Sidoti v Hardy

[2021] NSWCA 105

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Sidoti v Hardy [2021] NSWCA 105

Hearing dates:

25 November 2020

Date of orders:

26 May 2021

Decision date:

26 May 2021

Before:

Basten JA at [1];
Brereton JA at [45];
Simpson AJA at [179]

Decision:

(1) Leave to appeal be granted; and

(2) The appeal be dismissed, with costs.

Catchwords:

LAND LAW – Adverse possession – Actual possession – Old system title – Conversion to Torrens title – Limited title – Indefeasibility of title – Exceptions to indefeasibility – Where successful claim at trial in respect of adverse possession of small portion of a ‘dunny lane’ commencing before creation of limited folio – Whether statutory possessory application over Torrens title land able to be made – Alternatively, whether adverse possession claims preserved at common law by reason of possession for any length of time commencing prior to creation of folio – Whether wrong description of parcel or boundaries in circumstances where adverse possessory claim inchoate but not crystallised at time of conversion – Appeal dismissed

LIMITATION OF ACTIONS – Actions to recover land – Adverse possession – Interaction of Limitation Act 1969 (NSW), ss 27 and 65, with Real Property Act 1900 (NSW), s 45C

STATUTORY INTERPRETATION – Interpretation of Real Property Act 1900 (NSW) – Extrinsic materials – Explanatory memoranda and notes – Legislative history – Registrar-General’s guidelines – Second reading speeches

MORTGAGES AND SECURITIES – Mortgages – Duties, rights and remedies of mortgagee – Right to notice of proceedings in which orders might be made affecting mortgagee’s interest – Where no notice given and no application by mortgagee to set aside orders below – Where application may not succeed – Where if successful, ultimate result unlikely to be different – Where impact on value of mortgagee’s security likely de minimis – Absence of notice not decisive of appeal

APPEALS – Leave to appeal – Whether leave required – Monetary threshold – Whether threshold denotes value of whole parcel of land or disputed portion only – Where questions of principle and public importance as to Torrens system also raised – Leave granted

Legislation Cited:

Conveyancing Act 1919 (NSW), s 89

Interpretation Act 1987 (NSW), s 33

Land Titles Legislation Amendment Act 2001 (NSW), Sch 2[1]

Limitation Act 1969 (NSW), ss 8(1)(a), 27(2), 28, 65, Sch 4

Local Government Act 1919 (NSW), s 327

Real Property Act 1900 (NSW), ss 12, 14, 14A, 28A, 28C, 28D, 28E, 28EA, 28J, 28M, 28P, 28S, 28T, 28U, 28V, 28Y, 28Z, 28ZA, 42, 43, 43A, 44, 45, 45C, 45D, 74F, 74K, 118, 124, 125A, 135, 136, pts 4A, 4B, 6A

Real Property (Amendment) Act 1976 (NSW)

Real Property (Caveats) Amendment Act 1986 (NSW)

Real Property (Conversion of Title) Amendment Act 1967 (NSW)

Real Property (Conversion of Title) Amendment Act 1984 (NSW)

Real Property (Possessory Titles) Amendment Act 1979 (NSW)

Supreme Court Act 1970 (NSW), s 101(2)(r)

Survey Practice Regulation 1933 (NSW)

Cases Cited:

Ballas v Theophilos (No 1) (1957) 97 CLR 186; [1957] HCA 49

Braye v Tarnawskyj (2019) 19 BPR ¶39,213; [2019] NSWSC 277

Buckingham County Council v Moran [1990] 1 Ch 623

Clement v Jones (1909) 8 CLR 133; [1909] HCA 11

Deguisa v Lynn (2020) 94 ALJR 1020; [2020] HCA 39

Hamilton v Iredale (1903) 3 SR (NSW) 535

Hardie Rubber Co Pty Ltd v General Tire & Rubber Co (1973) 129 CLR 521; [1973] HCA 66

Hardy v Sidoti (2020) 19 BPR ¶40,535; [2020] NSWSC 1057

Jabulani Pty Ltd v Walkabout II Pty Ltd [2016] NSWCA 267

Michael v Onisiforou (1977) 1 BPR ¶9,356

Nanschild v Pratt [2011] NSWCA 85

Oertel v Crocker (1947) 75 CLR 261; [1947] HCA 40

Quach v Marrickville Municipal Council (No 1) (1990) 22 NSWLR 55

Refina Pty Ltd v Binnie (2010) 15 BPR ¶28,633; [2010] NSWCA 192.

Sahab Holdings Pty Ltd v Registrar-General (2011) 15 BPR ¶29,627; [2011] NSWCA 395

South Maitland Railways Pty Ltd v Satellite Centres of Australia Pty Ltd (2009) 14 BPR ¶26,823; [2009] NSWSC 716

Sparks v Meers [1976] 2 NSWLR 1

Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232

Taylor v Taylor (1979) 143 CLR 1; [1979] HCA 38

Van den Bosch v Australian Provincial Assurance Association Ltd [1968] 2 NSWLR 550; (1968) 88 WN (Pt 1) (NSW) 357

Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 538; [2007] HCA 45

Texts Cited:

Explanatory Memorandum, Land Titles Legislation Amendment Bill 2001 (NSW)

Explanatory Note, Real Property (Conversion of Titles) Amendment Bill 1984 (NSW)

HW Ballantine, “Title by Adverse Possession” (1918) 32(2) Harvard Law Review 135

K Gray & SF Gray, Elements of Land Law (5th ed, 2009, Oxford University Press)

Land Registry Services, “Registrar-General’s Guidelines – Deposited Plans – Conversion of Old System – Deposited Plans Redefining Old System Land – Limited Titles”, accessed 13 April 2021

Land Registry Services, “Registrar-General’s Guidelines – Land Dealings – Dealings Involving – Notifications on the Register”, accessed 13 April 2021

Land Registry Services, “Registrar-General’s Guidelines – Land Dealings – Dealing Requirements – Qualified Title – Cautions”, accessed 13 April 2021

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), Land Titles Legislation Amendment Bill 2001 (NSW) Second Reading Speech, 19 September 2001

New South Wales Legislative Council, Parliamentary Debates (Hansard), Real Property (Conversion of Titles) Amendment Bill 1984 (NSW) Second Reading Speech, 8 May 1984

RA Woodman & P Butt, “Possessory Title and the Torrens System in New South Wales” (1980) 54 Australian Law Journal 79

RA Woodman & PJ Grimes, Baalman’s The Torrens System in New South Wales (2nd ed, 1974, Law Book Co)

Category:

Principal judgment

Parties:

Joseph Geoffrey Sidoti (First Appellant)
Natalie Martinoski (Second Appellant)
Christopher Luke Hardy (Respondent)

Representation:

Counsel:
J Doyle, L-A Walsh (Appellants)
J van Aalst (Respondent)

Solicitors:
Connor & Co Lawyers (Appellants)
WWright Lawyer (Respondent)

File Number(s):

2020/248350

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity Division

Citation:

[2020] NSWSC 1057

Date of Decision:

12 August 2020

Before:

Kunc J

File Number(s):

2019/342572

HEADNOTE

[This headnote is not to be read as part of the judgment]

The appellants are the registered proprietors of a parcel of land in Redfern which comprises a limited folio of the register of land titles maintained under the Real Property Act 1900 (NSW) (“RP Act”). The land’s northern boundary abuts the southern boundary of another parcel of land, also a limited folio, of which the respondent is the registered proprietor. A narrow strip of land, 3.35 square metres in area, at the northern boundary of the appellants’ property, and adjacent to the southern boundary of the respondent’s property, is burdened by a right of way (the “Yellow Land”, per the attached diagram) which was created for the purposes of enabling access for a nightsoil carter to collect waste from outhouses on the properties. In the proceedings below, the primary judge held that the respondent had acquired title to the Yellow Land by reason of adverse possession, commencing in 2002, or at the latest, in early 2005. The appellants appealed, purportedly as of right, from that decision.

At all relevant times, the Yellow Land was within the surveyed and described boundaries of the appellants’ property and outside those of the respondent. The appellants’ property was conveyed to previous proprietors in 1958 and again in 1985 by deeds containing metes and bounds descriptions that included the Yellow Land. The respondent’s property was conveyed to him in 1998 by way of deed containing a metes and bounds description which did not refer to the Yellow Land. By this time, the Yellow Land was no longer usable as a right of way, due to various fences, and the respondent used the western end of the strip to store garden tools.

In August 1998, the respondent’s land was brought under the RP Act. The deposited plan did not refer to nor include the Yellow Land. In 2002, the respondent undertook renovations and removed the fence along the northern boundary of the strip. Between 2003 and early 2005, further works were carried out, fully incorporating the Yellow Land into the respondent’s backyard and effectively closing off access from the appellants’ property.

After these works had been performed, the appellants’ property was brought under the RP Act in September 2005, by the creation of a qualified and limited folio. The appellants became registered proprietors in April 2018, by which time the qualified title cautions had been removed. However, the land remained limited title. The appellants commenced works to reclaim the Yellow Land, specifically as a barbecue area. The proceedings were then commenced by the respondent in October 2019.

Held (per Brereton JA, Simpson AJA agreeing; Basten JA dissenting), granting leave to appeal but dismissing the appeal: [178] (Brereton JA), [211] (Simpson AJA), [43] (Basten JA).

As to the relevant limitation periods

1.  Per Basten JA, Brereton JA, and Simpson AJA: Apart from the RP Act, title to land may be acquired by possession for a period of twelve years. This is because the owner’s cause of action to recover land becomes statute barred after that period, and is thereupon extinguished: Limitation Act 1969 (NSW) (“Limitation Act”), ss 27(2), 28, 65(1), Sch 4. However, s 8(1)(a) provides that nothing in the Limitation Act affects the operation of RP Act, s 45C, and s 45C(1) excludes the operation of any statute of limitations, subject to s 45C(2): [10] (Basten JA), [84]-[85] (Brereton JA), [180]-[183] (Simpson AJA).

As to an application under RP Act, s 45D

2.  Per Basten JA: None of the permutations within RP Act, s 45D, allowing for the acquisition of title by possession, are applicable to the present case. The claim does not relate to possession commencing after the land was brought under the RP Act, as s 45D(1) requires, nor is the claim for the whole parcel of land, as s 45D(2) contemplates. Section 45D(2) also requires that ss 45D(1)(b)-(c) be complied with, which is not the case. Furthermore, s 45D(2)(b) is premised upon the presence of an “occupational boundary”, as defined by s 45D(6)(a), yet this definition is not satisfied by the back fence of the appellants’ land. Additionally, the land is not a residue lot, thus preventing reliance on s 45D(2A). Finally, s 45D merely allows an application to the Registrar-General to obtain title by registration, which, by reason of s 45D(4), cannot be made in this case, as the respondents obtained their title without fraud and for valuable consideration: [25]-[30].

3.  Per Brereton JA: Section 45D(1) is not available as the Yellow Land is not a whole parcel of land, s 45D(2) is not available as the part of the whole parcel in dispute lies between the occupational boundary and the true legal boundary, and no other parts of s 45D applicable: [90].

4.  Per Simpson AJA: The avenues provided by s 45D are inapplicable, as the claim is not for the whole parcel of land, as required by ss 45D(1)-(2), nor for a residue lot, as s 45D(2A) contemplates, because although the Yellow Land was part of a service lane, it was not contained on a separate title: [196]-[199].

As to the operation of RP Act, ss 28U(2) and 45C

5.  Per Brereton JA: Section 45C(2) preserves the right of an adverse possessor to acquire title to land brought under the RP Act in a qualified or limited folio by reason of possession for any length of time commencing before the folio’s creation. This requires only that adverse possession has commenced by the time the qualified or limited folio is created, and not that the documentary titleholder’s cause of action to recover possession has been extinguished by the expiry of the relevant limitation period at that time: [86]-[87].

Refina Pty Ltd v Binnie (2010) 15 BPR ¶28,633; [2010] NSWCA 192, considered; South Maitland Railways Pty Ltd v Satellite Centres of Australia Pty Ltd (2009) 14 BPR ¶26,823; [2009] NSWSC 716, not applied.

6. However, s 45C(2) does not mean that in cases to which s 45C(2) applies, s 45C(1) does not prevent a possessory application under s 45D. Moreover, even if the correct construction is that a s 45D application is permitted in cases to which s 45C(2) applies, presently, s 45D is not satisfied for the reasons above: [88]-[91].

7.  The RP Act does not contemplate a primary application based on adverse possession in respect of land which is included in a limited folio which is not also a qualified folio of which another person is the registered proprietor, other than in a case of wrong description of the parcel or its boundaries. The reference in s 45C(2) to limited title is restricted to pre-existing possessory claims to land included in a limited folio by wrong description of the land or its boundaries: [143]-[148].

8. The phrase “by any wrong description of parcels or of boundaries” in ss 28U(2), 42(1)(c), and 118(4)(b) should be regarded as bearing the same meaning. In the context of a limited folio created by the Registrar-General pursuant to a conversion action, there will be a wrong description if the description of the land in the limited folio does not reflect the occupational boundaries, with the result that it includes land in which a person other than the registered proprietor has an existing possessory interest, whether that claim is crystallised or inchoate: [149]-[161].

Michael v Onisiforou (1977) 1 BPR ¶9,356; Hamilton v Iredale (1903) 3 SR (NSW) 535, applied; Sahab Holdings Pty Ltd v Registrar-General (2011) 15 BPR ¶29,627; [2011] NSWCA 395; Quach v Marrickville Municipal Council (No 1) (1990) 22 NSWLR 55, distinguished.

9. Presently, the respondent had been in possession of the Yellow Land to the exclusion of the previous owners of the appellants’ property for a period commencing before the limited folio for the appellants’ property was created. The occupational boundary was the southern, not northern, side of the Yellow Land, and the respondent had an inchoate possessory interest in the Yellow Land, thus the Yellow Land was incorrectly included in the limited folio for the appellants’ property by wrong description of parcels or boundaries. The exception to indefeasibility in s 28U(2) is therefore engaged, as is the exception to the protection of the registered proprietor against proceedings for the possession or recovery of land in s 118(4)(b), while the respondent’s ability to enforce his inchoate interest is preserved by s 45C(2): [162]-[166].

10.  Per Simpson AJA: The respondent had not acquired possessory title to the Yellow Land at the time of the creation of the limited folio, as the twelve year period necessary to enliven the relevant limitation periods had not yet passed. There was therefore no wrong description for the purposes of s 28U(2) when the limited title issued, hence that exception to indefeasibility did not apply: [200]-[202].

11. However, s 45C(2) has the effect of preserving common law claims to possessory title in respect of adverse possession for any length of time commencing before the creation of the folio, notwithstanding s 45C(1). The primary judge’s finding that the respondent’s possession commenced prior to the creation of the folio was not challenged on appeal, and therefore the conclusion that s 45C(2) preserved the respondent’s common law adverse possession claim was correct: [203]-[210].

12.  Per Basten JA, contra: Section 45C(2) appears to allow title to be acquired, despite s 45C(1), by possession commencing before the land was brought under the RP Act, and so the question is whether this provision presently applies. While s 45C(2) places a limit on the exclusive operation of RP Act, Pt 6A, with respect to possessory applications for qualified or limited folios, that provision does not affect the operation of any other provision of the Act. The principle of indefeasibility of title provided for by s 42 remains paramount, and exceptions to that principle should not be readily accepted in the absence of a clear intention to that effect: [34]-[37].

Deguisa v Lynn (2020) 94 ALJR 1020; [2020] HCA 39; Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 538; [2007] HCA 45, considered.

13. Section 28U(2), which provides an exception to indefeasibility where “by any wrong description of parcels or of boundaries any land is incorrectly included in a limited folio”, is the potentially relevant qualification in this dispute. However, the Registrar-General made no mistake when undertaking the September 2005 conversion action. At that time, the respondent had only an inchoate claim to, and no interest in, the Yellow Land, and thus the folio correctly described the appellants’ property as including the Yellow Land, subject to the right of way. There is no evidence of any “wrong description” of any kind, nor that the Yellow Land was “incorrectly included” in the limited folio. The transfer to the appellants in 2018 was therefore not subject to any exceptions to indefeasibility, and the orders made by the primary judge must be set aside: [31]-[33], [38]-[40].

As to orders in the absence of the registered mortgagee

14.  Per Brereton JA, Simpson AJA agreeing: While it might be open to the National Australia Bank (“the Bank”), as the registered mortgagee of the appellants’ property, to apply to set aside orders made in its absence, any such application will not inevitably succeed, nor inevitably result in a different outcome, considering that a registered mortgagee’s interest is subject to the same exceptions as apply to the registered proprietor. Additionally, given the size of the Yellow Land, the impact of this judgment upon the value of the Bank’s security is likely to be de minimis. In such circumstances, and in the absence of any application by the Bank, the absence of notice does not require that the appeal be allowed: [167]-[171] (Brereton JA).

Taylor v Taylor (1979) 143 CLR 1; [1979] HCA 38; Hardie Rubber Co Pty Ltd v General Tire & Rubber Co (1973) 129 CLR 521; [1973] HCA 66, considered.

As to leave to appeal

15.  Per Brereton JA, Simpson AJA agreeing: Leave to appeal is required unless the appeal involves a “claim, demand or question to or respecting property of the value of $100,000 or more”: Supreme Court Act 1970 (NSW) (“SCA”), s 101(2)(r)(ii). The relevant value is that of the claim, not the whole property to which it relates, and there is nothing presently indicating that the Yellow Land, being only 3.35 square metres in area, exceeds $100,000 in value. However, leave should be granted as the appeal raises questions of principle with importance to the operation of the Torrens system in New South Wales: [172]-[173] (Brereton JA).

Jabulani Pty Ltd v Walkabout II Pty Ltd [2016] NSWCA 267; Nanschild v Pratt [2011] NSWCA 85; Ballas v Theophilos (No 1) (1957) 97 CLR 186; [1957] HCA 49; Oertel v Crocker (1947) 75 CLR 261; [1947] HCA 40, applied.

16.  Per Basten JA: There was no evidence before the Court as to the value of the Yellow Land, and it is not entirely clear whether SCA, s 101(2)(r), relates to the value of the whole property or only to the amount in dispute. In any event, no objection was taken to the filing of an appeal rather than an application for leave to appeal, and because the appeal raises issues of general importance as to the operation of the RP Act, leave should be granted if required: [9].

Judgment

1. BASTEN JA: The applicants are the owners of a terrace house in Redfern. Across the back of their land there is a right of way extending the length of the block between two streets. The right of way was recorded in a plan of subdivision created in 1953. On the other side of the right of way is a lot containing a house which extends along the length of the right of way. The owner of that house is the respondent, Luke Hardy.

1. Commencing in about 2002, Mr Hardy and his then partner sought to extend their back garden into the right of way. They did so by pulling down the fence along their side of the right of way, opposite the rear fence of the property later acquired by the applicants. The applicants are now the registered owners of the land which extends to the boundary of the respondent’s land, including that part subject to the right of way. They have removed the back fence along the line of the right of way and rebuilt a more substantial fence against the respondent’s boundary. The respondent was thereby deprived of access to the part of the right of way upon which he had undertaken some improvements by way of surfacing and paving. He claimed that the work he had undertaken resulted in him acquiring the section of the right of way on the applicants’ land by adverse possession which was unchallenged for a period of 12 years. The applicants were therefore not entitled to recover possession in reliance on their registered title, because proceedings to enforce their documentary title had become statute-barred prior to them obtaining title.

2. The trial judge accepted that the respondent had obtained a title in fee simple to 3.4m² of the right of way in accordance with general law principles. The correctness of that finding is the subject matter of the present appeal.

The applicants’ title

4. The applicants’ terrace house fronts onto Boronia Street, Redfern. The block runs in a north-south direction. It is one of seven houses constructed between Baptist Street in the west and Dalley Lane to the east. Along the northern border of the appellants’ land (and of all the terraces in the Boronia Street block) is the respondent’s home, which runs in an east-west direction, fronting onto Baptist Street in the west. Each of the Boronia Street terrace houses is shown on the 1953 survey plan as having an “outhouse” about one metre from the northern boundary, with the right of way running between the outhouses and the northern boundary. The original purpose for the reservation of the right of way, being to collect “night soil”, has long since gone; however, the right of way has not been extinguished, although its use may well have been abandoned long ago. [1]

   1. See Conveyancing Act 1919 (NSW), s 89.

5. The applicants’ land was identified as lot E in the subdivision of 1953. Their predecessors in title obtained the lot by a deed of conveyance executed in 1958. The right of way was identified on the deed as an encumbrance. The purchasers were Mr and Mrs Theodorou. Lot E was transferred to three of their children in 1985. In September 2005 the Theodorous were notified by the Registrar-General that it was intended to convert their old system title to Torrens Title. Although the title was originally issued as a qualified and limited title, 12 years later (in October 2017) the qualification was withdrawn and it became a “limited title” subject to Pt 4B of the Real Property Act 1900 (NSW).

6. On 18 April 2018 lot E was transferred by the Theodorous to the applicants, who became purchasers for value.

7. In the course of January–October 2019 the applicants, pursuant to a development consent, removed the brick outhouse and the fence on the southern side of the right of way and constructed a new paling fence on the northern side of the right of way, thus incorporating the 3.4m² of the right of way into their back garden.

8. Some four weeks after completion of the works, the respondent commenced proceedings in the Equity Division seeking to recover the area of the right of way, claiming title by adverse possession for a period in excess of 12 years.

Issues on appeal

9. There is a question as to whether the applicants required leave to appeal. There was no evidence before the Court as to the value of the thin strip of land 4.1m long and about 0.8m wide. However, although s 101(2)(r) of the Supreme Court Act 1970 (NSW) requires leave with respect to an appeal other than an appeal involving a question respecting any property of the value of $100,000, it is not entirely clear whether that qualification relates to the value of the whole property or the amount in dispute. There is no doubt that the respondent’s claim was for adverse possession of only a part of the applicants’ property, which, as a whole, was valued far above the threshold. In any event, as no objection was taken to the filing of an appeal rather than an application for leave to appeal, and because the issues raised involve matters of general importance as to the operation of various provisions of the Real Property Act, warranting the grant of leave if leave be required, there should be a grant of leave to the extent necessary.

10. The claim by the respondent for a title created by adverse possession invoked a general law concept (“adverse possession”) in combination with the operation of the Limitation Act 1969 (NSW), s 27(2) and s 65. Section 65 provides that ownership of land which has been the subject of adverse possession by another person for a period of at least 12 years no longer provides a basis for proceedings to recover the land and the title itself is “extinguished”. However, the possibility that the purchaser of a property with registered title may be deprived of part of the land purchased by reason of an interest not recorded on the register is contrary to the fundamental rationale of a system of title by registration. [2] That being so, it is common ground that, to succeed, the respondent had to bring his case within a qualification of the general principle within the terms of the Real Property Act. That exercise required consideration of specific provisions within Pt 4B and Pt 6A of the Real Property Act, in terms identified below.

    2. Deguisa v Lynn (2020) 94 ALJR 1020; [2020] HCA 39 at [3], [88] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ): see further below.

11. Before turning to those issues, it is convenient to note the basis upon which the trial judge upheld a claim of adverse possession for a period of not less than 12 years. The first step taken by the respondent, in May 2002, was to take down a paling fence dividing his back yard from the right of way. That act cannot have constituted an act of possession of the Theodorous’ property. What then took place, and was completed by January 2005, involved the laying of a “weed mat” across the area of the right of way and the inclusion of some granite pavers and mondo grass on the right of way. That work, the judge found, had been undertaken prior to the Theodorous’ land being brought under the Real Property Act in September 2005. If that activity had constituted “adverse possession” then the possession had commenced prior to the land coming under the Real Property Act, although over a period of less than a year.

12. Some activities undertaken by the respondent, such as the storage of garden equipment on the right of way, might have given rise to some form of easement. On the other hand, there was no submission that the activities undertaken were inconsistent with the use of the land as a right of way. How activities which were not inconsistent with the right of way could be a basis for depriving the owner of the servient tenement of a fee simple title was not explained. The activities undertaken were of the same kind as those which are commonly undertaken in suburban areas in order to render the “nature strip” outside people’s homes more attractive. Similar activities are not uncommonly undertaken on rights of way running between properties but over land which belongs to one of two neighbouring owners.

13. Even with respect to title which is not obtained by registration, title by adverse possession is anomalous; unlike prescription, it depends not on an assumption of right, but on “possession as of wrong”. [3] A century ago Professor Henry W Ballentine suggested that “[t]itle by adverse possession sounds, at first blush, like title by theft or robbery, a primitive method of acquiring land without paying for it.” [4] Possession which is “adverse” to the owner may be demonstrated by acts inconsistent with shared occupation, and may include locking a gate or door to prevent access to the land. The evidence in the present case indicated that there was at all times a door in the corrugated iron fence on the Theodorous’ land where it adjoined the right of way. The evidence did not establish that the respondent took any step to block the door or otherwise prevent access to the right of way by the Theodorous. He made no attempt to exclude anyone; he merely sought passive enjoyment of the land as an adjunct to his back yard. He did not pay rates, nor fence the land against the owner. The actions relied on did not establish an intention to assert exclusive possession, as opposed to an opportunistic user. [5]

    3. Buckingham County Council v Moran [1990] 1 Ch 623 at 644D (Nourse LJ), a phrase adopted by the Privy Council in its last judgment on appeal from Hong Kong, delivered by Lord Hoffmann, Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232 at 1235 (PC); K Gray & SF Gray, Elements of Land Law (5th ed, 2009, Oxford University Press) at [9.1.5] (“Gray & Gray”).

    4. HW Ballantine, “Title by Adverse Possession” (1918) 32 Harvard Law Review 135 at 135 (“Ballantine”); Gray & Gray at [9.1.6].

    5. Compare Clement v Jones (1909) 8 CLR 133, 139-140 (Griffith CJ); [1909] HCA 11.

14. Although there must be real doubt as to whether the minor steps taken by the respondent to provide access to the land for himself and to improve its amenity could constitute adverse possession, there was no challenge to the finding of the trial judge in that respect. Rather, the applicants’ case on appeal rested upon their entitlement under the Real Property Act, and the contention that the provisions relied upon by the respondent did not qualify that entitlement. It is necessary, therefore, to turn to the relevant statutory provisions.

Statutory scheme

15. The applicants relied primarily upon two provisions of the Real Property Act, which provide for the scheme of land ownership reflected in the phrase “title by registration”. Section 42(1) relevantly provides:

42   Estate of registered proprietor paramount

(1)   Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except:

…

(c)   as to any portion of land that may by wrong description of parcels or of boundaries be included in the folio of the Register or registered dealing evidencing the title of such registered proprietor, not being a purchaser or mortgagee thereof for value, or deriving from or through a purchaser or mortgagee thereof for value ….

16. There is no suggestion that the appellants’ title was infected by fraud; nor was the exception in par (c) engaged, they being purchasers for value.

17. They also relied upon s 45 which, as reinserted in the Act in 2000, states:

45   Bona fide purchasers and mortgagees protected in relation to fraudulent and other transactions

(1)   Except to the extent to which this Act otherwise expressly provides, nothing in this Act is to be construed so as to deprive any purchaser or mortgagee bona fide for valuable consideration of any estate or interest in land under the provisions of this Act in respect of which the person is the registered proprietor.

(2)   Despite any other provision of this Act, proceedings for the recovery of damages, or for the possession or recovery of land, do not lie against a purchaser or mortgagee bona fide for valuable consideration of land under the provisions of this Act merely because the vendor or mortgagor of the land:

(a)   may have been registered as proprietor through fraud or error, or by means of a void or voidable instrument, or

(b)   may have procured the registration of the relevant transfer or mortgage to the purchaser or mortgagee through fraud or error, or by means of a void or voidable instrument, or

(c)   may have derived his or her right to registration as proprietor from or through a person who has been registered as proprietor through fraud or error, or by means of a void or voidable instrument.

(3)   Subsection (2) applies whether the fraud or error consists of a misdescription of the land or its boundaries or otherwise.

18. The applicants contended that they obtained title to the land, including the area of the right of way now in dispute, as a result of registration, pursuant to s 42(1). Whatever other provision of the Act might have permitted a claim against them based on adverse possession, absent an express provision qualifying their title, nothing in the Act deprived them of their estate or interest in the land: s 45(1). Even if the persons from whom they purchased, who had owned the land for some 40 years, had lost title to the strip subject to the right of way and had become registered proprietors through error in a failure to record the respondent’s interest acquired by adverse possession, that would not, they submitted, diminish their title: s 45(2).

19. The respondent’s case turned on a distinction as to the creation of folios in the register which record the details of land bought under the Real Property Act. The Act provides for three kinds of folio, namely a limited folio, a qualified folio and an ordinary folio, the last being those folios which are neither limited nor qualified. A qualified folio is commonly issued when land bought under the Act has been alienated from the Crown in fee, but has not previously been subject to registration. A qualified folio is accompanied by a caution warning persons dealing with the registered proprietor that the land may be subject to a subsisting interest which is not recorded: s 28J(1). The caution (and the qualification) will lapse, or be removed, in prescribed circumstances which need not be described. The Theodorous held a qualified title from September 2005 until October 2017, when the qualification was withdrawn, but it remained a limited folio.

20. Part 4B provides for the issue of a “limited folio” where the boundaries of the land are not sufficiently defined to enable the Registrar-General to create an ordinary folio: s 28T(3). The relevant elements of limitation are found s 28T(2) - (4) and (8), which provide:

28T   Creation of limited folio

…

(2) Where the boundaries of land are not sufficiently defined to enable the Registrar-General to cause a notice to be given under section 28E (1), the Registrar-General may cause such a notice to be given and, subject to subsection (4), may create a qualified folio of the Register for the estate or interest in any of that land of the person for whose estate or interest in the land the Registrar-General could have created a qualified folio of the Register under section 28E, if no further survey definition had been necessary adequately to define the boundaries of the land.

(3) Where the boundaries of land are not sufficiently defined to enable the Registrar-General to create an ordinary folio of the Register under section 28EA, the Registrar-General may, subject to subsection (4), create a folio of the Register for the estate or interest in any of that land of the person for whose estate or interest in the land the Registrar-General could have created an ordinary folio of the Register under section 28EA, if no further survey definition had been necessary adequately to define the boundaries of the land.

(4)   When creating a folio of the Register under subsection (1A), (1), (2) or (3), the Registrar-General shall make in that folio a recording to the effect that the description of the land comprised therein has not been investigated by the Registrar-General and may therein or in any plan deposited in the Registrar-General’s office illustrating the land so comprised record such other particulars as the Registrar-General considers appropriate.

…

(8)   Except as otherwise provided by any other provision of this Part:

(a)   land comprised in a limited folio of the Register is subject to the provisions of this Act,

(b)   the provisions of this Act relating to ordinary folios of the Register, land comprised in ordinary folios of the Register and the registration of dealings affecting land comprised in ordinary folios of the Register shall apply to limited folios of the Register, land comprised in limited folios of the Register and the registration of dealings affecting land comprised in limited folios of the Register,

…   and

(d)   a limited folio of the Register shall be evidence as to title in all respects as if it were an ordinary folio of the Register, except that:

(i)   the certification of title is not conclusive as regards the definition of the boundaries of the land comprised therein, and

(ii) where the folio of the Register is also a qualified folio of the Register, the operation of section 28P (1) (d), as applied by subsection (7), is not affected.

21. Importantly, qualified and limited folios have different operations. With respect to qualified folios, s 28P (referred to in s 28T(8)(d)(ii)) provides:

28P   Application of provisions of this Act to qualified folio and land therein

(1)   Except as otherwise provided by this Act:

(a)   land comprised in a qualified folio of the Register is subject to the provisions of this Act,

…

(d)   a qualified folio of the Register shall be evidence as to title in all respects as if it were an ordinary folio of the Register, except that it shall be subject to every subsisting interest in the land comprised therein, whether recorded in the Register or not.

22. Section 12 of the Real Property Act confers powers on the Registrar-General to correct errors and omissions in the register, but not so as to prejudice or affect a right which has accrued from the uncorrected recording: s 12(3)(b). With respect to limited title, the following provision applies:

28U   Defeasibility of limited title

(1) Section 12 (3) (b) does not apply to or in respect of a correction made by the Registrar-General of any wrong description of parcels or of boundaries in relation to land included in a limited folio of the Register.

(2) Where by any wrong description of parcels or of boundaries any land is incorrectly included in a limited folio of the Register, section 42 (1) does not operate to defeat any estate or interest in that land adverse to or in derogation of the title of the registered proprietor and not recorded in the folio, whether or not the registered proprietor is a purchaser or mortgagee of that land for value or derives title from such a purchaser or mortgagee.

23. The creation of a limited title is therefore a result of the “boundaries of land” being “not sufficiently defined”, it being assumed that further definition would result from a survey. Section 28U prevents the registered proprietor obtaining an indefeasible title with respect to land “incorrectly included” in a limited folio, as a result of “any wrong description of parcels or of boundaries”.

24. It is also necessary to note the operation of Pt 6A of the Real Property Act, which provides for applications to be made to obtain possessory title to land under the Act. For present purposes, it is sufficient to have regard to the following provisions:

45C   Acquisition of possessory title to land under the Act

(1)   Except to the extent that statutes of limitation are taken into consideration for the purposes of this Part, no title to any estate or interest in land adverse to or in derogation of the title of the registered proprietor shall be acquired by any length of possession by virtue of any statute of limitations relating to real estate, nor shall the title of any such registered proprietor be extinguished by the operation of any such statute.

(2)   Subsection (1) does not prevent the acquisition of a title, adverse to or in derogation of the title of the registered proprietor thereof, to an estate or interest in land brought under the provisions of this Act by the creation of a qualified or limited folio of the Register by reason of possession of the land for any length of time commencing before the creation of the folio.

45D   Application for title by possession

(1)   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,

(b)   the title of the registered proprietor of an estate or interest in the land would, at or before that time, have been extinguished as against the person so in possession had the statutes of limitation in force at that time and any earlier time applied, while in force, in respect of that land, and

(c)   the land is comprised in an ordinary folio of the Register or is comprised in a qualified or limited folio of the Register and the possession by virtue of which the title to that estate or interest would have been extinguished as provided in paragraph (b) commenced after the land was brought under the provisions of this Act by the creation of the qualified or limited folio of the Register,

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.

(2)   Where, at any time after the commencement of this Part:

(a)   a person is in possession of part only of a whole parcel of land, and

(b)   any boundary that limits or defines the land in the person’s possession is, to the extent that it is not a boundary of the whole parcel of land, an occupational boundary that represents or replaces a boundary of the whole parcel,

the person may, unless the part of the whole parcel of which the person is in possession lies between such an occupational boundary and the boundary of the whole parcel that it represents or replaces, apply to the Registrar-General to be recorded in the Register as the proprietor of the same estate or interest in that whole parcel of land as could have been the subject of an application by the person under subsection (1) if the land in the person’s possession had been that whole parcel of land and subsection (1) (b) and (c) had been complied with in relation thereto.

…

(4)   A possessory application may not be made in respect of an estate or interest in land if:

(a)   the registered proprietor of that or any other estate or interest in the land became so registered without fraud and for valuable consideration, and

(b)   the whole of the period of adverse possession that would be claimed in the application if it were lodged would not have occurred after that proprietor became so registered,

unless the application is made on the basis that the estate or interest applied for will be subject to the estate or interest of that registered proprietor if the application is granted.

…

(6)   For the purposes of subsection (2), a reference to an occupational boundary that represents or replaces a boundary of a whole parcel of land is a reference to:

(a)   a fence, wall or other structure intended to coincide with or represent that boundary of the whole parcel,

(b)   a channel, ditch, creek, river or other natural or artificial feature that is itself land and is in close proximity to that boundary of the whole parcel, or

(c)   a give and take fence with respect to that boundary of the whole parcel.

25. There was no opportunity for the respondent to make an application for title by possession under s 45D(1), because it relates only to possession which commenced after the land was brought under the provisions of the Act by the creation of a limited folio. (His claimed possession pre-dated the creation of the limited folio.) However, in the course of the hearing, counsel for the respondent sought to rely upon s 45D(2). That approach recognised that s 45D(1) deals only with “a whole of parcel of land”: s 45(1)(a). Section 45D(2) applies where the person is in possession of “part only of a whole parcel of land”: s 45D(2)(a). However, s 45D(2), if applicable, would have permitted an application to be made for the whole of the land: that was no part of his claim. Further, it appears that subs (2) is only available if subs (1)(b) and (c) were complied with, which was not the case. Whatever the operation of that provision, it was of no assistance to the respondent in the present case.

26. There is a further point to be noted with respect to s 45D(2), namely that the section refers to “any boundary that limits or defines the land in the person’s possession” as “an occupational boundary” which is said to represent or replace a boundary of the whole parcel: s 45D(2)(b). There is a qualification in relation to applications under that provision, namely that the part of which the person is in possession must not lie between the occupational boundary and the boundary that it represents or replaces. An “occupational boundary” is defined to mean, relevantly, “a fence … intended to coincide with or represent the boundary of the whole parcel”: s 45D(6)(a). The back fence of the appellants’ land was not so intended: rather, it was intended to separate that part of the property which was subject to a right of way from that which was not. There is no other reference to the concept of “occupational boundary” in the Real Property Act: it has no role to play in this case.

27. Three further points may be noted. First, as Woodman and Butt have noted, with respect to s 45D(2) and (6): [6]

“The result is that claims for possessory title to trifling areas of land cannot be made. For example, there cannot be a claim to a strip of land along a boundary occasioned by an incorrect placement of a fence ….Further, there will be no right to lodge a possessory application in respect of an area of, say, thirty hectares out of a “whole parcel” of one hundred hectares.”This appears to be correct; but in 1980, when these observations were made, s 45D did not contain subs (2A) and (2B), which should also be referred to.

6. RA Woodman & P Butt, “Possessory Title and the Torrens System in New South Wales” (1980) 54 Australian Law Journal 79 at 85.

28. Secondly, it is necessary to note a new provision, found in subs (2A) and (2B), not introduced until 2001: [7]

    7. Land Titles Legislation Amendment Act 2001 (NSW), Sch 2[1].

45D   Application for title by possession

…

(2A)   A person who:

(a)   is in possession of part of a residue lot that could, if it had been a whole parcel of land, have been the subject of an application by the person under subsection (1), and

(b)   is (or is entitled to be) the registered proprietor of an estate in fee simple in land that adjoins that lot,

may apply to the Registrar-General to be recorded in the Register as the proprietor of an estate in fee simple in land consisting of a consolidated lot comprising the part of the residue lot in the person’s possession and the adjoining land.

(2B)   In subsection (2A), residue lot means an allotment consisting of a strip of land that the Registrar-General is satisfied:

(a)   was intended for use as a service lane, or

(b)   was created to prevent access to a road, or

(c)   was created in a manner, or for a purpose, prescribed by the regulations.

Quite correctly, no reliance was placed on subs (2A); the right of way was part of a lot the subject of a registered title now held by the applicants – it was not a “residue lot”.

29. Thirdly, satisfaction of a provision in s 45D would not confer title on the respondent: it would merely allow him to apply to the Registrar-General to be recorded as the proprietor of the land, and thus obtain title by registration. No such record could be made in respect of the land held by the applicants who obtained their title without fraud and for valuable consideration: s 45D(4).

30. On no view was s 45D engaged. However, s 45C(2) appears to allow a title to be acquired, despite s 45C(1), by possession commencing before the creation of the folio. One question is whether that provision applies in the present case.

Application of s 45C(2)

31. In order to consider the operation of the Act in relation to limited folios, the starting point is to note that the creation of a limited folio only arises where “the boundaries of the land are not sufficiently defined”. That provides the basis for the qualification of the principle of indefeasibility in s 42(1). As explained in s 28U(2), the principle of indefeasibility is not applicable where “by any wrong description of parcels or of boundaries any land is incorrectly included in a limited folio”.

32. However, it is by no means clear in what sense the respondent can assert that the land subject to the right of way was “incorrectly included” in the limited folio issued to the predecessor in title of the applicants. There can be no contention that the Registrar-General, in undertaking conversion action in September 2005, made any mistake in the preparation of the title. As appears from the letter sent to the then owners, the title was to be issued on the basis the land was lot E in a deposited plan. That showed the land extending to the boundary with the respondent’s land, and subject to a right of way of variable width as shown on the title diagram. That expressly identified the area the subject of the respondent’s possessory claim. There was no “wrong description” of any parcel, nor of any boundary.

33. The misdescription which may have arisen would have been one which could have been resolved by a survey defining the boundaries with precision. (The Registrar-General was apparently not satisfied with the survey on which the deposited plan was based.) There may have been imprecision in the boundaries, but that was irrelevant to the respondent’s claim. His case was that in 2005 he had an “inchoate claim” for a possessory title over the land subject to the right of way. In fact, he was at that stage no more than a trespasser. He had no interest in the applicants’ land.

34. When the applicants obtained a transfer of the limited title on 18 April 2018, it remained subject to misdescription of the kind referred to. Otherwise the effect of s 42(1) of the Real Property Act was to confer on them a title absolutely free from all other estates and interests not recorded on the folio in the register.

35. Although it is not entirely easy to establish an harmonious operation of the various provisions of the Real Property Act, qualifications to the principle of indefeasibility which forms the bedrock of a system of title by registration should not readily be accepted as a matter of statutory construction, in the absence of a clear intention to that effect. As counsel for the applicants correctly noted, so much was recently confirmed by the High Court in Deguisa v Lynn,[8] quoting the earlier decision of Westfield Management Ltd v Perpetual Trustee Co Ltd: [9]

“Together with the information appearing on the relevant folio, the registration of dealings manifests the scheme of the Torrens system to provide third parties with information necessary to comprehend the extent or state of the registered title to the land in question.”

Further, it was stated in Westfield: [10]

“The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.”

8. Deguisa at [66].

9. (2007) 233 CLR 528; [2007] HCA 45 at [5].

10. Westfield at [39]; Deguisa at [69].

36. The Court concluded in Deguisa:

“[70]   In Westfield, this Court indicated a distinct preference for the firm clarity of the approach of Barwick CJ in Bursill over the more equivocal statements of Windeyer J. The approach of Barwick CJ is a better fit with the understanding of the Torrens system as a system of title by registration, affirmed in Breskvar v Wall. Within that system, the State's guarantee of the state of the title of the registered proprietor shown by the certificate of title encompasses any qualification to that title by virtue of the interest in the land of a person other than a registered proprietor.”

37. Section 45C(1) operates to deny that a title in derogation of that of a registered proprietor may be acquired “[e]xcept to the extent that statutes of limitation are taken into consideration for the purposes of this Part”, being Pt 6A. The apparent purpose of that provision is to make Pt 6A an exclusive statement of the circumstances in which a possessory title may derogate from the title of the registered proprietor. The effect of s 45C(2) is to place a limit on the exclusive operation of Pt 6A with respect to qualified or limited folios. It does not, however, affect the operation of any other provision of the Act.

38. As has been noted, s 28T(8) and s 28U(2) provide a confined exception to the protection given by an ordinary folio for the title of the registered proprietor, as applied to a limited folio. Thus, that which is not protected by a limited title is the consequence of a wrong description of parcels or boundaries of land. When created in 2005 the folio correctly described the parcel of land as including the area the subject of the right of way; that area was not “incorrectly included”, within the meaning of that phrase in s 28U(2). For example, the respondent then had no caveatable interest in the land; nor if it be relevant, did he then have a “subsisting interest”, for the purposes of s 28J(1), relating to cautions applicable to qualified title.

39. No explanation was provided as to how a title which involved no wrong description of parcels or boundaries when created could fall within that description after it was created by maintaining unlawful possession for 12 years. (As has been explained, if his possession had commenced after the title was issued, he could not have made an application under s 45D.)

40. Immediately one acknowledges a limitation with respect to the identification of boundaries, the possibility of a claim for adverse possession arises. Thus, where a title reflects the position of a fence or wall constructed many decades earlier, but extending on to land of an adjoining registered proprietor, the former owner may have a claim for adverse possession against the latter. If valid, that example does not assist the respondent. No claim for a possessory title was made before the applicants obtained their title for valuable consideration. No application under s 45D could have succeeded.

Conclusions

41. In my view, the transfer to the applicants, for valuable consideration, of land contained in a limited folio, conveyed an estate and interest, on registration of the transfer, free of the respondent’s claim for a possessory title over that part of the land subject to a right of way.

42. That requires orders setting aside the orders made by the trial judge, including that dismissing the cross-claim brought by the applicants. In their notice of appeal, the applicants sought the orders which were sought in the notice of cross-claim. One order, requiring the withdrawal of the respondent’s caveat, follows from upholding the appeal. However, no submissions were addressed to the other orders: it is not clear if they are still apposite, nor the evidential basis on which they were sought. As the cross-claim remains on foot, the appropriate course is to remit it to the Equity Division, where, if thought necessary, the applicants can reagitate any aspects they wish to pursue.

43. Accordingly, the Court should make the following orders:

1. To the extent necessary, grant the applicants leave to appeal from the judgment and orders in the Equity Division.

2. Allow the appeal and –

1. set aside orders (1)-(5) and (7) entered on 21 August 2020;

2. dismiss the amended summons filed in the Equity Division on 30 July 2020.

3. order that the respondent pay the applicants’ costs in the Division.

3. With respect to the undetermined amended first cross-claim,

1. order that the respondent withdraw caveat AP918431B;

2. to the extent that the cross-claimants wish to pursue the further orders sought in the cross-claim, remit the cross-claim to the Equity Division.

4. Order that the respondent pay the applicants’ costs in this Court.

44. This, however, is a minority view. Dismissal of the appeal gives effect to a mechanism of the acquisition of land which, as noted above, has been described as “possession as of wrong”. [11] Ballentine’s description of obtaining title by adverse possession as “a primitive method of acquiring land without paying for it” [12] is not inapt in the present case. If one accepts that the acts of the respondent amounted to a taking of possession adverse to the owner (which must be doubtful), it was not a case of mistake, the identity of the holder of title was not in doubt, nor could the acts of the respondent have affected any person other than his neighbour. Whether he acquired title by this action turned not so much on the general law, devised in another age, but on a statute providing for title by registration. As explained above, I do not think that the Real Property Act permits the acquisition of title by adverse possession in this case. However, if the correct construction of the statute were uncertain, a construction which furthers the purposes of the Real Property Act should be preferred. [13] An interpretation which deprives a bona fide purchase for value of land identified in the register as vested in the vendor should not be frustrated absent clear words to that effect. No such language is found in the Real Property Act.

    11. Above at [13].

    12. Ballantine at 135; Gray & Gray at [9.1.6].

    13. Interpretation Act 1987 (NSW), s 33.

45. BRERETON JA: The appellants Mr Sidoti and Ms Martinoski are the registered proprietors of land situate in Boronia Street, Redfern, and comprised in Lot E/928XXX, which is a limited folio of the register of land titles maintained under the Real Property Act 1900 (NSW) (“RP Act”). On it stands a terrace house. Its southern boundary fronts Boronia Street; and its northern (rear) boundary abuts the southern (side) boundary of the backyard of a terrace house in Baptist Street, Redfern, which is comprised in Lot 1/986ZZZ, also a limited folio, of which the respondent Mr Hardy is the registered proprietor. It is convenient to refer to these properties respectively as “Lot E” or “the Sidoti Property”, and “Lot 1” or “the Hardy Property”.

46. The geographical relationship of the properties, and some of the key features referred to below, are depicted in the (not to scale) sketch plan attached to the primary judgment, [14] which is reproduced as an attachment to this judgment. Boronia Street runs east-west, there being four other terrace house properties (Lots A, B, C and D) between the Sidoti Property and its intersection, to the west, with Baptist Street, which runs north-south; and two other terrace house properties (Lots F and G) between the Sidoti Property and its intersection, to the east, with Dalley Lane. Dalley Lane provides the rear boundary of the Hardy property. The rear boundaries of all seven Boronia Street properties abut the southern boundary of the Hardy Property.

    14. Hardy v Sidoti (2020) 19 BPR ¶40,535; [2020] NSWSC 1057 (“Primary judgment”).

47. A narrow strip of land at the rear of each of the seven Boronia Street properties, adjacent to the southern boundary of the Hardy Property and running between Baptist Street in the west and Dalley Lane in the east, is burdened by a right of way, created when those lots were originally subdivided at the end of the nineteenth century. Originally, this formed a narrow lane, running east-west, leading to Dalley Lane, the purpose of which was to enable access for the nightsoil carter to collect waste from the brick outhouses at the rear of the Boronia Street properties; in the vernacular, a “dunny lane”. In the proceedings below, Kunc J held that Mr Hardy had acquired title to that part of the lane – a strip approximately 3.81 metres long and 88cm wide, and thus comprising 3.35 square metres in all – that passes over the rear of the Sidoti Property (“the Yellow Land”, because it was so coloured in the attached sketch plan), by adverse possession for a period in excess of twelve years running from 2002 or, at the latest, from early 2005. Mr Sidoti and Ms Martinoski appeal to this Court, purportedly as of right, from that decision.

The facts

48. The following account is based on the facts found by the primary judge, which were largely and are now entirely uncontroversial, and the documentary evidence.

49. The Sidoti Property, and the other Boronia Street properties, were created by FP928XXX, entitled “Plan of Subdivision of Lots 4, 5, 6 and 7 Section A of Baptist’s Bourke Street Subdivision”; as its title indicates, that plan was a subdivision of an earlier subdivision. It bore a certificate that the boundaries of the Sidoti Property were accurately surveyed, in accordance with the Survey Practice Regulation 1933 (NSW), on 24 April 1956, and an endorsement that it had been approved by the City of Sydney Council under Local Government Act 1919 (NSW), s 327.

50. By deed of conveyance dated 29 October 1958, the Perpetual Trustee Company (as administrator of the estate of William Aitcheson Haswell, who had died in 1925) as vendor conveyed the Sidoti Property to George and Despina Theodorou as purchasers. The deed contained a metes and bounds description of Lot E, including the Yellow Land which was expressed to be subject to the right of way. It also referred to the deed of conveyance by which Mr Haswell had acquired title in 1890, a subsequent mortgage by him, and a memorandum of its discharge in 1924.

51. Four years later, by deed of conveyance dated 21 September 1962, the Perpetual Trustee Company as vendor also conveyed the neighbouring property to the east, Lot F, to George and Despina Theodorou as purchasers. This property, which as described below remains in the ownership of the Theodorou family, is referred to as “the Remaining Theodorou Property”. The strip at its rear affected by the right of way is referred to as “the Green Land”, again because it was so coloured in the attached sketch plan. In 1969, the Theodorou family vacated both Lot E and Lot F and let them to tenants, and tenants remained in occupation of the Sidoti Property until it was sold, as described below, to the appellants in 2018. Tenants continue to occupy the Remaining Theodorou Property.

52. By deed of conveyance dated 18 March 1985, George and Despina Theodorou conveyed Lot E to their children Androula, Theodorou, Christopher and Jenny. This deed contained the same metes and bounds description as the deed of 1958, so that it included the Yellow Land. By another deed of conveyance of the same date, George and Despina Theodorou also conveyed Lot F to Androula, Theodorou, Christopher and Jenny.

53. Mr Hardy and his then partner purchased the Hardy property at public auction in November 1997. A survey of the Hardy Property dated 16 December 1997, presumably obtained in connection with the purchase, states:

“The southern boundary is correctly fenced and built-to; along part chimney coping overhangs the adjoining land 0.1 metres.

There are no other apparent encroachments by or upon subject property.”

The survey contains no reference to the Yellow Land or the right of way.

54. By deed of conveyance dated 9 January 1998 and registered on 19 January 1998, the Hardy Property was conveyed to Mr Hardy and his then partner as joint tenants. The deed contained a metes and bounds description of the property, which did not include the Yellow Land.

55. When Mr Hardy subsequently moved into his property, there was an old timber paling fence on the northern boundary of the Yellow Land and the Green Land (marked “B” on the sketch plan). This fence coincided with the boundary of the Hardy Property with, respectively, the Sidoti Property and the Remaining Theodorou Property. Gates in it provided access from the Hardy Property to the Yellow Land and the Green Land, indicating that, although the right of way does not legally benefit the Hardy Property, earlier occupants of the Hardy Property had accessed the lane. Along the southern boundary of the Yellow Land and the Green Land (that is, 88cm into the Sidoti Property), and aligned with the rear of the old brick outhouse on the Sidoti Property (marked “A” on the sketch plan), there was an old corrugated iron fence (marked “D” on the sketch plan). Gates in this corrugated iron fence provided access from the Sidoti Property and the Remaining Theodorou Property to the Yellow Land and the Green Land respectively.

56. By January 1998, the lane, including the Yellow Land, was no longer used or usable as a right of way. It had been occluded at various points, including relevantly by paling fences across the western end of the Yellow Land and the eastern end of the Green Land (marked “C” on the sketch plan). [15] Previous owners of the Hardy Property appeared to have used the western end of the Yellow Land for storing garden tools, and Mr Hardy continued to do so in the area marked “G” on the sketch plan, and for that purpose entering the Yellow Land through the gate in the old paling fence. The water meter for the Hardy Property was also located on the Yellow Land.

    15. It was unclear whether there was also a fence separating the Yellow Land from the Green Land; as the primary judge observed (Primary judgment at [23]), this seems unlikely, given that both were in the common documentary ownership of the Theodorou family for many years, but nothing turns on it.

57. DP986532, which comprises only Lot 1, was registered on 7 August 1998, for the purpose of bringing the Hardy Property under the RP Act. It did not refer to or include the Yellow Land (or for that matter the Green Land). Pursuant to conversion action CA73069, qualified and limited folio 1/986532 was issued on the same date. The second schedule of the folio included notifications coded QG (“Qualified Title. Caution Pursuant To s28J Real Property Act 1900”), [16] and QL (“Limited Title. Limitation Pursuant To Section 28T(4) Of The Real Property Act, 1900. The Boundaries Of The Land Comprised Herein Have Not Been Investigated By The Registrar-General”). [17]

    16. Land Registry Services, “Registrar-General’s Guidelines – Land Dealings – Dealings Involving – Notifications on the Register”, accessed 13 April 2021 (“Registrar-General’s Guidelines – Dealing involving Notifications on the Register”).

    17. Land Registry Services, “Registrar-General’s Guidelines – Deposited Plans – Conversion of Old System – Deposited Plans Redefining Old System Land – Limited Titles”, accessed 13 April 2021 (“Registrar-General’s Guidelines – Limited Titles”).

58. Mr Hardy did not seek to enter the Green Land until about 2001, when he observed that the Green Land was so filled with rubbish and domestic waste from the tenants in the Remaining Theodorou Property that the old paling fence was leaning from the Green Land into the Hardy Property.

59. Between October 2001 and June 2002, Mr Hardy and his then partner renovated their property and in the meantime resided elsewhere. In early to mid-May 2002, their builder removed the old paling fence on the northern boundary of the Yellow and Green Land, cleared out the rubbish from the Green Land, and levelled and tidied both so that they appeared to be part of the Hardy Property’s back garden. They continued to use the western portion of the Yellow Land (marked “G” on the sketch plan) to store garden equipment. Around this time, the water meter was also relocated from the Yellow Land to the front courtyard of the Hardy property.

60. Between 2003 and early 2005, Mr Hardy and his then partner made further improvements to their backyard, landscaping it so that it incorporated the Yellow Land and the Green Land. By 31 December 2004, these improvements included: [18]

    18. See Primary judgment at [31].

1. in or about August and September 2004, installing underground irrigation pipes for a watering system, including across the Yellow Land and the Green Land;

2. in or about September 2004, laying a weed mat across the entire backyard area up to the various boundaries, including across the Yellow Land and the Green Land up to the old corrugated iron fence on the southern side of the lane;

3. commencing in about September 2004, laying approximately five granite “railway sleeper” type slabs along the base of the old corrugated iron fence along the southern boundary of the Yellow Land and the Green Land, which then served as a footing for a reed matting screen that was installed alongside the length of the old corrugated iron fence to conceal it. This effectively closed off the access from the Sidoti Property and the Remaining Theodorou Property to the Yellow Land and the Green Land, which had been provided by the gates in the old corrugated iron fence; and

4. by early 2005, laying granite pavers to pave the garden. Although well- advanced by 31 December 2004 in the main backyard area, this was not completed in the Yellow Land until January 2005, when twelve granite pavers were laid in the Yellow Land and some mondo grass planted, up to the point where garden equipment continued to be stored at the western end of the Yellow Land (marked “G” on the sketch plan). The Green Land was not paved, but was landscaped with mondo grass and pine mulch.

61. Meanwhile, on 14 March 2004, departmental dealing AA472866 was registered in respect of the Hardy property. That dealing was not in evidence and it has not been possible to ascertain its effect, but as it is not the title to the Hardy property that is in issue, it does not matter.

62. On 21 September 2005, by conversion actions CA96563 and CA96565 respectively, the Sidoti Property and the Remaining Theodorou Property were brought under the provisions of the RP Act and qualified and limited folios E/928928 and F/928928 were created for them respectively. In each case, the second schedule of the folio contained notifications coded QS (“Qualified Title. Caution Pursuant to Section 28J Real Property Act 1900. This Title Was Created Using NSW Land Registry Services Records In Accordance With Section 28D Real Property Act 1900. Delivery Of The Title And/Or Registration Of Any Dealing Will Require Lodgment Of A Statement Of Title Particulars Supplying Complete Ownership Details”); [19] QG (“Qualified Title. Caution Pursuant to s28J Real Property Act 1900"); [20] and QL (“Limited Title. Limitation Pursuant To s.28T(4) Real Property Act 1900. The Boundaries Of The Land Comprised Herein Have Not Been Investigated By The Registrar-General”). [21] Following lodgement of a statement of title particulars, the QS qualification was removed, by departmental dealing AB800206, on 27 September 2005, but the QG Qualified Title caution and the QL Limited Title notification remained.

    19. Land Registry Services, “Registrar-General’s Guidelines – Land Dealings – Dealing Requirements – Qualified Title – Cautions”, accessed 13 April 2021.

    20. Registrar-General’s Guidelines – Dealing Involving Notifications on the Register.

    21. Registrar-General’s Guidelines – Limited Titles.

63. In late 2006, Mr Hardy planted a magnolia tree in the middle of the Green Land (marked “I” on the sketch).

64. In January 2007, following the termination of his relationship with his former partner, Mr Hardy became the sole registered proprietor of the Hardy Property by transfer.

65. On 14 September 2015, departmental dealing AJ811575 was registered, removing the QG caution from the title of the Hardy Property, apparently on the basis that it had expired, presumably pursuant to RP Act, s 28M(3). [22]

    22. For RP Act, s 28M(3), see [98] below.

66. On 9 October 2017, by departmental dealing AM785629, the QG cautions were removed from the title to the Sidoti Property and the Remaining Theodorou Property, because they had expired after twelve years, again presumably pursuant to RP Act, s 28M(3).

67. By contract for sale in April 2018, the appellants purchased the Sidoti Property from the Theodorous, for value. They did not obtain a survey, but had they done so it would have been apparent that while the Yellow Land was within the legal boundaries of the Sidoti property, it had been physically incorporated into the backyard of the Hardy Property. Transfer AN267888 was registered on 18 April 2018. Edition 2 of the folio, issued on 18 April 2018, contains the following notification:

“LIMITED TITLE. LIMITATION PURSUANT TO SECTION 28T(4) OF THE REAL PROPERTY ACT, 1900. THE BOUNDARIES OF THE LAND COMPRISED HEREIN HAVE NOT BEEN INVESTIGATED BY THE REGISTRAR-GENERAL.”

68. On 7 May 2018, Mr Sidoti lodged a Development Application with the Council of the City of Sydney, which relevantly stated, in respect of proposed alterations and additions to the Sidoti Property, that:

“The application also includes the relocation of the rear boundary fence to the rear of the site along the true norther (sic) boundary. This land currently sits vacant between 2 fences”

69. As part of the renovation of the Sidoti Property, in accordance with the development consent which they obtained, the appellants demolished the old brick outhouse and old corrugated iron fence on the southern side of the Yellow Land and erected a new paling fence at the location of the former old paling fence on the northern side of the Yellow Land, and built a barbecue area on the Yellow Land, which was thereby “reclaimed” into the backyard of the Sidoti Property. Although the primary judge chronicled the subsequent dealings between the parties in 2018 and 2019 in connection with the renovations to the Sidoti Property, culminating in the commencement of the proceedings by Mr Hardy on 31 October 2019, it is not necessary to rehearse them for the purposes of the appeal.

70. There are three important conclusions from this chronology. The first is that the Yellow Land has always been within the surveyed and described boundaries of the Sidoti Property, and outside those of the Hardy Property. The second is that both the Hardy Property and the Sidoti Property (and for that matter the Remaining Theodorou Property) were, when converted from old system to RP Act land, initially both qualified title and limited title. The Hardy Property appears to have ceased to be qualified title on 14 September 2015, and the Sidoti Property (and the Remaining Theodorou Property) on 9 October 2017 – before it was purchased by the appellants. All three properties, however, remain limited title. The third is that, on the facts found by the primary judge, the adverse possession by Mr Hardy of the Yellow Land commenced, on any view, before the Sidoti Property was brought under the RP Act by issue of a qualified and limited folio on 21 September 2005.

The primary judgment

71. In the proceedings below, Mr Hardy claimed, in substance, a declaration that he was entitled to the Yellow Land by adverse possession, and orders restoring possession of it to him. On 28 February 2020, Mr Hardy lodged a caveat in respect of the Sidoti Property, claiming an “estate in possession in part of the land shown in DP1258823 and as further shown in the plan annexed to the Summons annexed hereto”, by virtue of “that part of the land described above has been in adverse possession by the caveator for about 21 years”. The relevant plan depicted the Yellow Land as the subject of the claim. The appellants filed a cross-claim, claiming removal of the caveat.

72. The primary judge concluded as follows: [23]

    23. Primary judgment at [11].

1. the Sidoti Property is land under the RP Act;

2. possessory title to land under the RP Act can generally only be acquired in accordance with the provisions of Part 6A of the Act. If Part 6A applies, Mr Hardy’s case must fail;

3. part 6A does not apply, because Mr Hardy’s adverse possession of the Yellow Land commenced, if not by May 2002 (with the removal of the old paling fence as the commencement of the extension and landscaping of Mr Hardy’s backyard garden), then at the latest January 2005 (by which time landscaping was well advanced, including the laying of a weed mat covering the whole area including the Yellow Land and the Green Land, and the installation of granite pavers and mondo grass on the Yellow Land), and was extant as such when the Sidoti Property was brought under the Act in September 2005. By reason of ss 28U(2) and 45C(2) of the RP Act, Part 6A does not prevent Mr Hardy’s acquisition of a possessory title of the Yellow Land by adverse possession at common law;

4. pursuant to Limitation Act 1969 (NSW) (“Limitation Act”), s 27(2), the relevant limitation period for an action by the Theodorou family as then documentary title holders to recover the Yellow Land had expired no later than January 2017. At that time, their title to the Yellow Land was extinguished pursuant to Limitation Act, s 65(1). It followed that the appellants did not acquire title to the Yellow Land when they purchased the Sidoti Property in April 2018; and

5. Mr Hardy had therefore acquired possessory title at common law to the Yellow Land and was entitled to orders to recognise that ownership, including that the appellants cease to trespass upon the Yellow Land, and remove structures they had erected on it and relocate the fence they have built.

73. His Honour made the following orders:

“1. Declare that the plaintiff is the sole legal and beneficial owner of the land marked in yellow on the survey attached to these orders and marked “A” (the “Land”), such ownership having commenced no earlier than May 2002 and no later than January 2005.

2. Within three months from the date of the stay of these orders being lifted, the first and second defendants are to have at their expense:

(a) Removed all structures erected on the Land;

(b) Reinstated the granite pavers (or their equivalent as approved by the plaintiff) on the Land; and

(c) Constructed a wooden paling fence of at least 2 metres in height on the boundary between their property and the Land.

3. Dismiss the amended first cross-claim.

4. The Plaintiff is to pay the First and Second Defendants’ costs thrown away by each of the amendments to the Summons.

5. The First and Second Defendants are to pay 80% of the Plaintiff’s agreed or assessed party/party costs of the proceedings.

6. If the Defendants file their Notice of Appeal on or before 26 August 2020, then with effect from the date that Notice of Appeal is filed, Orders 1-5 (inclusive) above are stayed until further order of this Court or of the Court of Appeal.

7. Reserve further consideration in relation to any third party rights in respect of:

(a) the right of way referred to in paragraph 5 of the Court’s judgment dated 12 August 2020 (the “Judgment’); or

(b) any other existing encumbrances said to affect the Sidoti Property (as defined in the Judgment).”

74. The notice of appeal does not challenge his Honour’s factual finding that the Yellow Land had been in the adverse possession of Mr Hardy for the requisite twelve year period. It is therefore not necessary to consider what is required to sustain a claim to title by adverse possession of land which is subject to a right of way, which remains in existence for the benefit of others. In Braye v Tarnawskyj,[24] Darke J upheld a claim to have acquired land subject to a right of way by adverse possession, but the claimant was the dominant owner. The answer may be that while land subject to an easement can be acquired by adverse possession, including by a person other than the dominant owner, it would remain subject to the easement unless and until it is extinguished.

    24. (2019) 19 BPR ¶39,213; [2019] NSWSC 277.

75. However, the appellants dispute that, even accepting that factual finding, their title was able to be impugned. In substance, they say that they acquired an indefeasible title, subject only to the exceptions provided for by the RP Act, none of which were applicable. In particular, they dispute that their title could be displaced, in whole or in part, by adverse possession, except by a possessory application under Part 6A of the RP Act, which was neither invoked nor available.

167. It would also be relevant that, given the size of the Yellow Land (3.35 square metres) relative to the Sidoti Property as a whole (86.3 square metres), its location at the very rear of the property, and the absence of substantial improvements on it, its impact on the value of the mortgagee’s security would appear to be de minimis.

168. In those circumstances, where no application has been made by the Bank, and where there has been a reservation of further consideration but no application has been made in pursuance of it, absence of notice to the Bank does not require that the appeal be allowed.

Leave to appeal

172. An appeal to this Court from a final judgment requires leave unless, relevantly, the appeal involves (directly or indirectly) a claim, demand or question to or respecting property of the value of $100,000 or more. [55] In this context, the relevant value is that of the claim, rather than of the property to which it relates. [56] There is nothing to indicate that the claim to title of the 3.35 square metres that comprises the Yellow Land is worth $100,000 or more. Leave to appeal is required.

     55. Supreme Court Act 1970 (NSW), s 101(2)(r)(ii).

     56. Oertel v Crocker (1947) 75 CLR 261 at 265-267 (Latham CJ); [1947] HCA 40; Ballas v Theophilos (No 1) (1957) 97 CLR 186 at 193-196 (Dixon CJ, Webb and Fullagar JJ); [1957] HCA 49; Nanschild v Pratt [2011] NSWCA 85 at [26]-[34] (McColl JA; Campbell JA agreeing); Jabulani Pty Ltd v Walkabout II Pty Ltd [2016] NSWCA 267 at [80] (Bathurst CJ, Leeming and Payne JJA).

173. However, the issues raised are questions of principle, and not without importance to the operation of the Torrens system in this State. In circumstances where they have been fully argued, I would not refuse leave to appeal.

Conclusion

174. My conclusions may be summarised as follows:

1. the title of the registered proprietor of a limited folio is subject to an adverse interest in land which has been incorrectly included in the folio by wrong description of parcels or of boundaries (s 28U(2));

2. in the context of a limited folio, a portion of land will have been incorrectly included in the folio by wrong description of parcels or of boundaries if, at the time when the folio was created, that portion was subject to a crystallised or inchoate possessory interest of a person other than the registered proprietor of the limited folio; and

3. in such circumstances, the person with the possessory interest is not precluded from enforcing it, dehors Part 6A (s 45C(2)).

175. Applied to this case, the limited folio for the Sidoti Property incorrectly included the Yellow Land, in which Mr Hardy had an inchoate possessory interest, by wrongly describing the Sidoti Property as including the Yellow Land. In those circumstances, the Sidoti title was subject to the adverse interest of Mr Hardy, who was entitled to enforce it, as he has, in these proceedings.

176. In circumstances where no application has been made by the mortgagee Bank to set aside the orders, where it is far from clear that such an application must succeed, or if it did that it would ultimately result in a different outcome, and where there has been a reservation of further consideration but no application has been made in pursuance of it, absence of notice of the proceedings to the mortgagee does not require that the appeal be allowed.

177. Leave to appeal should be granted, but the appeal should be dismissed with costs.

178. I propose orders that:

1. Leave to appeal be granted; and

2. The appeal be dismissed, with costs.

179. SIMPSON AJA: This appeal and cross appeal involve consideration of provisions of the Limitation Act 1969 (NSW) and the Real Property Act 1900 (NSW). Since these provisions have been reproduced, and the relevant facts stated, in the judgments of Basten JA and Brereton JA I will confine my references to the minimum necessary to permit an understanding of my reasons for the conclusions I have reached.

Relevant legislative provisions

Limitation Act 1969 (NSW)

180. Section 27(2) creates a limitation period of 12 years for actions to recover land: it provides that an action to recover land is not maintainable after the expiration of 12 years from the date on which the cause of action arose. By s 65(2) and Schedule 4, on the expiration of that limitation period, the title to the land of a person who would formerly have had a cause of action to recover land is extinguished as against the person against whom the cause of action formerly lay.

181. However, while those provisions permit the acquisition of title to land under common law, or Old System title, and, from the expiration of the 12 year limitation period, effect the extinguishment of the title of the owner of such land, they do not have the same effect in relation to land under the provisions of the Real Property Act: Van den Bosch v Australian Provincial Assurance Association Ltd [1968] 2 NSWR 550; (1968) 88 WN (Pt 1) (NSW) 357, at 363-365; Spark v Meers [1971] 2 NSWLR 1, at p 13.

182. That was the effect of s 45 of the Real Property Act as it then stood, the terms of which are set out at p 3 of Spark, and which, subject to a qualification to which I will come, are essentially re-enacted in s 45C(1). Section 45C(1) provides:

45C Acquisition of possessory title to land under the Act

(1)    Except to the extent that statutes of limitation are taken into consideration for the purposes of this Part, no title to any estate or interest in land adverse to or in derogation of the title of the registered proprietor shall be acquired by any length of possession by virtue of any statute of limitations relating to real estate, nor shall the title of any such registered proprietor be extinguished by the operation of any such statute.

183. However, s 45C(2) provides:

(2)    Subsection (1) does not prevent the acquisition of a title, adverse to or in derogation of the title of the registered proprietor thereof, to an estate or interest in land brought under the provisions of this Act by the creation of a qualified or limited folio of the Register by reason of possession of the land for any length of time commencing before the creation of the folio.

The Real Property Act 1900 (NSW) (hereafter “the Act”)

184. Part 4 of the Act provides for applications to bring Old System land under its provisions. The essential feature (at least for present purposes) of land under the Act is that, on the inclusion of land in the Register, the registered owner has the advantage of the indefeasibility of title conferred by s 42 and s 45. The relevant provisions of s 42 and the whole of s 45 in its current form are set out at [15] and [17] of the judgment of Basten JA (see also [76] and [78] of the judgment of Brereton JA). The qualification to which I referred above is that statutes of limitation may be taken into consideration for the purposes of Pt 6A.

185. Part 4A (ss 28A-28R) provides for the creation of qualified folios of the Register. By s 28E the Registrar-General may initiate the process and, by subs (2) thereof, may create a qualified folio. The qualification (as expressed in s 28J(1) appears to be that the title is held subject to any subsisting interests, whether or not recorded in the Register. Part 4B (ss 28S-28ZD) provides for the creation of “limited folios” where the boundaries of the land in a registered deed are not sufficiently defined to enable the creation of a qualified folio. By subs (4) of s 28T, when creating a limited folio of the Register, the Registrar-General is required to make in the folio a recording to the effect that the description of the land comprised therein has not been investigated by the Registrar-General. Subsection 8 of s 28T relevantly provides as follows:

8   Except as otherwise provided by any other provision of this Part:

(a)   land comprised in a limited folio of the Register is subject to the provisions of this Act,

…

(d)   a limited folio of the Register shall be evidence as to title in all respects as if it were an ordinary folio of the Register, except that:

(i)   the certification of title is not conclusive as regards the definition of the boundaries of the land comprised therein …

186. Section 28U provides as follows:

28U Defeasibility of limited title

(1) Section 12 (3) (b) does not apply to or in respect of a correction made by the Registrar-General of any wrong description of parcels or of boundaries in relation to land included in a limited folio of the Register.

(2) Where by any wrong description of parcels or of boundaries any land is incorrectly included in a limited folio of the Register, section 42 (1) does not operate to defeat any estate or interest in that land adverse to or in derogation of the title of the registered proprietor and not recorded in the folio, whether or not the registered proprietor is a purchaser or mortgagee of that land for value or derives title from such a purchaser or mortgagee.

(Section 12(1)(d) permits the Registrar-General to correct errors and omissions in the Register; by s 12(3)(b), any such correction is deemed to have no force or effect where the correction would prejudice or affect a right already accrued from a recording in the Register).

Part 6A

187. Part 6A (ss 45B-45G), inserted in 1979 (by the Real Property (Possession Titles) Amendment Act 1979, Sch 1, cl 9), provides for the acquisition, in limited circumstances, of possessory title to land under the provisions of the Act. The key provision is s 45D. As s 45D has been set out in its entirety in the other judgments, it is sufficient to summarise its relevant provisions, as I understand them:

1. pursuant to subs (1) an application may be made to the Registrar-General by a person in possession of property to be registered as the proprietor of the property where:

   1. the land is comprised in an ordinary, qualified, or limited folio of the Register;

   2. the title of the registered proprietor would, had statutes of limitation been applicable, have been extinguished as against the person in possession;

   3. the possession by virtue of which title would have been extinguished commenced after the creation of the folio by which the land was brought under the provisions of the Act; and, importantly,

   4. the land in respect of which the claim is made is a whole parcel of land.

2. Subsection (2) applies where the possession is of part only of a whole parcel of land: the subsection nevertheless permits an application for possessory title of the whole parcel. There is no provision in s 45D or elsewhere in the Act for a claim for possessory title of part of a whole parcel of land.

3. Subsection (2A) provides for application for possessory title by adjoining owners of “residue lots” which are defined (in subs (2B)) as lots intended to be used as service lanes, lots created to prevent access to roads, and otherwise as prescribed by regulation.

4. By subs (4) a possessory application may not be made if:

   5. the registered proprietor became registered without fraud and for valuable consideration; and

   6. the whole of the period of adverse possession would not have occurred after the proprietor became registered

   unless the application is made on the basis that the estate or interest applied for will, if the application is granted, be subject to the estate or interest of the registered proprietor.

The relevant facts

188. As the relevant facts are comprehensively stated in the judgments of Basten JA and Brereton JA and in the judgment of Kunc J at first instance (Hardy v Sidoti [2020] NSWSC 1057), I can be brief. The following assumes familiarity with the judgments of Basten JA and Brereton JA.

189. The salient facts, which are not, for the purposes of the appeal, in dispute, are:

1. in January 1998 the respondent (Mr Hardy) and his then partner purchased the property that runs from west to east between Baptist St and Dalley Lane in Redfern (“the Hardy property”). The property was then held under Old System, or common law, title;

2. adjoining the Hardy property, at right angles, is a series of seven properties (Lots A-G) that face Boronia Street and run south to north. These properties were also, until 2005, held under Old System title;

3. on the southern side of the Hardy property (but not part of that property), running the length of the property between Baptist Street and Dalley Lane, is a narrow strip of land that was, in past times, used as a laneway for the purpose of “night soil” collection;

4. the laneway mentioned in (iii) above forms part of each of Lots A-G of the Boronia Street properties; that is, each of Lots A-G includes that part of the laneway that falls within the eastern and western boundaries of the individual Lot. In each case, that part of the Lot that constitutes the laneway is subject to a right of way for the purpose mentioned above;

5. at the time of the Hardy purchase, and until 2018, Lot E of the Boronia Street properties was owned by members of the Theodorou family. There were two fences (although dilapidated) on Lot E: one on the northern boundary, that marked Lot E from the Hardy property; and one that marked the southern boundary of the right of way and was well within Lot E;

6. from 2002 Mr Hardy so acted as to assert proprietorial rights over that part of Lot E that constitutes part of the right of way. He demolished the fence on the southern boundary of the Hardy property and used the space so accessed for storage of garden tools; by 2005 he had undertaken landscaping works on what had been the laneway;

7. in September 2005, consistently with government policy to bring existing Old System parcels of land under the Torrens System, the Registrar General, on his own initiative, commenced a process of converting the Boronia Street titles (including that of Lot E) to Torrens title under the provisions of the Act (s 28E). Initially, a qualified folio (s 28E(2)) was created; on 27 September 2005 the qualification was removed and a limited folio created (s 28T); the folio included the land subject to the right of way that was in accordance with the deposited plan that identified the boundaries of Lot E; it also included the recording, required by s 28T(4), that the boundaries of the land had not been investigated by the Registrar-General;

8. on 18 April 2018 the appellants purchased Lot E from the Theodorou family and their title was registered in accordance with the Act. The registered title includes that part of the land that constitutes the laneway and is subject to the right of way; the registration is subject to the limitation specified in s 28T(8)(d)(i) – that is, it is not conclusive as regards the definition of the boundaries of the land;

9. the appellants began renovations of Lot E and, in so doing, removed the fence on the southern boundary of the right of way and relocated it to the northern boundary, that is the boundary with the Hardy property. They thus effectively reclaimed that part of Lot E that Mr Hardy had occupied at least since 2005 and possibly since 2002.

   190. Mr Hardy then commenced proceedings claiming possessory title to that part of Lot E that is subject to the right of way (referred to in the pleadings and primary judgment as “the Yellow Land”). His claim was ultimately formulated in a Second Amended Summons filed in court on 30 July 2020 (the second day of the hearing). He claimed declarations to the effect (in the interests of clarity, I have taken the liberty of reformulating the declarations sought):

10. that, by reason of his adverse possession over a period of about 21 years of that part of Lot E that constitutes the laneway (“the Yellow Land”), any cause of action the appellants may have had to recover the land was not maintainable because the limitation period of 12 years fixed by s 27(2) of the Limitation Act had expired;

11. that, by operation of s 65(1) and Schedule 4 of the Limitation Act, from 8 January 2010 (representing the expiration of the 12 year limitation period fixed by s 27(2) thereof, the date apparently having been chosen by reference to the purchase by Mr Hardy and his partner of the Hardy property) the title of the appellants to the Yellow Land was extinguished;

12. that, as a consequence of his adverse possession, and the extinguishment of the title of the Theodorou family, he had acquired possessory title to the Yellow Land.

Mr Hardy also claimed consequential orders, for rectification works, to affirm his title to the Yellow Land.

191. By amended cross-claim also filed in court on 30 July 2020 the appellants claimed:

1. a declaration that, on the proper construction of s 45D(4) of the Act, Mr Hardy was not entitled to claim possessory title of the land,

2. an order restraining Mr Hardy from lodging with the Registrar-General any plan purporting to include the Yellow Land in the boundaries of the Hardy property;

3. a declaration that they were entitled to seek registration of a dealing redefining the boundaries of Lot E.

   192. The primary judge initially stated his conclusions in [11] of the primary judgment. The effect of his stated conclusions (again, I paraphrase and reformulate, but for brevity) is:

4. that the appellants’ property (Lot E) is land under the Act;

5. that possessory title under the Act can generally only be acquired in accordance with Pt 6A thereof, and that, if the Act applied, Mr Hardy’s claim must fail;

6. that the Act (that is, Part 6A) did not apply because Mr Hardy’s adverse possession commenced by no earlier than either May 2002 (with the demolition of the fence on the boundary of the Hardy property and the commencement of landscaping) or no later than January 2005 (with additional landscaping) and was extant in September 2005 when the limited folio was issued;

7. that, by no later than January 2017 (12 years from 2005), the limitation period for action by the then owners (the Theodorou family) to recover the Yellow Land had, by s 27(2) of the Limitation Act, expired, and their title to the land was extinguished by operation of s 65(1) thereof, and that, therefore, when the appellants purchased Lot E in April 2018 they did not acquire title (because by that time, the Theodorou family did not have title to the Yellow Land to convey); and, therefore,

8. that Mr Hardy had, by January 2017, acquired possessory title at common law to the Yellow Land and was entitled to orders recognising that title.

   193. After reviewing the evidence and the applicable legal principles the primary judge (at [128]) again summarised his conclusions, relevantly (for the purposes of the appeal) to the following effect;

9. Mr Hardy was in continuous possession of the Yellow Land adverse to the title of the Theodorou family commencing, at the earliest, in May 2002, or by no later than January 2005;

10. when Lot E was brought under the provisions of the Act by the creation of the limited folio in September 2005, Mr Hardy had been in possession of the Yellow Land for the purposes of s 45C(2) since at least January 2005 and as early as May 2002, so that, by reason of s 45C(2), his claim to possessory title was not subject to the prohibition in s 45C(1) and he was able to acquire possessory title to the Yellow Land at common law rather than under the provisions Pt 6A of the Act;

11. at the date of creation of the limited folio (in September 2005) comprising Lot E Mr Hardy had possessory title to the Yellow Land; therefore the Yellow Land was incorrectly included in the limited folio by a wrong description of boundaries for the purposes of s 28U(2). The indefeasibility provisions of the Act therefore did not defeat his possessory claim;

12. pursuant to s 27(2) of the Limitation Act, the Theodorou family’s cause of action to recover the Yellow Land was not maintainable as early as May 2014 (12 years from 2002) and by not later than January 2017 (12 years from 2005). The Theodorou family’s title to the Yellow Land was, by s 65(1) of the Limitation Act, extinguished no later than January 2017;

13. accordingly, the Theodorou family did not, at the time of the conveyance to the appellants, have title to the Yellow Land.

    194. The primary judge rejected a contention made on behalf of Mr Hardy that Pt 6A of the Act does not apply to land contained in a limited folio of the Register, and explained why, if it did, Mr Hardy’s claim would fail (at [111]). However, he accepted an alternative proposition, that s 45C(2) applied to preserve Mr Hardy’s common law claim to possessory title (at [112]).

    195. The primary judge found, on the application of common law principles, that Mr Hardy had established his claim to possessory title as a result of his assertion of proprietorial rights. Although a ground of appeal asserted that possessory title at common law “could not and did not ‘arise at common law’” no submissions were directed to that proposition.

The application of the Real Property Act

Part 6A

196. It was not in issue on the appeal that, once the limited folio was issued, the land comprising Lot E became subject to the Act (s 28T(8)(a)) and the appellant had the benefit of the indefeasibility provisions (s 42, s 45), subject to any relevant exceptions in the Act. The relevant exceptions are to be found in s 28U and Pt 6A.

197. Part 6A provides the avenues (limited to two) by which land under the provisions of the Act may be the subject of claims for title by adverse possession. Those avenues are provided in s 45D (and outlined above).

198. None of these was applicable to Mr Hardy’s claim. Subsections (1) and (2) of s 45D require the claim to be for the whole parcel of land (although, for a subs (2) application, it is not necessary that the adverse possession be of the whole parcel). Mr Hardy’s claim was never for the whole parcel of land, and, accordingly, s 45D(1) and (2) provide no avenue by which he could claim possessory title. Subsection (2A) provides for title of “residue lots” which are the subject of separate folios. Although in this case, the laneway was created as a “service lane”, it was part of each of Lots A-G of the Boronia Street properties, and was not contained on a separate title. Subsection (2A) provided no avenue for Mr Hardy to claim possessory title.

199. Mr Hardy was not entitled to claim possessory title under Pt 6A.

Section 28U(2)

200. As indicated above, the appellants acquired the benefit of indefeasibility subject to any relevant exceptions contained in the Act. The primary judge found that subs 28U(2) provided an exception. It is worth repeating subs 28U(2), which provides:

“Where by any wrong description of parcels or of boundaries any land is incorrectly included in a limited folio of the Register, s 42(1) does not operate to defeat any estate or interest in that land adverse to or in derogation of the title of the registered proprietor and not recorded in the folio, whether or not the registered proprietor is a purchaser or mortgagee of that land for value or derives title from such a purchaser or mortgagee.”

201. The primary judge found that that exception applied because the Yellow Land had incorrectly been included in the limited folio when it was created in September 2005 (at [128 (4)]). His explanation for that conclusion is puzzling. The limited folio was created in 2005. The primary judge said that, at the date of creation of the limited folio, Mr Hardy had possessory title of the Yellow Land. In the previous paragraph, however, he had said that, by September 2005, Mr Hardy had been in possession of the Yellow Land (for the purposes of s 45C, to which I will come) since at least January 2005, and as early as May 2002. That is well short of the 12 years necessary to enliven the relevant provisions of the Limitation Act.

202. In those circumstances, Mr Hardy could not have had possessory title to the Yellow Land at the time the limited folio was created in September 2005. There was no wrong description of any parcel or boundary at that time. Section 28U(2) did not operate to counter the effect of s 42(1).

Section 45C(2)

203. Again, it is worth repeating the relevant provision:

45C Acquisition of possessory title to land under the Act

(2)   Subsection (1) does not prevent the acquisition of a title, adverse to or in derogation of the title of the registered proprietor thereof, to an estate or interest in land brought under the provisions of this Act by the creation of a qualified or limited folio of the Register by reason of possession of the land for any length of time commencing before the creation of the folio.

204. The primary judge found that s 45C(2) applied in such a way as to preserve Mr Hardy’s common law claim to possessory title. That was because Mr Hardy had (on the primary judge’s factual finding) been in possession since at least January 2005 (that is “for any length of time commencing before the creation of the [limited] folio of the Register”), as a result of which subs (1) did not prevent Mr Hardy’s acquisition of possessory title. In my opinion, having regard to the primary judge’s factual findings which are not subject to challenge, that conclusion is inescapably correct.

205. Grounds 2 and 3 of the amended Notice of Appeal are relevantly in the following terms:

“2. The Judgment below held erroneously at [11(3)] and [128(3)] that by reason of ss 28U(2) and 45C(2) of the RP Act the respondent’s claim to possessory title to the ‘Yellow Land’ is not subject to the ‘prohibition’ in s 45C(1) of the RP Act, when it ought to have held:

a.   the respondent’s claim is subject to the restrictions imposed on the operation of any statute of limitations (that might otherwise create title to any estate or interest in land adverse to or in derogation of the title of the registered proprietor or extinguish the title of any such registered proprietor);

b.   s 45C(2) does not negate such limitations;

c. s 45C(2) instead operates to ensure that an adverse possession application that can otherwise [be] made under Part 6 of the RP Act (to the extent that statutes of limitation are taken into consideration for the purposes of that Part) can rely on a period of possession of the relevant land which commenced before the creation of a limited folio for that land – notwithstanding any restrictions imposed by s 45C(1) that might be read to the contrary); and

d.   s 45C(2) does not operate to facilitate the acquisition of a title, adverse to or in derogation of the appellant’s registered title in the land created by registration of the transfer to the appellant, and the listing of the appellant as registered proprietor of the Sidoti Property including the Yellow Land.

3.   The Judgment below held erroneously at [11(5)] and [128(3)] that the respondent ‘is able to acquire possessory title to the Yellow Land at common law rather than pursuant to s 45D of the Act’, when it should have held that:

a. the effect of s 45C is that except as provided for by Part 6A of the RP Act no title to any estate or interest in the Yellow Land adverse to or in derogation of the title of the appellants as registered proprietors of that land can be acquired by any length of possession by virtue of any statute of limitations relating to real estate, nor shall the title of any such registered proprietor be extinguished by the operation of any such statute (subject only to the limited qualification arising from s 45C(2) described in Ground 22 (sic) (b) above);

b. at all material times since the creation of the limited folio for the Sidoti Property, Part 6A has provided the exclusive scheme by which possessory title could be established over the Yellow Land, and s 27 of the Limitation Act could not albeit [sic] that possession of that land for any length of time commencing before the creation of that limited folio was available to be relied upon in any application made under s 45D subject to the restrictions imposed by that section;

… .”

206. The written submissions advanced in support of Ground 2 were limited to the following propositions:

“45. Where s 45C(1) applies ‘Part 6A applies exclusively’ (South Maitland Railways Pty Ltd v Satellite Centres of Australia Pty Ltd (2009) 14 BPR 26, 823; [2009] NSWSC 716 – cited at Judgment [81] …

46.   The court below erroneously held at Judgment [11(3)] and [128(3)] that the respondent’s claim of possessory title of the Yellow Land is not subject to the ‘prohibition’ in s 45C(1) of the Act because of ss 28U(2) and 45C(2) of the Real Property Act 1900.

…

48. S 45C(2) RP Act does not say that s 45C(1) does not apply, but only that ‘does not prevent the acquisition of a title … by reason of possession of land for any length of time commencing before the creation of the folio’.

49. As set out, that proviso can work quite sensibly with the application of s 45C(1) but allowing for a period of possession commencing before the land is brought under the RP Act be taken into account.

50. For the reasons set out above, s 45C(2) RP Act does not remove the application of Part 6A of the Act. It is to be read sensibly to operate in conjunction with that Part.”

207. No submissions were advanced in support of Ground 3.

208. The grounds as expressed ignore the exceptions provided for by s 28U(2) and s 45C(2). Section 45C(2) excludes the indefeasibility otherwise provided by s 45C(1) where the adverse possession of land commenced before the creation of the folio. As indicated above, that possession was found to have commenced prior to the creation of the folio.

209. The effect of subs (2) is that subs (1) does not prevent the acquisition of possessory title to land under the Act by reason of possession of the land for any length of time commencing before the creation of the folio. That is precisely this case.

210. The primary judge was correct to hold that s 45C(2) operated to exclude the provisions of Part 6A, and entitled Mr Hardy to claim possessory title at common law.

211. For these reasons I agree with the orders proposed by Brereton JA.

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Endnotes

Decision last updated: 26 May 2021