no operative effect because Westpac did not enter the deed. I infer that cl 23 is a clause introduced in the Selden lease by use of a precedent that did not reflect the transaction it purported to record. I draw this inference because Westpac was not a party to the Selden lease, it did not execute the deed and cl 23 is inexplicable by reference to any other provision of the lease.
The proposition that the Selden lease granted Hungry Jack's a licence or permission to operate a drive through on the Disputed Land is untenable.
The cumulative effect of the difficulties identified in the preceding paragraphs leads me to conclude that the 'drive-through' plea does not disclose a reasonable cause of defence and the amendments in pars 20(b) and (c) should not be allowed.
It is apparent from the reference in par 21(b) to 'the agreement pleaded at paragraph 20' that the amendments in pars 21(b) to (e) depend on the drive-through plea being allowed. As I have held that the amendments to par 20(b) and (c) should be not be allowed it follows that the amendments in pars 21(b) to (e) should not be allowed.
In their respective submissions the parties focussed on TrustCo's reliance on s 41 of the PLA. They advanced competing contentions in respect of the authority of Kirk v Sutherland, a decision on the equivalent provision of the Victorian legislation in force when that decision was made in 1949. TrustCo appeared to contend that the decision should not be followed or, at least, it should be distinguished. Although not strictly necessary, out of deference to the submissions of counsel, I will make three short observations on these issues.
Before doing so it is convenient to set out the relevant parts of s 41 of the PLA. They are as follows:
41.General words implied in conveyances
(1)A conveyance of land shall be deemed to include and shall by virtue of this Act operate to convey, with the land, all buildings, erections, fixtures, commons, hedges, ditches, fences, ways, waters, watercourses, liberties, privileges, easements, rights and all advantages of whatsoever kind, appertaining or reputed to appertain to the land, or any part thereof, at the time of conveyance.
(2)...
(3)This section applies only if and as far as a contrary intention is not expressed in the conveyance, and has effect subject to the terms of the conveyance and to the provisions thereof.
(4)This section shall not be construed as giving to a person a better title to any property, right or thing in this section mentioned, than the title which the conveyance gives to him to the land expressed to be conveyed, or as conveying to him any property, right or thing in this section mentioned, further or otherwise than the property, right or thing could have been conveyed to him by the conveying parties.
(5). . .
First, my understanding of the transfer plea as explained in TrustCo's written submissions (in particular pars 20 and 32) is that the defence sought to be pleaded does not depend, in truth, on a transfer of any possessory title held by Selden in the Disputed Land implied by operation of s 41(1) of the PLA. Rather, the defence is founded on the objectively assessed intention of the parties as a matter of construction of the 'commercial transaction' referred to at par 20 of TrustCo's written submissions, the relevant intention being to transfer any interest held by Selden in the Disputed Land to Westpac. Reliance on s 41(1) of the PLA appears to be unnecessary.
Second, to the extent to which TrustCo's argument depended on contentions that Kirk v Sutherland was wrongly decided or that the reasoning in it should not be followed, I do not accept such contentions.
In Kirk v Sutherland, s 62 of the (now repealed) Property Law Act 1928 (Vic) (the 1928 Act has been replaced by the Property Law Act 1958 (Vic)) was considered by Lowe J. Section 41 of the PLA is in terms not materially different from s 62 of Property Law Act 1928 (Vic).
The facts in Kirk v Sutherland were as follows: adjoining allotments of land were owned by H and B. H fenced his allotment and in so doing included within the fence part of B's land. B was aware of this and acquiesced in it. H sold the allotment of which he was the registered proprietor and it was onsold to the plaintiffs. B sold his allotment to the defendants. H purported to convey to the defendants that portion of B's land which had been fenced by him. The plaintiffs argued that they were entitled to be registered as the proprietors to that portion of B's land that was enclosed by the fence. Lowe J held that H had established title by adverse possession of that part of B's allotment which had been included within H's fence. One of the grounds upon which the plaintiffs argued that they were entitled to be registered as the proprietors of that portion of B's allotment over which H had established possessory title was that the possessory title passed to them by the enlarging words of s 62 of the Property Law Act 1928 (Vic) or s 121 of the Transfer of Land Act 1928 (Vic). Lowe J rejected this argument, stating:
I am clearly of the opinion that neither of these provisions helps the plaintiffs. Whatever may be the scope of the words used, the words 'rights powers and privileges' 'belonging or appertaining' to the estate or interest of the proprietor, they cannot be construed as extending to rights acquired by adverse possession in land in another certificate of title registered under the Transfer of Land Act. Nor do I think that sec. 62 of the Property Law Act 1928, even if it applies to land registered under the Transfer of Land Act (as to which I say nothing), is of any avail to the plaintiffs. It cannot be contended that what Robert Hawley enjoyed comes within 'liberties privileges [or] easements'. Is it a right or advantage 'appertaining or reputed to appertain to the land' or 'occupied or enjoyed with, or reputed or known as part or parcel of or appurtenant to the land or any part thereof'? The governing words are 'rights and advantages'. These words are not appropriate to describe land itself and, in my opinion, do not include it. I shall not further enter upon the discussion of the real limits of this section, but the side-note suggests that its meaning is rather to be sought in the general words once usual in common law conveyances and its purpose to avoid the necessity of a continued use of such words.
Lowe J's reasoning in the passage of Kirk v Sutherland set out above was applied by Gillard J in Riley v Penttila.[14]
[14] Riley v Penttila [1974] VR 547, 553.
Kirk v Sutherland was referred to by Young J in Shaw v Garbutt[15] and by Wilson J in Re Johnson[16] but these references were not to Lowe J's reasoning in relation to the ambit of the operation of s 62 of the Property Law Act 1928 (Vic) but to his Honour's reasoning on other issues that are not presently relevant.
[15] Shaw v Garbutt (1996) 7 BPR 14,816.
[16] Re Johnson [2000] 2 Qd R 502.
In Bassanelli v Rowsell[17] Hale J referred, in obiter, to Kirk v Sutherland as authority for the proposition that transfer of registered title to land did not operate to transfer a possessory title to adjoining land. And Murray J cited Kirk v Sutherland as authority for the same proposition in Hay Property Group Ltd v Goddard.[18]
[17] Bassanelli v Rowsell (Unreported, WASC, Library No 690, 1 & 17 October 1969).
[18] Hay Property Group Ltd v Goddard (Unreported, WASC, Library No 950432, 18 August 1995).
TrustCo refers, rather dismissively, in its submissions to the reasoning of Lowe J in Kirk v Sutherland as the reasoning of 'a trial judge in a sister state in 1949 (and adopted en passant in one decision in this state on the same narrow basis)' and as one involving 'a cursory survey of the provision by the trial judge'.
I agree, however, with the reasoning of Lowe J and consider that it applies with equal force to s 41 of the PLA. Absent a contrary intention, I consider that possessory title in adjoining land is not deemed to be included in a conveyance of land by reason of s 41(1) of the PLA. That is, relevantly, the possessory title in adjoining land does not constitute any of the following '... rights and ... advantages of whatsoever kind, appertaining or reputed to appertain to the land, or any part thereof, at the time of conveyance.' As Lowe J, stated these expressions are not appropriate to describe land itself. And, in my view, the expressions are not wide enough to, or indeed, apt to connote possessory title to adjoining land.

I should add that I do not consider that I should treat the approval by Hale J in Bassanelli v Rowsell and Murray J in Hay Property Group Ltd v Goddard of the reasoning in Lowe J, as if the citation by their Honours of Kirk v Sutherland were no more than mere passing remarks as opposed to reflecting considered views of members of this court on the operation of s 41(1) of the PLA.
Third, even if TrustCo's pleaded case was sufficient to sustain the proposition that by virtue of the Selden lease Hungry Jack's had a licence to use the Disputed Land, it is not readily apparent why such a licence would be sufficient to attract the operation of s 41 of the PLA, that is, why a licence enjoyed by a lessee over adjoining land has the effect of rendering the possessory title of the adjoining land as distinct from (at best) the licence, a right or advantage appertaining or reputed to appertain to the land.

Case management considerations

I have concluded that the amendments included in pars 20(b) and (c) and 21(b) to (e) should not be allowed because they disclose no reasonable cause of defence. Had I concluded that the impugned amendments disclosed a reasonable cause of defence, I would have refused leave to amend for the discretionary reasons outlined in the following paragraphs.
First, the amendments were first proposed less than two working days before the trial began and no adequate explanation for the lateness of the proposed amendments has been provided. In TrustCo's written submissions it advanced two reasons for the late amendment. The first was that it was occasioned by the 'new challenge posed by the pleading of the Northern Sliver'.[19] With respect, having regard to the minimal area of the Northern Sliver and its lack of any practical significance, this submission is indicative of a loss of perspective. There is also an element of forensic opportunism to the submission in that there is no logical or other rational connection between the Northern Sliver and the matters alleged in the impugned amendments.
[19] First Defendant's submissions in support of leave to amend filed 14 May 2020 [59].
The second reason advanced for the lateness of the amendments was a contention that the plaintiffs had been guilty of providing discovery very late. The reason was expressed as follows:[20]
Plaintiffs' late discovery, together with the plaintiffs' multiple applications for leave to amend the statement of claim and writ to introduce new evidence out of time, and to amend the contents of the papers for the Judge affords sufficient explanation for the comprehensive review by TrustCo of its defence and pleading and thereby the provision of these final pleading amendments.
[20] First defendant's submissions in support of leave to amend filed 14 May 2020 [74].
In reply submissions TrustCo contended:[21]
TrustCo have given an explanation for the lateness of the amendments: the construction it advances could not be responsibly put forward until general discovery had closed, and the corpus of documents which bore on a transaction to which TrustCo played no role was known.
That did not happen until 19 February 2020.
[21] First defendant's submissions in response to plaintiffs' objections to allowance of amendment filed 23 June 2020 [92] [93].
In Ms Levy's affidavit sworn on 7 April 2020 she set out a chronology of the provision of discovery by the plaintiffs and deals with other matters not of any present relevance. She does not, however, provide any explanation for the late amendments.
In Mr Hood's affidavit sworn on 3 June 2020 he deposed that the Selden lease and the transfer of the Leased Land by Selden to Westpac dated 1 July 2002 had been referred to in the plaintiffs' pleading since 13 January 2017 and had been discovered informally by the plaintiffs since 13 November 2017.
The authorities make it clear that a party making a late application to amend its pleadings must provide an explanation for the lateness of the application. The absence of a clear and cogent explanation in Ms Levy's affidavit is telling. And the attempts to explain the late application by reference to the Northern Sliver and the delay in the provision of discovery were unconvincing.
The second discretionary reason for refusing leave to make the impugned amendments is because they raise issues that are, at best, of marginal significance but have the capacity to expand the evidence by an exploration of transactions involving a third party, Westpac, that occurred some 18 years ago. There is no right to introduce an arguable case. TrustCo had the documents upon which the impugned amendments are based for over two years. It has had ample opportunity to plead its case. Hungry Jack's should not be put to the inconvenience and expense of investigating a new defence at this late stage. Had the defence had the capacity to be of decisive significance then different considerations may have been engaged.

Conclusion

The application for leave to amend will be refused in relation to the proposed amendments to pars 20(b) and (c) and 21(b) to (e) but will otherwise be allowed. I will hear the parties in relation to costs but my provisional view is that TrustCo should pay the plaintiffs' costs of the application such costs to be taxed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AS
Associate to the Honourable Justice Tottle
25 NOVEMBER 2020