Seyffer v Adamson

[2000] NSWSC 1219

CITATION:	Seyffer v Adamson & anor [2000] NSWSC 1219
FILE NUMBER(S):	SC 3420/00
HEARING DATE(S):	19 October 2000
JUDGMENT DATE:	19 December 2000
PARTIES :	Michael Alan Seyffer (Plaintiff) Jennifer Frances Adamson (First Defendant) Mark Ross Adamson (Second Defendant)
JUDGMENT OF:	Master McLaughlin

COUNSEL :	P. L. G. Brereton SC and M. J. Leeming (Plaintiff) J. van Aalst (Defendants)
SOLICITORS:	Speed and Stracey, Commercial Lawyers (Plaintiff) Hardings Lawyers (Defendants)
CATCHWORDS:	Practice - Summary dismissal - Whether reasonable cause of action is disclosed - Possessory title - Asserted agreement between parties - Defendants acquire title by transfer from registered proprietor - Whether Plaintiff was a trespasser and his claim is grounded in an illegality - Effect of any such illegality upon entitlement of Plaintiff to invoke intervention by a Court of Equity - Estoppel - Feeding the estoppel - Whether equity should intervene to prevent Defendants from relying upon their strict legal rights - Possessory title can be acquired only of a whole parcle of land - Whether claim of Plaintiff is in respect to only one half of a whole parcel of land
LEGISLATION CITED:	Real Property Act 1900, section 45D Supreme Court Rules, Part 13 rule 5
CASES CITED:	General Steel Industries Inc. v Commissioner for Railways (1964) 112 CLR 125 United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1 Banner Homes Group PLC v Luff Developments Limited [2000] 2 WLR 772 Nelson v Nelson (1995) 184 CLR 538 Holman v Johnson (1775) 1 Cowp 341; 98 ER 1120 Tinsley v Milligan (1994) 1 AC 340 The Juliana (1822) 2 Dods 504; 165 ER 1560 Central London Property Trust Limited v High Trees House Limited [1974] KB 130 Legione v Hately (1983) 152 CLR 406 Verwayen v The Commonwealth (1990) 170 CLR 394 Spark v Whale Three Minute Car Wash (Cremorne Junction) Pty Limited (1970) 92 WN (NSW) 1087 Muschinski v Dodd (1985) 160 CLR 583 Guimelli v Guimelli (1999) 196 CLR 101
DECISION:	See paragraph 54

SUPREME COURT OF
NEW SOUTH WALES
EQUITY DIVISION

MASTER McLAUGHLIN

Tuesday, 19 December 2000

3420/00 MICHAEL ALAN SEYFFER -v- JENNIFER FRANCES ADAMSON and ANOR

JUDGMENT

1    MASTER: There is presently before the Court a notice of motion filed on 6 September 2000 on behalf of the First and Second Defendants, Jennifer Frances Adamson and Mark Roth Adamson. By that notice of motion an order is sought that the proceedings be dismissed pursuant to Part 13 rule 5(1) of the Supreme Court Rules. (The notice of motion states that that relief will be sought by the Plaintiff: I assume that statement to be an error, and that it is intended that that relief will be sought by the First and Second Defendants.) 2 The substantive proceedings were instituted by statement of claim filed by the Plaintiff Michael Alan Seyffer on 1 August 2000. Subsequently an amended statement of claim was filed on 19 October 2000. 3 The proceedings relate to a strip of land (to which I shall, consonant with the nomenclature used in the statement of claim and the amended statement of claim, refer as “the Land”) located between the land situate at and known as 12 Victory Street, Clovelly (of which the Plaintiff is the registered proprietor) and the land situate at and known 14 Victory Street, Clovelly (of which the Defendants are now the registered proprietor). 4 By the amended statement of claim the Plaintiff makes certain allegations concerning the Land. Those allegations include the following matters. 5 The Land is about 1.8 metres wide and about 25 metres long, and is presently described as Lot 7 in Deposited Plan 10122. Before 10 April 2000 the registered proprietor of the Land was Florence May O’Brien, who died on 6 October 1962. From that date until 10 April 2000 the Land formed part of the undistributed residue of the estate of the late Mrs O’Brien. 6 In about July 1996 the Plaintiff and Mr and Mrs Pierce (which latter persons were the predecessor of the Defendants as registered proprietor of 14 Victory Street, Clovelly) entered into an oral agreement which contained the following terms:

(a) They were to construct a fence down the middle of the Land.
(b) Mr and Mrs Pierce would occupy that half of the Land adjacent to 14 Victory Street.
(c) The Plaintiff would occupy that half of the Land adjacent to 12 Victory Street.
(d) The Plaintiff and Mr and Mrs Pierce would lodge possessory applications to obtain title to the land; and
(e) Neither Mr and Mrs Pierce nor the Plaintiff would independently seek to acquire the land and thereby frustrate the agreement reached to launch possessory application.

7    Between July 1996 and 21 November 1997 the Plaintiff and Mr and Mrs Pierce caused to be constructed, at their joint cost, a fence down the middle of much of the land;

(b) Mr and Mrs Pierce occupied that part of the land divided by the fence adjacent to 14 Victory street;
(c) Neither Mr and Mrs Pierce nor the Plaintiff sought to acquire separately title to the land other than through possession of their respective halves of the land.

8 Between July 1996 and about 21 November 1997 the Plaintiff occupied that part of the land adjacent to 12 Victory Street, and caused improvements to be effected thereon. 9 The Defendants acquired 14 Victory Street from Mr and Mrs Pierce by transfer dated 21 November 1997. 10 It is alleged that there was an oral agreement concerning the land entered into between the Plaintiff and the Defendants in early 1998, and that that agreement contained terms which were similar to those contained in the agreement made between the Plaintiff and Mr and Mrs Pierce in about July 1996, and, in particular, terms that the Plaintiff and the Defendant would lodge possessory applications to obtain title to the land and that neither the Defendants nor the Plaintiff would independently seek to acquire the land and thereby frustrate the agreement reached to lodge possessory applications. 11 It is alleged that between early 1998 and 10 April 2000 the Plaintiff occupied the half of the land adjacent to 12 Victory Street, divided by the fence, and that the Defendants occupied the other half of the land adjacent to 14 Victory Street, and that each of the Plaintiff and the Defendants effected improvements to the half of the land adjacent to their respective properties. 12 It is further alleged that pursuant to that agreement with the Defendant the Plaintiff between early 1998 and 10 April 2000 did not take steps to acquire title to the land other than through possession of half of the land, in anticipation of a possessory title application. 13 In or about March 2000 the Defendants applied to have the whole of the land transferred to them from the executor of the estate of the late Florence May O’Brien. On 10 April 2000 the Defendants became joint registered proprietors of the whole of the land. It is further alleged that from about May 2000 the Defendants have sought to exclude the Plaintiff from possession of the half of the land which adjoins 12 Victory Street. 14 It is also appropriate here to record that the Plaintiff has lodged a caveat in respect to the land, and that the operation of that caveat currently stands extended until the final determination of the proceedings. 15 The present application by the Defendants for dismissal of the proceedings is brought pursuant to Part 13 rule 5 of the Supreme Court Rules. The Defendants rely upon paragraph (a) of subrule (1) of that rule, and submit that no reasonable cause of action is disclosed. The principles upon which the Court exercises its discretion under that subrule are well recognised. (See, for example, the decision of the High Court of Australia in General Steel Industries Inc. v Commissioner for Railways (1964) 112 CLR 125, especially the judgment of Barwick CJ.) 16 It is a very serious step for the Court to deprive a Plaintiff of the right to have his claim determined by an appropriate tribunal at a final hearing. Accordingly, it is only in cases where it is apparent that the Plaintiff’s claim is doomed to failure that it is appropriate for the Court to order summary dismissal of the proceedings. Unless the Court is satisfied that the claim is doomed to failure, then it must not order such summary dismissal. If the Court is not so satisfied, then it is not for the Court to express any view concerning the strengths or weaknesses of the Plaintiff’s case, or the likelihood that the Plaintiff may or may not succeed at a final hearing. If the claim of the Plaintiff is arguable, then it must be allowed to proceed to a final hearing, and not be the subject of a summary dismissal. 17 In the instant case the ground upon which the Defendants submit that the Plaintiff’s claim is doomed to failure is that, so it is submitted, the Plaintiff cannot succeed in establishing possessory title to the Land. 18 On behalf of the Defendants it was submitted that the Plaintiff was no more than a trespasser upon the land. Further, that there is no evidence which would support agreements of the nature asserted by the Plaintiff in the amended statement of claim. In particular, it was submitted that the conversations relied upon as constituting such an agreement with the Defendants were in loose and general terms about the occupation of another person’s land (the land at that time being vested in the executor of the estate of the late Mrs O’Brien), and that any such conversations cannot be the foundation of an asserted constructive trust alleged by the Plaintiff against the Defendants. 19 Further, it was submitted on behalf of the Defendants that, in any event, the Plaintiff cannot succeed in his present claim. In this regard the Defendants rely upon the provisions of section 45D of the Real Property Act 1900, and submit that the effect of that section is that there can never be acquired possessory title to only part of a lot, and that in the instant case it is only part of the Land in respect of which the Plaintiff asserts that he has acquired a possessory title. The Defendants submit that the Plaintiff has only ever occupied half of the Land and that the Defendants only ever occupied half of the Land. 20 The Plaintiff presented to the Court as the essential issues in the case the following:

1. Whether upon the proper construction of section 45D of the Real Property Act the Plaintiff could not have acquired his half of the land by way of possessory title.

2. Whether, even if the foregoing issue be determined against the Plaintiff, that conclusion is now fatal to the Plaintiff’s claim in the events which have happened, including the fact that the Defendants have become the registered proprietor of the Land.

The Plaintiff mounted his case upon the basis that it did not rest primarily or exclusively upon either contract or agreement. The Plaintiff did not contend that it was as a result of some agreement with the Defendants (or with the predecessor in title of the Defendants) that the Plaintiff had become entitled to an equitable interest in the land.

21    According to the Plaintiff that equitable interest in the land arose as a result of, firstly, an expectation or assumption generated by the agreement between the Plaintiff and the Defendants; then, reliant activities of the Plaintiff and of the Defendants consequent upon that agreement; and, superimposed upon the foregoing matters, the conduct of the Defendants in acquiring title to the land in circumstances not contemplated by the agreement between the Plaintiff and the Defendant. 22    The Plaintiff presented his claim as being grounded upon:

(a) the principles relating to equitable estoppel, being, in the instant case, an expectation coupled with reliant activity;

(b) the failure of a joint enterprise, at least where fault cannot be attributed to the Plaintiff;

(c) The equity arising where two parties contemplate prosecuting an enterprise for the joint advantage of the parties, with the consequence that one of those parties is precluded from obtaining that advantage for his sole benefit, to the exclusion of the other. (In this latter regard the Plaintiff relied upon the decision of the High Court of Australia in United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1; and the decision of the English Court of Appeal in Banner Homes Group PLC v Luff Developments Limited [2000] 2 WLR 772).

23    It was submitted on behalf of the Plaintiff that in each of the foregoing circumstances equity intervenes to prevent a defendant from insisting on his strict legal rights. The Plaintiff submitted that in the instant case he had an expectation, grounded upon the asserted agreement between himself and the Defendants, that he would obtain one half of the land; further, that in reliance upon that expectation the Plaintiff expended money in order to effect improvements upon the land. 24    To the extent that it might be asserted on behalf of the Defendants that the Plaintiff grounded his asserted right to the land or part thereof upon an illegality - that illegality being the asserted status of the Plaintiff as a trespasser upon the land - and the submission on behalf of the Defendants that such illegality could not ground rights in the Plaintiff of the nature which he is presently claiming, the Plaintiff relied upon the decision of the High Court of Australia in Nelson v Nelson (1995) 184 CLR 538, especially at 561, 563 per Deane and Gummow JJ and at 603 per McHugh J. 25 It is trite law to say, in the words of the famous dictum of Lord Mansfield (Holman v Johnson (1775) 1 Cowp 341 at 343; 98 ER 1120 at 1121), that “[n]o Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act” (see also Tinsley v Milligan (1994) 1 AC 340 at 372-376, and cases cited therein). As McHugh J said in Nelson, at 604, the principle contained in that dictum applies in both law and equity, but is subject to exceptions which allow relief to be granted despite the presence of illegality. 26 The Plaintiff, to the extent that his claim against the Defendants in the instant case be regarded as being grounded upon an illegal act (being in the nature of a trespass upon the Land, which at the time of his occupancy was vested in the executor of the late Mrs O’Brien) relied upon what, in the words of his Senior Counsel, were described as concepts of proportionality. 27 In this regard the Plaintiff pointed to the fact that the Defendant had paid nothing for the Land (the transfer discloses a nil consideration). Further, that to the extent that there may have been some illegality, it was, at worst, in the nature of a civil trespass, and certainly not a criminal offence. 28 The Plaintiff submitted that at a final hearing of the proceedings equity would intervene in order to do justice, and that in consequence the nature of the relief to which the Plaintiff might be entitled could be moulded to suit the circumstances of the instant case, and could include such relief as the granting of an easement over part of the land, the granting to the Plaintiff of a licence to use part of the land, or an order for equitable compensation to be paid by the Defendants to the Plaintiff. Such an approach appears to be consistent with the authorities referred to and quoted by McHugh J at 604-614. 29 I am in respectful agreement with the statement of McHugh J at 608, that it is doubtful whether Lord Eldon intended to lay down a rule to the effect that, if the purpose of a transaction was to defeat the operation of an Act of Parliament, equity would always refuse its remedies to a person who had participated in that transaction. Further, I consider that it is here appropriate to observe that the Court should never lose sight of the concept (enshrined in the famous dictum of Lord Eldon’s own brother, Lord Stowell, regarded as an even greater lawyer than the Lord Chancellor) that “A Court of Equity...looks to every connected circumstance that ought to influence its determination upon the real justice of the case” (The Juliana (1822) 2 Dods 504 at 521; 165 ER 1560 at 1567). 30 I have already referred to the submission on behalf of the Defendants that, even if the asserted illegality grounding the Plaintiff’s claim (the trespass of the Plaintiff upon land belonging to the estate of the late Mrs O’Brien) does not of necessity defeat that claim, nevertheless the provisions of section 45D do have that result. 31 That section (which was introduced into the Real Property Act in 1979: see Peter Butt, Land Law, 3 ed. (1996), 835 [2229]) makes provision for the concept of the obtaining of title to land by possession. Subsection (1) of that section provides, relevantly,

Where, at any time after the commencement of this Part, a person is in possession of land under the provisions of this Act and:

(a) The land is a whole parcel of land;

...

that person in possession may, subject to this section, apply to the Registrar-General to be recorded in the Register as the proprietor of that estate or interest in the land.

32 I have been taken to a number of authorities in which the provisions of section 45D of the Act have been the subject of judicial consideration. 33 It was the submission of the Defendants that the Plaintiff could not obtain possessory title to one half of the land, since paragraph (a) of section 45D (1) contemplates that the registration of a possessory title shall be effected only in favour of a person who is in possession of “a whole parcel of land”, and that the one half of the Land adjacent to 12 Victory Street does not constitute “a whole parcel of land”. 34 It was the submission of the Defendants that that fact -- that the land of which the Plaintiff sought, in consequence of some arrangement with the Defendants (or with their predecessor in title) to become registered in consequence of the possession by the Plaintiff of that one half of the land, did not constitute “a whole parcel of land” -- and thus was fatal to the claim of the Plaintiff. 35 In response to the foregoing submission, the Plaintiff submitted that the possession asserted by the Plaintiff was not limited to a possession of one half of the land, but was, in effect, a possession conjointly with the Defendants of the totality of the land, that possession being to the exclusion of all other persons; then by arrangement between the Plaintiff and the Defendants each of those parties limited their respective activities upon the land to one half thereof. Thus, so the submission of the Plaintiff ran, each of the Plaintiff and the Defendants was entitled to make a conjoint application for possessory title, and that, upon the granting of such possessory title to the parties conjointly, they would then, either as a result of the contractual obligations between them, or as a result of the equitable obligations arising between them, be obligated to effect a partition of the land between them. 36 Further, it was submitted on behalf of the Plaintiff that, even if the foregoing argument of the Defendants be correct (that the Plaintiffs were not in possession of land which was “a whole parcel of land”), that fact would not of itself be fatal to the Plaintiff’s claim. The contractual arrangement between the parties was, so it was submitted on behalf of the Plaintiff, not limited to the making of or granting of an application for possessory title of the land. Indeed, so it was submitted, the intended result of the arrangement between the parties could be achieved by purchase of the land from the registered proprietor, being the executor of the estate of Mrs O’Brien. (It will be appreciated that it was in such a fashion, by acquisition from the registered proprietor, albeit for a nil consideration, that the Defendants have now become the registered proprietor of the totality of the Land.) 37 Further, it was submitted that, even if section 45D does, in fact, preclude the Plaintiff from achieving the fulfilment of the terms of the agreement between himself and the Defendants asserted in the amended statement of claim, nevertheless, equity operates in the territory of the unenforceable contract or the territory of the absence of contract. (In this regard, the Plaintiff relied upon the celebrated decision of Denning J. (as he then was) in Central London Property Trust Limited v High Trees House Limited [1947] KB 130 and the decision of the High Court of Australia in Legione v Hately (1983) 152 CLR 406.) 38 Thus, so it was submitted, the provisions of section 45D (in particular, subsection (1)(a)) are not fatal to the Plaintiff’s claim. 39 In this regard, also, as well as more generally in respect to the entirety of the Plaintiff’s claim, the Plaintiff submitted that equity intervenes to prevent unconscionable enforcement of the legal rights of (in the instant case) the Defendants. 40 The Plaintiff here referred to the concept of estoppel which was described by Deane J in Verwayen v The Commonwealth (1990) 170 CLR 394 at 440-441, 443-446. The Plaintiff also relied upon the concept which has been described as “feeding” the estoppel, where the party against whom the estoppel is asserted acquires, as here, a legal estate in the place of an earlier, merely equitable, interest. (See Andrew Lang, Leases and Tenancies in New South Wales (1976), 94 [610] - [611]), and the decision of Slattery J (as he then was) in Spark v Whale Three Minute Car Wash (Cremorne Junction) Pty Limited (1970) 92 WN (NSW) 1087 at 1099, 1103.) 41 The Plaintiff submitted in this regard that the application of the principles relating to estoppel answers the argument of the Defendants grounded upon the asserted illegality of the basis of the Plaintiff’s claim. Further, that the concept of feeding the estoppel enables the Defendants to transfer to the Plaintiff the interest which the Plaintiff expected to receive. The Plaintiff also submitted that the dealings between the parties were such that in equity neither party could take advantage of the other to the extent of exclusively acquiring the land. In this regard the Plaintiffs relied upon the decision in United Dominions Corporation v Brian Property Limited (supra). 42    It will be appreciated that, in the submission of the Plaintiff, the joint endeavour of the parties to acquire the Land and the rights flowing from that joint endeavour are the positive aspect of the same concept of which the asserted estoppel is the negative aspect. 43    In this latter regard the Plaintiff also relied upon the decision of the High Court of Australia in Muschinski v Dodd (1985) 160 CLR 583, and submitted that the effect of that judgment (as enunciated by Deane J at 618f) is that where a joint enterprise fails without fault on the part of the plaintiff, the plaintiff is entitled to equitable protection in respect of the interest which he was by both parties intended to have under the joint enterprise. In the instant case it was submitted that the Plaintiff expended moneys in expectation of the intended joint relationship between the Plaintiff and the Defendants, which joint relationship failed without blame on the part of the Plaintiff. In such circumstances, therefore, as it was submitted by the Plaintiff, equity will intervene to prevent an unconscionable insistence by the Defendants upon their strict legal rights. (See Guimelli v Guimelli (1999) 196 CLR 101.) 44 In response, Counsel for the Defendants relied upon the doctrine of clean hands. 45 It should, however, be recognised (as it was by McHugh J in Nelson v Nelson, at 608) that the clean hands doctrine does not constitute or provide a sound basis for a special rule in equity. The illegality principle is one of general application; it is not limited to proceedings in equity. To say that in the equitable context it derives from the clean hands doctrine is wrongly to deny its conceptual links to the rule as it is applied in other areas. Further, it fails to recognise that the rationale for the two doctrines is distinct: the clean hands doctrine arises from the relationship between the parties to the proceedings, whilst the illegality doctrine derives from public policy considerations. 46 The overriding submission of the Defendants was that if the Plaintiff is by the provisions of section 45D (1) (a) of the Real Property Act precluded from relief concerning possessory title, then the substratum of the Plaintiff’s claim is defeated, and the Plaintiff cannot succeed on equitable grounds. The Defendants have submitted that underpinning the Plaintiff’s claim is the assertion that there was an arrangement concerning possessory title - an arrangement which, because of section 45D was, so it was submitted by the Defendants, incapable of fruition. 47 It will be appreciated that in applications of the nature of that presently before the Court it is appropriate that the Court should assume that at a final hearing the Plaintiff will be able to establish the factual matters asserted in the amended statement of claim. Therefore the submissions of the Defendants grounded upon what they referred to as a loose arrangement, rather than any binding contract between the parties are not an adequate ground upon which the present application of the Defendants should succeed, or upon which the substantive proceedings of the Plaintiff should be dismissed. 48 As I have already observed, in an application of the nature of that presently before the Court it is not necessary for the Court to be satisfied that the Plaintiff must necessarily succeed at a final hearing. So long as the Court is satisfied that the claim of the Plaintiff is not doomed to failure, then the Court is precluded from dismissing the proceedings upon the ground that no reasonable course of action is disclosed. 49 For the reasons set forth in the submissions made on behalf of the Plaintiff, I am not satisfied that, even if (as asserted by the Defendants) the Plaintiff’s claim is grounded upon illegality, that fact has the consequence that the claim is doomed to failure. 50 In respect to the submissions of the Defendants grounded upon the provisions of section 45D, and their argument that the Plaintiffs could not, in any event, obtain possessory title, since the part of the Land in respect of which they intended to obtain that possessory title was not “a whole parcel of land” as contemplated by (a) of subsection (1) of that section, I consider that there is at least an argument available to the Plaintiff that the possession (as distinct from the physical occupation) of the land was a conjoint possession by both the Plaintiff and the Defendants of the totality of the land - to the exclusion of all other persons. That situation would enable the Plaintiff and the Defendants to make a conjoint application for a possessory title, which would then be granted to those parties conjointly. 51 Such a submission on the part of the Plaintiff is certainly not doomed to failure. 52 Further, the submissions made on behalf of the Plaintiff in respect to the consequences of the conduct of the Defendants in (as it may be described) going behind the back of the Plaintiff and obtaining a transfer to them from the registered proprietor of the land without the knowledge of the Plaintiff, and in defiance of the asserted arrangement between the Plaintiff and the Defendants, is conduct upon which it is certainly arguable that the Plaintiff is entitled to invoke the intervention of a Court of Equity and the application of the various equitable doctrines which have here been relied upon by the Plaintiff. 53 In all the circumstances, it is apparent that the claim of the Plaintiff certainly is not doomed to failure. Accordingly, the present application of the Defendants will be dismissed. 54 I make the following orders:

1. I order that the notice of motion filed by the Defendants on 6 September 2000 be dismissed.

2. I order that the Defendants pay the costs of the Plaintiff of the aforesaid notice of motion.

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Last Modified: 01/22/2001