JNM Pty Ltd v Adelaide Banner Pty Ltd
[2009] VSC 327
•7 August 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 6645 of 2007
| JNM PTY LTD (ACN 064 222 242) | Plaintiff |
| v | |
| ADELAIDE BANNER PTY LTD (ACN 080 242 584) | Defendant |
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JUDGE: | BYRNE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 July 2009 | |
DATE OF JUDGMENT | 7 August 2009 | |
CASE MAY BE CITED AS: | JNM Pty Ltd v Adelaide Banner Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 327 | |
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REAL PROPERTY – Claim for possession by registered proprietor – Claim for adverse possession by adjoining owner – Fence some distance from the title boundary – Disputed land only partly fenced – Whether possessory acts by claimant – Unfenced portion of land unused and unusable – Constructive possession – No clearly defined boundary – Doctrine of constructive possession inapplicable.
Limitations of Actions Act 1958 s. 8
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Settle | Charlesworth Josem Partners Pty Ltd |
| For the Defendant | Mr M Osborne | B2B Lawyers |
HIS HONOUR:
This case concerns a block of land at the northwest corner of Neilson Place and Maribyrnong Street, Footscray bounded Neilson Place to the south, by Maribyrnong Street to the east and by a railway reserve to the north. The land is that described in three titles, Lots 2, 3 and 4 on Plan of Subdivision 99955 and being respectively the land more particularly described in certificates of title Vol 9032 Folio 437, Vol 9032 Folio 438 and Vol 9032 Folio 439. As appears from the survey, the fenced[1] boundary running nearly the full depth of the land in a north-south direction between Lots 2 and 3 on the one hand, and Lot 4, on the other, is located some 3.51m to 5.04m east of the title boundary. As a consequence, the plaintiff, JNM Pty Ltd, as the registered proprietor of Lots 2 and 3, seeks possession of this strip beyond the fence line; the defendant, Adelaide Banner Pty Ltd, the registered proprietor of Lot 4, resists the claim, relying upon s 8 of the Limitation of Actions Act1958 and, by counterclaim, seeks declaratory and other relief as an adverse possessor of the strip.
[1]I use this expression to refer to a series of constructions which presently exist, partly fence and partly the walls of buildings.
Annexed to these reasons and forming part of them are a plan of levels and cross-sections dated 27 May 2008 prepared by licensed surveyor, Peter Andrew Hallyburton. For convenience I have caused to be written on this document the lot numbers by which I refer to the land in the three titles with which this judgment is concerned. This survey is accepted by both parties as being accurate.
In addition to the survey, I have a number of photographs taken by Frank James Palazzo, director of JMN, in late 2008, of the land and, in particular, of the disputed strip and the structures and fences on it. I have also a series of aerial photographs of the land taken on various dates between November 1989 and March 2007. I also have had the benefit of an inspection of the land in the course of the trial which enables me the better to understand these documents and the oral evidence.
Topography
On the plan, the title boundary is shown as a heavy unbroken line. A little to the right is shown what I have called the fence line. The plan also shows the levels across the title boundary and on Lots 2 and 3. The strip of land in question runs for the full depth of the land, a little less than 86.3m, and comprises area of about 404m². It is about 3.51m wide for the first 20m or thereabouts from Neilson Place to the commencement of a sleeper wall, and 5.04m wide from there to the northern end of the brick building. The northern boundary at the railway reserve is about 20m from the northern wall of the brick building. The claim of Adelaide Banner asserts adverse possession of the strip bordered to the west by the title boundary and to the east by an unfenced line running in a northerly direction from the north-west corner of the brick building, being a continuation of the west wall of that building. This last portion of the disputed strip occupies about 100m².
The land generally falls from the west to the east. Some time ago, the land to the east of the fence line has been cut to create level areas which are presently used for car parking and for an electrical substation and a brick building. For a distance of about 45m north of the southern boundary to the point where the brick building commences there are a series of retaining walls apparently supporting the cut. The height of these walls varies from about 1.2m at Neilson Place to about 4.2m at a point immediately south of the brick building. It will be seen from the plan that this retaining wall is not in a straight line and that it is partly a brick wall and partly a wall of wooden sleepers. The greater height of this wall at the north end is in part due to the fact that the lower car park which abuts the brick building is about 2m lower than the upper car park to the south. This is shown in sections A:A1 and B:B1 on the survey.
In each case there is a cyclone wire fence on top of the wall. Section B:B1 shows the cut at the north end of the sleeper wall. At this point, the embankment falls away from a point slightly west of this wall which accordingly serves to retain only about 1m of the toe of the embankment at the fence line. There is also a low cyclone wire fence on this sleeper wall. The fall of the embankment at this point and the heavy vegetation, as well as the structure which I have described, all prevent access from Lot 3 to the disputed strip at this point.
The sections and the photographs suggest that this cyclone wire fence, other than that on the sleeper wall, would serve to protect a person on the top of the cut from falling down the embankment. In the area west of the sleeper wall this protection would be achieved by the presence of the heavy vegetation on and at the top of the embankment. Since this fence was erected at a time when the lots were in the one ownership, it may be that this was a purpose in the mind of the then owner when the walls and wire fences were erected, but there was no evidence of this.
The southernmost portion of the strip, from Nielson Place running about 20m to the sleeper wall, is now part of a paved area extending west to the shed but the evidence does not permit me to conclude when this paving occurred. The aerial photographs to do not assist me to resolve this issue.
To the north of the sleeper wall and in a direct line with it is the west wall of a brick building on Lot 2. This wall serves no protective function. The wall in fact commences on Lot 3, at a point a little south of the brick building and may well have been part of the building at some earlier stage. On the top of this part of the brick wall there is a cyclone wire fence. This wire fence, or at least part of it, would serve a protective function.
There was no evidence as to when these improvements and structures were made or erected, other than that they were already in existence in 1989 when the first of the aerial photographs was taken and when Con Goulas and his wife, Genny Goulas, became the owners of Lot 4. The only changes since that date have been in the nature and extent of the vegetation along the title boundary and, perhaps, in the paving of the southern portion of the disputed strip.
The area to the north of the brick building was the subject of some controversy. The plan and the section C:C1 accurately depict the topography. The top of the embankment runs in a north-westerly direction towards the railway reserve at the rear of Lot 4. The land on Lot 2 at the toe of the embankment is about 2.5m lower than that at the lower car park south of the brick building and is 6.6m below the top of the embankment. The incline of the slope is about 30° over broken ground. It was said that the climb up the embankment at this point was not an easy one and would require a person to scramble up using hands as well as feet. The descent, too, is one which cannot be achieved without some difficulty.
There is no fence or other structure north of the brick building separating Lot 2 and Lot 4, although there was evidence from Mr Goulas that there was a fence running across this area on Lot 2, generally following the toe of the embankment from the east end of the north wall of the brick building in a north-north-westerly direction towards the railway reserve. No such fence is present today and it does not appear on the photographs. It is not clear from his evidence who erected this fence and when it was erected and removed. He did say that it is still there but this is not correct.
There was some debate about the vegetation in this northernmost area of the disputed strip. The aerial photographs show that it was dense throughout the whole of the period from 1989 to 2007 and confirm the suggestion put on behalf of Adelaide Banner that its present condition is the result of some clearing carried out since the encroachment was discovered. The photographs, however, show a consistent gap between the trees so that they alone would not prevent a person from passing over this part of the strip.
Subject to the difficulty posed by the steep incline and the presence of vegetation in this area there is nothing to prevent a person from passing between Lot 2 and Lot 4 at this northernmost area. There is, however, no path and no steps which might
facilitate access. The photographs show that this northernmost area between the lots is not and has not been used for any purpose other than, perhaps, the dumping of rubble.
I find that a person who managed to come onto the strip at the top of the embankment near the northwest corner of the brick building would have no difficulty moving south as far as the southern wall of that brick building. The photographs show that the passage within the strip beyond that point to the south would be impossible because of the fall of the embankment and the vegetation at about section B:B1 on the plan. To the south of the sleeper wall, the strip is flat and easily traversable.
User and Possession
The three titles were created upon the registration of Plan of Subdivision 99955 in 1974. The registered proprietor of each of Lots 2, 3 and 4 was Michaelis Bayley (Vic) Pty Ltd. This was the landholding company within the Michaelis Bayley Group.
Lot 4 was transferred from Michaelis Bayley (Vic) to Mr and Mrs Goulas on 17 May 1989, and on 25 February 2002 it was transferred by them to the defendant, Adelaide Banner.
On 16 October 1996 Lots 2 and 3 became registered in the name of JNM following their purchase from Michaelis Bayley (Vic). This appears to have been associated with the acquisition by Mr Palazzo of the business of manufacturer and wholesaler of shoes formerly conducted by Michaelis Bayley (Aust ) Pty Ltd.
From their appearance and that of the locality, Lots 2, 3 and 4 are large commercial or industrial parcels of land. Insofar as they have been developed, they appear to be used for parking storage of goods and for what appears to be industrial buildings. For some years prior to 1989, the three lots were used for the manufacturing and wholesale purposes of the Michaelis Bayley Group save for an electrical substation on the southwest corner of Lot 3.
Mr Goulas gave evidence that he and his wife conducted business as wholesale fishmongers from other premises and that they did not use Lot 4 very much for themselves. He said that he stored cartons within a building on the land and parked trucks on it. He said that he did not use the land next to Lot 3. There is on Lot 4, but some distance west of the disputed strip, a substantial building which appears to be a shed or factory of some kind. Mr Goulas said that during his ownership he planted some trees on an unspecified part of the land, stored goods in the shed and used an unspecified part of it for the parking of cars. The aerial photographs show throughout this period two smaller buildings to the north of the shed and that much of the land around these buildings was paved and used for the parking of trucks and cars. In aerial photographs taken in 1994, 1996, 1998, 2002 and 2004 trucks and cars are shown as standing on the paved part of the strip south of the sleeper wall.
Mr Goulas said that the existing structures and fencing along the disputed strip were in existence when he purchased the land as they are now. He said that he was not aware that they were not on the title boundary.
During much of the period from 1989 to 2002 that Lot 4 was owned by Mr and Mrs Goulas it was let to tenants. Details of leases prior to 1997 were not provided. Between August 1997 and August 1999 it was leased to Intermotor Sales Pty Ltd , a company associated with Adelaide Banner, which carried on business as a motor dealer. Peter Van Camp, a director of Adelaide Banner, said that this company maintained a workshop there, presumably in the shed or the buildings to the rear of it. Upon the expiry of this lease, Mr and Mrs Goulas leased the land until October 1999 to Michaelis Bayley Footwear Company, a company or firm apparently associated with the then owner of Lots 2 and 3, JNM. Mr Goulas also said that at another time he permitted the owner of Lots 2 and 3 to use Lot 4 for storage purposes and that he charged a fee for this. The date of this is not known. It was not suggested that this storage occurred on the disputed strip of land.
In 2002 Mr and Mrs Goulas sold Lot 4 to Adelaide Banner. It seems that since that date the land has been used for purposes associated with its car sale business including the storage of cars. Cars were kept on the southern portion of Lot 4 including the paved southern part of the disputed strip south of the sleeper wall for a distance of some 20m from Nielson Place. Indeed, the crossing and gateway in the wire fence which extends across the southern boundary of Lot 4 straddle the title boundary. Mr van Camp said that he thought this entrance was created in the early 1990s. There has been since 2002 no possessory act carried out by Adelaide Banner on any part of the disputed strip beyond this southern portion.
Mr Palazzo told me that he climbed the unfenced embankment from Lot 2 “probably 12, 15, maybe 20 times” during the period since 1996 when he purchased the Michaelis Bayley business. He thought this occurred in the late 1990s. His evidence as to this was, frankly, not very convincing. I consider that his evidence as to the number of these events was exaggerated. They may have occurred during the times that his company was permitted access to Lot 4 as tenant or licensee of Mr and Mrs Goulas. In any event, it appears that he climbed the embankment on these occasions, not in the exercise of any right to do so, but rather in order to determine the source of water flowing down the embankment onto Lot 2.
Adverse Possession
There was no dispute as to the principles which I must apply in determining the claim of Adelaide Banner to adverse possession of the disputed strip. In its statement of claim JNM seeks to recover possession of the whole of the land on the east side of the title boundary. Adelaide Banner’s case for adverse possession is for the strip of land bounded by the title boundary to the west and to the east by a line following the existing fence line up to the northern wall of the brick building and, thereafter, in a straight line to the northern boundary.
The claimant, Adelaide Banner, must establish that for 15 years prior to the commencement of this proceeding on 8 June 2007, or perhaps the bringing of the counterclaim, that it has been in adverse possession of the strip. On the facts of this case nothing turns upon the start date: it is accepted that the present situation has existed since 1989 at least. Nor was there any suggestion that this situation was not continuous in the sense that there has been no interruption in the user of the strip as the title to Lot 4 passed from Mr and Mrs Goulas to Adelaide Banner. The point of difference between the parties was as to whether this user amounted to adverse possession.
As Gillard J observed in Riley v Penttila,[2] the acts of the claimant implying dispossession necessary to establish a possessory title must be considered with reference to the peculiar circumstances of the case. These will include “the character and value of the property, the suitable and natural mode of using it, having regard to all the circumstances, and the course of conduct which the proprietor might reasonably be expected to follow with due regard to his own interests…”.
[2][1974] VR 547 at 561
A very relevant indication of adverse possession is enclosure. It is clear that the strip other than the northernmost 20m is fenced or is protected by the brick structures and that this has continued without interruption for 15 years at least. It contended, therefore, that, so far as this portion of the strip is concerned, the owner of Lot 4 from time to time has asserted possession of the land to the exclusion of the world, including the true owner. But this was merely part of the condition of the land when Lot 4 came into separate ownership. Furthermore, I have found that the fencing does not exclude the true owner, if it be minded and able to climb the unfenced embankment, to enter upon the strip as far south as a point at about section B:B1 on the plan.
Adverse possessors must show possessory acts; to adopt the expression of Slade J,[3] they must show that they have used the disputed strip as “an occupying owner might have been expected to deal with it and that no-one else has done so”. They must exercise this dominion over the whole of the land unless they can rely upon the doctrine of constructive possession, namely, that the circumstances are such that possession of part indicates possession of the whole.
[3]Quoted by Ashley J in Bayport Industries Pty Ltd v Watson [2002] VSC 206 at [39].
I am not satisfied that, notwithstanding the fencing, the successive owners of Lot 4 have actually made relevant use of any part of the strip other than the southernmost 20m which is now paved and used for car parking. Lot 4 and the disputed strip, like the land of which they form part, is industrial or commercial property and the evidence before me shows that the only activity of that kind conducted on it was conducted in or about the three buildings which are some distance west of the disputed strip. The portion of the disputed strip immediately north of the car parking area appears to have been left in its natural state with, perhaps, some minimal garden maintenance in the vicinity of the wall of the brick building. Given the nature of the land and the use to which it might have been put, this does not amount to use which would amount to adverse possession. This is particularly the case with respect to the unfenced northernmost portion whose physical condition is such that it cannot readily be used for any purpose whatsoever.
I am satisfied, too, that the successive true owners of Lots 2 and 3 did not use or seek to use any part of the disputed strip at any time since 1989. They appear to have accepted that the fence line marked the title boundary. With respect to the unfenced northernmost portion, the nature of the terrain is such that access is difficult so that they would not be expected to create a fence or other obstruction in order to protect their land from intrusion from Lot 4.
I am mindful of the fact that the cyclone wire portions of the fencing may well have been constructed, not to mark the boundary, but rather as a protective measure for those on top of the embankment. This was not relied upon by either party and, I think, correctly so. My concern is not as to the state of mind of the persons who established the fence, but rather as to the circumstances which existed during the relevant 15 year period.
It is of no consequence that the owner of Lots 2 and 3 has been permitted to enter into possession of Lot 4 as lessee of Mr and Mrs Goulas for two months in 1999 and has been permitted by them to use the land for storage for a short period at sometime between 1989 and 2002. There is no evidence as to whether this possession or occupation affected the user of the disputed strip other than that of the southernmost portion.
I conclude, therefore, that those in possession of Lot 4 have not discharged the burden which lies on them to prove acts amounting to possession of the fenced portion of the disputed strip except for the southernmost paved area which has been used for the parking of vehicles. With respect to this last mentioned portion, I am satisfied that the Adelaide Banner has proved continuous adverse possession sufficient to establish a possessory title.
A particular difficulty facing the claim for adverse possession in this case arises from the fact that the northernmost portion of the strip, some 20m extending to the northern boundary and representing about 25% of the area of the strip, is not fenced. Furthermore I find that this portion of the strip has not been used for any purpose by the owners of Lot 4 or, indeed, by the owners of Lots 2 and 3. The fact is that this land, by reason of its topography is not usable for any purpose which might be expected of land of this kind. This has the consequences that the owner of Lot 4 has not exercised exclusive dominion over this northernmost portion at any time over the past 15 years and, further, to the extent that access to this portion provides access to the south, that it was not excluding the true owner from that portion of the strip immediately to the south of this northernmost portion.
This brings me to the argument offered on behalf of Adelaide Banner that the absence of a fence over the northernmost 20m of the disputed strip and the absence of acts of possession of this and much of the balance of the strip is not fatal to its claim for adverse possession of the whole. Counsel relied upon the doctrine of constructive possession.
The Lord Advocate v Lord Blantyre[4], concerned a claim for adverse possession of foreshore land fronting a navigable tidal river. The point was raised as to the fact that the claimant’s acts of ownership did not extend to the whole of the 700 acres in dispute. Lord Blackburn disposed of this contention by observing that acts of the claimant tending to prove possession as owners of part may tend to prove ownership of the whole “provided that there is such a common character of locality as would raise reasonable inference that if the barons possessed one part as owners they possessed the whole, the weight depending on the nature of the tract, what kind of possession could be had of it and what the kind of possession proved was”.[5]
[4](1879) 4 App Cas 770.
[5]4 App Cas 770 at 791-2, per Lord Blackburn.
Another case decided in the Privy Council 90 years later is to the same effect. Higgs v Nassauvian Ltd[6] concerned a claim for adverse possession of about 105 acres on the Island of New Providence in the Bahamas. The advice of the Privy Councillors was given by Sir Harry Gibbs. The point here at issue was whether the farming of parts of the land in rotation over many years established adverse possession of the whole. After quoting the passage from the speech of Lord Blackburn in Lord Blantyre’s case, to which I have referred, Sir Harry observed that the principle is not applicable to a question of undefined and disputed boundaries. The rule will apply only where the whole of the land, of which the acts of dominion of the adverse possessor relate to part only, is sufficiently defined by fence or physical barrier or otherwise.
[6][1975] AC 464.
Sir Harry Gibbs relied upon the authority of the old case of Clarke v Elphinstone[7]. There, the land in question was jungle in Ceylon and the true boundary was said to be a particular stream. But the surveyors could not agree as to whether it was this stream or another, so that the Privy Council concluded that there was insufficient evidence of the establishment by agreement between the parties of a defined boundary. This meant that the claimant had not discharged the burden of showing actual acts of possession of the true owner’s land. The contention of the claimant was, then, that acts of possession on parts were evidence of possession of the whole. This argument was rejected for the same reason, namely, the want of a defined boundary. In the case of a large field surrounded by hedges, possessory acts within the field may be effective to show possession of the whole.[8] This was not such a case.
[7](1880) 6 App Cas 164.
[8](1880) 6 App Cas 164 at 170.
Another decision of the Privy Council in West Bank Estates Ltd v Arthur[9] to the same effect is closer to the present. The disputed land was a mile long strip whose width varied from 100 yards to 30 yards. The respondent claimed adverse possession of this strip, asserting that it had used parts of it for cultivation purposes. The Privy Council rejected this contention but went on to consider a further argument offered by the appellant. This was directed to the adverse possessor’s contention that a dam to the north of the disputed land constituted the boundary of this land. The Privy Council[10] accepted the finding that this was not an agreed or customary boundary and that it was not sufficient that the adverse possessor believed that it formed the boundary. The lack of a defined boundary meant that the claimant had to establish actual possession of the whole of the disputed land. The principle of constructive possession had therefore no role to play.
[9][1967] AC 665.
[10][1967] AC 665 at 678-9.
In Kynock Ltd v Rowlands[11] the true boundary was the centre line of a dry ditch. The true owner of the land erected a wall some short distance on its own side of the ditch, so that a strip of land, including the ditch which was owned by it, was beyond the wall. The adjoining owners placed rubbish on this strip and resisted the true owner’s claim for injunction restraining them from doing so by setting up a possessory title to the strip on their side of the wall. The acts of possession relied upon by the defendants as constituting adverse possession were that the cows of their tenant had grazed up to the wall. The trial judge had no difficulty finding that, having regard to the nature and condition of the land, this did not amount to acts of possession by the adjoining owners. This decision was not disturbed on appeal.
[11][1912] 1 Ch 527.
I return to the facts of this case. From a point at the northwest corner of the brick building on the disputed strip there is no fence or other mark indicating that the area of adverse possession should be bounded on the east by a continuous straight line. The natural topography would suggest that the boundary moved in a north-westerly direction along the crest of the embankment. An alternative might have been that it passed along the toe of the boundary in the area where Mr Goulas said that there had been a wall. Whatever be the true situation, it cannot be said with any confidence that the boundary should proceed as counsel for Adelaide Banner contended. This means that his client must establish actual use of the northernmost portion of the strip on the west side of the boundary which it asserts. This it has not done.
I conclude from this that Adelaide Banner has failed to demonstrate that it and its predecessors in title have continuously exercised dominion over the whole of the strip which it claims. Accordingly, its claim for a possessory title of the strip must fail. On the other hand, I am satisfied that the claim of JNM for possession of the whole strip must also fail because, insofar as it includes what I have called the paved southernmost portion, the defence based on the Limitation of Actions Act succeeds.
I will hear counsel further as to the precise orders that should be made to give effect to these conclusions and as to costs.
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