Roy v Lagona

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 4896 of 2006

NORMAN FRANCIS ROY AND WALLACE JOHN ROY (who sue as the administrators of the unadministered estate of WALLACE ROY, deceased)	Plaintiffs
v
MICHAEL LAGONA	Defendant

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JUDGE:	HANSEN J
WHERE HELD:	Melbourne
DATES OF HEARING:	1-3, 6 and 7 April 2009
DATE OF JUDGMENT:	10 June 2010
CASE MAY BE CITED AS:	Roy v Lagona
MEDIUM NEUTRAL CITATION:	[2010] VSC 250

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REAL PROPERTY – Residential property – Adverse possession – Successive occupiers – Continuity – Gaps in occupation – Damages/Mesne profits – Improvements undertaken by last possessor claiming adverse possession – Whether unjust enrichment – Restitution.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr R B Phillips	Tolhurst Druce & Emmerson
For the Defendant	Mr M J Corrigan	Rose Mary Brondolino & Co

TABLE OF CONTENTS

The Roy family and the property.................................................................................................... 1

The Lagona family............................................................................................................................. 3

Issues.................................................................................................................................................... 5

Statement of claim................................................................................................................... 5
Defence..................................................................................................................................... 5
Reply....................................................................................................................................... 10
Counterclaim......................................................................................................................... 11
Defence to counterclaim....................................................................................................... 12

Adverse possession – the principles............................................................................................ 12

The defence and counterclaim – principles................................................................................ 18

Evidence and witnesses – an overview........................................................................................ 18

Occupation of the property by Gloria Clare Hearse and her relationship to Eileen Roy.. 23

Facts......................................................................................................................................... 23
Submissions............................................................................................................................. 25
Conclusion............................................................................................................................... 26

Subsequent occupation................................................................................................................... 27

Occupation by Cerra........................................................................................................................ 28

Facts......................................................................................................................................... 28
Submissions............................................................................................................................. 43
Conclusion............................................................................................................................... 45

The Hearse family and their attitude to having an interest in the property........................ 48

Facts......................................................................................................................................... 49
Submissions............................................................................................................................. 55
Conclusion............................................................................................................................... 56

Squatters............................................................................................................................................ 58

The plaintiffs and the property..................................................................................................... 59

Further facts....................................................................................................................................... 60

Scope of the works and costs......................................................................................................... 77

Lorich....................................................................................................................................... 80
Arends...................................................................................................................................... 84
Conclusion............................................................................................................................... 85

The rental value and market value............................................................................................... 87

Facts......................................................................................................................................... 87
Conclusion............................................................................................................................... 91

Defence and counterclaim.............................................................................................................. 91

Issues........................................................................................................................................ 91
Defendant’s submissions on the law........................................................................................ 92
(a)       Money paid by mistake................................................................................................ 92
(b)       Mistaken provision of goods and services.................................................................... 92
(c)       Mistaken improvements to land.................................................................................. 93
(d)       Incontrovertible benefit.............................................................................................. 101
Conclusions............................................................................................................................ 102
The mistake case..................................................................................................................... 102
(a)       No person had any interest legal or equitable in the property................................... 102
(b)       Any persons who had an interest in the property were not intending to pursue their rights (if any) to take possession of the property.................................................................................. 103
(c)       Improvements made to the property would be to the defendant’s benefit and not for the            financial gain of others............................................................................................... 103
(d)       The defendant might peaceably enjoy the property for so long as he desired............ 103
The representation case.......................................................................................................... 105
The unjust enrichment case................................................................................................... 106

The plaintiffs’ claim for mesne profits/damages..................................................................... 108

Overall conclusion......................................................................................................................... 110

HIS HONOUR:

In this proceeding the plaintiffs, Norman Francis Roy (“Norman Roy”) and Wallace John Roy (“Wallace Roy”) claim possession of a property at 38 Clauscen Street, North Fitzroy, being the land more particularly described in certificate of title volume 10879 folio 528 (“the property”), and damages or mesne profits in respect of the defendant’s occupation of the property. The property has front and rear boundaries of 5.03 metres and 4.80 metres respectively to a depth of 32.004 metres. It is a relatively flat block sloping slightly downwards to the rear boundary. It is situated in an old established area of mainly single fronted Victorian houses; over the road from the property is a large block of three storey Department of Housing units. Erected on the property is a single fronted Victorian single storey brick terrace, with a party wall on one side, built around 1910. The house is set back from the front boundary about 1.47 metres. It originally comprised two bedrooms, lounge, kitchen, dining and bathroom/laundry at the rear. There is lane way access to the rear backyard[1].
[1]The property, and its improvements, is described in the reports of Ernest Daniel Williams (Exhibit K) and Robert Adrian Lorich (Exhibit J).

It is common ground that the defendant, Michael Lagona, is and has for some time been in occupation of the property and has improved the property. Relying on that occupation, combined with a continuity of occupation of others before him, the defendant counterclaims for the following relief, in summary, first that he has acquired title to the property by way of adverse possession and second, if that claim be unsuccessful, that in one or more of several alternative ways he is entitled to relief appropriate to his betterment of the property. The prior occupiers on whose occupation the defendant relies to establish continuous adverse possession were Gloria Clare Hearse (“Gloria”), Anthony Cerra (“Cerra”), Gloria’s children and squatters.

The Roy family and the property

On 12 June 1924 Wallace Roy (“Mr Roy”) was registered as the proprietor of the property subject to two registered mortgages. At the time Mr Roy was married to Eileen Roy. They lived at the property. They had one child, Wallace John Roy.

Mr Roy died intestate on 28 February 1928. Letters of administration of his estate were granted to his widow, Eileen Roy, on 21 March 1928. She continued to live at the property.

Mr Roy’s next of kin for intestacy purposes were his widow and son. In the ordinary course of administration of the estate the property would have been registered in their name. But that did not happen. The property remained registered in Mr Roy’s name. Julie McKay (a daughter of Gloria Hearse) gave evidence that Eileen told her that following Mr Roy’s death she “paid off the house” by payments “to a solicitor [who] absconded with the title”. Whether that be correct does not now matter for whatever steps Eileen may have taken, the fact is that she never got on title. Thus, Eileen never completed administration of Mr Roy’s estate.

Wallace John Roy married Corelia Isabella Roy. They lived in Queensland and had six children, two of whom are the plaintiffs. They divorced on 10 April 1967.

Wallace John Roy died intestate on 21 October 1973.

Eileen Roy died intestate on 19 August 1983 aged 87 years. She had lived continuously at the property until moving to a nursing home some months before her death.

Eileen was survived by her six grandchildren. Pursuant to the intestacy provisions in the Administration and Probate Act 1958 they are entitled to the property. That is, of course, subject to the defendant’s claim.

Since Eileen’s death none of her grandchildren has lived at the property.

On 21 December 2004 the plaintiffs obtained letters of administration of the estate of Wallace John Roy, deceased. Thereafter, on 22 April 2005 the plaintiffs obtained letters of administration of the unadministered estate of Mr Roy.

On 5 May 2005 the plaintiffs became registered as the proprietors of the property as the legal personal representatives of Mr Roy. The registration is not subject to any registered mortgage. On 15 February 2006 the plaintiffs wrote to the defendant demanding possession of the property.

It is thus seen that the plaintiffs bring this proceeding as legal owners of the property and subject only to the claim of the defendant are in a position to proceed to complete the administration of Mr Roy’s estate.

At this point it is convenient to refer to the pleadings and, in doing so, to identify the issues raised for determination.

The Lagona family

The defendant, who was born on 22 January 1973, lived with his family in the Housing Commission flats on the corner of Nicholson Street and Clauscen Street, North Fitzroy. The defendant put it more simply, saying that his family lived at 18 Clauscen Street, and referred to his family and Eileen and Gloria living at number 38 Clauscen Street as “neighbours” from the 1970s until his father died in 1975 when the Lagona family moved. The defendant was one of six children who were then brought up by their mother Paula.

The defendant deposed that Gloria and Paula became close friends and that the friendship continued after 1975. He said that he regularly stayed at 38 Clauscen Street, that Gloria cared for him and some of his siblings a few times a week when he was a child, and that they regularly stayed overnight. Gloria treated them like grandchildren, bought them birthday and Christmas presents, and many Christmases were spent with Eileen and Gloria. I note that Philip Hearse deposed to being friendly with an older brother of the defendant; he also remembered the Lagona children running errands for Gloria.

The defendant deposed that as he grew older, and especially after Eileen died, he felt a responsibility to care for Gloria. He and his mother tried to help Gloria maintain the house, made sure she had what she needed and spent time with her. He referred to items of work he carried out at the property between 1985 and 1992. He said that Gloria’s sons Michael and Philip rarely visited her or offered help, and that over those years between 1985 and 1992 Gloria told him he “should stay on after she passed and fix the place up … and that I should raise my family in that house”.

I should say at once that in my view the defendant’s evidence on this matter, as on other matters, suffered from embellishment and invention. In particular, I reject the evidence that Gloria’s sons rarely visited her or offered help.

I accept Philip’s evidence that he, Michael and their sister Gloria visited their mother every couple of weeks or so. I accept that their mother was a chronic alcoholic, and that the house was very run down and not such as to have a social gathering in. In cross-examination Philip said that he saw Gloria on a regular basis and, as to whether his family had a very close relationship with his mother, stated:

“Considering the circumstances we still had a very strong bond. It was a dysfunctional family, there was mitigation of circumstances with my mother with her health, with her mental stability and with her drinking. But considering those circumstances there was still a bond there.”

I accept Philip’s evidence that while Gloria and Paula were friends, he never saw the defendant at the property after he stopped living there. I note Philip’s denial that the defendant had performed the works he alleged; while I accept that the defendant performed work it is difficult to know the exact truth as to the extent of the work and I reach no conclusion upon it; it is unnecessary to do so.

Julie McKay also gave evidence on these matters. After she ceased living at the property she regularly returned to visit. She had not seen her mother as often in the last couple of years as she had in previous years, but denied a suggestion that over the years going back to the death of Eileen her siblings had not had much contact with their mother.

On the matter of Gloria’s sons offering help, Hübl deposed that Michael and Philip installed a gas hot water service in the outside bathroom and, towards the end of Gloria’s life, a new outside toilet.

Issues

While the proceeding was commenced by originating motion pleadings were ordered and thus identify the issues. I refer to the essential points.

Statement of claim

Concentrating on that which is contentious, the statement of claim alleges that at some time during 2000 the defendant entered into possession of the property as trespasser and, despite demand of the plaintiffs to vacate made on or about 15 February 2006, had remained in possession as trespasser.

As mentioned earlier, the plaintiffs claimed damages or mesne profits. These have been particularised as follows:

(a)Rental payable from the date the defendant went into occupation to the delivery up of possession. An amount is specified as the reasonable weekly rental for the property in its condition at the relevant time in each year 1997 to 2009 inclusive.
(b)Interest is claimed on such rental under the Penalty Interest Rates Act 1983.
(c)$35,000 as the cost of demolition of an extension to the rear of the property, built by the defendant without a building permit.
(d)Unpaid council and water rates.

The defendant responded with a further amended defence dated 13 November 2006 (“the defence”) to which the plaintiffs filed a further amended reply (“the reply”). The defendant also filed a counterclaim dated 25 October 2007 to which the plaintiffs filed a defence (“the defence to counterclaim”).

Defence

The defence alleges:

(a)Admitting the defendant is in possession, any claim in trespass is barred by s 5(1)(a) of the Limitation of Actions Act 1958, the cause of action having accrued more than six years prior to the filing of the originating motion.
(b)There was a line of possession of the property through Gloria until her death on 11 October 1992, Cerra until 1994 when he took up a Housing Commission unit, followed shortly after in or about 1994 and until 1997 by a series of squatters each of whom took possession from the other (Cerra attending the property and continuing in possession until the first squatters took possession), and the defendant since in or about 1997 when he took sole possession from the last of the squatters.
(c)That line of possession established that the plaintiffs’ right of action to recover the property accrued more than 15 years before the proceeding was commenced, and was thus barred by ss 8 and 14, and the plaintiffs’ title to the property was extinguished by s 18, of the Limitation of Actions Act.
(d)That between 1997 and 16 September 2000 the defendant carried out extensive repairs to and expended money on the property (called “the earlier expenditure”), particulars of which are set out.
(e)It is alleged that the earlier expenditure was incurred by the defendant under a mistake of fact and/or law (called “the mistake”) in that he was labouring under the belief that:
(i)no person had any legal or equitable interest in the property;

(ii) any persons who had an interest in the property were not intending to pursue their rights (if any) to take possession of the property;
(iii) improvements made to the property would be to the defendant’s benefit and not for the financial gain of others;
(iv)the defendant might peaceably enjoy the property for so long as he desired.

Particulars of the “mistake” are set out.
(f)That between Eileen’s death and the first plaintiff[2] making a “representation” to the defendant on or about 16 September 2000 (as to which representation see (i) below) the plaintiffs and persons through whom they claim:
[2]The first plaintiff is Norman Roy, but in closing address counsel for the defendant said that this reference should be understood to be to the second plaintiff, Wallace Roy.

(i)       did not take any steps or enter into possession of the property;
(ii)      did not take any steps to have themselves registered as proprietors to                    the property;
(iii)     did not take any responsibility for the upkeep of the property or the   payment of rates, taxes, charges and other like outgoings;
(iv)     permitted the property to fall into decay and ruin.
This conduct – called “the conduct” - is alleged to have “contributed to the            mistake”.
(g)That by reason of the earlier expenditure:
(i)       the house on the property was saved from:
•         deteriorating to such a ruinous condition that its restoration   would not have been feasible;
•         demolition by the City of Yarra as a public hazard;

(ii)      the property was protected from sale by the City of Yarra for non-  payment of outstanding rates;
(iii)     the property was rendered habitable;
(iv)     the value of the property was increased;
and the plaintiffs received an incontrovertible benefit.
(h)In the premises, if the plaintiffs’ legal title has not been extinguished, it is subject to an equitable charge or lien and/or constructive trust and/or resulting trust in the defendant’s favour for the purpose of reimbursing him for monies expended on the property between 1997 and September 2000 on the basis that it would be unconscionable for the plaintiffs to obtain a financial benefit therefrom. Alternatively, the defendant was entitled to set off the earlier expenditure against the plaintiffs’ claim.
(i)Further or in the alternative, on or about 16 September 2000 the first plaintiff[3] attended at the property and represented to the defendant that:
[3]In closing address counsel for the defendant said that this reference should be understood to be to the second plaintiff.
(i)       the defendant’s presence at the property was not a problem;
(ii)      the defendant should continue his good work in restoring the property                 and his hard work would be rewarded;
(iii)     the defendant’s occupation of the property would not be interfered   with.
This was called “the representation”. The representation was alleged to have been made on behalf also of the other plaintiff and those for whom they claim, and when they knew or ought to have known the defendant might, relying upon it, incur further expenditure in restoring the property. It is alleged that induced by the representation the defendant expended further monies on the property (called “the further expenditure”) in the reasonable belief that he would acquire a beneficial interest in the property. Particulars are provided which conclude with the following statement of total expenditure:
“From until 1997 until the present time the defendant has spent approximately $114,000 on materials for renovating the house. He has also had work done by other tradesmen and repaid them by his own labour as a bricklayer. He estimates that the value of his own labour on those occasions amounts to approximately $60,000.”
(j)That the representation was misleading or deceptive or likely to mislead or deceive or was false or untrue in that:
(i)the plaintiffs and those for whom they claim had no intention of:
•permitting the defendant to remain in the property;
•rewarding the defendant’s hard work;

(ii) the plaintiffs and those for whom they claim intended to interfere with the defendant’s occupation of the property.
(k)That by reason of the earlier and further expenditure, alternatively the further expenditure:
(i)the house on the property was saved from:
• deteriorating to such a ruinous condition that its restoration would not have been feasible;
•demolition by the City of Yarra as a public hazard;

(ii)the property was protected from sale by the City of Yarra for non- payment of outstanding rates;
(iii)the property was rendered habitable;

(iv)     the value of the property was increased from a market value of            approximately $125,000 in 1999 to a present market value of approximately $320,000;
and the plaintiffs received an incontrovertible benefit.
(l)That in the premises, if the plaintiffs’ legal title had not been extinguished:
(i)       the defendant was entitled in equity to a moiety or upwards of the property based on his financial contributions either from 1997 to the    present or 16 September 2000 to the present, and the plaintiff should      only recover possession subject to his equitable interest.
(ii)      Alternatively, the plaintiffs’ legal title is subject to the defendant’s    entitlement to reside rent free for life at the property.
(iii)     Alternatively, the plaintiffs’ legal title is subject to an equitable charge            and/or constructive trust and/or resulting trust in his favour for the            purpose of reimbursing him for monies expended by him on or in relation to the property between 16 September 2000 and judgment on     the basis that it would otherwise be unconscionable for the plaintiffs to          obtain a financial benefit therefrom.
(m)Further or in the alternative, the defendant is entitled to set off the further expenditure against the plaintiffs’ claim.

Reply

In addition to denials the reply includes the following points:

(a)Following Eileen’s death, Gloria resided at the property in accordance with Eileen’s presumed wish that Gloria do so as long as she wished, and there was no person who could, prior to 11 October 2002, lawfully revoke such licence, permission or consent. Accordingly, Gloria’s residence was referrable to a lawful title or consent and did not amount to a trespass.
(b)Cerra’s occupation after Gloria’s death was for a number of weeks.
(c)The proceeding was commenced within 15 years of persons having been unlawfully in possession of the property.
(d)Any repairs to the property carried out by the defendant were carried out at his risk and not in the reasonable expectation that he would acquire a beneficial interest in the property.
(e)The plaintiffs did not induce the “mistake” alleged by the defendant.
(f)They admit that between 19 August 1983 and 16 September 2000 they did not enter into possession of the property and were not registered as proprietors, and did not take steps to either end.

Counterclaim

While not identical, in essence the counterclaim repeated the defence. It did not include a plea of set off, doubtless because that is a matter of defence. The relief sought includes:

(a)a declaration that the plaintiffs’ right and title to sue did not first accrue within 15 years before the commencement of the proceeding and had been extinguished by virtue of s 18.
(b)An order that the plaintiffs provide an executed transfer of the property to the defendant.
(c)Alternatively, a declaration that:
(i) the defendant is entitled in equity to a moiety or upwards of the property based on his financial contributions over the period from 1997 to the present time alternatively from 16 September 2000 to the present time;
(ii)the plaintiffs may only recover possession subject to the equitable interest of the defendant.

(d)Alternatively to (c), a declaration that the defendant is entitled to reside rent free for life at the property;
(e)Alternatively to (d), a declaration that the plaintiffs hold their legal title to the property subject to an equitable charge, lien and/or constructive trust and/or a resulting trust in favour of the defendant for the purpose of reimbursing him for monies expended by him on or in relation to the property between –
(i)1997 and September 2000; and/or
(ii)September 2000 and the date of judgment.

(f)Alternatively, an order for the sale of the property to satisfy any equitable entitlement of the defendant.

Defence to counterclaim

This followed the reply and needs no further reference.

Adverse possession – the principles

Before referring to the facts it is convenient to identify the principles concerning the acquisition of title by possession of land.

In this consideration one commences with the Limitation of Actions Act 1958 (“the Limitation Act”) s 8 of which provides that no action shall be brought by any person to recover any land after the expiration of fifteen years from the date on which the right of action accrued. Upon the expiration of that period the title of any such person shall be extinguished: s 18. But the question is, when did the plaintiffs’ right of action accrue? This might ordinarily be answered by the deeming provision in s 9(2) which would have the right of action accruing on the death of Mr Roy. But the person then in possession was his widow who was administratrix of Mr Roy’s estate and a trustee for the purpose of the Limitation Act[4]. Counsel for the defendant accepted that Eileen’s occupation of the property until her death was thus not adverse to the estate of Mr Roy. Hence, the plaintiffs’ right of action did not accrue prior to Eileen’s death. This conclusion is, in fact, the effect in this case of s 14(1) of the Limitation Act. Section 14 provides:

“14 Right of action not to accrue or continue unless there is adverse possession
(1)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 (hereafter in this section referred to as "adverse possession"); and where under the foregoing provisions of this Act any such right of action is deemed to accrue on a certain date and no person is in adverse possession on that date the right of action shall not be deemed to accrue until adverse possession is taken of the land.
(2)Where a right of action to recover the land has accrued and thereafter before the right is barred the land ceases to be in adverse possession, the right of action shall no longer be deemed to have accrued and no fresh right of action be deemed to accrue until the land is again taken into adverse possession.”

[4]Limitation of Actions Act 1958, s 3(1).

It is important to note the requirement in s 14(1) that the land be in the possession of a person in whose favour the period of limitation can run; unless that be so, no right of action will accrue. I refer below to the circumstances that may constitute “adverse possession”. It is then important to note the reference in s 14(2) to the situation in which land ceases to be in adverse possession before the right is barred. Each is relevant in this case. For not only must there be adverse possession in fact but, as was acknowledged by counsel for the defendant, it “must be continuous”, even through a line of successive adverse possessors. This was the case in Mulcahy v Curramore Pty Ltd[5] in which Bowen CJ in Eq, in whose reasons Moffitt P and Hope JA agreed, after referring to the requirement that “the adverse possession must be continuous” for the statutory period (in Victoria, of fifteen years under s 8) stated that[6]:

“If a person, A, is in adverse possession for a period of less than twenty years, say, ten years, and then abandons the property, he leaves no cloud on the true owner’s title, which is then restored to its pristine force, and another person, B, who later enters into adverse possession of the property, cannot add the period of A’s possession to his own so as to extinguish the title of the true owner when the period of twenty years from A’s first entry into possession is reached: Trustees Executors and Agency Co Ltd v Short (1888) 13 App Cas 793, at pp 798, 799; Allen v Roughley (1955) 94 CLR 98, at pp 114, 115, 131; cf Solling v Broughton [1893] AC 556; (1893) 14 LR (NSW) 412.
When a person enters into adverse possession, and so long as he continues in possession before the expiry of the statutory period, he has title to the land in the nature of a fee simple, good against all the world except the true owner, and his title may be conveyed or devised to, or devolve upon, another person: Asher v Whitlock (1865) LR 1 QB 1; Perry v Clissold [1907] AC 73; (1907) 4 CLR 374; Wheeler v Baldwin (1955) 94 CLR 98, at pp 108, 130 et seq; Allen v Roughley (1955) 94 CLR 98. Where there has been a series of persons in adverse possession by virtue of successive transmissions of the inchoate possessory title for a total period of twenty years or any extended period required by the Act, s 34 will operate to extinguish the true owner’s title. At that point of time the last successor being then in possession will acquire a title in fee simple to the land good against all the world including the true owner: Allen v Roughley (1955) 94 CLR 98; see generally Lightwood, The Time Limit on Actions (1909) p 118, Voumard, The Sale of Land, 2^nd ed., p 431.
Where there is a series of trespassers, not deriving title from each other, who have been in adverse possession for a continuous period of twenty years or any extended period required by the Act, s 34 will operate to extinguish the true owner’s title: Willis v Earl Howe (1893) 2 Ch 545, at pp 553, 554; Allen v Roughley (1955) 94 CLR 98; Salter v Clarke (1904) 4 SR (NSW) 280; 21 WN 71. It is emphasised that possession by successive trespassers must be continuous to have this effect. An abandonment by one adverse possessor followed by a break in time when the land is not in possession of some person adversely to the true owner will, as we have seen, restore the true owner’s title to its pristine force.
Upon the extinguishment of the true owner’s title by successive trespassers, say A, B, C, D and E, who have been in adverse possession continuously for the necessary period, the question arises as to the person in whom the title in fee simple exists at that time. The better view appears to be that it exists in the first of the successive trespassers, A: see Allen v Roughley (1955) 94 CLR 98, at pp 131, 132; and see generally Halsbury’s Laws of England, 3^rd ed., vol 24, p 255; Lightwood, op. cit., at pp 125-126. E, the final trespasser, who is in possession at the time when the true owner’s title is extinguished, would, by virtue of his possession, have a title in fee simple good against all the world except A, B, C and D.
The last statement needs qualification. If A brought proceedings to eject E, and E could prove that A had abandoned possession, then, in my view, E could successfully resist A. On the same ground he might be able to resist B, C and D. Accordingly, if the departure of A, B, C and D in each case took place in circumstances constituting an abandonment by each of them, E would indeed have a title in fee simple good against all the world: see Allen v Roughley (1955) 94 CLR 98, at pp 114, 115, 131; and see generally Voumard, op. cit., at pp 431-431. It is, perhaps, unlikely this would occur without a break in possession, which would restore the true owner’s title and prevent aggregation.
To determine the matter in a particular case of successive trespassers it is necessary to know whether a succeeding trespasser is in possession wrongfully as against his predecessor, in which case his predecessor will retain a higher right than the successor, or whether, on the other hand, the succeeding trespasser has entered immediately following an abandonment by his predecessor.”

[5][1974] 2 NSWLR 464.

[6]At 476-477.

These principles were referred to in Shelmerdine v Ringen Pty Ltd[7], a decision of the Appeal Division of this Court. In rejecting an argument that periods of possession of successive occupiers could be aggregated only if there had been express assignments of their possessory rights, Brooking J stated that:

“Adverse possession for the necessary period cannot be established by means of successive occupiers if there is any gap in their possession. But if there is no gap their periods of possession may be aggregated, although there has been no assignment of their possessory rights.”[8]

Brooking J referred to earlier Victorian authorities which had determined the issue, and to the decisions at trial and on appeal in Mulcahy v Curramore Pty Ltd[9].

[7][1993] 1 VR 315.

[8]At 341, Marks and Hedigan JJ agreeing.

[9][1973] 1 NSWLR 737; [1974] 2 NSWLR 464.

In this case the defendant relies on an alleged continuity of adverse possession. While I address the facts below, the immediate question is - what satisfies the requirement of continuous possession? In Mulcahy Bowen CJ in Eq referred to “a break in time”, to a succeeding trespasser entering “immediately following an abandonment by his predecessor”, while in Shelmerdine Brooking J referred to “a gap”. Whether possession has been abandoned, or whether one possession has ceased and been followed by another “immediately” or with no “gap” will depend on the relevant facts and circumstances. It may be held that a person not presently in actual physical occupation of the land has yet not abandoned possession of it. I considered this issue in Kierford Ridge Pty Ltd v Ward[10] in the course of which I found that in the circumstances there had been “no appreciable gap in occupancy”, in the sense that as a matter of fact, there had not been a break in possession that indicated a disconnection with the land or abandonment of the intention to possess it, such as to break the continuity of the adverse possession.
[10][2005] VSC 215, [129]-[130].

As mentioned earlier, the defendant relied upon possession of the property by Gloria, Cerra, Gloria’s children, squatters and the defendant. Dealing first with Gloria, it was said that her occupation of the property during Eileen’s lifetime was that of a licensee pursuant to permission of Eileen to live at the property. However, being a bare licence, the licence terminated on Eileen’s death; see Megarry & Wade, The Law of Real Property, 6^th ed, 17-003; Terunnanse v Terunnanse[11]. The defendant submitted that Gloria’s subsequent occupation was that of a trespasser or squatter. Then, following Gloria’s death Cerra continued to occupy the property until the commencement of occupation by squatters, which occupation continued until the defendant took possession.
[11][1968] AC 1086, 1095.

This is how the defendant argues the case. In each case the trespasser or squatter had gone into possession without the consent of the paper owner and, overall, for the requisite period. The defendant also relied on Gloria’s children having, for a period after her death, asserted rights in relation to the property.

But, the defendant submits, it is he who has acquired title. That was because the preceding possessors abandoned their possession of the property. As to Cerra, he left the property to reside elsewhere, he has died and his estate makes no claim. As far as Gloria was concerned her estate had abandoned any right or claim to title to the property. That was made clear by the evidence of her children, Julie McKay and Philip Hearse. Then there are the various squatters, the last of whom abandoned the property. That left the defendant who seeks to count in his favour the period of possession of the preceding occupiers.

In the course of their submissions counsel referred to a number of authorities and texts that deal with the applicable principles. Counsel for the defendant referred in particular to the judgment of Lord Browne-Wilkinson in J A Pye (Oxford) Ltd v Graham[12] Among other references counsel for the plaintiffs referred to Sunny Corporation Pty Ltd v Elkayess Nominees Pty Ltd[13].
[12][2003] 1 AC 419.
[13][2006] VSC 314.

More recently, in Whittlesea City Council v Abbatangelo[14] the Court of Appeal referred with approval to the statement of principles by Slade J in Powell v McFarlane[15], and stated:
[14][2009] VSCA 188.
[15](1977) 38 P & C R 452, 470-472.

“The law is clear enough. A number of the basic principles were summarised by Slade J in Powell v McFarlane. Thus, pertinently:
‘It will be convenient to begin by restating a few basic principles relating to the concept of possession under English law:
(1)In the absence of evidence to the contrary, the owner of land with the paper title is deemed to be in possession of the land, as being the person with the prima facie right to possession. The law will thus, without reluctance, ascribe possession either to the paper owner or to persons who can establish a title as claiming through the paper owner.
(2)If the law is to attribute possession of land to a person who can establish no paper title to possession, he must be shown to have both factual possession and the requisite intention to possess (animus possidendi).
(3)Factual possession signifies an appropriate degree of physical control. It must be a single and [exclusive] possession, ... The question 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 ... It is impossible to generalise with any precision as to what acts will or will not suffice to evidence factual possession ... Everything must depend on the particular circumstances, but broadly, I think 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.
(4)The animus possidendi, which is also necessary to constitute possession, ... 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 he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow ... the courts will, in my judgment, require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world. If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having had the [requisite] animus possidendi and consequently as not having dispossessed the owner’.”[16]
[16][2009] VSC 314, [5]. See too the balance of [5] and [6].

The defence and counterclaim – principles

Insofar as the defendant’s pleadings raise matters of law additional to the above principles concerning adverse possession, consideration of them may be deferred until I have dealt with the facts. I do not overlook, and indeed have regard to all of the defendant’s case and all that counsel submitted, in the discussion and findings that follow. But otherwise those aspects of the submissions, which rest on the factual findings, may be referred to later.

Evidence and witnesses – an overview

With the single exception of Julie McKay the witnesses gave evidence by affidavit or witness statement supplemented as necessary and they were cross-examined. As will be seen by the description following, the witnesses fell into different categories.

For the plaintiffs, evidence was given by:

(a)the plaintiffs, Norman Roy and Wallace Roy, each of whom resides in Queensland.
(b)Philip Anthony Hearse (who I will refer to as Philip Hearse or Philip) and Julie McKay, who as mentioned are two of Gloria’s children.
(c)Charles George Angeli, a Housing Officer in the Department of Human Services who gave evidence of an application by Cerra to the then Department of Planning and Housing for rental accommodation dated 26 October 1992, and of a tenancy agreement dated 19 November 1992 whereby Cerra rented premises at 166/530 Lygon Street, Carlton. The lease commenced on 22 November 1992. During his evidence the certificate of Laura Donley, an officer in the Department of Human Services, was tendered under the Evidence Act 1958. The certificate attached a statement of account of rental charged and paid by Cerra as tenant of the premises at 166/530 Lygon Street during the period 19 November 1992 to 20 March 2000.
(d)Joseph Grundy who purchased the adjoining property at 36 Clauscen Street in 1993 and where he lived until July or August 1994. He gave evidence of his observations and knowledge of and concerning the property down to 2001.
(e)Ernest Daniel Williams, a registered valuer who valued the property at 15 February 2007 and 11 June 2008, and assessed the weekly and annual rent that would be payable by a hypothetical occupier of the property from 1997 until 1 April 2009.
(f)Robert Adrian Lorich, a registered building practitioner who gave evidence as to the state of the property, the works carried out and required to be carried out and as to matters of cost, and compliance with town planning and building permit requirements.

For the defendant evidence was given by:

(a)the defendant.
(b)Barbara Joana Hübl, who has resided at 48 Clauscen Street since 1978 and who gave evidence of her knowledge and observations as to occupation and use of the property.
(c)Desmond Amos who has resided at 50 Clauscen Street since 1986.
(d)David Craig Doyle, who between February 1998 and January 2003 rented premises at 40 Clauscen Street and gave evidence of his observations as to the property and its occupation.
(e)Rosemary Finn who, as a friend of Hübl, visited the street and observed the property, and who gave evidence of its published use as a “squat”.
(f)Rudolf Theodore Pieter Arends, a registered architect and building consultant who gave evidence as to the works carried out and their cost.

In assessing the credit and reliability of the witnesses for the purpose of fact finding I have regard to the difficulty in accurately recollecting statements and events that occurred years ago. There is, with “the passage of time … a natural dimming of recollection and memory”.[17] It is trite but true that human memory is fallible. It may fade with time, and may be affected by recollection partially true, or innocent but inaccurate reconstruction of what is thought to have been said or observed. Sometimes, also, understanding and recollection may be affected by the interest of the person giving evidence, even quite innocently. The judicial task in these circumstances is difficult, yet must be undertaken by the court in order to resolve the parties’ dispute. Steadily bearing in mind considerations of this nature, and having carefully read the transcript, and clearly recalling the witnesses, I have concluded as follows concerning the credit and reliability of the witnesses.
[17]Mihaljevic v Eiffel Tower Motors Pty Ltd [1973] VR 545 at 547 per Gillard J.

Each plaintiff impressed me as a witness of truth. I found each to be honest and reliable. In his closing address counsel for the defendant made the following criticisms of the plaintiffs. I reject them as possessing no substance.

First, in relation to Wallace Roy, counsel submitted that his evidence that, apart from certain matters, in 2002, the house looked the same as it did in 1972, indicated hostility towards the defendant in refusing to recognise the work the defendant had carried out. I find that Wallace Roy did not manifest hostility to the defendant, far from it. He gave evidence in a balanced way from his best recollection. Having observed the evidence being given, the submission was bizarre.

Secondly, he submitted that the plaintiffs were either confused or not telling the truth in relation to the issue whether a letter had been sent to Norman Roy by Philip Hearse. Philip gave evidence that he did not think he had written to the Roys, and he did not know that any member of his family had. The defendant pointed out that no such letter had been discovered. I accept Norman Roy’s evidence and find that he did receive a letter as he stated. I make that finding not merely because I find Norman to be an honest witness, but also because it is likely that a letter was sent. Moreover, there was no need for Norman Roy to make up the fact of a letter.

Thirdly, basing himself on evidence of the plaintiffs, “without any apparent justification”, that Gloria only lived at the property for some eighteen months before Eileen died, counsel submitted that the plaintiffs “go in tandem and there is not the always at least the disclosed basis for what they say”. In fact, however, Norman Roy deposed that he was so advised by his mother, which counsel accepted when I drew the evidence to his attention. In his turn Wallace Roy said that that was his understanding, that Gloria had only lived there permanently for eighteen months prior to Eileen’s death. He did not know of his personal knowledge. The likelihood is that Wallace Roy’s “understanding” was similarly based as Norman’s. But, however that may be, there was nothing of substance in counsel’s point. The evidence was hearsay, as was a deal of other evidence in the case. However, relevance was not counsel’s point, he used it to attack the plaintiffs’ credit and reliability. The attack fails because it is groundless and because I accept that in this respect (and generally) the evidence was given honestly, and not falsely. Indeed, the point does not matter because Gloria’s occupation of the property prior to Eileen’s death could not, as counsel conceded, constitute adverse possession.

I mention these specific attacks on the plaintiffs without overlooking other differences in their evidence and that of the defendant. I refer to these matters, and make findings thereon, below. The findings that I make further evidence my acceptance of the plaintiffs’ evidence, and the reasons why I accept their evidence.

I also found Julie McKay and Philip Hearse to be honest witnesses. They stood to gain nothing from the outcome of the case. They impressed me as honest and decent people. Rehearsal was not evident in their evidence, indeed the contrary for there were some differences of recollection between them. At times there appeared some uncertainty or confusion as to dates, which I understood as a reflection of honesty and impartiality in evidence, and which matters I resolve in the fact finding process.

It is to be noted that Michael Hearse did not give evidence. As appears below, following Gloria’s death he attended at the property and could have given evidence as to its state and occupation. There was no explanation as to why he did not give evidence. It was not stated that he was for any reason unable to do so. Counsel for the defendant submitted that the inference should be drawn that if he had been called his evidence would not have assisted the plaintiffs’ case. In the circumstances I draw that inference.

Angeli was evidently an honest witness. I accept his evidence and find that the documents he produced, along with the Donley certificate, truly record the arrangements with Cerra.

Grundy was an honest witness. He no longer owned the adjoining property or lived in Clauscen Street and, quite clearly, had no axe to grind one way or the other in the result of the case. There was, as might be expected, some vagueness in his evidence, but he clearly gave evidence from his best recollection, and reasonably. He impressed me as careful and considered. His ready acceptance that it was “possible” that squatters were in the property “closer to May 1993” I considered reflected an awareness of the difficulty in possessing a precise memory rather than that his earlier evidence was not correct, and in no way reflected upon him adversely as a witness.

Williams, Lorich and Arends I deal with where I consider their evidence.

That brings me to the defendant who, I find, was neither honest nor reliable. He was artful, alert to the issues, and at times was untruthful. At times, when it suited, he was vague. At times he engaged in exaggeration and embellishment including in respect of when he and others occupied the property and the timing and cost of the works he carried out at the property. In short, he tailored his evidence to suit his case.

Hübl was an unsatisfactory witness and I find that to a significant degree she was an unreliable witness. Observing her I considered that the quality of her evidence was affected by her friendship with, and sympathy for, the defendant. She sought to support his case. Her evidence as to Cerra living at the property for approximately one year or so, and to finally moving into a Housing Commission flat, was wrong, both on the objective facts and the weight of the evidence I accept. That she had over sworn was evident in cross-examination. Her evidence in other respects reflected vagueness in memory.

As to Amos, it was evident from his affidavit that he had sympathy for the defendant, but relevantly, in giving evidence of matters in his personal knowledge, I considered he did so to his best recollection.

Doyle was an honest witness. I accept his evidence which essentially was that, as an adjoining occupier he observed the defendant move into occupation of the property in May 1998.

Finn’s evidence I regard with some circumspection. Her evident concern at the lack of accommodation for the homeless, and thus the value of squats, affected her approach and thus her evidence, I considered. Certainly I considered that her evidence as to the property being a squat in 1993 took her memory too far. That is not, however, to say that I reject her evidence generally for I do not.

Occupation of the property by Gloria Clare Hearse and her relationship to Eileen Roy
Facts

In March 1926 Mr Roy and Eileen Roy fostered a child Gloria Clare McDougall who was born on 8 November 1924. She was brought up as though she was Eileen’s daughter, and regarded Eileen as her mother, but she was never adopted.

Gloria lived at the property until her marriage to George Wallace Hearse. They had four children, Gloria, Julie, Michael and Philip. They separated when Gloria was expecting Philip.

At some time or times subsequently, Gloria returned to live at the property with her children. It does not matter exactly when. I merely note Norman Roy’s evidence, based on what his mother had told him, that at various times Gloria returned to live with Eileen and that she was living there some 18 months before Eileen died. He further deposed that he had visited Eileen at the property in 1969, and in 1972 with his brother Wallace; on each occasion Eileen was living alone. He deposed that he first met Gloria in 1969/1970. He last visited the property in 1972. As to this, the defendant deposed that Gloria lived with Eileen from at least 1975.

The ultimate resolution of the case does not turn on how long Gloria lived with Eileen. At least from time to time and certainly for a time before Eileen’s death Gloria, who was a chronic alcoholic, lived at the property as though she was Eileen’s daughter, and with Eileen’s consent.

Julie McKay gave evidence that she lived at the property with Eileen (who she understood to be her grandmother), her mother (who she understood to be a natural child of Eileen), and brothers from her birth in 1953 until she was 15 when she went to live with another family. She thought that subsequently Gloria moved out for a period of “maybe six months at some stage” although she could not say when. However, she could say that her mother had been living at the property for years before Eileen died in 1983.

Philip Hearse said in evidence that he was born in 1958 and that from time to time when he was aged between 2 and 9 he and his mother lived for short periods at Ballarat. Otherwise he believed she lived at the property until her death; that is, from 1967. He lived at the property until 1976 when he left home, aged 17, leaving his mother and Eileen in occupation.

Following Eileen’s death, Gloria Hearse continued to live at the property until she went to hospital several weeks before she died on 11 October 1992, aged 67 years.

Gloria’s children had been brought up believing that Gloria was Eileen’s birth daughter, and regarded Eileen as their blood grandmother accordingly. It was not until after Gloria’s death that her children ascertained that rather than being a natural child of Eileen, Gloria had been a foster child, and had not been adopted.

Submissions

As mentioned above, the defendant relied on Gloria’s continuing occupation of the property from Eileen’s death until her death on 11 October 1992. That was a period of a little under nine years and two months. It was submitted that during this time Gloria’s occupation was in the nature of a trespasser or squatter.

Denying this proposition, counsel for the plaintiffs submitted as follows. Acknowledging that a bare licence is revoked by the death of the licensor, counsel submitted that prior to Eileen’s death Gloria’s occupation of the property must have been more than pursuant to simply a bare licence, having regard to the long-standing, close “family” relationship with Eileen. Why, therefore, counsel asked, should Gloria’s status have changed to that of a trespasser on the death of Eileen? Counsel submitted that it was open to find that Gloria had “more than simply a bare licence”. The circumstances suggested that Gloria had the right to stay in the house for as long as she wanted to do so. At the very least, she was entitled to reasonable notice to vacate from any person with a superior right to possession of the property. It was said that the law has recognised circumstances within family arrangements where the court is not prepared to hold a person to be a trespasser: Morris v Tarrant[18].
[18][1971] 2 QB 143, 149, 152, 154.

Assuming that such an approach was applicable in the circumstances, until a grant of administration of Eileen’s estate there was no-one who could require Gloria to vacate. For until a grant was made the estate was “notionally” vested in the State Trustees pursuant to s 19 of the Administration and Probate Act 1958. It was implicit in this submission that State Trustees did not have power to give notice to vacate or to otherwise seek possession, but no such submission was addressed. Consequently, it was submitted, Gloria’s consensual possession continued. It was to be assumed that Eileen would not, if she had been asked, have wanted Gloria put out on the street. Thus, until such time as Eileen’s estate told her to leave the property, she had the right to continue to live there. That right was not determined in her life time.

Hence, it was submitted, Gloria was never in adverse possession. If that was so the plaintiffs must succeed because the 15 year period had not elapsed prior to the proceeding being commenced.

Conclusion

In my view the defendant is correct on this point. The plaintiffs’ submission is that it was open to find, and should be found, that Gloria had more than a bare licence. I do not agree.

While Gloria lived at the property with Eileen she clearly did so with Eileen’s approval and consent. It is evident that there was a long friendship in which there was mutual support and comfort. But that does not transpose to an interest in the property. Clearly, there was no legal interest and there was no evidence that could found a right enforceable in equity in relation to ongoing occupation of the property. The case of Morris v Tarrant was concerned, as Lane J made clear in his judgment, with the situation between husband and wife in which after separation the wife continues in occupation of the matrimonial home subject to an order of the court. It is not relevant to this case. Nevertheless, as Lane J observed in his judgment:

“To establish that an occupier of land is a trespasser it must be shown that he has no right, legal, equitable or personal, to be there.”

In my view Gloria’s right of occupation never rose above that of a licensee which licence was revoked on Eileen’s death. Eileen left no will or other instrument which conferred on Gloria any right of occupation. The consequence is that Gloria’s occupation was as a trespasser. As such, in my view, it constituted possession that was adverse to the right of the paper owner and those who claimed in the line of inheritance from his estate.

In this situation it is unnecessary to consider the plaintiffs’ submission as to the power of State Trustees to give notice to vacate. Consideration of the submission would have required reference to authorities including Andrews v Hogan[19] and Fred Long & Sons Ltd v Burgess[20], on which neither counsel addressed a submission, making it more undesirable to consider the issue.
[19](1952) 86 CLR 223, 250-251.
[20][1950] 1 KB 115, 119.

Subsequent occupation

The question that now arises is whether the property was held in adverse possession continuously for the statutory period of 15 years from the death of Eileen. That would be until 19 August 1998. This would require Gloria’s period of possession to be aggregated with possession by Cerra, Gloria’s children, squatters and the defendant.

The defendant’s pleadings allege that:

(a)from approximately 1987 to Gloria’s death Anthony (Tony) Cerra also resided at the property;
(b)he continued to reside there until approximately 1994 when he took up residence at a Housing Commission unit in Carlton;
(c)shortly thereafter squatters moved in;
(d)between taking up residence in Carlton and when squatters first took possession of the property, Cerra “continued to attend the property and was in possession of it”.
(e)In the alternative, at all times between the death of Gloria and when squatters took possession in or about 1994 Cerra, or alternatively the estate of Gloria and Cerra, was in possession of the property;
(f)in or about 1994 a series of squatters took possession of the property from the estate of Gloria and/or Cerra.

In their pleadings the plaintiffs admitted that Cerra occupied the property with Gloria up to her death and for “a number of weeks thereafter” but otherwise denied the allegations.

Occupation by Cerra
Facts

I now refer to the evidence pertaining to the matter of Cerra’s occupation of the property. The first thing to note is that Cerra did not give evidence. He died on 17 January 2005.

I commence with the evidence of Charles George Angeli and Laura Donley (by way of her certificate under the Evidence Act) that:

(a)By an application dated 26 October 1992 Cerra applied to the Department of Planning and Housing for rental accommodation. The application gave his date of birth as 31 November 1934, his address as 38 Clauscen Street, North Fitzroy, stated that he had arrived in Australia in 1954, that he had a disability, received a pension and had no assets. Further information provided with the application, which information appeared clearly to have been written by another person for him, stated that Cerra had been living at 38 Clauscen Street “for near twenty years taking care of Mrs Gloria Hearse or her Mother. Now both have passed away he has only two or one weeks to vacate house. Mrs Hearse family told him they are going to sell the home. Mr Cerra is only on a pension and has nowhere to go. …”. I note that the person who wrote that note did not give evidence, and the correctness of the statements in it was not established by evidence. I refer below to evidence of Julie McKay and Philip Hearse on these matters.
(b)By letter to Cerra dated 6 November 1992 the department requested a social security statement and income statement in order to determine eligibility for rental accommodation.
(c)The next step would normally have been to write to the applicant advising that the application for accommodation had been approved and that they were on the waiting list. Such a letter was not on the file available to Angeli but there was a letter to Cerra dated 16 November 1992 which indicated that that step had been undertaken. That is because the letter of 16 November advised Cerra that a property had become available for him to inspect and he was requested to arrange to view the property.
(d)On 19 November 1992 Cerra made a declaration before Angeli by which he applied for a rebate of rent, the purpose of the application being to obtain information and documentation required to assess a tenant’s eligibility for a rebate. Then, by letter dated 19 November 1992 the Department advised Cerra that his application for a rebate of rent was approved, the consequence being a weekly rent of $34.25 from 22 November 1992.
(e)By a written agreement stated as being made on 19 November 1992 the Department let to Cerra the premises known as 166/530 Lygon Street, Carlton, the agreement and rental commencing on 22 November 1992 and continuing from week to week until terminated.
(f)Angeli also referred to a letter from the Department of Planning and Development (as it then was) to Cerra dated 2 August 1995 requesting Cerra to reapply for a rental rebate. Angeli explained that such a letter was sent to all tenants at that time and that annual application was required. The purpose was to obtain documents and information from the tenant so that the department could assess their eligibility for a rebate of rent.

Wallace Roy deposed (in his affidavit) to being in Melbourne on 18 and 19 September 1993 to attend a meeting. On 19 September he visited the property as he wanted to see the house where his father had grown up. When he got to the property he noticed that the small roof over the front landing had collapsed and other signs that the building was neglected and not lived in. He wanted to look inside the property but the front door was not open. He was told by the next door neighbour that the house was empty and no-one had lived in it since “the old lady” had died. He walked around the back of the property via the access road and entered the house by the back door. The inside of the property was dusty and had a stale smell, and letters were lying over the floor inside the front door. He stated that the property was definitely unoccupied. He next visited the property on 26 July 2002 when he was again in Melbourne for a conference. I refer to this occasion below, merely mentioning at the moment that he then found the defendant in residence.

Wallace Roy swore an affidavit in reply to an affidavit of the defendant. He repeated the above evidence as to his visit to the property on 19 September 1993. He added that the mail he found on the floor near the front door was addressed to Gloria Hearse.

In cross-examination Wallace Roy said that he knew Gloria had died prior to him visiting the property in 1993. The next door neighbour who he spoke to was at number 36. His evidence as to the house not being lived in since Gloria died was based on what he said and on his own observations when he went into the house. There was furniture and some belongings in the house, a few things in the kitchen, a bed in the second bedroom, a couple of chairs and a lounge chair in the front room. And there were letters on the floor. There were no newspapers. The presence of a bed did not possibly indicate there was someone using it from time to time as “it was all covered by dust”.

I now refer to the evidence of Julie McKay that bears on Cerra’s occupation of the property. She deposed that she went to the property with her brother Michael the day after Gloria died. She was asked if Cerra was living at the property when Gloria died. She believed that he was, but that when she went there the day after Gloria died “he was gone and his possessions were gone”. She went to collect her mother’s personal papers (including her will) and things like that, it being her mother’s express wish that she collect all her personal papers. She said that her mother had her own items of furniture, some of which were “noticeably missing”; those that remained Michael took to the opportunity shop. Later (in cross-examination), as to the condition of the property on the day following Gloria’s death, she said that “things had been taken and there wasn’t a lot there, nothing much left. It was a frugal household”. As to whether the house was in a liveable condition, she said that she would not want to have lived there.

Julie McKay deposed that she and Michael cleared out the house in stages, not all in one day. We “did it in stages … we went up a few times. We certainly went up the day after she died and another time in the first week and then another stage about three months later and maybe we went up again but I can’t really put a date to that, whether it was six or nine months later”. She was asked if they had literally emptied out the contents of the house; she said that she could not remember exactly what was left behind; she sorted out her mother’s clothes and the smaller things and Michael took care of the bigger things and at some point he said he would take the large furniture to the Salvos. To the question whether during the time she and Michael were clearing out the house anybody was living there, she answered:

“No, definitely not. It wasn’t really all that liveable.”

She added that when she left the property the doors were locked.

As to whether there came a time when she stopped going to the property, she said that eventually she heard that squatters had got in and she was not interested in being involved in anything like that and stopped going. She could not put a date or time to that, it was possibly about a year or so later.

As far as she knew the last time she went inside the property no-one was living there; that could have been nine months, six months or eighteen months after her mother died, there was a point where they went up and heard that squatters had got in and then she stopped going.

In the cross-examination that followed Julie McKay was questioned about Cerra. She was aware of him. She did not know how long he had lived at the property, it was “on and off over a period of time … he would come and go”. She added: “there were long periods when he wasn’t there. He certainly wasn’t there all the time, he would come and go. Sometimes he would be there for three or six months and then he’d be gone and then, you know, maybe a year later he would turn up again”. He and his possessions had gone when she went to the property the day after her mother had died. As to what possessions he had, she said there were no clothes or those sorts of things. The furniture that was missing was not his. More specifically she said that:

“When I went up there, there wasn’t anything of Tony’s, being personal possessions, like clothes, shaving things, all that, there and he was there at that time because my mother said he was there before she died. And then when I went up the day after she died, like she asked me to, his things – there was nothing of his there and there was furniture that had been in the house ever since I can remember from a child that was missing.”

Julie McKay further deposed that she disagreed with evidence of Philip Hearse that Cerra left the premises some weeks after the death of their mother, stating that there “was no-one there when I went up the day after she died”. It was not only that no-one was physically in the house, there was “no presence of Tony Cerra”. She said that she and Michael “were cleaning out the house, so we were packing up her clothes and things and whatever there was to send to the opportunity shop. So we did go through all cupboards and drawers and all those sorts of things that you do”. They did it over a period of time, they looked everywhere “and sorted it into stacks”. They went a couple of times in the first week, and then she went back once in the first three to six months and maybe once after that. On none of those occasions did she see any sign that would indicate that Cerra had resumed occupation at the property.

McKay said that they locked the house. She vaguely remembered her brother saying in relation to the lock on the back door – which was not very strong – that he would take care of it. They locked the house as you would lock a normal house, the intention being to keep people out unless they had a key to the premises. As to whether the premises were boarded up, she did not know if her brother had done that.

Later in cross-examination Julie McKay was asked about the statement in Cerra’s application for a Department of Housing flat that he had been given two or one weeks to vacate the house. She did not know about that. Nor did she know about it being the intention of her family or any member of the Hearse family to sell the property. She said that was not true.

I now refer to evidence of Philip Hearse.

In his affidavit he stated that Cerra remained in occupation of the property “for a matter of some weeks” after Gloria died. He stated that when Cerra left the property, it was “simply left with its contents remaining which weren’t of any real value”. Those items of sentimental value were retrieved by his brother Michael and sister Julie, otherwise the remaining contents were abandoned. In cross-examination Philip stated that the reference to Cerra remaining in occupation for a matter of “some weeks” was only an estimate because he had not gone to the property after his mother died, he “just presumed that [Cerra] was still in residence there because he was in residence there prior to her dying”. That is, his statement as to occupation for “some weeks” was not based on his personal knowledge. He was then asked what it was based on and answered:

“Just I presumed it would have taken him a week – I presumed the time that my mother was in hospital was the time that he had left, in that period that she was in hospital, because after she died he was not there.”

Philip added that he had not required Cerra to leave by a particular time. He added that since the death of his mother he had not been inside the property, but he had driven past the property on numerous occasions. He had no knowledge whether Cerra, after leaving the property, went back from time to time.

Philip was also referred to Cerra’s application to the Department of Housing for a flat and said that the Hearse family did not intend to sell the property, in fact they had no idea what they were going to do concerning it. He had not spoken to Cerra “from way before my mother died and I have never given any threats or told him to leave or anything like that. I have not had a conversation with this man prior to my mother’s death. And when he was in the presence of my mother I would never talk to him”. He did not like Cerra. Indeed, earlier in his evidence he had referred to Cerra freeloading in living at the property. He had not spoken to Cerra since his mother’s death.

Joseph Grundy gave evidence for the plaintiff. He purchased the property at 36 Clauscen Street with his former partner in or about early 1993 and lived there from May 1993 until July or August 1994 when he commenced living in Sydney. He deposed that when he moved into number 36 the adjoining property (number 38) “was definitely unoccupied and empty” and that for most of the time that he lived at number 36, number 38 “remained empty and unoccupied”, although he recalled that possibly nearer the time he left for Sydney there could have been people or “squatters” in the property. While in Sydney he rented his property and recalled receiving complaints about squatters who occupied the property (number 38). He recalled that in the period between 1994 and 1998 the porch roof on number 38 collapsed and remained in that state for many months and that whoever occupied that property caused damage to it and left rubbish. In 1998 he resumed living at number 36 and moved out again in late 1999. Grundy could not recall whether number 38 was empty and unoccupied at this time. In 2000-2001 he observed a man making repairs to and cleaning up the property. He recalled meeting the defendant at some time in the period 2000-2001 when they had brief discussions about sharing the cost of removing creepers that had overgrown the back of number 38 and number 36 and the defendant’s progress with repairs. He sold his property in 2001.

In cross-examination Grundy said he did not go into the property in 1993. He did walk through the property before going back to Sydney but could not remember the year. He said he was vague about dates. He said it was possible that it could have been closer to May 1993, when he first moved into number 36, that squatters were at number 38. In re-examination Grundy said that before going to Sydney in 1994 on one occasion he walked through number 38, he could not remember the year but he went through the house and it seemed deserted. The reason for going in was that his house had a rising damp problem and having made a number of attempts to get hold of somebody at number 38 he eventually went and pushed on the front door and it was open and he went and had a look at the problem from that side to see if it was a joint problem or just something that he needed to have repaired on his side. He did not wander through the rooms, he was only looking at the hallways. But no-one was in the house at the time and he had the impression it was deserted.

I now refer to evidence given by the defendant and witnesses called by him that bears on the matter of Cerra’s occupation of the property.

In his affidavit the defendant stated that Cerra was a friend of Gloria, that Cerra moved into the property in 1987 and stayed on after Gloria died until 1994 when he moved out “… as the house had reached the point where it was just too rundown for him to live in. During the time he lived there, I would call past once a week to say ‘hello’ and see whether he was okay as he was an elderly gentleman”. The defendant deposed that “a very short time after” Cerra moved out in 1994 he (the defendant) found that squatters had started staying at the house.

The defendant was cross-examined upon this evidence. He was asked if it was correct that Cerra had moved out in 1994. He answered:

“Well, I used to see him there at the property in those stages, so I believe, yes, he was still there.”

The defendant was asked if he accepted that Cerra had leased a flat from the Department of Housing in Carlton from mid to late November 1992. He answered:

“I do accept that but I do know too that he would go past 38 Clauscen Street and he would go there to the property and he would spend time there.
He started to live in Lygon Street, Carlton from about mid to late November 1992, didn’t he? — — — Yes, but he would come back to 38 Clauscen Street to visit maybe the neighbourhood friends that he would have created through the years.
Who would he come back to 38 Clauscen Street to visit? — — — I’m not saying he visited anyone at 38, but he would have gone to maybe adjoining neighbours that he may have known. So he’d come back to the property.”

The defendant was then referred to the evidence of Julie McKay (and to which I refer below) that Cerra left the property virtually immediately after Gloria died and that over 12 months she and Michael Hearse emptied out and cleaned up the property, and gave the following evidence:
“Do you accept that for the 12 month period or so after Gloria Hearse died nobody lived at 38 Clauscen Street? — — — Tony was thereabouts from time to time and I would see him there at the property.
He wasn’t sleeping there was he after Gloria died? — — — Well, I wouldn’t go there after certain times of a night because I’d be in bed myself, so I wouldn’t be able to witness him sleep there but I know he’d be there from time to time.

Counsel then referred to the statement of the Lord Chief Baron in Lord Cawdor v Lewis that:

“It is admitted to be a proper subject for equitable interference, where one party stands by and allows another to spend money upon his lands without giving him notice of his title.”[29]

And see Set-Off, Derham, 1987, 12.

[29]At 176.

Counsel noted the statement of Edelman and Bant in Unjust Enrichment in Australia[30] that the decision in Cawdor v Lewis had been criticised for a long time and in particular in the first edition of Mayne On Damages (1856) on the basis that where the improvements may be unsuited to the plaintiff or were such that he could not have afforded them, it would be unjust to compel him to pay for them. Edelman and Bant suggest that the inquiry is an objective one as to whether the true owner desired the receipt of the benefit. They suggest this may be shown in three ways: first, that what is received is incontrovertibly beneficial (such as money or the discharge of a necessary expense); secondly, by the act of exercise of a choice to obtain the benefit; thirdly, the defendant’s conduct may show that what is received was desired by him.
[30]At 107-108.

Counsel then referred to the decision of the High Court in Svenson v Payne[31] and submitted that it is the “only authority” that might be said to stand in the way of an Australian court applying “the unifying concept of unjust enrichment” so as to produce a principle that improvements made to land under a mistake may be the subject of a claim in restitution. I return below to consider Svenson, and other relevant authorities not mentioned by counsel for the defendant. For the moment I will continue with indicating the course of his submissions.
[31](1945) 71 CLR 531.

Counsel did, however, refer to the decision of Santow J (as his Honour then was) in Cooke v Dunn[32] which he came across during the trial and described as the only case in point he had been able to find. Perhaps he meant by that that it was the only adverse possession case he had found in which the issue of restitution for the value of improvements effected to the property by the unsuccessful adverse possessor was dealt with on the basis of incontrovertible benefit, and in which restitution was ordered.
[32](1998) 9 BPR 16,489.

In his judgment Santow J noted that the plaintiff had not addressed him on the merits of the claim for restitution or disputed in any detailed fashion the defendant’s contention. It is to be noted that the judgment makes no reference to Svenson v Payne and the principles applied by the High Court in deciding that case, or Brand v Chris Building Co Pty Ltd[33]. It would seem clear that these authorities were not drawn to Santow J’s attention.
[33][1957] VR 625.

Santow J referred to academic texts and the decision of Carruthers J in J Gadsden Pty Ltd v Strider 1 Ltd (The “AES Express”)[34] concerning restitutionary relief where a party has been incontrovertibly benefited, and observed that whether or not a party can recover where it has voluntarily conferred a benefit upon another was far from settled.
[34](1990) 20 NSWLR 57.

Gadsden concerned a claim for an additional freight charge in respect of the carriage of goods by sea. The further remuneration was sought from the shipper of the cargo on the basis of restitution or unjust enrichment, the goods having been carried further by the decision of the owner than was necessary. Accepting that there was authority for the view that where a defendant has been incontrovertibly benefited he may be liable to make restitution even though he did not request or freely accept the benefit, but noting that a restitutionary claim can be defeated if the claimant has acted officiously, Carruthers J held that in the circumstances justice did not require the payment of the compensation sought because the equities in favour of that claim were not more compelling than the shipper’s plea that it did not request or freely accept the services, that is, the claimant acted officiously or as a volunteer[35].
[35]At 70.

Santow J noted references in Carruthers J’s judgment to academic texts concerning restitutionary or unjust enrichment claims and to the notion of “free acceptance” advocated by Professor Birks and which was the subject of debate. Whatever the state of the academic writings, Santow J concluded that the case before him was “an instance where, having regard to the competing equities of the case, the doctrine [of incontrovertible benefit] should be applied”. An equity arose in the defendant’s favour because the plaintiff was aware “that someone was living in the property and making various improvements to it. He clearly was happy to be the beneficiary of the improvements, never demurring”. Accordingly restitution was ordered, the amount of which had to be ascertained. In the meantime the defendant by way of equitable lien was permitted to continue in occupation, unless the plaintiff was able to nominate another method of satisfactorily securing the defendant’s rights.

It is thus seen that a critical element in Santow J’s conclusion was the plaintiff’s awareness of improvements being effected, of never demurring and wishing to have the benefit thereof. That is not the present case. Hence, even assuming that as a matter of principle restitution may be ordered on the basis of incontrovertible benefit, in the circumstances of this case no “equity” arises in the defendant’s favour. To express it another way, it is not unconscionable or unjust for the plaintiffs to recover possession of the property without making restitution for the value of the improvements.

At this point, however, by way of concluding discussion on this aspect of counsel’s submissions, it is convenient to return to Svenson and the other critical authorities which counsel ignored.

The facts in Svenson v Payne are instructive and it is convenient to refer to them. A life tenant, who was trustee under a will, leased a hotel to the licensee (Svenson) who, on the faith of the lease and without searching the life tenant’s title, spent money on improvements. The term of the lease exceeded the period authorised by the will but the remainderman, who was the daughter of the life tenant, although aware of the negotiations, was not a party to them. After the lease was executed and before any expenditures were undertaken, the remainderman became aware of the life tenant’s limited powers of leasing, but took no action believing that the life tenant, her father, was entitled to exercise complete control in his lifetime, and that there was nothing she could do. After the life tenant died the remainderman applied for a declaration that the lease was void. In a unanimous judgment (Latham CJ, Rich and Williams JJ) the High Court held that the remainderman was not estopped by her conduct, and that the lease was void and should be cancelled without compensation to the licensee. Two findings of fact of the trial judge were critical in this respect. The first was that the remainderman “did not know that [the licensee] held a mistaken view of his own rights. She had no means of knowing that the usual course of investigation undertaken in such a transaction had not been followed, and his action in spending the money was not inconsistent with knowledge of the true position because he may have been taking a deliberate risk on the duration of her father’s life”. The second was that “having discovered the existence of her interest in remainder before the money was expended by Svenson, [the remainderman] did nothing until after her father died not with the idea of encouraging Svenson to expend the money on the property which was ultimately to come to her, but because she believed that there was nothing which she could do”.

The decision is Svenson v Payne was based on the well recognised principles in Ramsden v Dyson[36]. In that case, where a tenant had built on his landlord’s land, the House of Lords had to consider whether the tenant was entitled to relief in equity by reason of the improvements effected and in view of the relevant arrangements. The Lord Chancellor, Lord Cranworth, stated “the principles of equity on this subject”, as follows[37]:

“If a stranger begins to build on my land supposing it to be his own, and I, perceiving his mistake, abstain from setting him right, and leave him to persevere in his error, a Court of equity will not allow me afterwards to assert my title to the land on which he had expended money on the supposition that the land was his own. It considers that, when I saw the mistake into which he had fallen, it was my duty to be active and to state my adverse title; and that it would be dishonest in me to remain wilfully passive on such an occasion, in order afterwards to profit by the mistake which I might have prevented.
But it will be observed that to raise such an equity two things are required, first, that the person expending the money supposes himself to be building on his own land; and, secondly, that the real owner at the time of the expenditure knows that the land belongs to him and not to the person expending the money in the belief that he is the owner. For if a stranger builds on my land knowing it to be mine, there is no principle of equity which would prevent my claiming the land with the benefit of all the expenditure made on it. There would be nothing in my conduct, active or passive, making it inequitable in me to assert my legal rights.”

[36](1899) LR 1 HL 129.

[37]At 140-141.

In Svenson the High Court quoted with approval the first paragraph in the Lord Chancellor’s statement. Their Honours added a reference to Willmott v Barber[38], and decided the case on the principles stated by the Lord Chancellor. The earlier case of Lord Cawdor v Lewis is not mentioned in their Lordships’ speeches in Ramsden v Dyson. But that is of no moment as the Lord Chief Baron’s statement quoted above is consistent with the principles stated by the Lord Chancellor. It may also be noted that the Lord Chief Baron was dealing only with an interlocutory application. In any event, the opinion of the House of Lords would prevail if there were any inconsistency.
[38](1880) 15 Ch D 96.

In Brand v Chris Building Co Pty Ltd[39] Hudson J followed and applied Ramsden v Dyson, Willmott v Barber and Svenson v Payne. In Brand the defendant had built a dwelling on the plaintiff’s land. Hudson J found that the plaintiff had not known what was going on. Hence he had not acquiesced in the defendant’s building works, let alone stood by and encouraged the defendant while not asserting his rights as owner of the land. Hudson J observed that “it must be shown that the plaintiff was guilty of something in the nature of a fraud” and there was nothing of that kind and no ground that could raise an equity in favour of the defendant. By fraud Hudson J meant conduct recognised as such in equity.
[39][1957] VR 625, 629.

In concluding his judgment[40] Hudson J referred to the defendant having argued that relief could be founded in the doctrine of unjust enrichment, but (Hudson J noted) counsel “was not able to point to any case where it had been applied in circumstances such as the present, and to apply it would be to fly in the face of the highest authority. It is quite impossible to apply it in the face of those authorities”. With respect, I agree with Hudson J. I would add that even if the matter was to be approached on some separate basis of unjust enrichment or restitution or incontrovertible benefit the same consideration of the conduct of the parties would be involved in determining the relative equity or unconscionability or otherwise of the situation. On that basis the result would be the same as I conclude. But, however that may be, I agree with Hudson J on the law applicable to the resolution of the issue in this case.
[40]At 629.

Notwithstanding this line of authority, counsel bravely submitted “that arguments based upon mistake and unjust enrichment would now prevail and that Svenson does not prevent an Australian court from recognising that the law has advanced since 1945”. He stated that in the same way as the English Court of Appeal in Greenwood “was prepared to extend the availability of restitutionary remedies in relation to improvements to goods, the time is ripe for recognising the availability of restitutionary remedies in relation to land”. Counsel sought support in a passage in Restitution in Australia and New Zealand, Cato, Cavendish, (1997), 42-43.

This invitation to treat a decision of the High Court as no longer stating relevant principle, and that I should myself state what the law is, is untenable. No matter what advance there may have been in the law I am bound by a decision of the High Court. When I questioned counsel on his submission he said that “it may be possible to distinguish it [Svenson v Payne] in any case on the facts … “. As to the underlying principle in Svenson v Payne, counsel said that “the reference to Ramsden v Dyson itself betrays the antiquity of the decision”. What in essence counsel was saying was that the principles applied in Svenson v Payne and Brand Chris Building Co Pty Ltd have been overtaken by developments in the area of unjust enrichment and restitution or quantum meruit. I informed counsel that he would need to tell that to the High Court. If it is considered that the time “is ripe” for a change as counsel suggests then that change should be sought from, and made by, the High Court. Moreover, Brand v Chris Building Co Pty Ltd is a long-standing decision of a judge of this Court which applied the same principles, and I would not depart from it unless I considered that it was wrongly decided; being decided consistently with Svenson v Payne I am not of that view. Accordingly I approach the resolution of the relevant issues in this case on the basis of those principles.

Counsel submitted further that the amounts the defendant paid for rates should be recoverable on the following basis. The LocalGovernment Act 1989 gave the council the right to sue the defendant as occupier of the property for unpaid rates if the owner could not be found or identified (s 156(2)), and to sell the property to recover unpaid rates (s 181). Hence the defendant paid rates – in the total amount of $13,050 between July 2000 and September 2005 – under compulsion and should be able to recover the amount he paid[41]. Further, the Local Government Act (s 181(9)) authorised the council, if following a sale of a property no person having an estate or interest in the land could be found after reasonable efforts to do so, to use any balance remaining after recouping its debt and expenses for its general purposes.
[41]See Gemmell v Brienesse (1933) 33 SR (NSW) 472; Restitution Law in Australia, Mason & Carter, 1995, para 627; Restitution in Australia & New Zealand, Cato, 1997, 49-52.

It was submitted that if the defendant was not entitled to affirmative relief he was able to set-off the amount paid for rates against the plaintiff’s claim for mesne profits. This set-off should be permitted on the basis that unless it is the plaintiffs will unjustly have the benefit of the defendant’s actions in stepping in and improving the property and saving it from compulsory sale, thus preserving it, and at an increased value for the plaintiffs. Further, if there had been a compulsory sale and the council had not been able to find the person entitled to the balance remaining the council could have applied the balance to its general purposes, in which event the amount would have been lost to the plaintiffs.

(d) Incontrovertible benefit

Counsel next addressed on the matter of incontrovertible benefit. He of course relied on Cooke v Dunn but he also referred to other authority. He referred to Monks v Poynice Pty Ltd[42] where Young J[43] referred to there being at least four circumstances in which equity, if not the common law, finds a person liable to pay a reasonable amount for services provided to it. The first was quantum meruit; the second was where the party benefited accepted or acquiesced in the provision of the service under circumstances where it must have known that the service was not being rendered gratuitously; the third was where the service provided is necessary for the protection of the defendant’s property; and the fourth is where the service conferred uncontrovertible benefit on the defendant and it would be unconscionable for the defendant to keep the benefit of the service without paying a reasonable sum therefor.
[42](1987) 8 NSWLR 662.
[43]At 663-664

In Peel (Regional Municipality) v Canada[44] McLachlin J (as she then was) explained the rationale for incontrovertible benefit thus:

“While the principle of freedom of choice is ordinarily important, it loses its force if the benefit is an incontrovertible benefit, because … the defendant would not have realistically declined the enrichment.”

[44][1992] 3 SCR 762, 795.

In the circumstances, counsel submitted, it was incontrovertible that the defendant’s expenditure was necessary for the protection, preservation, and enhancement of the value, of the property and that the plaintiffs would have incurred similar expenditure for the same reasons if the work had not already been done for them. The defendant’s expenditures had almost certainly prevented the plaintiffs from entirely losing the property and its value.

In his written outline counsel submitted that the property was worth $130,000 in 1996 and according to Williams was worth $360,000 in June 2008 on land value alone. He submitted that the defendant’s conduct saved the plaintiffs from losing that amount. It is to be noted that the figure of $130,000 is not established by evidence, and is to be disregarded. It seems from a question put to Williams in cross-examination that Dunn had valued the property in 1996 and favoured a figure of $115,000, as to which Williams was asked if he agreed. Williams could not agree because he had not valued the property as at 1996. Hence there is no evidence of value at that time. Likewise, the figures for market value of $125,000 and $320,000 in the defendant’s pleadings (referred to at [29](k)(iv) above) are not established by evidence.

Conclusions

In my view none of the defendant’s claims are established. Each fails on the facts.

I discuss each case in turn.

The mistake case

The first case is that the defendant incurred the earlier expenditure under a mistake. The defence and counterclaim each set out identical particulars of the work carried out by the defendant in the years 1997 to 2000 inclusive. There is no need to again list the work allegedly done; that has been done above. Then followed what is the more critical for present purposes, that the defendant incurred the earlier expenditure under a mistake of fact and/or law. The mistake was the erroneous belief set out at [27] (e) above. It is convenient to discuss each mistaken belief in turn.

(a) No person had any interest legal or equitable in the property

In final address counsel for the defendant relied on the following matters to establish this belief. First, the defendant’s evidence that in early 1996 he telephoned Philip Hearse who he thought must have the legal right to the property and who told him the property could not be bought from anyone; on being so advised the defendant decided to step in and restore the property. That is, he had assumed the Hearses would have an entitlement, but on a Hearse saying “it can’t be bought from anyone then he is entitled to assume that no‑one – at least no‑one to his knowledge – is making a claim in relation to it, not knowing anything, of course, about the Roys”. I refer to this evidence at [191] above. Counsel further relied on the defendant having a longstanding interest in the property and Gloria having said to him that when she died he should do the place up and move in; and he had happy family memories in relation to the property.

(b)Any persons who had an interest in the property were not intending to pursue their rights (if any) to take possession of the property

Counsel for the defendant said this belief was based upon Philip Hearse being unresponsive to the defendant’s request to step in and do something about the squatters, other than saying he could not do anything about it. That statement, counsel submitted, indicated that the Hearses were not interested in pursuing any rights they might have had. Counsel acknowledged that Philip Hearse had warned the defendant but the defendant indicated that Philip Hearse was “not being entirely forthcoming in relation to the situation”, counsel submitted. Counsel also relied on the condition of the property in 1996/1997; any person with an interest in the property would have been expected to have at least made some cosmetic changes on the outside to not give the impression that the property was simply open for anyone to come in. This absence of activity “persuaded” the defendant that he was entitled to proceed.

(c)Improvements made to the property would be to the defendant’s benefit and not for the financial gain of others

Counsel for the defendant submitted that this “belief” was “an inference from all of the material”. He referred to the conversation with Philip Hearse and the unexplained difficulty as to selling the property; the fact that no‑one endeavoured to remove him from the property; that the situation was ongoing with the defendant occupying the property and spending money, and it was not plausible that he would have spent that money if he believed someone could turn up and claim an entitlement.

(d)The defendant might peaceably enjoy the property for so long as he desired

Counsel for the defendant submitted that this was an inference drawn from the fact that the defendant carried out improvements. Of course Philip Hearse warned him, but he also said there was no‑one from whom he could buy the property and did not take action to stop the defendant doing the work.

It is on this basis that in final address counsel sought to establish the mistaken belief under which the defendant was alleged to have laboured in incurring “the earlier expenditure”. I have regard also to the various matters alleged in the particulars to the pleading. They include the alleged occupation of Cerra and the squatters and other matters.

Counsel for the defendant acknowledged that his submissions were based on acceptance of the defendant’s affidavit evidence which I set out at [191] above. He conceded that if on the other hand I accepted the evidence of Philip Hearse concerning this evidence then the defendant’s submission must fail.

I dealt with the matter of this conversation at [191] – [195] above. I accepted Philip Hearse’s evidence. It is unnecessary to again recount the conversation, it is sufficient to say that I agree with counsel that preferring Philip Hearse the defendant’s case of mistake must fail. The fact is, I find, that in entering into the property, undertaking works and expending money (including on rates) he did not hold any of the alleged beliefs. I find that the defendant took a knowing risk that the person truly entitled to the property may one day appear and claim it, and that he may have to give up possession. He did so adventitiously, with no encouragement from any person, hoping that one day, if he were there long enough, the property would become his, but aware it may not.

For completeness, I reject the defendant’s further allegation (referred to at [27] (f) above) that “the conduct” of the plaintiffs and those through whom they claim “contributed to the mistake”. There was no mistake. What the defendant did he did on his own initiative taking advantage of the opportunity that presented itself and hoping that the longer time went by no‑one would come forward and that the property would ultimately become his. Hence, and as a matter of principle, his expenditures were at his risk; see Land Law, Butt, 5^th ed Law Book Co [323]; Brand v Chris Building Co Pty Ltd[45]; Svenson v Payne[46]. And he so acted without the knowledge and consent of the plaintiffs. The first and only awareness of the plaintiffs was what Wallace Roy observed on his visit in July 2002. That was very limited in terms of work he appreciated had been done. Further, Wallace Roy did not know that he and his siblings were entitled to the property by succession, but he asked the defendant who had given him permission to live there. Tellingly, in retrospect, the defendant could not answer that question; reflective, I find, of the fact that the defendant knew he was there without any lawful permission. Moreover, Wallace Roy did not discuss ownership of the house or give the defendant any indication that it was alright for him to stay at the house. Finally, it was not until March 2004 that Norman Roy was alerted that he and his siblings might have a legal interest in the property. The Roys then set about ascertaining the time position and establishing their right. It was not until 2 June 2005 that they became registered proprietors of the property and their cause of action accrued. By then the defendant had completed, or all but completed, all of his works.
[45][1957] VR 625, 629.
[46](1945) 71 CLR 531.

For these reasons the claim in relation to expenditures made upon the basis of the alleged mistake and belief must fail.

The representation case

I now discuss the second case of the further expenditure incurred on the inducement of a representation by Wallace Roy in September 2000.

If, counsel for the defendant submitted, it is accepted that Wallace Roy made a representation to the defendant in 2000 or 2002 to the effect alleged, and the defendant relied on that representation in carrying out further works, on traditional principles[47] the defendant was entitled to an equitable interest in the property to secure his outlay. It was submitted that a half interest would be appropriate recompense in the circumstances. Alternatively, he should have a lien on the property. That relief would also be available if the alternative basis of unjust enrichment were accepted.
[47]Dillwyn v Llewellyn (1862) 4 DeG F & J 517; Unity Joint Stock Mutual Banking Association v King (1858) 25 Beav 72.

I dealt with the evidence of and concerning the conversation between Wallace Roy and the defendant at [203], [208] and [212]-[215] above. At [2125] I stated my finding that I accepted Wallace Roy’s evidence as to the time (July 2002), and content of the conversation. It is evident that the alleged “representation” depends upon acceptance of the defendant’s evidence as to statements of Wallace Roy in this conversation. But I have rejected the defendant’s account as deliberately false. In that situation, on Wallace Roy’s evidence, there is simply no evidentiary basis for finding the alleged representation.

Of course the defendant spoke to Philip Hearse in about September 2000, not Wallace Roy, as to which at [230] I found that I accept Philip’s account. That conversation could not support the alleged representation.

A further reason why the defendant’s representation fails is that, even if made the representation was not misleading or deceptive or likely to mislead or deceive or was false or untrue in the respects alleged (and referred to at [27(l)] above). In neither respect did the plaintiffs in July 2002 have or not have the intention alleged.

For these reasons the case of further expenditure induced by the alleged representation must fail.

That brings me to the alternative claim of unjust enrichment.

The unjust enrichment case

I now consider the defendant’s further plea of unjust enrichment referred to at [27(h) and (k) above]. The basis of this claim is that if the plaintiffs are held entitled to possession of the property they will receive it with the benefit of the improvements carried out by the defendant. This is submitted to be an incontrovertible benefit to the plaintiffs who, being unjustly enriched thereby, should compensate the defendant by way of restitution for the monies expended. Alternatively, such restitution may be by way of a set-off.

These claims must immediately confront the above findings which destroy the factual premises upon which the claims are pleaded. Stripped of these factual premises the situation that I find is that the defendant carried out works to the property without encouragement, approval, permission or knowledge of the plaintiffs other than the awareness of Wallace Roy in July 2002 of some improvements. But that awareness of Wallace Roy was very limited indeed. In no sense did the plaintiffs stand by knowing the defendant was expending money on improvements and letting him do so being aware that they were the true owners of the property and declining to act. They did not become aware they might be entitled to the property until some time after March 2004 by which time the great majority of the work was complete.

If, on the other hand, restitution were to be considered the question to be asked is – in what amount? The answer is found in the evidence considered above concerning the value of the improvements effected by the defendant and the value of the property, and accordingly, to these I now turn.

There are two relevant matters here, the value of the works and the value of the property. In relation to the works, by reason of the absence of the necessary building approval and the probability that the rear extension will have to be demolished and rebuilt, the net value of the defendant’s works is $1,350, a relatively negligible amount. Further, the status of the rear extension and others matters referred to by Williams means that the property on an unrenovated basis has not been increased in value by the works. It is appropriate that the issue of value be regarded on that basis as the defendant seeks that account be taken of all of his works and expenditures. On that basis the answer, established by Williams, is that the defendant has not added value to the property. Accordingly, in recovering possession of the property the plaintiffs will not be “enriched”. I should say that I accept the plaintiffs’ submission that the correct approach to this question of enrichment is to consider whether the value of the property has been increased by the works rather than the value of the work simpliciter for (as is seen here) for some reason or other the works or part thereof may be of no value.

For these reasons the defendant’s claim of an unjust enrichment must fail. More fundamental of course is the fact that in undertaking the works the defendant took a knowing risk in the hope that one day, if he could stay in the property long enough, he would obtain title thereto. In incurring the claimed expenditures he was under no mistake as to his position which was that of an adventitious opportunist trespassing on the property of another, and without that other being aware of what he was doing. As to this it is unnecessary to repeat the previous findings and conclusions.

The plaintiffs’ claim for mesne profits/damages

It will be recalled that the plaintiffs seek rent from the date the defendant commenced occupation to delivery up of possession together with interest thereon, $35,000 as the cost of demolition of the rear extension, and unpaid council and water rates.

The claim for rent is based on the defendant’s occupation as a trespasser and Williams’ evidence of the rental value of the property. In his final address counsel for the plaintiffs stated that damages should be nominal in the period prior to 5 May 2005 on which date the plaintiffs were registered as proprietors of the property. Counsel for the defendant accepted this as the correct date, as that was when the plaintiffs’ right of action accrued. I agree, and consider that the claim for nominal damages is not properly made. From 5 May 2005 the plaintiffs sought mesne profits based on Williams’ evidence. But, counsel submitted, Williams’ figures should be discounted because the property was not complete. As an alternative to that claim, counsel submitted that damages could be the amount of $35,000 to demolish and rebuild the rear extension. Alternatively, the damages could be the amount of $20,000 estimated by Williams as the difference in the value of the property with and without the necessary permits.

As counsel readily conceded, there are “some problems” with these claims. Beyond that observation he said little other than the following, that Williams’ evidence “was based upon a market rent which would be highly unlikely in the circumstances”. I agree with that observation. I find Williams’ evidence as to rental value was unrealistic given the condition of the property. I do not accept the evidence provided an accurate basis on which to determine the rent reasonably likely to be achieved at any relevant time. His assessment was speculative and over-stated. I am left with no cogent basis upon which to determine the probable level of a rent reasonably achievable at the relevant time. I do not consider it appropriate to refer the matter for inquiry before an associate judge and I was not asked to do so. Counsel frankly recognised the problem and left it there for me to deal with. In my view the plaintiffs have simply failed to establish a rental figure, and accordingly, and there being no evidentiary basis on which I could otherwise determine the rental, that basis of claim fails.

Then there are the alternative bases of claim. Counsel developed no argument in support of either. I reject them both. It is important to bear in mind that the claims are for damages suffered by acts of the defendant as a trespasser. The considerations that obtain in this context are different from those in the restitution context.

It is sufficient to say of the $35,000 claim that the defendant is entitled to bring to account against it the amount of $36,350 being the value of the balance of the improvements. It is not reasonable as between the parties that the plaintiff could take the benefit of one aspect of the works for the purpose of claiming damages while not allowing the defendant the benefit of the other aspect of the works and which are in fact of benefit to the plaintiffs.

As to the $20,000 claim this fails because it is ill-founded conceptually. The relevant works were done prior to the plaintiffs becoming registered proprietors of the property, yet the claim seems to assume some sort of duty on the defendant towards the plaintiffs in relation to obtaining permits for the purpose of ensuring the bettering of the value of the property. Of course the defendant was legally required to have the necessary approval, but that did not create a duty enforceable in damages of the nature now sought.

Finally, I note that the plaintiffs’ counsel did not press the claim for unpaid council and water rates. Clearly, it was abandoned and, I consider, rightly so.

Overall conclusion

The plaintiffs having succeeded on the issue of adverse possession are entitled to an order for possession of the property. Save for costs the balance of the claim fails.

The defendant has failed to establish any of the relief sought, and the counterclaim will be dismissed with costs.

I will hear counsel as to the form of the orders and costs.

[2010] VSC 250

10 June 2010