Urban Renewal Authority Victoria v Obeid
[2013] VSCA 371
•17 December 2013
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2012 0121
| URBAN RENEWAL AUTHORITY VICTORIA (formerly VICTORIAN URBAN DEVELOPMENT AUTHORITY) | Appellant |
| v | |
| SAMIR OBEID | Respondent |
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| JUDGES | MAXWELL P, TATE JA and DIXON AJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 19 August 2013 |
| DATE OF JUDGMENT | 17 December 2013 |
| MEDIUM NEUTRAL CITATION | [2013] VSCA 371 |
| JUDGMENT APPEALED FROM | Samir Obeid v Victorian Urban Development Authority [2012] VSC 251 (Cavanough J) |
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RESUMPTION AND ACQUISITION OF LAND – Compulsory acquisition – Acquisition by appellant Authority – Notice of acquisition – Identification of interest in land acquired – Freehold land subject to lease – Interest acquired identified as interest of owner ‘as registered proprietor’ – Register recorded interest as estate in fee simple – Whether interest acquired subject to lease – Registered interests subject to statutory encumbrances including leasehold interests – Whether interest acquired ‘freed and discharged’ from leasehold interest – No acquisition of leasehold interest – Respondent not entitled to compensation – Appeal allowed – Land Acquisition and Compensation Act 1986 (Vic) ss 19, 21, 24(1), Transfer of Land Act 1958 (Vic) ss 42(2), 54.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr J Delany SC with Mr P F Chiappi | Garland Hawthorn Brahe |
| For the Respondent | Mr S R Morris QC with Ms J M F Trewhella | Rennick & Gaynor |
MAXWELL P
TATE JA
DIXON AJA:
Summary
Samir Obeid had a lease of some land in Dandenong. In June 2008, the appellant Authority acquired the lessor’s freehold interest in that land, under the Land Acquisition and Compensation Act 1986 (Vic) (‘the LAC Act’). Mr Obeid sought a declaration that the effect of the notice of acquisition was to divest him of his leasehold interest; and that he was therefore entitled to compensation under s 30 of the LAC Act. He succeeded at first instance, and the Authority has now appealed.
In our view, the appeal must be allowed. On the proper construction of the notice of acquisition, the Authority did not acquire Mr Obeid’s leasehold interest. Rather, the Authority acquired the freehold interest subject to the subsisting lease. Accordingly, Mr Obeid has no right to compensation.
Our reasons may be summarised as follows:
(a)the interest which the notice of acquisition identified as being acquired by the Authority was the interest of the owner of the land, Ms Di Giulio, ‘as Registered Proprietor’;
(b)Ms Di Giulio’s registered fee simple interest in the land was, by force of s 42(2)(e) of the Transfer of Land Act 1958 (Vic) (‘the TLA’), subject to the interest of Mr Obeid as tenant in possession;
(c)accordingly, the interest in land which the notice of acquisition identified was the fee simple interest as so qualified or encumbered;
(d)since the leasehold encumbrance formed part of the description of the interest in land which the Authority acquired, s 24(1) of the LAC Act did not operate to discharge the leasehold interest; and
(e)accordingly, Mr Obeid’s leasehold interest remained in existence after the acquisition, as a qualification on the Authority’s interest in the land.
Background and issues
Mr Obeid was the lessee of a retail shop at 2A Mason Street, Dandenong. The registered proprietor of the land was Ms Sandra Di Giulio. In the Certificate of Title, the land was described as ‘Unit 4 on Strata Plan 005899 and an undivided share in the common property for the time being described on the plan’. Under the strata plan, the common property was vested in Body Corporate RP5899.
Mr Obeid operated a Lebanese grocery and video hire business named ‘Al‑Shark Store’ from the premises. Mr Obeid was entitled to possession of the premises under a lease for a term of three years that commenced on 24 September 2004 with options to renew. At the relevant time, the lease was current to 24 September 2010 with another option. The lease was a retail lease under the Retail Leases Act2003 (Vic). Subject to complying with his obligations under the lease and exercising his option, Mr Obeid had the right to remain in possession of the land until 24 September 2013.
On 26 September 2005, the Victorian Government launched the Revitalising Central Dandenong Initiative as a partnership between the Victorian Government, through the Authority, and the City of Greater Dandenong. The project included works in the area known as ‘Little India’, being a collection of shops on Foster Street and Mason Street. The land in question was in this area. On 31 July 2007, the Greater Dandenong Planning Scheme was amended to include the land and other land in a Public Acquisition Overlay. From this date, the Authority was able to acquire the land by compulsory process.
On 23 April 2008, the Authority served on Mr Obeid a Notice of Intention to Acquire. That Notice was addressed to Ms Di Giulio, Mr Obeid, Body Corporate RP 5899, and ‘all other interests’. It provided:
NOTICE OF INTENTION TO ACQUIRE
To: Sandra Di Guilio
2 Rowdon Place, Aspendale Gardens VIC 3195 (as Registered Proprietor),
Samir Obeid
2A Mason Street, Dandenong VIC 3175 (as Occupant)
Body Corporate RP 5899
Melbourne Body Corporate Management
160 South Gippsland Hwy, Dandenong South VIC 3164
and all other interests.
The Victorian Urban Development Authority (VicUrban) intends to acquire an interest in the following described land.
Title particulars: Being the whole of the land contained in Certificate of Title Volume 9088 Folio 557.
Description: Unit 4 of Strata Plan 005899 and an undivided share in the common property Parish of Dandenong being the property situated at 2A Mason Street, Dandenong VIC 3175.
…
Date: 23 April 2008
On 6 May 2008, the Authority registered the Notice of Intention to Acquire on the title to the land. On 26 June 2008, the Authority published a notice of acquisition (‘the Notice’) in the Victorian Government Gazette. Under s 24 of the LAC Act, an acquisition is effected upon and by virtue of the publication of a notice of acquisition in the Gazette.
The Notice was in Form 7 and, omitting formal and irrelevant parts, read:
Notice of Acquisition
Compulsory Acquisition of Interest in Land
The Victorian Urban Development Authority (VicUrban) declares that by this notice it acquires the following interest in the land described as Unit 4 on Strata Plan 005899 and an undivided share in the common property, Parish of Dandenong, being the land contained in Certificate of Title Volume 9088 Folio 557:
Sandra Di Giulio (as Registered Proprietor);
and
Body Corporate RP 5899 …Published with the authority of VicUrban
Dated 26 June 2008.
(Like notices of acquisition were published on the same day with respect to units 1, 2 and 3.)
In a covering letter accompanying the Notice, the Authority informed Mr Obeid that it had ‘determined to compulsorily acquire the owner’s interest in the property’,[1] and continued:
As at the date of acquisition, VicUrban became the proprietor and landlord in respect of the property which you occupy. The terms and conditions of your lease remain the same, however you are now required to pay your rent to VicUrban. … As previously advised, you will be able to continue to occupy the property in accordance with your existing lease until physical possession of the property is required by VicUrban for construction works. At this stage, possession will not be required before 2010. If possession is required before the expiration of your lease, VicUrban will acquire your interest in the property at this time.
[1]Emphasis in original.
Mr Obeid then paid rent to the Authority, and, on 15 June 2010, exercised his option to renew the lease, executing a new lease with the Authority for a term of three years commencing 24 September 2010. Shortly afterwards, on 25 June 2010, Mr Obeid lodged a claim for compensation with the Authority. The claim form contended that the lease had been ‘discharged pursuant to s 24(1) of the [LAC] Act upon publication of the Notice of Acquisition’, and sought compensation of $200,804.08, comprising the following amounts:
$
· market value of the interest acquired 20,200.00
· disturbance — business destruction 157,242.00+tba
· professional expenses 23,362.48
The claim was refused. The written response from the Authority’s solicitors said:
VicUrban has compulsorily acquired the relevant freehold interests in the subject land by Notice of Acquisition gazetted in June 2008. Your clients were specifically informed that it was only the freehold interests which were being acquired and that your clients would be continuing in occupation pursuant to the terms of their respective occupancy agreements. Your clients have accepted this position, remaining in occupation of the land in accordance with the occupancy agreements in question.
The statutory scheme
The effect of an acquisition under the LAC Act is to bring an identifiable piece of physical land under the dominion and control of the acquiring authority for public purposes.[2] Consistently with the common law, the Act provides for the acquisition of interests in land. The Act contains the following definition in s 3:
interest, in relation to land, means—
(a) a legal or equitable estate or interest in the land; or
(b)an easement, right, charge, power or privilege in, under, over, affecting or in connexion with land.
[2]Section 1 of the Act states that the main purposes of the Act are to ‘establish a new procedure for the acquisition of land for public purposes and to provide for the determination of the compensation payable in respect of land so acquired’.
Part 2, div 4 of the LAC Act governs the acquisition of interests other than by agreement.[3] Three provisions are relevant to the determination of the appeal.
19. Notice of acquisition
Subject to this Act, the Authority may acquire an interest in land for the purposes of the special Act by causing a notice declaring that interest to be acquired to be published in the Government Gazette.
21. Form of notice
A notice of acquisition must —
(a) be in the prescribed form; and
(b)contain a description sufficient to identify the interest in land acquired and the land in which that interest subsists.
[3]As to which see s 18 of the Act.
24. Effect of notice of acquisition
(1)Subject to this section, upon publication in the Government Gazette of a notice of acquisition —
(a)the interest in land described in the notice vests in the Authority without transfer or conveyance freed and discharged from all trusts, restrictions, dedications, reservations, obligations, mortgages, encumbrances, contracts, licences, charges and rates of any kind; and
(b)any interest that a person has in that land is divested or diminished to the extent necessary to give effect to this subsection.
Upon the statutory vesting of an interest in land in the Authority under s 24(1)(a), s 54 of the TLA operates to require that the Authority be registered forthwith as registered proprietor of the acquired interest. Importantly for present purposes, the conclusiveness of the Register[4] as provided by s 42 of that Act is subject to exception. Section 42(2) of the TLA states:
[4]Gibbs v Messer [1891] AC 248, 254; Bahr v Nicolay (No 2) (1988) 164 CLR 604, 637.
(2)Notwithstanding anything in the foregoing the land which is included in any folio of the Register or registered instrument shall be subject to—
(a)the reservations exceptions conditions and powers (if any) contained in the Crown grant of the land;
(b) any rights subsisting under any adverse possession of the land;
(c) any public rights of way;
(d)any easements howsoever acquired subsisting over or upon or affecting the land;
(e)the interest (but excluding any option to purchase) of a tenant in possession of the land;
(f)any unpaid land tax, and also any unpaid rates and other charges which can be discovered from a certificate issued under section three hundred and eighty-seven of the Local Government Act 1958, section 158 of the Water Act 1989 or any other enactment specified for the purposes of this paragraph by proclamation of the Governor in Council published in the Government Gazette —
notwithstanding the same respectively are not specially recorded as encumbrances on the relevant folio of the Register.[5]
[5]Emphasis added.
As will appear, we have concluded that the operation of s 42(2) of the TLA is decisive of the question raised by this appeal. The effect of the subsection is that a registered interest in land may be subject to one or more unregistered encumbrances. Relevantly for present purposes, s 42(2)(e) of the TLA means that where the holder of an estate in fee simple in land has leased land (or any part of it) to a tenant who is in possession, the owner’s interest in the land is held subject to the tenant’s leasehold interest, whether or not that interest is recorded in the register.
The leasehold interest ‘qualified the nature and extent of the proprietary interest’ of the freehold owner.[6] In this sense, the existence of the lease is a defining feature of the owner’s interest. If, on the other hand, there was no lease (and assuming that none of the other paragraphs of s 42(2) was applicable), the owner’s ‘interest in the land’ would be unqualified.
[6]See Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651, 668 [49] (‘Pioneer’).
The distinction between these two cases is of fundamental importance when the question to be answered is: what interest in land was acquired? In the first case, the interest acquired is a qualified interest; in the second, the interest acquired is unqualified. The ‘nature and extent’ of the interest acquired is different. There is a direct analogy here with the question which arises in relation to the dutiability of a conveyance of land: what interest in land was conveyed?[7] Whereas a lease is a proprietary interest which qualifies the lessor’s title, neither other forms of contractual obligation[8] nor trust obligations[9] qualify the title of the landowner.
[7]Ibid 663–4 [34]–[36].
[8]Ibid 667 [44]. See also Wilmott Growers Group Inc v Wilmott Forests Limited (Receivers and Managers Appointed) (in liq) [2013] HCA 51 (‘Wilmott Forests’).
[9]Commissioner of State Revenue v LendLeaseFunds Management Ltd (2011) 33 VR 204, 233–4 [113]–[116], 243 [163] (‘LendLease’).
We note that, although the argument based on s 42(2)(e) was at the forefront of the Authority’s appeal submission, it hardly featured in the submissions before the trial judge. There was no mention of s 42(2) in the Authority’s written submission to his Honour. The Authority’s case was put on the basis that the interest acquired was Ms Di Giulo’s reversionary interest, as understood at common law. There was only passing reference to s 42(2)(e) in the oral argument. It is unsurprising, therefore, that the trial judge did not address s 42(2)(e) in his reasons.
Ground 1: the proper construction of the Notice
The acquisition of interests, and in particular the identification of the interest acquired, is governed by s 19 of the LAC Act. As set out above, s 19 provides that the Authority may acquire an interest in land by causing a notice declaring that interest to be acquired to be published in the Government Gazette. Section 21 prescribes that the notice contain a description ‘sufficient to identify the interest in land acquired and the land in which that interest subsists’.
There was no dispute that the land was adequately identified in the Notice. The controversy concerned the identification of the interests being acquired. The primary judge relevantly found that there were three subsisting interests in the land, as identified in the Notice of Intention to Acquire. The respective owners of those interests were Ms Di Giulio, Body Corporate RP 5899, and Mr Obeid. The Notice, however, identified only two specific interests in the land as being acquired. They were identified in each case by the name of the proprietor of the interest, namely:
(i) ‘Sandra Di Giulio (as Registered Proprietor’); and
(ii) ‘Body Corporate RP 5899 …’
The Notice made no mention of Mr Obeid or of his leasehold interest.
In our view, the description in the Notice of the interest acquired was clear and unambiguous. The critical words of acquisition are these: ‘… by this notice [the Authority] acquires the following interest in the land … : Sandra Di Giulio (as Registered Proprietor)’. On its face, the Notice did not purport to identify the whole of the estate in fee simple in its pure sense. We were informed by counsel that it was not uncommon for a notice of acquisition to identify the interests acquired as ‘all interests in the land described’, when that was the intention of the acquiring authority. Plainly, no such comprehensive description of all possible interests in the identified land was chosen by the drafter of this Notice. So much is evident from the inclusion, with the interest of Ms Di Giulio, of the interest of Body Corporate RP 5899.
As already mentioned, the Notice did not refer to Mr Obeid’s interest ‘as occupant’ or as tenant in possession pursuant to a lease. Mr Obeid’s interest was, of course, a distinct interest in land for the purposes of the LAC Act. No party contended otherwise.
What was being acquired was identified by the Notice as being Ms Di Giulio’s interest as the registered proprietor of a legal estate recorded in the Register maintained under the TLA by the Registrar of Titles. It cannot be, and was not, suggested that this description was inappropriate in respect of land that is under a system of title by registration. The Notice describes Ms Di Giulio’s actual registered title interest. The Authority acquired that interest, and no more.
Nor is there any ambiguity as to what that interest was. Ms Di Giulio’s interest was identified by reference to, and defined by, the Register. Ms Di Giulio was recorded in the Register as the sole proprietor of an estate in fee simple of the land identified in the particular volume and folio of the Register.
The paramount estate of a registered proprietor of land under the TLA is defined by s 42(1). The registered proprietor holds the land subject to such encumbrances as are recorded on the relevant folio of the Register, but absolutely free from all other encumbrances — except as provided for by the section. Subsection 42(2) lists the exceptions. As noted earlier, the subsection relevantly provides that land which is included in any folio of the Register shall be subject to:
(e)the interest (but excluding any option to purchase) of a tenant in possession of the land.
This will be so by operation of law, notwithstanding that the tenant’s interest is not recorded in the Register as an encumbrance.
In short, Ms Di Giulio’s interest ‘as Registered Proprietor’ of the land was subject to Mr Obeid’s interest in the land.[10] Her freehold interest was subject to an unregistered encumbrance, being Mr Obeid’s leasehold interest. That was the interest which the Authority said (in the Notice) it was acquiring — a fee simple estate in the land with the benefit, and the burden, of Mr Obeid’s lease.
[10]For a recent judicial statement to this effect see Australian Securities & Investments Commission v Money for Living (Aust) Pty Ltd (Administrators Appointed) (No 2) (2006) 155 FCR 349, 355 [24]. See also Perpetual Trustee Company Limited v Smith (2010) 186 FCR 566, 585 [64].
The trial judge viewed as significant the fact that neither the Notice nor the Register made any reference to Mr Obeid’s leasehold interest. In his Honour’s view, the Notice should be construed
as it would be construed by a member of the public reading it as published in the Government Gazette and in the light of the relevant legislation and the relevant entries in the register of titles.
His Honour went on to hold that a member of the public reading the Notice should not be taken to know that Ms Di Giulio’s interest as registered proprietor ‘was encumbered by a lease to Mr Obeid’. Alternatively, even if that knowledge was to be attributed to such a reader, the Notice ‘would still not indicate to the reader that the leasehold interest of Mr Obeid was to be preserved’.[11]
[11]Samir Obeid v Victorian Urban Development Authority [2012] VSC 251, [60] (‘Reasons’).
It follows from what we have said that we respectfully disagree with this reasoning. The question of construction is not to be approached by reference to the knowledge or understanding of an ordinary member of the public. Rather, the task is to ascertain the meaning conveyed by the words actually used. Technical language, such as ‘as Registered Proprietor’, must be given its technical meaning, ascertained by reference to the relevant body of knowledge — in this case, the legislation (the TLA) which establishes the Register and defines the scope and limits of a registered interest in land. The Notice in the present case clearly identified the interest being acquired. The nature and extent of that interest could readily be established by reference to the Register and the applicable legislation.
On its face, his Honour concluded, the Notice ‘appears to bring about an acquisition of the “full” fee simple in the land’.[12] On that view, the effect of publication of the Notice was that the Authority acquired an unqualified freehold interest in the land. We have already explained why, in our view, that was not so. But, if his Honour’s conclusion were correct, there would be no scope for s 24(1) of the LAC Act to apply, since ex hypothesi the acquired interest was not subject to any relevant ‘restriction’.
[12]Ibid [88].
Notwithstanding his Honour’s conclusion that the Notice identified the ‘full’ fee simple interest as being acquired, his Honour went on to hold that s 24(1) operated to discharge Mr Obeid’s leasehold interest. We turn to consider the applicability of s 24(1).
Whether s 24(1) of the LAC Act is applicable
As noted earlier, s 24(1)(a) provides that the interest in land identified in the Notice vests in the Authority ‘freed and discharged from all trusts, restrictions, dedications, reservations, obligations, mortgages, encumbrances, contracts, licences, charges and rates of any kind’. The judge found that Mr Obeid’s leasehold interest fell within the scope of this discharging provision. It followed from the operation of s 24(1)(b) that his interest in the land was divested, that divestment being necessary to give effect to a vesting freed of restrictions.
His Honour explained his conclusion as follows:
Section 24(1) is expressed to operate such that the interest described in the notice vests in the Authority (or, as here, the Crown) freed and discharged from all trusts, restrictions etc and such that any interest that a person has in the land is divested or diminished to the extent necessary to give effect to s 24(1). Section 24(1) operates on each and every notice of acquisition, saving the drafter from spelling out the consequences to which the subsection refers. The very existence of s 24 creates a starting point or default position in relation to those consequences. To the extent that the drafter of a notice of acquisition wishes to avoid the specified consequences or any of them, the drafter must say so in the notice.
To all appearances, Ms Di Giulio’s interest was the fee simple estate in the land. It was burdened by Mr Obeid’s unregistered lease, but VicUrban concedes that a lease is comprehended within the list of restrictions, encumbrances and other like things contained in s 24(1)(a), notwithstanding that leases are not expressly mentioned in that subsection. VicUrban further concedes that, to the extent that Ms Di Giulio’s interest was subject to any restrictions etc other than Mr Obeid’s lease (such as an easement of any kind), those restrictions were discharged by the notice of acquisition as drafted. There is no sufficient reason to pick out and exclude Mr Obeid’s lease in this regard. In my view, the fee simple estate was likewise freed and discharged from Mr Obeid’s lease.[13]
[13]Ibid [127]–[128].
As this passage makes clear, his Honour accepted that the owner’s fee simple interest in the land was ‘burdened by Mr Obeid’s unregistered lease’. The effect of s 24(1)(a), on his Honour’s view, was to free the estate of this burden. In order to give effect to that discharge, s 24(1)(b) operated to divest Mr Obeid of his leasehold interest.
We respectfully disagree. We are content to assume that s 24(1)(a) is capable of applying to a leasehold interest, whether viewed as a ‘contract’[14] or as an ‘encumbrance’.[15] But we do not think that s 24(1) was intended to apply to a case such as the present, because of the description of the interest acquired. For the reasons we have given, the Notice identified the interest being acquired as the fee simple subject to the leasehold interest of Mr Obeid. On this view of the Notice, the Authority was acquiring a qualified, rather than an unqualified, interest in the land. It was not acquiring Mr Obeid’s leasehold interest.
[14]See Wilmott Forests [2013] HCA 51.
[15]See, eg, the definition of ‘encumbrance’ in s 4 of the TLA, and the use of the word ‘encumbrance’ in s 42(2) of that Act.
It would be a very strange result if, notwithstanding the Authority’s clear identification of the qualified interest it was acquiring, s 24(1) nevertheless operated — of its own force — to defeat the Authority’s purpose, such that an unqualified estate in fee simple vested in the Authority and the Authority was obliged to compensate Mr Obeid for the loss of his leasehold interest. Plainly enough, s24(1) was enacted to facilitate, not to defeat, the Authority’s acquisition of such interest as it specifies in a notice of acquisition.
We conclude, therefore, that where a notice of acquisition describes the interest in land being acquired as subject to a restriction or qualification falling into one of the categories listed in s 24(1)(a), the interest is acquired subject to that restriction or qualification and s 24(1)(a) does not apply. In the present case, as we have explained, the description of the interest incorporated — by its reference to ‘the Registered Proprietor’ — the qualification imposed by s 42(2)(e) of the TLA.
The description of the interest being acquired is critical. So, for example, if a notice of acquisition described the interest in land being acquired as the interest of ‘R as registered proprietor, subject to the licence granted by R to Stone Co dated … to quarry for stone on the land’. In that case the interest acquired would be the interest of the registered proprietor as qualified by the licence and s 24(1)(a) would not operate to free the vested interest identified in the notice from the licence. Section 24(1)(a) would, however, free that vested interest on any restriction not identified in the description of the interest acquired. Thus, if R held the benefit of the licence agreement on trust, the interest in land would be acquired free of that trust.
What if s 24(1)(a) did apply?
If we were wrong, and s 24(1)(a) did apply to the leasehold interest in the present case, it would be necessary to consider the application of s 24(1)(b). As we have said, Parliament cannot have intended that the Authority be compelled — by law — to acquire a greater interest in land than that which it specifies in its notice of acquisition. We would therefore be constrained to read s 24(1)(b) as effecting only such divestment as was necessary to give effect to the acquisition of the specified interest. In the present case, the divestment of Mr Obeid’s leasehold interest was not ‘necessary to give effect to this subsection’ as applied to the acquisition of Ms Di Giulio’s interest. It was not ‘necessary’ in that sense, because the Authority was able to acquire the fee simple estate without the leasehold interest having to be divested.
A legal estate in fee simple is not diminished, nor is a vesting of it at law restricted, when the registered proprietor is not in actual physical occupation of the land but is in receipt of its rents and profits. An estate in fee simple is the most ample estate which can exist in land.[16] As Wilson J observed in Commonwealth of Australia v Maddalozzo:
One may recall the broad scope of the interest connoted by a fee simple estate, as emphasized by Isaacs J in Commonwealth v New South Wales (1923) 33 CLR 1, at 42, when he referred with approval to the definition of ‘fee simple’ in Challis's Real Property, 3rd ed, at 218: ‘ … A fee simple is the most extensive in quantum, and the most absolute in respect to the rights which it confers, of all estates known to the law. It confers, and since the beginning of legal history it always has conferred, the lawful right to exercise over, upon, and in respect to, the land, every act of ownership which can enter into the imagination, including the right to commit unlimited waste; and for all practical purposes of ownership, it differs from the absolute dominion of a chattel, in nothing except the physical indestructibility of its subject ...[17]
[16]Using the words of Robert Megarry and H W Wade, The Law of Real Property (Steven & Sons Limited, 5th ed, 1984) 59, which in turn is based on Coke upon Littleton (19th ed, 1832) 11 and T C Williams (ed), Joshua Williams, Principles of the Law of Real Property (23rd ed, 1920) 6.
[17]Commonwealth of Australia v Maddalozzo (1980) 29 ALR 161, 173–4.
A fee simple estate is properly described as being ‘in possession’ even though the registered proprietor has granted a lease. From a general law perspective, Megarry and Wade in The Law of Real Property explain why that is so.
From its very nature it follows that a reversion is a vested interest; for it is the remnant of an estate which has never passed away from the grantor, and he or (if he is dead) his representatives stand ready to receive the land as soon as the particular estate determines. According to feudal principles, moreover, a freehold reversioner on a term of years has an estate which is vested not only in interest but also in possession, for the grant of a lease does not deprive a grantor of seisin, and he therefore has what is properly called a freehold in possession subject to the term. From this point of view a reversion on a lease is not a reversion or, indeed, a future interest at all. This technicality is a relic of the ancient doctrine that leases were not even estates and were to be disregarded for feudal purposes. But, as has been seen, leases have long since achieved the status of estates, and it is therefore common and correct to speak of a landlord’s reversion.[18]
In the context of Torrens title, that passage was approved by Debelle J in Perpetual Trustee Company Ltd v Valuer-General (No 2),[19] and, on appeal, by the Full Court of the Supreme Court of South Australia.[20]
[18]Megarry and Wade, The Law of Real Property (Steven & Sons Limited, 5th ed, 1984) 237 (citations omitted).
[19](2007) 99 SASR 251, 261–2.
[20]Trust Company of Australia Ltd v Valuer-General (2008) 101 SASR 110, 126 [56] (Bleby J, with Duggan and Anderson JJ agreeing).
As Croft J added in Challenger Property Asset Management Pty Ltd v Stonnington City Council:
This is entirely consistent with the opening discussion of the nature of the estate in fee simple as being the most ample, the highest, estate which can exist in land at common law. It is consistent in the sense that the estate in fee simple is, as Pollock and Maitland describe it, ‘... the full range of proprietary rights in land ...’. The estate is, thus, not a tangible thing, but rights in land. Consistently with this position, Debelle J noted that the definition of ‘possession’ in s 7 of the Law of Property Act1936 (SA) reads:
’”possession” includes receipt of rents or profits or the right to receive the same (if any)’.
The same is true of the corresponding definition in s 18(1) of the Victorian Property Law Act, save that the expression is ‘rents and profits’, rather than ‘rents or profits’ as in South Australia. As Debelle J noted, these definitions only apply to the respective law of property legislation, but they are consistent with the general law.[21]
[21]Challenger Property Asset Management Pty Ltd v Stonnington City Council [2011] VSC 184, [63] (citations omitted).
In Perpetual Trustee Co Ltd v Valuer-General (No 2), Debelle J concluded, relevantly for present purposes, that it is
well established that the expression ‘fee simple in possession’ refers both to the situation where the holder of the estate in fee simple is in physical occupation and possession of the land and to the situation where the holder of the estate in fee simple has leased the land for a term of years and is entitled to receive the rents from the land. [22]
[22]Perpetual Trustee Co Ltd v Valuer-General (No 2) (2007) 99 SASR 251, 262 [25]. See also Bleby J in the Full Court at (2008) 101 SASR 110, 127 [58]–[59].
Properly understood, therefore, the Authority was able to acquire the fee simple estate in the land without it being ‘necessary’ (in the s 24(1)(b) sense) for Mr Obeid’s interest as tenant in possession of the land to be extinguished or diminished.
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