Mazzuchelli v Mazzuchelli - [2006] WASC 124

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: MAZZUCHELLI -v- MAZZUCHELLI & ANOR [2006] WASC 124

CORAM: HASLUCK J

HEARD: 8 JUNE 2006

DELIVERED : 29 JUNE 2006

FILE NO/S: CIV 2160 of 2005

BETWEEN: ANSELM JOSEPH MAZZUCHELLI
Plaintiff
AND
KIERAN BENEDICT MAZZUCHELLI
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Conveyancing - Land titles under the Torrens system - Easements - Claim of equitable estoppel - Application to maintain or extend caveats - Adjoining farms owned by brothers - Assertion of informal agreement to allow plaintiff a licence to enter and use the defendant's lands and facilities - Plaintiff expended moneys on maintenance and improvements - Claim that defendant induced plaintiff to act on assumed state of affairs - Assumption by plaintiff that alleged arrangement would continue - Allegation that acquiescence of defendant contributed to plaintiff's belief - Application to amend pleadings allowed - Whether sufficient evidence of representation or agreement concerning the perpetual licence contended for - Plaintiff held not to have a caveatable interest in the land based upon an equitable estoppel or easement - Leave to lodge further caveats or to extend operation of caveats refused

Legislation:

Property Law Act 1969 (WA), s 34
Rules of the Supreme Court 1971 (WA), O 21 r 5

Transfer of Land Act 1893 (WA), s 137, s 138, s 138B, s 138C, s 138D(1)(e), s 139

Result:

Plaintiff refused leave to lodge or extend operation of subject caveats
Application to amend statement of claim allowed

Category: B

Representation:

Counsel:

Plaintiff:     Mr H Sklarz
First Defendant             :     Mr I Weldon
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Henry Sklarz
First Defendant             :     Lavan Legal
Second Defendant         :     No appearance

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

Blacks Ltd v Rix [1962] SASR 161
Butler v Fairclough (1917) 23 CLR 78
Coleman v Foster (1856) 1 H & N 37
Commonwealth v Verwayen (1990) 170 CLR 394
Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605
Crabb v Arun District Council [1976] Ch 179
Crampton v French (1995) V Conv R 54‑529
Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129
Di Masi v Piromalli [1980] WAR 57
Errington v Errington & Woods [1952] 1 KB 290
Foran v Wight (1989) 168 CLR 385
Forestview Nominees Pty Ltd & Silkchime Pty Ltd v Perpetual Trustees WA Ltd (1998) 193 CLR 154
Howie v New South Wales Lawn Tennis Ground Ltd (1956) 95 CLR 132
Hurt v Freeman [2002] NSWSC 264
J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546
Jandric v Jandric [1999] WASC 22
Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419
Legione v Hateley (1983) 152 CLR 406
Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407
Lieschke v Lieschke [2003] NSWSC 743
McBean v Howey [1958] NZLR 25
Piromalli v Di Masi [1980] WAR 173
Porter v McDonald & Registrar of Titles [1984] WAR 271
Radonich v Radonich [1999] WASC 165
Ramsden v Dyson & Thornton (1866) LR1HL 129
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Water Board v Moustakas (1988) 180 CLR 491
Wood v Leadbitter (1845) 13 M & W 838

Case(s) also cited:

Bahr v Nicolay (No 2) (1988) 164 CLR 604
Coles, In re Municipal District of Concord (1905) 5 SR (NSW) 259
Concord Municipal Council v Coles (1905) 3 CLR 96
Frazer v Walker [1967] 1 AC 569
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641
Mobil Oil Australia Ltd v Wellcome International Pty Ltd; sub nom Mobil Oil v Lyndel Nominees Pty Ltd (1998) 81 FCR 475
R J Finlayson Ltd v Elder Smith & Co Ltd [1936] SASR 209
Webster v Lampard (1993) 177 CLR 598

HASLUCK J:

Introduction

The plaintiff, Anselm Joseph Mazzuchelli, claims an equitable estate or interest in land at Yuna, north of Geraldton, known as Victoria Locations 4996 and 4997. In these proceedings, he seeks orders directed to establishing his claim and to protecting his interest by lodgement of caveats against the subject locations.
I understand that the second defendant, the Registrar of Titles, has been served and is content to abide the outcome of any ruling made by the Supreme Court. Accordingly, for ease of reference, I will henceforth refer to the first defendant simply as the "defendant".

The proceedings

The proceedings were commenced by a writ of summons issued on 30 September 2005 to which is attached a statement of claim. The defendant has filed and served a statement of defence in general terms dated 24 October 2005. In effect, the defendant denies that the plaintiff is entitled to the relief claimed, or any relief.
For reasons which will become apparent in due course, counsel for the parties at the hearing before me accepted that the matter essentially in issue arises pursuant to s 138D(1)(e) of the Transfer of Land Act1893 (WA) which allows for lodgement of a "further caveat" with the leave of the Supreme Court. This meant that the matter in issue was to be dealt with in chambers on the basis of affidavit evidence. The plaintiff's case is supported by his affidavits sworn 28 September 2005 and 19 December 2005; the defendant's case by his affidavit sworn 18 November 2005. The parties have also filed written submissions.
The central issue arises in this way. It seems that about 18 months ago the plaintiff was informed that the defendant had in mind to sell a property belonging to the defendant (which included the subject locations) to a third party, Magnolia Holdings (WA) Pty Ltd ("Magnolia Holdings"). This prompted the plaintiff to lodge caveats against the subject locations 4996 and 4997. The defendant then caused a notice to be issued under s 138B of the Transfer of Land Act, as a consequence of which the caveats lapsed. This meant that the plaintiff was obliged to commence these proceedings in order to obtain orders from Master Newnes dated 10 and 28 October 2005, providing for the lodgement of further caveats, with the parties being allowed liberty to apply to dissolve or vary the orders. In essence, leave to lodge further caveats was allowed upon a provisional basis only pending the hearing of the matter at a special appointment.
In effect, then, the principal matter in issue before me is whether, pursuant to the liberty to apply just mentioned, the provisional leave to lodge further caveats should be confirmed, and provision made for the operation of such caveats to be extended. I will review the statutory provisions and principles bearing upon an application of this kind in due course.
The defendant's stance is that, on the affidavit evidence, the plaintiff is not in a position to mount an arguable case in support of the caveats, with the result that the operation of the caveat should not be extended. In that event, the likelihood is that the proposed sale of the property to Magnolia Holdings will proceed and the plaintiff will have to decide whether his claim is worth pursuing.
On the other hand, the defendant submitted, if the caveats are extended, the Court should make programming orders requiring the plaintiff to bring the matter on for trial. A final determination could then be made as to whether the plaintiff is entitled to declaratory or other relief relating to the plaintiff's claim.

Background

The plaintiff and the defendant are brothers. It seems that their parents, Bernard Benedict Mazzuchelli and Mary Mazzuchelli, owned the original Dartmoor Farm comprising 11,000 acres. The plaintiff worked this farm in partnership with his parents and played a part in establishing various improvements on location 4996, being the site of the family homestead. These improvements included a machinery shed, shearing shed and sheep yards, pig yards, a holding shed, diesel fuel tanks and grain silos. Where the context permits, I will call these collectively the "subject improvements".
The defendant had worked on the original farm also. It seems that in 1990 the original farm was sold to the plaintiff and the defendant. In 1991, the farm was divided into two parts, being 7000 acres known as Rainmore, which was transferred to the plaintiff, and 4000 acres known as Dartmoor, which was transferred to the defendant. Locations 4996 and 4997 (and thus the subject improvements) were situated on the defendant's property which lay to the east of the plaintiff's Rainmore property, being separated from the same by a road.
The plaintiff said this in his first affidavit at pars 29 and 30:
"29. From the time that the family farm was split up in 1990, it was always my understanding, from conversations I had with my brother Kieran, and his oral undertakings to me, that if either one of us intended to sell his farm, he would give the other first option to purchase it.
30.On this understanding, I was prepared to 'let things be', even though the main infrastructure, sheds and farming equipment were located on Kieran's property and I was using it for farming purposes, however, I was forced in to the action of registering these Caveats, to protect my interests, when I realized that Kieran was not prepared to give me the first option to purchase his farm, when he entered into a Contract of Sale of his farm, incorporating Victoria Locations 4996 and 4997, to Magnolia Holdings (WA) Pty Ltd, on 8 February 2005. That Contract is now at an end."
The plaintiff went on to provide further details in his first affidavit as to the use he made of the subject improvements on location 4996 after the division of the family property. The plaintiff said that he had a key to the main gate of the defendant's farm and had an expectation that he was entitled to enter location 4996 for the purpose of using and continuing to use the improvements. The defendant did not seek to prevent the use of this entitlement. The plaintiff expended moneys on the maintenance of the improvements and refrained from erecting equivalent facilities on his own farm.
The plaintiff said this, at pars 36 to 39 of his first affidavit:
"36. From 1990, Kieran my brother, the First Defendant, encouraged me and allowed me to expend much money and effort in maintaining and improving the land comprised in Victoria Locations 4996 and 4997, and its facilities, and also passively stood by, allowing me to expend much money and effort developing and producing crop from these locations.
37.I believed in and relied upon this assumed state of affairs and upon the conduct of my brother Kieran.
38.By virtue of the facts above, I claim the benefit of an interest in Location 4996, arising by reason of an equitable proprietary estoppel being -
(a)a perpetual licence to enter and remain on location 4996 at all times for the purposes of:
(i)the use of the shearing shed and sheepyards for shearing his sheep;
(ii)maintaining and improving the shearing shed and sheepyards;
(iii)access to the shearing shed and sheepyards, machinery shed and grain storage shed, the diesel storage tanks and grain silos;
(b)the right to exclusive occupation of the grain storage shed;
(c)the right to exclusive use of the diesel storage tanks and grain silos;
(d)the right to use the machinery shed;
(e)the right to store the diesel storage tanks and grain silos on location 4996.
39.The First Defendant acquiesced in my belief that I had the rights that I claim above, by the fact that I had keys to the facilities and free access to the farm, I was regularly welcomed by the First Defendant, upon entry to the farm premises and I was not prohibited from entering. Further, the First Defendant allowed me to conduct improvements and alterations to the lands, as stated above."
I note in passing that the plaintiff appears to rely essentially upon acquiescence by the defendant in order to substantiate his claim to an interest in the subject locations. He does not purport to identify a document, event or crucial conversational exchange which could be regarded as a representation made or an undertaking given by the defendant to the effect that the plaintiff could assume that he was to have a perpetual licence to enter and remain on location 4996 of the kind contended for.
As to location 4997, the plaintiff said that this formed part of the farm now known as Dartmoor transferred to the defendant. The plaintiff said that, prior to the 1991 division, he had cleared more than 330 acres of location 4997 for the purposes of cropping and grazing stock. After the transfer, he continued to have free access to the land for the purposes of growing wheat and grazing sheep and stock. He said further that the defendant had not sought to prevent him using the land in that way, and since at least 1982 to the present, he had an expectation and belief that he was entitled to use the land. He had expended money on an annual basis on the subject location of at least $20,000.
The plaintiff said that, by reason of these facts, he claimed a perpetual licence to enter and remain on location 4997 pursuant to an equitable estoppel for the purposes of cropping, harvesting and working the land for wheat production, maintaining and improving the arable soils of the said land and grazing stock on the land.

The defendant's affidavit

The defendant by his affidavit provided further information as to how the parents of the parties had acquired and worked the original Dartmoor Farm. He described his own association with the property. He referred also to the plaintiff's acquisition in 1973 of a 2000‑acre farm adjacent to the original Dartmoor Farm called Longhurst.
The defendant said that the effect of the 1991 division was that the plaintiff purchased 7000 acres, of which 6500 acres were arable and contained all of the four farm water bores. The defendant purchased 3000 acres, of which 2200 were arable. The defendant's smaller arable acreage was compensated for by the presence of the subject improvements upon the new Dartmoor Farm. The defendant said that, at the time of the division, there was never any mention of a mutual first option to purchase each other's acreage as alleged by the plaintiff, although, at that time, there had been some talk of the plaintiff purchasing the entirety of the original Dartmoor Farm.
According to the defendant, he told the plaintiff that the plaintiff could only use the shearing sheds and other improvements on the new Dartmoor Farm for three or four years. The plaintiff failed or neglected to erect similar facilities on his own property, although he did erect some sheds on the Longhurst property. The defendant said that he frequently reminded the plaintiff of the latter's agreement to erect his own sheds. He did not induce the plaintiff to believe that he could use the subject improvements indefinitely.
The defendant said further that as to location 4997, a temporary arrangement was made that the plaintiff would crop part of the defendant's location 4997 and the defendant would crop part of the plaintiff's location 4998. At no time did the defendant ever intend the plaintiff to have perpetual licences over locations 4996 and 4997 of the kind contended for in these proceedings.
I pause here to note that the defendant's affidavit and the plaintiff's second affidavit (being his answering affidavit) are lengthy and go into considerable detail as to how various disputes arose between the brothers, which led eventually to a breakdown in their relationship. I find it unnecessary to traverse these issues in full, for it is not the practice of the Court in ruling upon an application to maintain or extend caveats to resolve factual issues having regard only to the affidavit evidence. Moreover, it is important to focus upon the issues arising from the pleadings.
Importantly, however, the defendant said in his affidavit that early in 2005 he decided to sell the new Dartmoor Farm to Magnolia Holdings as the owner of a neighbouring farm. On 8 February 2005, the company executed an offer and acceptance undertaking to purchase the farm for the sum of $395,000.
When the defendant advised the plaintiff of this, the plaintiff lodged caveats against locations 4996 and 4997. This led to the settlement being postponed. As indicated in earlier discussion, when the original caveats lapsed, the plaintiff was eventually obliged to seek leave to lodge further caveats (being the caveats the subject of the present application). The plaintiff as caveator seeks to restrain any dealing with the subject locations unless the dealing be expressed as subject to the caveator's claim (that is, the plaintiff's claim of an estate or interest in the land under and by virtue of an equitable proprietary estoppel).
The defendant said in his second affidavit (at par 1.37) in answer to the plaintiff's par 37 allegation (mentioned earlier) that "at no time did I actively or knowingly encourage the plaintiff to assume he had any permanent proprietary interest in my land. I note that the plaintiff confirms that it was merely an assumption on his part." The defendant said also that in 2002 he ordered the plaintiff orally to vacate location 4997.
In his second or answering affidavit, the plaintiff disputed many matters of detail concerning the vexed history of the relationship between the parties, especially since the division of the original Dartmoor Farm in 1991, and referred to a discussion about the mutual first options proposal at the office of the plaintiff's lawyer at the time of the division. The plaintiff alleged that the defendant agreed to this proposition. The plaintiff denied that there was any conversation at a later stage to the effect that he (the plaintiff) would only use the shearing sheds for three or four years, or that reminders to that effect were given.
To my mind, it is significant that a plaintiff does not in his answering affidavit purport to identify any conversation or event that bears upon a supposed representation or arrangement concerning a perpetual licence over location 4996 of the kind contended for. The plaintiff simply asserts (at par 37) that "the first defendant's conduct led me to believe that I had a perpetual licence to use part of location 4996".
The plaintiff asserted, at par 73 of his affidavit, that the defendant's sale of the new Dartmoor Farm to Magnolia Holdings was in breach of the oral mutual first options agreement. The plaintiff referred also to an offer made by him dated 24 March 2005 to acquire the defendant's Dartmoor Farm (that is, after the defendant's sale to Magnolia Holdings).

Statement of claim

The plaintiff's pleaded case reflects the allegations set out in his affidavits. For the moment, I will put to one side certain amendments to the statement of claim that were applied for at the hearing and deal with the statement of claim in its original form.
The plaintiff pleads, at pars 4 and 6, that "by virtue of the conduct of the parties", the plaintiff claims a caveatable interest of equitable proprietary estoppel with respect to locations 4996 and 4997 being a perpetual licence of the kind referred to in earlier discussion.
It is said, at par 8, that in 1990, the plaintiff and the defendant made an agreement and/or arrangement that the plaintiff would have free access to and usage of the lands and facilities located upon locations 4996 and 4997.
Reference is made to the conduct of the parties and other matters covered by the plaintiff's affidavits, including the so‑called mutual first options agreement. There is an assertion in par 16 that the plaintiff acted upon the assumption that he had a licence to enter, occupy and remain on the said lands, "as he required".
It is said in par 17 of the claim that the defendant induced the plaintiff to believe and rely on the assumed state of affairs. Further (at par 18), that this gave rise to the plaintiff's entitlement of proprietary estoppel.
By his prayer for relief, the plaintiff seeks to lodge further caveats and an injunction to restrain the defendant from dealing with the subject land.

I have noted that the defendant by his statement of defence in general terms disputes the case advanced by the plaintiff and denies that the plaintiff is entitled to relief. It will now be useful to look at the statutory provisions and legal principles bearing upon the issues before me.

Statutory provisions and principles

Section 137 of the Transfer of Land Act provides that any beneficiary or other person claiming an estate or interest in land under any unregistered instrument may lodge a caveat with the Registrar of Titles in an approved form forbidding the registration of any person as transferee or proprietor of and of any instrument affecting such estate or interest either absolutely or after notice of the intended registration be given to the caveator or unless such instrument be expressed to be subject to the claim of the caveator.
Section 138 of the Act and related provisions provide a mechanism whereby the caveator can be called upon to substantiate his claim. Section 139 provides that, so long as the caveat remains in force, the Registrar shall not enter any transfer or other instrument purporting to transfer or otherwise deal with or affect the estate or interest with respect to which such caveat may be lodged.
Section 138C provides that a caveator who is served with a notice calling upon the caveator to respond within 21 days may apply to the Supreme Court for an order extending the operation of the caveat. Such an order may be made if the Supreme Court is satisfied that the caveator's claim has or may have substance. By s 138D(1)(e), if a caveat has lapsed due to a caveator's failure to respond to a notice, the caveator cannot lodge any further caveat unless the Supreme Court has made an order giving leave for the lodgement of the further caveat.
In essence, a person who acquires land under the Torrens system, bona fide and for consideration, will be subject only to those interests he or she can discover from a search of the register. The principal exception to this concept of indefeasibility is fraud. In addition, the caveat system is a means of warning persons proposing to deal with the subject land of the presence of an unregistered equitable interest and of enabling the equitable claimant to protect his claim by bringing an action if his claim be disputed. Failure to lodge a caveat in circumstances which induces a claimant later in time to act to his prejudice may result in the claimant first in time losing priority: Butler v Fairclough (1917) 23 CLR 78; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546.
In Jandric v Jandric [1999] WASC 22, Commissioner Buss QC said, at [24] to [26] that an applicant for extension must demonstrate on the evidence that his claim to a caveatable interest in the land raises a serious question to be tried. If there is a serious question to be tried, the question will not, except in the most exceptional circumstances, be determined on originating summons, as it is not appropriate to attempt to resolve conflicts of evidence on affidavit: Porter v McDonald & Registrar of Titles [1984] WAR 271 at 276; Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129 at 141.
In Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407, the High Court indicated that the purpose of requiring the caveator to specify the estate or interest claimed is to enable the registered proprietor to know, or find out, the claim which he or she will have to meet. The term "specify" should be understood in the sense of "mention definitely or explicitly".
In Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419, the caveator claimed "an estate or interest as purchaser of an estate in fee simple as to the estate or interest of the above‑named registered proprietor in the land above". Malcolm CJ held at 429 that the statement in the caveat was sufficiently explicit. The interest of a purchaser under a contract of sale is said to be commensurate with the availability of specific performance. In his opinion, the estate or interest claimed by the purchasers under the contracts in question was sufficient to ground a caveatable equitable interest in the relevant land, notwithstanding the conditional nature of the contracts.
Generally speaking, a contractual licence to enter or occupy another person's land (such as the defendant's land in the present case) is revocable and can be terminated by the licensor: Cowell v RosehillRacecourse Co Ltd (1937) 56 CLR 605. However, it emerges from the decided cases that licences coupled with a grant are irrevocable: Wood v Leadbitter (1845) 13 M & W 838 at 845. Moreover, in certain circumstances where revocation by the licensor could be characterised as the breach of a negative stipulation, an injunction can be obtained to restrain the revocation until the events allowed for by the stipulation have been completed: Bingham v 7‑Eleven Stores Pty Ltd (2003) QCA 402 per Williams JA at [6] to [11].
These rules suggest that in the circumstances of the present case where the plaintiff is relying essentially upon a licence to enter (which is not coupled with a grant), it will be difficult to establish that he has a caveatable interest. For example, in Howie v New South Wales Lawn Tennis Ground Ltd (1956) 95 CLR 132, persons designated as special members had various entitlements, including an allocation of reserved seats in the grandstand. The High Court held that the so‑called rights of the special members were based upon a contract with the company. If the company ceased to carry on its business at the ground, the rights would cease. Further, the doctrine concerning restrictive covenants is limited to negative covenants and to covenants made for the benefit of the land of the covenantee.
There is authority to the effect that an unregistered restrictive covenant is an equitable interest in land which may be protected by a caveat provided three conditions are satisfied, namely, that the covenant or promise is negative in nature, that it benefits the land retained by the covenantee, and that the burden of the covenant was intended to run with the covenantor's land: Blacks Ltd v Rix [1962] SASR 161; Crampton v French (1995) V Conv R 54‑529.
These cases suggest that if a claimant is found to be entitled to resort to or use land in a manner that will be binding upon third parties who acquire the land with notice of the prior interest because of the availability of specific performance, or an injunction to restrain the breach of a negative covenant, then this could arguably be characterised as a caveatable interest in land. However, it is clear that something more is required than a mere contractual relationship with the registered proprietor conferring a right to enter. There must be an intention to charge or burden the land itself. The position of successors to the covenantor with respect to the burden of the covenant rests not upon any legal principle of privity of estate, but upon the equitable principle of privity of conscience: Forestview Nominees Pty Ltd & Silkchime Pty Ltd v Perpetual Trustees WA Ltd (1998) 193 CLR 154 at [23].
It is apparent from the circumstances of the present case that the plaintiff cannot point to any document reflecting an agreement to charge or burden locations 4996 and 4997 with a covenant or perpetual licence of the kind contended for. The statement of claim proceeds from the premise that an equitable estoppel was created by the conduct of the defendant which has essentially the same effect as an agreement between the parties to encumber or charge the subject land so that an injunction could be obtained to restrain revocation of the licences contended for. It therefore becomes necessary to look at the principles concerning estoppel.
At common law, estoppel was limited to representations of existing fact. However, equity developed the doctrine of promissory estoppel, which most commonly prevents someone departing from a representation that he or she will not enforce a contractual right. However, the representation or conduct relied on must be clear, unequivocal and unambiguous: Legione v Hateley (1983) 152 CLR 406 at 405.
In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, Mason CJ and Wilson J noted that, for many years, there was a reluctance to allow promissory estoppel to become a vehicle for the positive enforcement of a representation by a party that he would do something in the future. It was thought to be a defence in equity. Generally speaking, they said, a plaintiff cannot enforce a voluntary promise because the promisee may be expected to appreciate that, to render it binding, it must form part of a binding contract.
They went on to accept, however, that, in some circumstances, promissory estoppel may extend to the enforcement of a right not previously in existence when the defendant has encouraged in the plaintiff a belief that it will be granted and has acquiesced in action taken by the plaintiff in that belief. What gave rise to the need for the Court to intervene was the defendant's unconscionable attempt to go back on the assumptions which were the foundation of their dealing.
Mason CJ and Wilson J, setting out the majority view, summarised their reasoning in this way, at 404:
"One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it': per Dixon J in Grundt v Great Boulder Gold Mines Pty Ltd (1937) 59 CLR 641. Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption."
It is apparent from this passage and the reasoning of other members of the High Court in Waltons' case (supra) that the purpose of the doctrine of estoppel is to preclude parties relying on strict rights where to do so would be unconscionable.
Justice Brennan observed at 428 that silence will support an equitable estoppel only if it would be inequitable thereafter to assert a legal relationship different from the one which, to the knowledge of the silent party, the other assumed or expected. His Honour went on to say this:
"In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise."
It emerges from later decisions of the High Court in Commonwealth v Verwayen (1990) 170 CLR 394 and Foran v Wight (1989) 168 CLR 385 that the basic assumption being relied upon by the claimant may be one as to a legal as well as to a factual state of affairs. In other words, a representation as to the effect of a legal agreement or the adequacy of arrangements made between the parties can give rise to an estoppel.
The decided cases suggest that the question of whether it would be unconscionable for the defendant to assert his strict legal rights against the plaintiff depends on how great a part the defendant has played in inducing the plaintiff to adopt the particular expectation. It could be unconscionable for the defendant to assert his strict rights as proprietor where he has observed the plaintiff making improvements to the defendant's land: Hurt v Freeman [2002] NSWSC 264 at 192; Lieschke v Lieschke [2003] NSWSC 743.
It is apparent from the reasoning of Parker J in Radonich v Radonich [1999] WASC 165 at [112] that the representation or conduct in issue must not only have been clear, but also that it was intended to be relied upon and that the reliance was reasonable.
The plaintiff in Radonich's case was unable to make out his claim to an interest in a family market gardening property due to the absence of any sufficiently specific discussion as to how the property was to be used. The learned Judge gave weight to a number of decided cases, including Errington v Errington & Woods [1952] 1 KB 290, which indicate that family arrangements may well need to be judged in a different light from commercial transactions. His Honour observed at par 157 that the nature and purpose of the family arrangement may well be persuasive against a conclusion that legally binding obligations were contemplated or created.
I note in passing that this was said by Denning LJ in Errington v Errington & Woods (supra) at 296:
"The classic definition of a licence was propounded by Vaughan CJ in the 17th century in Thomas v Sorrell [(1674) Vaugh 330 (124 ER 1098 at 1109)];
'A dispensation or licence properly passeth no interest nor alters or transfers property in any thing, but only makes an action lawful, which without it had been unlawful.'
The difference between a tenancy and a licence is, therefore, that in a tenancy an interest passes in the land, whereas in a licence it does not."
Let me now apply the reasoning in the decided cases to the circumstances of the present case.

Findings as to estoppel issue

The plaintiff's case is set out succinctly at par 16 of the plaintiff's outline of submissions. It is said that the plaintiff assumed and expected that he had an interest, or would obtain an interest in the defendant's land. The interest is said to be the right by way of perpetual licence to enter locations 4996 and 4997 for farming purposes.
In summary, the plaintiff contends that the assumption arose because the defendant by his conduct from 1990 onwards allowed the plaintiff to enter and use the subject locations as alleged and encouraged or allowed the plaintiff to expend funds maintaining and improving the land.
It is said that the plaintiff abstained from building his own facilities by reliance upon such conduct and a belief induced by the defendant that the plaintiff would have a first option to purchase the defendant's farm. There will be a detriment to the plaintiff if his assumption or expectation is not fulfilled in that he will no longer be able to use the subject improvements on location 4996, or resort to the acreage on location 4997 for farming purposes. It is said that the defendant had taken no step to avert the detriment.
The plaintiff's pleaded case, taken at its highest, and without any attempt being made to resolve various evidentiary issues, appears to be seriously flawed. It is not sufficient for the plaintiff simply to assert that he made arrangements with his brother to use the subject locations. The relevant provisions of the Transfer of Land Act require that a caveator must make out an arguable case that he has an unregistered estate or interest in the land.
The plaintiff clearly accepts that, since 1991, the defendant has been the registered proprietor of the new Dartmoor Farm, which includes the subject locations. The effect of s 34 and s 35 of the Property Law Act 1969 (WA) is that no interest in land is capable of being created except by writing, save for the creation or operation of resulting, implied or constructive trusts and the law relating to adverse possession and part performance. The plaintiff cannot point to any written agreement or specific oral agreement conferring an interest in the land. The plaintiff's description of a mutual first option arrangement (taken at its highest) is not sufficiently certain in its terms to be characterised as an agreement intended to confer an interest in land. It follows from earlier discussion that informal arrangements for the use of land might arguably give rise to a contractual licence, but this is not sufficient of itself to confer an interest in the land.
The plaintiff's pleaded case endeavours to overcome these difficulties by referring to a "perpetual licence", arising from what is said to be an equitable proprietary estoppel; that is, supposedly a licence based on the assumption that the defendant would never revoke the licence, so that it would be unconscionable for him to do so, or to act in a manner which might prevent use of the land pursuant to the licence.
The pleadings do not set up a case that a licence of this kind fulfils the requirements of a restrictive covenant. In any event, the evidence relied upon by the plaintiff is not sufficient to support a finding that a specific agreement was made in the form of a negative covenant by the defendant not to use or deal with the land in a way that would prevent or obstruct the plaintiff's use of the subject improvements and acreage to the intent that the burden of a covenant would run with the defendant's land and also be of benefit to the plaintiff's land. The so‑called perpetual licence can only be regarded as giving rise to a claim of a different kind, namely, a covenant not to revoke the licence which is capable of being enforced by a restraining order or injunction.
I am not persuaded that a claim to a licence of the kind contended for gives rise to caveatable estate or interest in the subject locations. The licence arrangement (if there be one) appears to be directed not to the creation of an interest in land, but to the continuance of the relationship between the plaintiff and the defendant as neighbouring landowners. It clearly depends upon the existence of that relationship and can be and will be revoked if the relationship is brought to an end: Coleman v Foster (1856) 1 H & N 37. If either party disposed of his land, it would be impossible to conclude (in the absence of any finding as to restrictive covenant) that the licence ran onwards. The basis for restraining any revocation of the so‑called licence by injunction has disappeared.
Further, and in any event, even if it be held that a perpetual licence of the kind contended for could give rise to an equitable estate or interest in the subject land, I am not persuaded, having regard to the plaintiff's pleaded case, that a claim based on equitable estoppel has sufficient prospects of success to justify a grant of leave for the lodgement or extension of fresh caveats.
The plaintiff was not acting pursuant to a mistaken assumption of the kind found in many of the decided cases that the subject land was his, or was soon to be his. At all material times, he was well aware that the land belonged to his brother, and his permission to enter could be withdrawn by the proprietor. The plaintiff cannot point to any specific agreement or clear representation that the licence would not be revoked, but relies only on the conduct or acquiescence of the defendant in letting the permission to enter run onward.
It emerges from the observations of Brennan J in Waltons' case (supra) that silence will support an equitable estoppel only if it would be inequitable thereafter to assert a legal relationship different from the one which, to the knowledge of the silent party (the defendant), the other (the plaintiff) assumed or expected. However, in this case, there is nothing in the plaintiff's pleaded case or related evidence to suggest that there was any moment of alteration in the relationship between the parties in law or in fact after 1991, or that the plaintiff did not at all times know that the land belonged to his brother, and permission to enter was required.

Moreover, it is apparent from the decided cases that it is difficult to infer from informal family arrangements that there was any specific representation or agreement which might be regarded as having had the effect of altering the basis of the relationship between the parties. The plaintiff contends that he was induced to act to his detriment by spending money on the subject improvements, but the fact is that he obtained an immediate benefit by keeping them in a workable condition in that he had rent‑free use of the improvements and was able to carry on farming without having to construct his own facilities. He had a rent‑free use of the acreage on location 4997 to produce an annual crop. Thus, I am not satisfied that the evidence relied upon to establish detriment is sufficient to make out an arguable case.
To my mind, it follows from all of this that the plaintiff is not in a position to make out a claim that the defendant has acted unconscionably in seeking to exercise his strict legal entitlement as owner to sell the land to a third party if he wishes to do so. In the absence of any clear representation or conduct by the defendant that the informal licence arrangement would never be revoked, it cannot be said that the plaintiff acted reasonably in acting pursuant to such a belief (even if it be found on the evidence that he did, in fact, harbour such a belief).
Accordingly, I am not prepared to make the orders sought by the plaintiff on the basis of the statement of claim as originally pleaded. However, I must now turn to the plaintiff's application to amend the claim.

The easement issue

The plaintiff applied for leave at the hearing before me to amend his statement of claim in terms of a minute dated 6 June 2006. In essence, he sought to amend pars 4 and 6 of the claim by introducing a plea as to both of the subject locations that the plaintiff has a caveatable interest in the subject locations of equitable proprietary estoppel "and/or easement" by way of a perpetual licence to enter and use the land in a manner referred to in earlier discussion. It is apparent from the plaintiff's minute that the facts and matters relied on in support of the new plea correspond to those supporting the earlier plea. In effect, the matter was argued upon the basis that the defendant was estopped from denying that the plaintiff had an easement over the subject locations arising from his use of the land for farming purposes over many years.
The application to amend was opposed by counsel for the defendant upon the basis that it had been applied for at short notice, and in circumstances where there was a lack of compliance with previously made programming orders concerning the delivery of submissions. Nonetheless, counsel for the defendant acknowledged that some opportunity had been allowed to him before the hearing to look at the new plea, and to prepare written submissions bearing upon the issue. Against this background, I heard argument from both sides concerning the matter and reserved my decision as to whether the application to amend should be allowed.
Pleadings play an essential part in civil actions in defining the issues to be dealt with at trial before the trial commences so that a party opposing the case is not taken by surprise: Water Board v Moustakas (1988) 180 CLR 491. By O 21 r 5 of the Rules of the Supreme Court1971 (WA), an amendment to the pleadings may be made with leave at any stage of the proceedings. The general rule is that a party should be allowed to make any necessary amendments so that all matters truly in controversy are determined with a view to bringing finality to the dispute.
However, in considering whether an amendment should be allowed, a Court will usually give consideration to the question of whether the proposed amendment is consistent with the particular pleading and whether it is likely to survive a striking‑out application. Accordingly, I must turn to the statutory provisions and legal principles bearing upon the easement plea.
An easement is essentially the right to make use of another's property, as in the case of a right of way to pass over another's land. It follows from this that there must be a dominant tenement, the owner of which is entitled to the benefit of the easement, and a servient tenement that is subject to the burden of the easement. The corollary is that the owner of the dominant and servient tenements must be different persons. Moreover, a right over land cannot amount to an easement unless it is capable of forming the subject matter of a grant: see Bradbrook & Neave: Easements and Restrictive Covenants in Australia (2nd ed par 1.4).
At common law, the meaning and effect of an easement conferred by a deed of grant is determined by reference to the language of the grant, construed in the light of the circumstances existing at the time of the execution of the deed. An easement over Torrens system land is not created by deed. But a document registered under that system, such as a transfer of land, is deemed to be a deed.
The decided cases suggest that prescriptive rights to easements affecting land under the Transfer of Land Act may be acquired even after those lands are brought under the Act: Di Masi v Piromalli [1980] WAR 57 (on appeal Piromalli v Di Masi [1980] WAR 173). However, in the circumstances of the present case, I am not persuaded that any question of prescriptive user arises, bearing in mind that the subject locations formed part of a common (parental) ownership until 1990 and, in any event, the plaintiff's pleaded case proceeds from the premise that he used the land pursuant to a licence arrangement.
The learned authors of Bradbrook & Neave (supra) observe that equity has never insisted on a formal deed for the conveyance of an interest in land, having regard to the maxim that equity deems as done that which ought to be done. If a deed is absent, equity will treat a contract to convey an easement as effective to transfer the equitable interest to the purchaser. However, for the reasons I have given previously, it is clear that the plaintiff in the present case is not in a position to rely upon a specific written or oral agreement amounting to a contract to convey an easement, and thus the plaintiff seeks to rely upon an equitable estoppel.
In that regard, the learned authors observe, at par 2.4, that in the context of easements the equity of acquiescence (or proprietary estoppel) does not depend upon an agreement between the parties, but on the words or conduct of the servient owner. The effect of the equity of acquiescence, which has its modern starting‑point in Ramsden v Dyson & Thornton (1866) LR1HL 129, is to turn what would otherwise be a licence revocable at will into a binding interest.
It follows from the reasoning in Waltons' case (supra) that the owner of the servient tenement (in this case the defendant) must be shown to be acting unconscionably if he exercised his legal right of revocation or otherwise insisted upon his strict legal rights as proprietor of the land.
Thus, in Crabb v Arun District Council [1976] Ch 179, Scarman LJ observed, at 195, that the plaintiff has to establish as a fact that the defendant, by setting up his right, is taking advantage of the plaintiff in a way which is unconscionable, inequitable or unjust. The fraud or unconscionable conduct, if it be such, arises after the event, when the defendant, by relying on his legal rights, seeks to defeat the expectation which he, by his conduct, encouraged the plaintiff to have.
However, the decided cases do not suggest that a permanent easement will invariably be created by the equity of acquiescence if the servient owner acquiesces in, or encourages that alleged dominant owner to spend money on improvements on the dominant land on the mistaken assumption that he or she is entitled to an easement: see Bradbrook & Neave (supra) at par 29.
In McBean v Howey [1958] NZLR 25, the parties agreed that the plaintiff, who wished to erect a garage on his land, should be permitted to excavate and construct a short driveway across the corner of the defendant's land. The plaintiff built the garage on his own land, and the defendant saw the construction and encouraged it. After the plaintiff had regularly used the driveway for nine years, the defendant gave him two months' notice of intention to revoke the licence.
In rejecting an action by the plaintiff for an injunction restraining the defendant from interfering with the driveway, Barrowclough CJ held, at 30, that on the facts, there was no proof that the defendant must have known of the plaintiff's mistaken beliefs as to his rights: The building of the garage and the construction of the driveway were not inconsistent with a belief by the defendant that the plaintiff might be prepared to incur the necessary expenditure even though he had only a temporary right.
In the circumstances of the present case, I consider that, notwithstanding the lateness of the proposed new plea, the application to amend the statement of claim should be allowed upon the basis that all matters potentially in controversy between the parties should be brought before the Court so that a final determination can be made. However, upon the basis that the easement plea is now before the Court as part of the plaintiff's pleaded case, I am not persuaded that the plaintiff has an arguable case in respect of that matter.
I am of the view that the case I mentioned a moment ago, McBean v Howey (supra), illustrates the difficulties confronting the plaintiff in the circumstances of the present case, and weighs against a finding in his favour. The reasoning in that case reflects the conclusion I came to previously when dealing with the estoppel plea, namely, it does not appear that the plaintiff, or either party, was acting upon a mistaken assumption as to the entitlement of the defendant to grant or withdraw permission to enter his land. Further, the defendant's acquiescence in the plaintiff's use of the subject locations cannot reasonably be regarded as having induced the plaintiff to act to his detriment, because the plaintiff received immediate annual benefits as a consequence of the user.
The plaintiff's use of the subject locations arose out of and was consistent with an informal family licence arrangement. I can see nothing in the circumstances which might have induced the plaintiff to believe that he was to obtain a permanent right of user in the nature of an easement. That being so, it cannot be said that the defendant encouraged or was responsible for a mistaken assumption or acted unconscionably in exercising his entitlement as the owner of the supposedly servient property to revoke the licence.
It follows that I am not minded to grant the plaintiff leave to lodge or to extend the operation of fresh caveats upon this further ground.

Summary

The application to amend the statement of claim will be allowed. The plaintiff will be refused leave to lodge or extend the operation of the subject caveats affecting locations 4996 and 4997. I will hear from the parties as to whether any further orders or directions are required.