Nicholas Olandezos v Bhatha
[2017] VSC 234
•5 May 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2017 00558
| NICHOLAS OLANDEZOS | Plaintiff |
| v | |
| SATNAM SINGH BHATHA | First Defendant |
| JASWINDER BHATHA | Second Defendant |
| AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION | Third Defendant |
| REGISTRAR OF TITLES | Fourth Defendant |
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JUDGE: | DERHAM AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 April 2017 |
DATE OF JUDGMENT: | 5 May 2017 |
CASE MAY BE CITED AS: | Nicholas Olandezos v Bhatha & Ors |
MEDIUM NEUTRAL CITATION: | [2017] VSC 234 |
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CAVEAT – Removal of caveats – Caveats lodged by persons claiming interests by adverse possession – Subject land vested in ASIC – Plaintiff owner of neighbouring land is applicant to ASIC to purchase subject land – Standing of plaintiff not disputed – Serious question to be tried established – Balance of convenience favours caveators – Caveators applied pursuant to s 60 of the Transfer of Land Act 1958 for an order vesting the land in them for an estate in fee simple – Whether disputes of fact warrant maintenance of caveat subject to condition that caveators commence proceedings – Conditional order for the removal of the caveats made – Ex Parte Vincent (1886) 12 VLR 566; Re Jasper’s Caveat [1923] VLR 650; Evandale Estates Pty Ltd v Keck [1963] VR 647; McMahon v McMahon [1979] VR 239; Piroshenko v Grosjman (2010) 27 VR 489; Carbon Black Pty Ltd v Launer [2015] VSCA 126; Sylina v Solanki [2014] VSC 2.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P G Cawthorn QC with Mr J P Foster | Garden & Green Australian Lawyers |
| For the First and Second Defendants | Mr W F Rimmer | Peter Speakman & Co |
| For the Third Defendant | Ms E Levine | ASIC |
| No appearance for the Fourth Defendant |
TABLE OF CONTENTS
Introduction......................................................................................................................................... 1
Summary of Conclusions................................................................................................................. 2
Factual Background........................................................................................................................... 2
Disputed Land is vested in ASIC............................................................................................... 5
Relevant legal principles.................................................................................................................. 7
Application to Remove Caveats................................................................................................. 7
Adverse Possession.................................................................................................................... 10
Prima facie case................................................................................................................................. 12
Submissions................................................................................................................................. 12
Analysis........................................................................................................................................ 16
Balance of convenience................................................................................................................... 19
Conditional Removal of the Caveats............................................................................................ 21
Conclusion......................................................................................................................................... 24
HIS HONOUR:
Introduction
The plaintiff seeks the removal of 2 caveats (‘the Caveats’) pursuant to s 90(3) of the Transfer of Land Act1958 (Vic) (‘the TLA’). The Caveats have been lodged by the first and second defendants (‘Caveators’) in relation to a strip of land near the Benjeroop-Tresco Road, Tresco, Victoria registered in the name of Australian Farms Pty Ltd (ACN 004 066 513) (‘Australian Farms’), being the whole of the land described in Certificate of Title Volume 11256 Folio 932. The Caveators’ claim a freehold estate in that land by adverse possession (‘the disputed land’). The prohibition against the registration of any instrument affecting the estate claimed is absolute.
The disputed land is 347.42 meters long and 20.12 meters wide and adjoins the plaintiff’s land.[1] It also adjoins the Caveators’ land.[2] The disputed land lies to the east of the Caveators Land and between it and the plaintiff’s land.
[1]Situate at Benjeroop-Tresco Road, Tresco, Victoria, which is more particularly described in Certificate of Title Volume 06434 Folio 797 (‘the plaintiff’s land’).
[2]Situate at 1341 Benjeroop-Tresco Road, Tresco, Victoria, being the land in Certificate of Title Volume 10222 Folio 674 (Caveators’ Land’).
Australian Farms was deregistered on 17 June 1927. The parties agree that the disputed land is vested in the Australian Securities and Investments Commission (‘ASIC’) or, at least, ASIC has the power to deal with the land. The plaintiff has applied to purchase the disputed land from ASIC and claims that this makes him a person adversely affected by the Caveats and therefore a person entitled to make application for their removal under s 90(3) of the TLA.
Associate Justice Daly made directions in this proceeding on 12 March 2017 for the filing of affidavits and outlines of submissions and adjourning the matter to me. On 27 April 2017, J Forrest J referred the hearing and determination of the proceeding to me pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015(‘the Rules’).
The Caveators initially took issue with the plaintiff’s standing to apply to remove the Caveats, but at the hearing accepted for the purposes of argument that the plaintiff did have standing and concentrated their argument on the strength of their adverse possession claim and the balance of convenience. They did this so as to avoid any delay or complication arising from submissions made by ASIC that, in the circumstances, notices under s 78B of the Judiciary Act 1903 (Cth) were required to be given. It is not necessary to go into the argument advanced by ASIC to support that proposition.[3] Nevertheless, regardless of the legal issue of standing, the position of the plaintiff as a prospective buyer of the disputed land rather than, for example, a registered proprietor seeking to complete a contract of sale, remains relevant to the balance of convenience.
[3]An argument that is, in my view, unlikely to be correct.
Summary of Conclusions
For the reasons set out below, I consider that the order of the Court must be that unless the Caveators commence proceeding to establish their entitlement to the freehold estate in the disputed land by adverse possession within one month, the Caveats be removed.
Factual Background
The Caveators became registered proprietors of their land in December 2010 having purchased from Mr and Mrs Brake, who were registered as proprietors of that land from June 1995. The Caveators claim that since 2010 they have exercised exclusive and continuous possession of the disputed land. The first defendant deposes that he is informed by his solicitor and believes that Mr and Mrs Brake have indicated that they exercised exclusive and continuous possession over the disputed land since their purchase in 1995. The Brakes have recently signed an assignment of their possessory rights with respect to the disputed land for the purposes of the Caveators making application pursuant to s 60 of the TLA.[4] The most recent affidavit filed by the plaintiff’s solicitor’s law clerk shows that the plaintiff was informed of the lodgement of the application under s 60 of the TLA by letter from the Caveators solicitor dated 26 April 2017.[5] The Caveators have not introduced the application into evidence in this proceeding, as they might have done. Nor had they, at the time of the hearing, provided it to the plaintiff, notwithstanding a request for it.
[4]Ibid.
[5]Affidavit of Gryffin Morys Bainbridge sworn 27 April 2017. The application is lodged in dealing number AP138304H.
The Caveators conduct a stone fruit business on their land - there are stone fruit trees planted on their land that extend eastwards, occupying the western half of the disputed land. The Caveators use the eastern half of the disputed land to operate and store machines and implements for the propagation, maintenance and harvesting of the trees. The Caveators have possessed and used the disputed land exclusively since they purchased their land from Mr and Mrs Brake.[6]
[6]Bhatha’s affidavit, [12].
There is no fence between the Caveators’ land and the disputed land. The boundary between the Caveators’ Land and the disputed land is covered by fruit trees. These trees were planted by Mr and Mrs Brake, and they were clearly in existence when the Caveators took possession of their land. There is also no fence on the northern boundary on the Caveators’ Land, which is not uncommon in the locality. Similarly, there is no fence on the northern or southern boundaries of the disputed land. However, on the eastern boundary of the disputed land, a fence separates the Caveators’ Land (and the disputed land) from the plaintiff’s property on the east. That fence has been in existence during the whole time of the Caveators’ ownership of their land and Mr Bhatha understands from Mr and Mrs Brake that the fence, (a post and wire fence) has been in place for about 30 years.[7] The effect of this evidence is clearly that the disputed land is fenced in with the Caveators’ Land.
[7]Ibid [13].
In about the first half of December 2016, the plaintiff (or somebody on behalf of the plaintiff) removed a section of the eastern fence and installed a gate. The apparent purpose of this gate was to allow the plaintiff or his agents and workers to enter into the disputed land. This was done without the knowledge or consent of the Caveators.[8] It has been the subject of complaint by the solicitors for the Caveators.[9]
[8]Ibid [16].
[9]By letter dated 20 December 2016: Exhibit NO-12 to the affidavit of Nicholas Olandezos sworn 15 February 2017.
In November 2015, the plaintiff applied to ASIC to purchase the disputed land. That application was supported by a statutory declaration setting out the searches that show the land to be vested in ASIC and attempting, unsuccessfully, to trace the mortgagees of a mortgage of the disputed land. Amongst the material in the statutory declaration is some evidence that the disputed land has been valued at $3,850.00. After that application was made, the Caveators lodged their Caveats. In July 2016, ASIC informed the plaintiff that it will generally not approve applications for ASIC to sell the property owned by a deregistered company when it is subject to third party disputes. Despite ASIC not wishing to be vested with the property any longer than necessary, it will not take steps to defeat the interests of the Caveators until their lawyer has had time to prepare and lodge a claim to the disputed land by adverse possession.[10] Further, the evidence of the Caveators’ solicitor indicates that from what he has been told by officers of ASIC, it is the practice of ASIC not to oppose, and to acquiesce in, the grant of applications under s 60 of the TLA where the registered proprietor of the land is a deregistered company.
[10]Affidavit of Nicholas Olandezos sworn 15 February 2017, [12] and [21].
There was subsequent correspondence between the solicitors for both the plaintiff and the Caveators and ASIC. That correspondence included a letter of 20 December 2016 from the plaintiff’s solicitor to the Caveators’ solicitor where the plaintiff’s solicitor maintained that the Caveators were not entitled to the disputed land by adverse possession for two reasons. First, because they would not be able to establish that they had actual and exclusive possession of the disputed land, without interference, for a minimum of 15 years. This will become clear by way of evidence of the previous owner of the Caveators’ Land and other long term farmers from the district. Second, because adverse possession could not be maintained against the Crown, the land having vested in ASIC and any real or personal property held by ASIC was held for and on behalf of the Commonwealth.
That letter enclosed copy of an affidavit of Nikitas Olandezos (‘Nikitas’),[11] which the plaintiff’s solicitors stated would be relied upon to support an objection to any claim by the Caveators for adverse possession. In that copy affidavit[12] Nikitas says that from 1994 to 2008 he and his wife owned the plaintiff’s land. Before 1994, he had leased it from the then owner, Mr John Morton, for about 15 years. Over a period of about 30 years, therefore, Nikitas says that at all material times he, his wife and their servants and agents had continued to use the disputed land on a regular basis to access the plaintiff’s land. The disputed land is approximately 20 metres wide and was never gated during the time that he leased or owned the plaintiff’s land. He states that he and Mr Brake, the previous joint owner of the Caveators’ Land, had an understanding that the disputed land was a common laneway and they both had a right of access over it.[13]
[11](The plaintiff’s father). Affidavit sworn 11 March 2016.
[12]It is merely a copy of an affidavit and is not filed in this proceeding.
[13]Exhibit NO-13 to the affidavit of Nicholas Olandezos sworn 15 February 2017.
Disputed Land is vested in ASIC
It is common ground between the plaintiff and the Caveators that the disputed land is vested in the third defendant, ASIC, although so far as the paper title reveals, it remains registered to Australian Farms. Counsel for ASIC helpfully set out in her written submission the chain of legislation by which the disputed land comes to be vest in ASIC or is otherwise able to be dealt with by ASIC, as follows:
(a) upon the deregistration of Australian Farms in 1927, the disputed land vested in the Registrar-General by operation of s 232 the Companies Act 1915 (Vic);[14]
[14]That section deemed the land to be vested in the Registrar-General (of the State of Victoria) for ‘all the estate and interest therein legal or equitable of the company … at the date the company was dissolved, together with all the claims rights and remedies which the company…then had in respect thereof’.
(b) the disputed land was deemed and taken to have vested in the Registrar of Companies by operation of s 4(5) the Companies Act 1958 (Vic);
(c) the disputed land vested in the Commissioner for Corporate Affairs by operation of s 24(3) the Companies (Interstate Corporate Affairs Commission) Act 1974 (Vic);
(d) the disputed land vested in the National Companies and Securities Commission (‘NCSC’) by operation of s 23 of the Companies (Application of Laws) Act 1981 (Vic);[15]
[15]From that time, s 462 of the Companies (Victoria) Code (being the provision of the Companies Act 1981 (Cth) applying in Victoria by reason of section 6 of the Companies (Application of Laws) Act 1981 (Vic)) applied in relation to the subject property as it would apply if the property had vested in the NCSC pursuant to s 461 of that Code.
(e) the disputed land became an asset of the Australian Securities Commission (‘ASC’) by operation of s 254 of the Australian Securities Commission Act 1989 (Cth);[16]
(f) the ASC was able to deal with the disputed land under Chapter 5A of the Corporations Law[17] as if the disputed land were vested in ASC under section 601AD of the Corporations Law by operation of subs 1438(2) of the Corporations Law;[18] and
(g) ASIC is able to continue to deal with the disputed land as if it were vested in it under section 601AD of the Corporations Act 2001 (‘CA’) by operation of ss 1400 and/or 1403 of the CA.[19]
[16]Section 254 was inserted by the Corporations Legislation Amendment Act 1991 (Cth) and applied as a law of Victoria by operation of s 58 of the Corporations (Victoria) Act 1990 (Vic). The disputed land was a ‘trust asset’ because it was a ‘s 462 asset’ within the meaning of s 253 of the Australian Securities Commission Act 1989 (Cth). The subject property was a ‘s 462 asset’ because it was an asset held by the NCSC in relation to which s 462 of the Companies Act 1981 (Cth) or a corresponding law of Victoria (i.e. the Companies (Victoria) Code) applied. See also In the matter of Rocha Pty Ltd (Deregistered) [2016] NSWSC 899 [13] cf Hall and Gardiner v ASIC [2015] VSC 362 [5].
[17]Corporations Law (being the law set out in section 82 of the Corporations Act 1989 (Cth).
[18]Subsection 1438(2) of the Corporations Law was inserted by the Company Law Review Act 1998 (Cth). Section 1438 applied as a law of Victoria by operation of s 7 of the Corporations (Victoria) Act 1990 (Vic). The subject property was property to which s 1438(2) of the Corporations Law applied because it was vested in the ASC under s 254 of the ASC Law, which was previously vested in the NCSC under s 461 of the Companies Act 1981 (Cth). This was the previous law of the Commonwealth corresponding to section 576 of the old law and not under s 43 of the National Companies and Securities Commission Act 1979 (Cth). Subsection 1438(2) caused the ASC, on and from 1 July 1998, to have, in relation to the subject property ‘all the powers of an owner’ (s 601AD(4)) and to have the powers mentioned in s 601AE(1). See Danich Pty Ltd re Cenco Holdings Pty Ltd [2005] NSWSC 293 [22] (‘Danich’).
[19]The ownership of and rights, powers and duties in relation to the disputed land residing in ASIC by virtue of the Corporations Law provisions became the equivalent ownership, rights, powers and duties under corresponding provisions of the CA. See Danich [22].
Relevant legal principles
Application to Remove Caveats
Under s 89(1) of the TLA, a caveat can only be lodged by a person claiming an estate or interest in the land. The estate or interest must be established to the requisite standard by the person who lodged the caveat, if the caveat is challenged.
The plaintiff’s application is made pursuant to s 90(3) of the TLA, where any person adversely affected by a caveat lodged under s 89 of the TLA is permitted to ‘bring proceedings in a court against the caveator for the removal of the caveat’. Section 90(3) empowers a court to ‘make such order as the court thinks fit’, and thus gives the Court a discretion. The application is in the nature of a summary procedure analogous to the determination of interlocutory injunctions.[20] The procedure is consequently interlocutory in substance, even though it may give rise to a final order.[21] The principles applicable were dealt with by Warren CJ in Piroshenko v Grosjman,[22] and have been recently and conveniently summarised by Elliott J in Sylina v Solanki[23] as follows:
The principles to be applied on an application to remove a caveat are well settled. There are numerous cases enunciating the approach the court must take. Relevantly, the authorities[24] establish as follows:
(1) The Court’s power under s 90(3) of the Act is discretionary.
(2) A caveator bears the onus of establishing that there is a serious question to be tried that it does have the “estate or interest in land”[25] as claimed.
(3) If the caveator establishes a serious question to be tried in relation to the estate or interest claimed, the caveator must further establish that the balance of convenience favours the maintenance of the caveat until trial.
(4)There is a relationship between the strength of the case in establishing a serious question to be tried and the extent to which the caveator must establish the balance of convenience favours the caveator; the stronger the case in establishing a serious question, the more readily the balance of convenience might be satisfied. It is sufficient that the caveator show a sufficient likelihood of success that, in the circumstances, justifies the practical effect which the caveat will have on the ability of the registered proprietor to deal with the property in question in accordance with its normal proprietary rights.
[20]Eng Mee Yong v Letchumanan [1980] AC 331, 337 (‘Eng Mee’); Piroshenko v Gosjman, (2010) 27 VR 489, [12]-[23] (‘Piroshenko’); Goldstraw v Goldstraw [2002] VSC 491 [30] (‘Goldstraw’).
[21]Eng Mee, 337; Smith v Callegari (1988) V Conv R 54-300, 63,858-9; Joseph Lynch Land Co Ltd v Lynch, [1995] 1 NZLR 37, 43.
[22]Piroshenko [7]-[11].
[23][2014] VSC 2 [43] (‘Sylina’).
[24]See, for example: Percy & Michele Pty Ltd v Gangemi [2010] VSC 530 [38]-[48] (Macauley J); Piroshenko [13]-[20] (Warren CJ); Schmidt v 28 Myola Street (2006) 14 VR 447, 457 [32] (Warren CJ); Goldstraw [30] (Dodds-Streeton J).
[25]The Act, s 89(1).
The decision of the Chief Justice in Piroshenko included consideration of which of the ‘serious question to be tried’ or ‘prima facie case’ test was appropriate. She concluded that the prima facie case test is the appropriate test and in doing so applied the decision of the High Court in Australian Broadcasting Corporation v O’Neill.[26]The prima facie case and serious question to be tried tests are often used interchangeably. Nevertheless, the prima facie case test is to be preferred.[27] That does not mean that the Caveators must show that it is more probable than not that at trial the plaintiff will succeed; the Caveators must show that they have a prima facie case with sufficient likelihood of success to justify the maintenance of the caveat, and the preservation of the status quo pending trial.[28]
[26](2006) 227 CLR 57.
[27]CFHW Pty Ltd v Burness [2014] VSC 451 [17], citing Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, 82 (Gummow and Hayne JJ) (‘O’Neill’); Carbon Black Pty Ltd v Launer [2015] VSCA 126, [37] (‘Carbon Black’).
[28]Sylina [2014] VSC 451 [20]; Piroshenko 494 and O’Neill 82.
An application to remove a caveat involves two steps. First, the Caveators must establish that there is a prima facie case - there is a probability on the evidence before the Court that the Caveators will be found to have the asserted legal or equitable rights or interest in the disputed land by adverse possession. Second, having done so, the Caveators must establish that the balance of convenience favours the maintenance of the Caveats on the title until trial:[29]
that probability is sufficient to justify the practical effect which the caveat has on the ability of the registered proprietor to deal with the property in question in accordance with their normal proprietary rights.[30]
[29]Piroshenko; Carbon Black.
[30]Piroshenko, [18].
The Court of Appeal in Carbon Black Pty Ltd v Launer[31] approved the approach Piroshenko and noted:
It is also to be observed that an application for removal of a caveat does not, at least ordinarily, present an occasion for the final determination of disputed factual issues or of the claims which the caveat seeks to protect. In McMahon v McMahon[32] Marks J referred to a number of authorities in which it had been held that it was not necessary or appropriate in an application for removal of a caveat finally to determine disputed questions of facts.[33] Those authorities reflect the reality that a prima facie case may be capable of being sustained by supporting evidence, without the need for the Court to answer the question whether or not that evidence should be accepted. The position may be different, as was the case in Simons v David Benge Motors Pty Ltd,[34] when no substantial issue of fact appears and the Court is able to have the claims in question fully argued and decided on a summons under s 90(3).[35]
[31][2015] VSCA 126, [35].
[32][1979] VR 239 (‘McMahon’).
[33]Ibid 245–6.
[34][1974] VR 585, 591 (Norris J).
[35]See McMahon [1979] VR 239, 245 (Marks J).
The principles upon which Marks J proceeded in McMahon have long roots. In Ex Parte Vincent,[36] Holroyd J ruled that where there is a conflict of testimony, the Court will not order the caveat to be removed but may order the caveat to be removed unless steps are taken to establish the caveator’s title within a certain time. He noted, however, that where the owner had actually dealt with the land it is different, and the caveator must prove their case.[37] To similar effect is Re Jasper’s Caveat.[38]
[36](1886) 12 VLR 566.
[37]Ibid 567.
[38][1923] VLR 650.
In Simons v David Benge Motors Pty Ltd,[39] a case referred to by the Court of Appeal in Carbon Black, it was argued before Norris J that the proper order to be made was one removing the caveat only if the respondent failed to commence proceedings within a specified time. Norris J considered there was no substantial issue of fact in the matter and in the exercise of his discretion ordered the caveats to be removed. In this regard, he relied on the approach to the exercise of the discretion taken by Hudson J in Evandale Estates Pty Ltd v Keck[40] where it was said:
If there were any substantial issue of fact to be tried, I think it would not be proper to make an order absolute for removal without giving the respondent the opportunity of having the issue determined in an action brought by him.
[39][1974] VR 585, 591 (Norris J).
[40][1963] VR 647 at 652.
Norris J did, however, refer to the practice in Victoria being, in a proper case, to have the matter fully argued and decided on the application to remove the caveat.
A consideration relevant to the course to be adopted if the caveators establish a prima facie case is the nature and purpose of a caveat. In the famous case of Butler v Fairclough,[41] Griffith CJ pointed out that the right to caveat is given by the statute, not for the purpose of giving notice to the world of a claim by the caveator to an estate or interest in the land, but for the purpose of protecting the caveator’s interest from being defeated by the registration of a dealing without the caveator having had an opportunity to invoke the assistance of the court to give effect to his interest.[42] In J & H Just (Holdings) Pty Ltd v Bank of New South Wales, Barwick CJ (in addition to referring to the nature and purpose described above) also described it as an injunction to the Registrar to prevent registration of dealings with the land until notice is given to the caveator.[43] In Kerabee Park, Holland J[44] described the caveat as ‘nothing more than a statutory injunction to keep the property in statu quo until the Court has an opportunity of discovering what are the rights of the parties’.[45]
[41](1917) 23 CLR 78.
[42]Butler v Fairclough (1917) 23 C.LR. 78, 84, per Griffith CJ; see also J & H Just (Holdings) Pty. Ltd. v. Bank of New South Wales (1971) 125 C.L.R. 546, 552, 556 (‘J & H Just (Holdings)’); Kerabee Park Pty Ltd Daley [1978] 2 NSWLR 222 at 228 per Holland J (‘Kerabee Park’).
[43]J & H Just (Holdings) at 552.
[44]Quoted Owen J in Re Hitchcock (1900) 17 W.N. (NSW) 62, 63.
[45]Kerabee Park at 228.
Adverse Possession
The parties’ submissions proceeded against the background of an assumed knowledge of the law relating to adverse possession. Much of that law has been reviewed and stated in recent decisions of the Court.[46] It is unnecessary to set out the law comprehensively here and is sufficient to note the following:
[46]Whittlesea City Council v Abbatangelo [2009] VSCA 188; (2009) 259 ALR 56 at [4]-[6] (‘Whittlesea CC’); Cervi v Letcher [2011] VSC 156 (‘Cervi v Letcher’).
(a) section 7 of the Limitation of Actions Act 1958 (Vic) (‘the LAA’) provides in substance, that the right title or interest of the Crown to or in any land shall not be in any way affected by reason of any possession of such land adverse to the Crown;
(b) section 8 of the LAA provides that no action shall be brought by any person to recover any land after the expiration of 15 years from the date on which the right of action accrued to them or, if it first accrued, to some person through whom they claim, to that person;
(c) section 18 of the LAA provides that at the expiration of that period, the person’s title to the land shall be extinguished;
(d) a number of provisions deal with when the cause of action accrues.[47] Section 9(1) of the LAA directs attention to the date upon which the person whose paper title is in issue was dispossessed or discontinued possession;
[47]Sections 9-13 of the LAA.
(e) section 14 of the LAA provides (in part) that that no right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run. The reference to ‘adverse possession’ in s 14 is to possession by a person in whose favour time can run and not to the nature of the possession;[48]
[48]J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419, 433-5 at [33]-[36](Lord Browne-Wilkinson); Cervi v Letcher, [16].
(f) the claimant for adverse possession must be shown to have both factual possession and the requisite intention to possess:[49]
[49](animus possidendi). Whittlesea, [5].
(i) factual possession signifies an appropriate degree of physical control. It must be a single and exclusive possession. What must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.[50] What acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed;[51]
[50]Ibid.
[51]Ibid.
(ii) the intention to possesses involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if they are not themselves the possessor, so far as is reasonably practicable and so far as the processes of the law will allow. This requires clear and affirmative evidence. If the claimants acts are open to more than one interpretation, and they have not made it perfectly plain to the world at large by their actions or words that they intended to exclude the owner as best they can, the courts will treat them as not having requisite intention and consequently as not having dispossessed the owner;[52] and
(g) a claimant to adverse possession may rely upon possession and intention to possess on the part of predecessors in title. Periods of possession may be aggregated, so long as there is no gap in possession.[53]
[52]Ibid.
[53]Ibid.
Prima facie case
Submissions
The Caveators contend that the affidavits filed by the caveators[54] establish that they have a claim which meets the O’Neill standard of probability of success. The Caveators say they have been in possession of the disputed land adversely to the owner of the land for more than 15 years.
[54]Affidavits of Peter Speakman and Satnam Singh Bhatha.
If ASIC were to take the point that the plaintiff seeks to agitate in this proceeding (and only ASIC is entitled to take that point), there may also be a serious question to be tried as to whether the title vested in ASIC is such that ASIC is immune from the adverse possession claim under s 7 of the LAA. The triable issue would be whether the title vested in ASIC is the Crown’s title in right of the Commonwealth by virtue of s 601AD(2) of the CA and s 8 of the Australian Securities and Investments Commission Act 2001 (Cth) (‘ASIC Act’), or whether the title vested in ASIC is no more nor less than the title that would be vested in the company as if it had not been deregistered and dissolved by virtue of s 601AD(2), (3) & (4) and s 601AE(3) of the CA, and the precursors to these legislative provisions that have applied since 1927.
The plaintiff submitted that on a proper analysis of the Caveators’ affidavits, there is no serious question to be tried as that material does not establish adverse possession. The evidence of possession of the disputed land was weak, dependant on hearsay[55] and by reference to the anticipated evidence of Nikitas, showed that the disputed land was used as a common laneway between the plaintiff’s and the Caveators’ land.
[55]To which objection was taken on the footing that the hearing was a final hearing and not interlocutory.
Counsel for the plaintiff, Mr Cawthorn QC, conceded that there was a serious question to be tried as to the operation of s 7 of the LAA in the circumstances of this case.[56] That turned on a number of matters, including:
[56]Section 8(3) of the Australian Securities and Investments Commission Act 2001 (Cth) (‘ASIC Act’), provides that any real or personal property held by ASIC is held for and on behalf of the Commonwealth.
(a) whether the reference to the Crown in s 7 of the LAA included the Crown in right of the Commonwealth;
(b) whether the operation of s 601AD(3) of the CA, and its predecessors, had the effect that ASIC took only the same property rights over the land as Australian Farms and that it was not, in effect, holding title in its own right; and
(c) what is the effect of s 601AE(3) of the CA in the circumstances of this case.
ASIC did not seek to make submissions on whether the evidence established a sufficient probability that the Caveators will be found to have an interest in the subject property by adverse possession. ASIC attempted to raise several constitutional questions which may have a bearing on the ultimate determination of the Caveators’ claimed interest in the disputed land - should that claim be pressed following the resolution of this application. It is therefore not strictly necessary to set out the argument in full as the constitutional questions are relevant to this application only as showing there are some tangled questions to be determined in the course of the Caveators establishing their entitlement to the freehold estate in the disputed land by adverse possession.
If, on the other hand, it were necessary in order to decide the extant application for the Court to determine these questions, ASIC contended it would first be necessary for notices of the relevant constitutional issues to be given to the Attorneys-General of the Commonwealth and the States in accordance with s 78B of the Judiciary Act 1903 (Cth).
The first question raised by ASIC is that the determination of whether the Caveators have a claim to the disputed land by adverse possession may involve the question of whether, as a matter of construction, s 7 of the LAA applies to the disputed land by reason of that property coming to be vested in ASIC and able to be dealt with by ASIC under Chapter 5A of the CA. The reasoning leading to this question is as follows:
(a) the adverse possession claim raises the question of the proper construction of s 7 of the LAA which operates as a qualification to s 8 of that Act;
(b) the plaintiff contends that s 7 of the LAA applies to the disputed land because of s 8(3) of the ASIC Act;
(c) section 38 of the Interpretation of Legislation Act 1984 (Vic) (‘Interpretation Act’) provides that in all Acts, unless the contrary intention appears, ‘Crown means the Crown in right of Victoria’. The ‘Crown in right of Victoria’ is distinct from the ‘Crown in right of the Commonwealth’;[57] and
(d) the caveators submit that s 7 of the LAA must nevertheless extend to the Crown in right of the Commonwealth, as it would otherwise be discriminatory against the Commonwealth.
[57]Hyams v Victorian Electoral Commissioner & Buchanan [2003] VSC 156 at [102].
The second question raised by ASIC is whether, if s 7 of the LAA does not apply, ss 8 and 18 of the LAA and/or ss 42 and 60 of the TLA bind the Crown in right of the Commonwealth and can operate to divest the Commonwealth of property. This may depend upon:
(a) a question of construction having regard to the presumption that a statute does not divest the Crown (including the Crown in right of the Commonwealth) of property, rights, interests or prerogatives unless such an intention is clearly stated or necessarily intended;[58]
(b) a question as to the States’ constitutional competence to bind the executive government of the Commonwealth by divesting the Commonwealth of land;[59] and
(c) because this matter is in the federal jurisdiction (so it is said), a question whether ss 7 and/or 8 of the LAA apply, and if so, whether of their own force, or alternatively, pursuant to s 64 or s 79 of the Judiciary Act 1903 or pursuant to s 601AE(3) of the CA.
[58]Commonwealth v Western Australia (1999) 196 CLR 392 at 409-410 (per Gleeson CJ and Gaudron J).
[59]Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410.
The third question raised by ASIC is whether the Caveators’ adverse possession claim raises the issue of potential inconsistency for the purposes of s 109 of the Commonwealth of Australia Constitution Act (‘the Constitution’) between applicable Federal and State legislation, because:
(a) section 601AD(2) of the CA provides that the Commonwealth or ASIC takes only the same property rights that the company itself held. If the company held particular property subject to a security or other interest or claim, the Commonwealth or ASIC takes the property subject to that interest or claim;
(b) section 601AE(3) of the CA provides that any property that vests in the Commonwealth or ASIC under s 601AD(1A) or (2) remains subject to all liabilities imposed on the property under a law and does not have the benefit of any exemption that the property might otherwise have because it is vested in the Commonwealth or ASIC; and
(c) the Caveators contend that s 7 of the LAA may apply to the subject property but that s 109 of the Constitution would operate to ensure that any immunity conferred upon the Commonwealth by that section would be subject to specific Commonwealth legislation that was inconsistent with that immunity, being s 601AD(3) of the CA.
ASIC agrees that the Caveators’ adverse possession claim raises the question of whether, if s 7 of the LAA applies to the subject property, there is a relevant inconsistency for the purposes of s 109 of the Constitution between that section and the provisions of the CA concerning property of deregistered companies vested in ASIC.
Analysis
The evidence advanced by the Caveators does, in my view, establish a sufficient probability that the Caveators will be found to have entitlement to the disputed land by adverse possession. In arriving at this conclusion, I emphasise that it is not a finding that it is more probable than not that the Caveators have such an interest in the disputed land. My reasons are that:
(a) the disputed land is fenced in with the Caveators’ land, even though it is open at each end. That is, there is no fence between the Caveators’ land and the disputed land, but there is a fence between the disputed land and the plaintiff’s land;
(b) they have fruit trees planted on a part of the disputed land and those trees were planted by their predecessors in title and, by implication, they manage and harvest those trees;
(c) they store their equipment on the other part of the disputed land;
(d) they have made application under s 60 of the TLA for title to the disputed land by adverse possession;
(e) a part of the application under s 60 of the TLA is an assignment by their predecessors in title of their interest in the disputed land; and
(f) the hearsay evidence of the possession of the disputed land by their predecessors in title is admissible, the proceeding being in substance interlocutory.[60] Even if the decision in the proceeding is considered be final,[61] and not interlocutory, the fact that the Caveators have been told of that alleged fact is itself evidence admissible on this application. It is relevant to this application that the Caveators have been informed of Mr and Mrs Brake’s previous occupation and that the Brakes have been requested to provide, and have provided, an assignment of their possessory interest.[62] This makes the hearsay material admissible as to the truth of the information. It goes some way to establishing that at a trial of their claims, the Caveators will be likely to be able to adduce admissible evidence in support of continuous occupation of the disputed land for over 15 years.
[60]Eng Mee, 337.
[61]Hall v Nominal Defendant (1966) 117 CLR 423; because it disposes of the rights of the Caveators to lodge a caveat. It does not, however, finally dispose of the right to claim title by adverse possession.
[62]Section 60 of the Evidence Act 2008.
The material advanced by reference to the copy affidavit of Nikitas as to the use of the disputed land as a right of way, and the questions raised as to the operation of s 7 of the LAA,[63] and the possibility of the operation of that section giving rise to constitutional issues - no matter how far-fetched - makes it entirely inappropriate to come to any conclusion as to the rights of the Caveators.
[63]And whether that amounts to the plaintiff relying on a jus tertii as the Caveators submitted.
It is clear as a matter of fact, however, putting aside the questions relating to the effect of s 7 of the LAA, that the Caveators have advanced evidence to establish that there is a sufficient probability that they will be found to have the asserted interest in the disputed land by adverse possession.
I add that, in my view, the outcome of the argument as to the application of s 7 of the LAA to the disputed land is likely to be straight forward. The capacity in which ASIC holds the disputed land is limited. Section 232 of the Companies Act 1915 (Vic), which is the provision under which the land was originally ‘deemed’ to be vested in the Registrar-General, and then the Registrar of Companies, and so on, is cast in terms that refer to the deemed vesting of ‘all the estate and interest therein legal or equitable of the company … at the date the company was dissolved…’ The current provision, assuming it is applicable, is similarly, but more clearly limited. Section 601AD(3) of the CA states that ASIC takes only the same property rights that the company itself held. The company did not hold as one of its property rights the Crown’s immunity from adverse possession claims under s 7 of the LAA. The Caveators submitted, correctly in my opinion, that the use of the word only in that subsection is decisive.
Added to these considerations are the terms of s 601AE(3) of the CA, which states that any property that vests in the Commonwealth or ASIC under s 601AD(1A) or (2) of the CA remains subject to all liabilities imposed on the property under a law and does not have the benefit of any exemption that the property might otherwise have because it is vested in the Commonwealth or ASIC. The express provision that the property does not have the benefit of any exemption is apt to exclude the operation of a provision such as s 7 of the LAA, assuming it has some application to the Crown in right of the Commonwealth.
Although it is not necessary or desirable finally to decide whether s 7 of the LAA is applicable, the view expressed above may be taken into account in the assessment of the strength of the Caveators’ case, and whether they have sufficient likelihood of success to justify the maintenance of the Caveats, and the preservation of the status quo pending trial. If this preliminary view is correct it means that the Caveators claim is strengthened.
Balance of convenience
The Caveators submitted that there is no inconvenience to the plaintiff if the Caveats remain on the title because:
(a) ASIC has not asserted that it will sell the land to the plaintiff if the Caveats are removed;
(b) ASIC has not said in its correspondence with either party that the existence of the Caveats on the title are the reason it declines to sell the land to the plaintiff;
(c) rather, ASIC has said is that it will not treat with anyone for a sale of the land while there is a prospective vesting order application in play; and
(d) therefore, the removal of the Caveats will not remove the inconvenience to the plaintiff of ASIC declining to sell the land to him. Nor will the removal of the Caveats cause ASIC to change its stated policy of acquiescing in vesting order applications going through, as a result of which the caveators’ application under s 60 of the TLA is likely to succeed.
Further, as I have said, the fact that the plaintiff’s interest in the disputed land is as a prospective purchaser and not as the registered proprietor seeking to sell or otherwise deal with the land, is relevant to the balance of convenience. There is less prejudice or harm to the plaintiff than to the Caveators on the evidence before the Court at present.
The fact that the disputed land has fruit trees growing on it and is fenced in with the Caveators’ land points strongly to maintenance of the status quo pending the determination of the rights of the parties. Given, as I set out below, that this is a case where the Caveators should be required to commence a proceeding to vindicate their claims, (failing which the Caveats should be removed) this is the course least likely to cause injustice in the event that I am wrong.[64]
[64]Bradto Pty Ltd v Victoria(2006) 15 VR 65 at [35].
It is well to recall that there is a relationship between the strength of the Caveators’ case in establishing a serious question to be tried and the extent to which the caveator must establish the balance of convenience favours the Caveators. The observations of Lush J in Slater Walker Superannuation Pty Ltd v Great Boulder Gold Mines Ltd[65] are apt:
The weight to be given to the various considerations shown by the authorities to be relevant will vary from case to case. All the authorities say in one way or another that the plaintiff must show he has a chance of success before he will be granted an interlocutory injunction. The authorities refer to the use of the injunction for the purpose of maintaining the status quo or maintaining a state of affairs which is on the balance of convenience appropriate to be maintained until trial. They refer to avoiding irreparable harm to the plaintiff. There will be situations in which the plaintiff cannot expect to be granted an injunction unless he can show that he can prove positively the existence of his rights and the infringement of them. There will be other situations in which though the plaintiff’s proof of his rights or the infringement of them is not strong, an injunction may be granted because to withhold it would do the plaintiff irreparable harm, while to grant it would not greatly injure the defendant. The possible variety of situations is unlimited.
[65][1979] VR 107 at 110; cited with approval by the Full Court in Magna Alloys & Research Pty Ltd v Coffey [1981] VR 23 at 28; Dataforce Pty Ltd v Brambles Holdings Ltd [1988] VR 771 at 774-5.
In this case, it will be likely to cause greater harm to the Caveators to lose their restraint on ASIC dealing with the disputed land pending their commencement of a proceeding than it will harm the plaintiff to await the outcome of any application the Caveators wish to make to vindicate their claims.
Conditional Removal of the Caveats
In the course of the hearing, I suggested to the plaintiff that this might be a case where the Caveats should be removed unless the Caveators commenced proceeding to substantiate their claims within a certain period. That was accepted by the plaintiff as the appropriate course.
The Caveators, on the other hand, opposed that course. They maintained that their case is one where they had established a prima facie case (called by them a serious question to be tried) and that because they have lodged an application under s 60 of the TLA, their rights and those of the plaintiff should be dealt with pursuant to the procedure under the TLA.
Section 60 of the TLA is in Division 5 of Part IV headed ‘Acquisition by possession’. The procedure is, in summary, as follows:[66]
[66]So far as the TLA provides.
(a) the claimant applies to the Registrar in writing in an appropriate approved form accompanied by a plan of survey (with an abstract of field records) of the land certified by a licensed surveyor or any other plan, diagram or document describing the land which satisfies the Registrar as to description, for an order vesting the land in them for an estate in fee simple or other the estate claimed;[67]
[67]Section 60(1) of the TLA.
(b) the Registrar causes notice of the application to be advertised once at least in a newspaper circulating in the city of Melbourne or in the neighbourhood of the land and to be given to any person he thinks proper including every person appearing by the Register to have any estate or interest in the land;[68]
[68]Section 60(2) of the TLA.
(c) the applicant posts the notice in a conspicuous place on the land or at such place as the Registrar directs and it is so posted for not less than 30 days prior to the granting of the application, and that notice must be posted on the day on which the application is advertised;[69]
[69]Section 60(3) and (3A) of the TLA.
(d) the Registrar appoints a period of not less than 30 days from the publication of the advertisement or service of the notice after the expiration of which he may, unless a caveat is lodged, grant the application altogether or in part;[70]
(e) a person claiming any estate or interest in the land in respect of which any such application is made may, before the granting of the application, lodge a caveat in an appropriate approved form with the Registrar forbidding the granting thereof. The caveat is subject to the same provisions, and have the same effect with respect to the application against which it is lodged, as a caveat under section 26R against the creation of a folio;[71] and
(f) subject to the TLA, after the expiration of the period appointed, the Registrar, if satisfied that the applicant has acquired a title by possession to the land, may make an order vesting the land in the applicant, or in such person as the applicant directs, for an estate in fee simple or the estate or interest acquired by the applicant free from all encumbrances which have been determined or extinguished by such possession.[72]
[70]Section 60(4) of the TLA.
[71]Section 61 of the TLA. Section 26R concerns caveats lodged by persons claiming an interest in land the subject of an application to bring land under the operation of the TLA.
[72]Section 62 of the TLA (in part).
The Caveators submit that the removal of the Caveats against the land under s 90(3) of the TLA will not result in the plaintiff being entitled to lodge a caveat under s 61 of the TLA against the Registrar granting the caveators’ s 60 application. To lodge a s 61 caveat, the plaintiff must himself claim an interest in the land. It would appear that at best, the plaintiff may have some entitlement to use the disputed land as a right of way. Otherwise, his interest is entirely in prospect as a person who has applied to purchase the land from ASIC.
The difficulty with that course is that, as the matter is presented to the Court, there is a factual dispute as to the Caveators’ entitlement to the freehold estate in the land by adverse possession. The evidence of the situation of the land, the totality of the fencing, the history of the occupation of the disputed land, the use to which the plaintiff and his predecessors may have put the land (as the affidavit of Nikitas suggests) require more extensive evidence. If the Caveats remain without any condition requiring the commencement of proceedings, and if the plaintiff lodges a caveat under s 61 of the TLA claiming an interest in the land, for example a right of way by long user, the dispute will have to return to Court, but with the plaintiff having the burden of establishing a prima facie case and that the balance of convenience is in his favour.
This may be an advantage to the Caveators. But it is hardly in the interests of the due administration of justice and the overarching obligation under the Civil Procedure Act 2010 (Vic) to take a course that results in precisely the reverse of the position that now faces the parties.
The apparent market value of the disputed land was not relied on by either party in their submissions and is likely to be small. But the value to the proprietor of either neighbouring property, the plaintiff or the Caveators, may be much greater. Whether or not it is in the financial interest of the Caveators to commence proceedings to vindicate their claim to the freehold estate in the land by adverse possession is a matter for them. The plaintiff, the Caveators and ASIC have incurred considerable legal costs in pursuing the matter so far. There is no evidence of any attempt by the plaintiff and the Caveators to resolve their differences. Behind the complications arising from the fact that the registered proprietor of the disputed land is a defunct company and the consequent ‘deemed vesting’ of the land in ASIC, the reality is that it is a dispute between neighbours.
If the Caveators do not commence a proceeding to vindicate their claim, that may not be the end of the dispute. The Caveators appear to be in possession of the disputed land in fact. A sale by ASIC to the plaintiff would not necessarily affect that possession, unless the Caveators voluntarily gave up possession to the plaintiff. ASIC may yet refuse to sell to the plaintiff when faced with the asserted possessory rights of the Caveators, or decide to sell to the Caveators, should they apply.
Conclusion
For these reasons, I consider that the order of the Court must be that unless within one month the Caveators commence proceeding to establish their entitlement to the freehold estate in the disputed land by adverse possession, the Caveats shall be removed.
The Caveators should submit an appropriate minute of proposed order to my chambers and each of the parties should provide my chambers with a very short written submission as to the appropriate order as to costs.
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