Rayo & Anor - [2024] SASC 3

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
RAYO & ANOR
[2024] SASC 3
Judgment of Judge Dart a Master of the Supreme Court
REAL PROPERTY - TORRENS TITLE - MORTGAGES, CHARGES AND ENCUMBRANCES - COVENANTS
Registered proprietors own land on which is registered an encumbrance - encumbrance includes a restrictive covenant which expired in 1983 - encumbrance also includes a rent charge - encumbrance properly registered - restrictive covenant would not bind the applicants even if it had not expired - rent charge exists in perpetuity - is it appropriate to remove the encumbrance from the register - objective law of contract applies - the purpose of the encumbrance was to restrict the use of the land for a period - the purpose has been spent - the contractual intention was not for the encumbrance to remain registered after the expiry of the restrictive covenant - appropriate for the encumbrance to be removed.
Held:
1. The encumbrance creates no binding obligation on the applicants.
2. The encumbrance should be removed from the titles.
Corporations Act 2001 (Cth) s 601AD; Real Property Act 1886 (SA) s 3, s 64, s 128, s 128B, referred to.
Burke v Yurilla SA Pty Ltd (1991) 56 SASR 382; Clem Smith Nominees Pty Ltd v Farrelly & Ors (1978) 20 SASR 227; Jaggumantri v Registrar General [2023] SASC 74; KI Seaport Pty Ltd v Abstraxion Pty Ltd & Anor [2020] SASC 113; Netherby Properties Pty Ltd v Tower Trust Ltd (1999) 76 SASR 9; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Tulk v Moxhay (1848) 41 ER 1143, considered.

RAYO & ANOR
[2024] SASC 3

The applicants are the registered proprietors of two titles of land at Sturt. On each of the titles there is registered encumbrance number 3196101. In this proceeding the applicants seek orders from the Court for the removal of the encumbrance from the titles. They are entitled to such orders.
Background
A copy of the encumbrance 3196101 has been produced to the Court. It is registered on a number of titles of land including the applicants’ land. The encumbrance was registered on the various titles on 1 June 1971. The original parties to the encumbrance were Preece’s Building Pty Ltd, which was then the registered proprietor of the subject land, and Arndale (Marion) Pty Ltd.
The encumbrance was in what was the standard form at the time. It provided for a rent charge and it also provided for a restriction on the use of the encumbered land. The relevant provisions are as follows:
1.The Encumbrancer will pay to the Encumbrancee the sum of ten cents (10c) (if demanded) on the 30^th day of June next and each succeeding 30^th day of June.
2.The Encumbrancer will not use or permit or suffer to be used for the purpose of the business of a retailer of goods of any description the said land or any part thereof at the time…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] SASC 3
Decision Date: 10 January 2024

CaseChat Overview and Summary

Rayo & Anor is a case before the Supreme Court of South Australia. The applicants, who are the registered proprietors of two titles of land at Sturt, seek the removal of an encumbrance from their titles. The encumbrance, registered on 1 June 1971, was originally between Preece’s Building Pty Ltd and Arndale (Marion) Pty Ltd. This encumbrance includes a rent charge and a restriction on the use of the land for retail purposes for 15 years from 1 April 1968, which expired on 1 April 1983. The applicants argue that the encumbrance is now obsolete and should be removed from their titles.

The central legal issue before the Court was whether the encumbrance, which had lapsed by its own terms, should be removed from the applicants' titles. The applicants contended that the encumbrance had expired and thus should no longer burden their properties. The Court had to determine if the encumbrance still held any legal effect or if it could be expunged from the titles. Additionally, the Court needed to consider the implications of the encumbrance vesting in the Australian Securities and Investments Commission (ASIC) following the deregistration of Arndale (Marion) Pty Ltd.

The Court concluded that the encumbrance had indeed expired by its terms and no longer had any effect. The restriction on the use of the land for retail purposes lapsed on 1 April 1983, and the rent charge was no longer payable. The Court noted that ASIC, which now holds the rights under the encumbrance, had no intention of enforcing it and had not opposed the removal. Consequently, the Court ordered that the encumbrance be removed from the applicants' titles. This decision was based on the understanding that no orders were sought against ASIC, and it had explicitly stated that it did not wish to be heard on the matter.

The Court's final order was that the encumbrance number 3196101 be removed from the titles of the applicants. This decision effectively relieved the applicants of any obligations under the expired encumbrance and removed it from their titles.

Orders

Orders of the court

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Background

Background to the litigation

The applicants are the registered proprietors of two titles of land at Sturt. On each of the titles there is registered encumbrance number 3196101. In this proceeding the applicants seek orders from the Court for the removal of the encumbrance from the titles. They are entitled to such orders. Background A copy of the encumbrance 3196101 has been produced to the Court. It is registered on a number of titles of land including the applicants’ land. The encumbrance was registered on the various titles on 1 June 1971. The original parties to the encumbrance were Preece’s Building Pty Ltd, which was then the registered proprietor of the subject land, and Arndale (Marion) Pty Ltd. The encumbrance was in what was the standard form at the time. It provided for a rent charge and it also provided for a restriction on the use of the encumbered land. The relevant provisions are as follows:1.The Encumbrancer will pay to the Encumbrancee the sum of ten cents (10c) (if demanded) on the 30th day of June next and each succeeding 30th day of June.2.The Encumbrancer will not use or permit or suffer to be used for the purpose of the business of a retailer of goods of any description the said land or any part thereof at the time within the period of fifteen (15) years from the 1st day of April 1968 PROVIDED THAT nothing herein contained shall prevent the use of the said land or any part of parts thereof:(a) For the purposes of a motel or a service station or both; or(b) By any governmental public or municipal authority for public purposes; or(c) For the purposes of a licensed hotel or public house. The restriction on the use of the subject land meant that it could not be used for the retailing of goods for a fixed period of time which expired on 1 April 1983. The land is adjacent to the Marion shopping centre which opened in 1968. In the result, Arndale (Marion) Pty Ltd was deregistered in 1980. Then as now, the property of a deregistered company vests in the relevant government body. At the relevant time, the applicable statutory provision was the Companies (South Australia) Code. It provided that the property of a defunct company vested in the Corporate Affairs Commission.[1] The Corporate Affairs Commission became the registered proprietor of the encumbrance.[2][1] Companies (South Australia) Code s 461.[2] Real Property Act1886 (SA) s 3. There is an analogous provision in the Corporations Act 2001 (Cth). The property of a deregistered company now vests in the Australian Securities and Investments Commission (ASIC).[3] ASIC was served with the application but has not appeared before the Court. It sent a letter which said:[4]ASIC has no direct knowledge of the specific circumstances or background of this matter. ASIC does not intend taking any steps on behalf of the company to assert, exercise, enforce or waive any rights the company may have. If the company itself wishes to do so, then the former officeholders must firstly reinstate the company. Please ensure you have taken steps, to the best of your ability given the age of the deregistration, to notify the former directors to afford them an opportunity to reinstate. ASIC has no direct knowledge of the background to the legal proceeding. On the strict understanding that no orders are sought against, or directly affecting, ASIC, then ASIC does not wish to be heard. [3] Corporations Act 2001 (Cth) s 601AD.[4] Letter from ASIC to Eckermann Lawyers dated 11 October 2023.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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