Yip v Frolich & Frolich
[2004] SASC 287
•17 September 2004
Supreme Court of South Australia
(Full Court)
YIP v FROLICH & FROLICH
Judgment of The Full Court
(The Honourable Justice Perry, The Honourable Justice Bleby and The Honourable Justice Gray)
17 September 2004
REAL PROPERTY - EASEMENTS - EASEMENTS GENERALLY - CREATION
Creation of easement - Torrens Title land - easement created by reservation by transferor contained in a registered memorandum of transfer - nature of the right conferred by the easement - whether a right of way or drainage easement had been created - principles of construction of an easement - construction of instrument as a whole - relevance of accompanying plan - relevance of restricted class of beneficiaries - whether ambiguity - surrounding circumstances as an aid to construction - effect of reservation rather than grant of an easement - whether easement should be construed against transferee of land - easement held to be drainage easement not right of way - whether trial judge's discretion as to costs miscarried - appropriate exercise of discretion to make no order as to costs - Appeal dismissed.
Real Property Act 1886 s 96A, s 89, 5th Schedule, Parts 3, 10 and 57; Real Property Act Amendment Act 1939 ; Real Property Act 1861 (Qld) ; Real Property Act 1881 (SA) s 57; Building Act 1923-1929 ; Law of Property Act 1925 (UK) s 65(1); Real Property Act 1886 s 84, s 85, s 87, s 88, s 89A, s 96; Real Property Act 1861 ; Rights of Way Act 1881 s 3, s 5, s 7, s 8, s 9, s 10, s 11, s 15, s 16; Supreme Court Act 1935 s 41, s 51, referred to.
Metropolitan Gas Co v Federated Gas Employee's Industrial Union (1924) 35 CLR 449; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; Mayor v Isaac (1840) 6 M&W 605; St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No 2) [1973] 1 WLR 1572; Cordell v Second Clanfield Properties Ltd [1969] 2 Ch 9, applied.
Copping v ANZ McCaughan Ltd (1994) 63 SASR 523, distinguished.
St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No 2) [1975] 1 WLR 468, discussed.
Somerset v The Great Western Railway Company (1882) 46 LT, NS 883; Mitcalfe v Westaway (1864) 34 LJCP 113; Baxendale v North Lambert Liberal and Radical Club Ltd [1902] 2 Ch 427; Hammond v Prentice Bros Ltd [1920] 1 Ch 201; Breskvar v Wall (1971) 126 CLR 376; Gibbs v Messer [1891] AC 248; Fels v Knowles (1906) 26 NZLR 604; Wamiha Saw Milling Co Ltd (In Liquidation) v Waiome Timber Co Ltd (1926) AC 101; Hemmes Hermitage Pty Ltd v Abduraham (1991) 22 NSWLR 343; Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73; Shannon Ltd v Venner Ltd [1965] Ch 682; Johnston v Holdway [1963] 1 QB 601; Cannon v Villars (1878) 8 Ch D 415; Todrick v Western National Omnibus Co [1934] Ch 190; Nickerson v Barraclough [1981] Ch 426; Proprietors Strata Plan No 11173 (1979) 2 NSWLR 605; Rodwell v GR Evans & Co Pty Ltd [1977] ACLD 510; [1978] 1 NSWLR 448; SS & M Ceramics v Kin [1996] 2 Qd R 540; Gallagher v Rainbow (1994) 179 CLR 624; Williams v James (1867) LR 2 CP 577; Durham and Sunderland Railway Co v Walker (1842) 2 QB 940; Bullen v Denning (1862) 5 B and C 842; Savill Brothers Ltd v Bethel [1902] 2 Ch 9; Broomfield v Williams [1897] 1 Ch 602; Mill and Fenton v Duke of Devonshire (1882) 8 App Cas 135; Bulstode v Lambert [1953] 1 WLR 1064; Mason v Clark [1954] 1 QB 460; Golding v Tanner (1991) 56 SASR 482, considered.
YIP v FROLICH & FROLICH
[2004] SASC 287Full Court: Perry, Bleby and Gray JJ
PERRY J: I am indebted to Bleby J for his comprehensive treatment of the issues arising on this appeal.
I agree with the orders which he proposes and with his reasons.
BLEBY J:
The issue
The issue on this appeal is whether an easement over the respondents’ land constitutes a right of way in favour of the appellant, the owner of the adjoining dominant land, or whether it merely confers on the appellant a right to lay pipes in the area of the easement, to break open the land and to go onto the land for that purpose. I refer to this as the “drainage easement”.
Before the trial Judge other issues were argued, namely whether the easement had been abandoned, and if so whether that could apply to land under the Real Property Act 1886, and whether injunctive relief sought by the appellant should be refused in the exercise of the Court’s discretion. These issues were decided in favour of the appellant and are not the subject of any cross-appeal by the respondent.
The trial Judge decided that on the proper construction of the easement it was a drainage easement only. He made declarations accordingly, and made orders relating to the conditions under which the easement could be used by the appellant.
The appellant now appeals against the declaration that the easement is only a drainage easement and against any order restricting his alleged right of way over the land described in the easement.
The land
The dominant land, owned by the appellant, is the land situated at 128 O’Connell Street, North Adelaide. It is the land comprised and described in Certificate of Title Register Book Volume 5312 Folio 905. It is situated on the eastern side of O’Connell Street between Gover Street and Tynte Street. Subject to an irregular boundary on the southern side, it is rectangular in shape with a frontage of 16.62 metres to O’Connell Street and a depth of 32.28 metres. The appellant conducts a restaurant business on the land.
The servient land, owned by the respondents, is situated at 124 O’Connell Street, North Adelaide and is the land comprised and described in Certificate of Title Register Book Volume 5404 Folio 407. The land adjoins the appellant’s land on the latter’s southern boundary. The respondent’s land is on the north-eastern corner of O’Connell Street and George Street. George Street joins O’Connell Street at a right angle on O’Connell Street’s eastern boundary. The respondent’s land has a frontage of 6.92 metres to O’Connell Street. Subject to the same irregular boundary, it too is rectangular in shape with the same depth from O’Connell Street as the appellants’ land. The respondents conduct a flower shop from the premises.
The dominant and servient land are shown in the plan reproduced below. The enlargement that follows shows the easement in more detail.
The easement
The easement in question is y shaped with the base of the y on the southern boundary of the respondent’s land and the two upper limbs of the y adjoining the appellant’s land at two points on its southern boundary. It covers the area within the broken lines shown on the plan of the respondents’ land.
The eastern limb of the easement is approximately 7.83 metres long and .91 metres wide. The eastern limb is joined on its western side by the western limb which is 1.01 metres wide at that point. Where the western limb joins the boundary of the appellant’s land at an acute angle the width along the boundary line is 2.44 metres.
Creation of the easement
In 1888 the land which now comprises both the dominant land and the servient land, together with an additional strip of land immediately to the north of the dominant land, was all comprised in Certificate of Title Register Book Volume 521 Folio 179. The land was owned by Mr William Pullin, Butcher, of North Adelaide. William Pullin died on 9 October 1933. The executors of his will, as described in the various Certificates of Title, were William Alexander Pullin and Alfred Bertie Pullin of Prospect, Butchers, Cyril Edgar Pullin, Insurance Representative and Elizabeth Mary Pullin, Spinster.
Transmission to the executors of the land comprised in Certificate of Title Register Book Volume 521 Folio 179 was registered on the title on 8 December 1933. A portion of that land, comprising what is now the servient land, was transferred to Alfred Bertie Pullin “in consideration of the said land forming portion of the estate of the said William Pullin deceased and of the said Alfred Bertie Pullin being a beneficiary in the said estate and for the purpose of vesting the said land in the said Alfred Bertie Pullin as such beneficiary as aforesaid and for no other consideration”. The date of that memorandum of transfer was 1 December 1933. It was registered on 12 December 1933.
What was transferred to Alfred Bertie Pullin was the estate and interest of the executors in the servient land, subject to the following reservation which created the easement:
“Reserving nevertheless to ourselves a full free and unrestricted right and liberty of entry egress and regress from time to time and at all times hereafter for ourselves and our servants and workmen and for the registered proprietors for the time being of the balance of the land in the said certificate of title their servants and workmen over the lands coloured red in the said plan and therein marked Easement and also full free and unrestricted right and liberty for the said persons from time to time and at all times hereafter to break the surface of dig open up and use the said lands marked Easement for the purpose of laying down, fixing, taking up, repairing, relaying or renewing pipes therein and of using and maintaining such pipes”.
A new certificate of title was issued for the servient land (Certificate of Title Register Book Volume 1624 Folio 16) which described the land as being “subject nevertheless to the right of way and easement reserved” by the memorandum of transfer. Mr Wells QC, counsel for the appellant, quite properly did not seek to rely on that description, a description which in all respects must give way to the actual words of reservation contained in the memorandum of transfer. Subsequent replacement certificates of title merely refer to the land being subject to “an easement” created by the memorandum of transfer.
The memorandum of transfer creating the easement was signed by all four executors of the will of William Alexander Pullin as transferors. Alfred Bertie Pullin did not sign the transfer in his capacity as transferee, as it was not necessary at that time for him to do so. Section 96A of the Real Property Act, which now requires, in most cases, an acceptance signed by the transferee, was only inserted into the principal Act by the Real Property Act Amendment Act 1939, which came into effect on 1 February 1940.
The subsequent history of ownership of the two allotments of land is not relevant for present purposes. The history that I have summarised can be gleaned from the relevant certificates of title and instruments of transfer.
Relevant principles of construction
Before turning to the proper interpretation of the reservation of the easement, it is desirable to refer to some of the more important principles of construction.
As with any written instrument, the object of the Court in interpreting the reservation is to give effect to the evident intention of the parties. If the meaning of the words used is clear and unambiguous, effect must be given to them.
If the words admit of ambiguity, other principles may sometimes be called in aid. It was the application of some of these principles on which the parties to the appeal differed.
Another fundamental principle of construction is that a document or an instrument is to be construed as a whole: Metropolitan Gas Co v Federated Gas Employees’ Industrial Union (1924) 35 CLR 449. In elaborating on that principle Isaacs and Rich JJ noted, at 455:
“In construing an instrument ‘every part of it should be brought into action, in order to collect from the whole one uniform and consistent sense, if that may be done; or, in other words, the construction must be made upon the entire instrument, and not merely upon disjointed parts of it; the whole context must be considered, in endeavouring to collect the intention of the parties, although the immediate object of inquiry be the meaning of an isolated clause’ (Broom’s Legal Maxims, 9th ed., pp. 367-368, and cases there cited: and per Lord Haldane L.C. in Toronto Suburban Railway v Toronto Corporation).”
Of relevance in this case is not only the words used in the reservation but the plan to which the reservation refers. I accept Mr Wells’ proposition that the plan does not control the text by including additional words not accommodated by the text. I also accept that the plan cannot detract from the plain words used in the text. However, the plan may control the text in the sense of giving colour and meaning to the words used. The plan is important in order to identify the portion of the servient land which is subject to the easement and over which the rights are exercisable. It is also important because the shape, configuration and dimensions of the area in question may be used to construe or give colour to words used in the reservation. For example, in this case, if the reservation does constitute a right of way, its width and configuration require that the right be construed as to exclude the passage of most vehicular traffic, thus confining the right effectively to a pedestrian right of way.
However, the shape, configuration and dimensions of the area in question may go further in assisting to determine whether the terms of the reservation constitute a right of way at all.
Construction of the easement
Mr Wells QC argued that the reservation created two separate and distinct sets of rights: the first right being one of entry, egress and regress, and the second right being to dig up and use the designated land for laying, taking up, using and maintaining pipes to carry drainage water. So construed, there was no limitation of purpose on the first right. Entry, egress and regress alone constituted the purpose.
However, it is the primary assertion that the reservation comprises two separate rights that requires examination. That assertion derives its greatest support from the conjunctive phrase “and also”, and the repetition at the commencement of each conjoined segment of the words “a full free and unrestricted right and liberty …”
However, a consideration of three significant aspects of the reservation suggests that only one composite right was conferred. The first aspect is that, although at the time of creation of the easement section 89 of the Real Property Act provided a short form of creating a right of way for use in instruments registered under the Act, the drafter chose not to use that short form in creating the so called first right. A longer and quite different form was chosen. Section 89 does not require use only of the short form to create a valid right of way, but its non-use is consistent with an intention of the drafter to create some interest other than a right of way.
The second aspect relates to a closer examination of the words used. The drafter has not used in the portion creating the so-called first right the classic expression commonly used in elaboration of rights of way, namely “to pass and repass”. That is the expression used in the expansion of the optional shorthand description offered by s 89 of the Real Property Act and the Fifth Schedule. That is an expression also used in all other similar legislative expressions in Australia of what constitutes a right of way.[1] That expression carries with it the implication of passing and repassing over the whole of the land depicted in the easement, of using the land comprised in the easement for the rights of passage from one boundary of the servient land to another, or to some point on the servient land to which the dominant owner has some right of access, and for the purpose of return passage in the opposite direction.
[1] Conveyancing Act 1919 (NSW), s 181A and Schedule 8; Transfer of Land Act 1958 (Vic), s 72(3) and 12th Schedule; Transfer of Land Act 1893 (WA), s 65 and 9th Schedule; Real Property Act (NT), s 89 and 5th schedule; Real Property Act 1925 (ACT), s 81 and 1st Schedule; Conveyancing and Law of Property Act 1884 (Tas), s 34A(1) and 8th Schedule.
The expression in this easement, however, is not to provide a right of passage and repassage over the servient land but of “entry, egress and regress … over” the land depicted in the plan. That means to enter upon, to exit from and to return to the land depicted in the plan. If the easement had used the terms “entry to, egress from and regress to” the dominant land or George Street, there could be little doubt that a right of way was intended. But it does not. It might constitute a right of way if it provided for entry, egress and regress to and from the land comprising the easement. Such was the case in Somerset v The Great Western Railway Company (1882) 46 LT, NS 883, but the construction in that case was aided by the fact that the right of “ingress, egress and regress” was “to and from the road which adjoins to and abounds …” the dominant land. (Emphasis added). Furthermore, the use of the prepositions “to” and “from” suggests a purpose of entry to and exit from the designated land, thus using the land for the purpose of passing across it.
The entry, egress and regress in this case is restricted to entry, egress and regress “over” the relevant part of the servient land, suggesting that the right of entry onto the servient land is for some more limited purpose. There is no description of the relevant part of the servient land which makes it obvious that the land constitutes a right of way. Rather, the third aspect referred to below suggests otherwise. There is nothing in this reservation to suggest that ingress or egress to the land is for the purpose of leaving the land at some other point. When one reads on and sees that there is an additional right to dig and lay pipes etc, the justification for the more restrictive language of the first part of the reservation becomes apparent.
The third aspect of the easement relates to the shape, size, configuration and location of the easement. The servient land is only 7.83 metres wide at its widest point. Ready and convenient access by public roads is available to George Street from the dominant land. At best, the easement, by virtue of its width, could only be for pedestrian access. There is no simple explanation why two points of access from the dominant land would be necessary for a right of way, converging in the way those points do on the servient land to a single access point to George Street. If one was creating a right of way over that portion of the servient land for the purpose of access to the dominant land direct from George Street, there are more direct ways of doing so.
These factors give rise to a serious question whether a right of way was really intended. The shape, width and configuration are, however, entirely consistent with and appropriate for the provision of drainage pipes to George Street from two points within the buildings or structures on or adjacent to the southern boundary of the dominant land from points for which drainage connections to O’Connell Street might well have proved difficult and expensive. The shape of the easement would require the least amount of trenching and pipe work from the two access points on the dominant land to what the evidence suggests is a convenient drainage connection point in George Street.
When these three significant aspects of the reservation are considered together, the intention of the author of the reservation becomes apparent. All aspects, when considered together, point clearly, not to two separate rights of way and of drainage, but to a right to enter, exit and return for the purpose of digging and laying pipes etc, and to use the relevant part of the servient land for that purpose.
Viewed in that manner, any perceived ambiguity disappears. The words used, coupled with the shape, size, configuration and location of the easement, indicate that only a drainage easement was intended. Construing the reservation as a whole, there is no ambiguity. It is therefore not necessary to resort to other aids to construe the reservation for the purpose of resolving an ambiguity.
I do not consider that the phrase “full, free and unrestricted” expands the purpose for which the right of entry, egress and regress is created. It merely means that, for whatever purpose the right is created, there will be no restrictions on its exercise. It cannot expand the nature of the right so as, for example, to extend a right of pedestrian access to include vehicle access where the circumstances indicate that that is plainly not permitted. The fact that the phrase is repeated in the second limb of the easement indicates that the drafter of the easement was merely seeking to ensure that there should be no restrictions on the exercise of whatever rights are created by the easement.
Mr Wells argued that the order of expression of the two limbs is inconsistent with the creation merely of a drainage easement. In the case of a drainage easement, he argued, the right of access is merely ancillary to the main purpose of the easement, and would not normally receive primary and conjunctive recognition. I do not regard that argument as persuasive. In some methods of drafting it might be expected that the primary purpose would be stated first, with ancillary rights following. On the other hand, there is a logic which this drafter appears to have adopted as part of the drafting style, namely that before one can proceed to dig trenches and lay pipes one must first gain access to the land for that purpose.
Mr Wells argued that to limit the easement to a drainage easement overlooks the fact that a drainage easement would not require the first limb of this easement, as a right of entry, egress and regress is a necessary incident of, and therefore ancillary or secondary to, the drainage easement itself. I accept that this is so. It may be that the second limb in this case would have been sufficient. However, the drafting style that has been employed is elaborate, detailed and somewhat repetitive. The reservation must be read in that light. The fact that the right of entry is stated separately and in a limited fashion but in a logical way, in the sense that entry must precede work being performed on the land, does not mean that a separate and independent right has been created by the first limb.
Indeed, the description of the persons who may enjoy the right (“ourselves and our servants and workmen”) and the repetition of that class in relation to subsequent registered proprietors are indicative of the right of entry being for a purpose for which that class of person is likely to need entry, namely the persons required to carry out the work referred to in the second limb.
Such expressions of a class or classes of beneficiaries are not usually construed as being exhaustive or restrictive, but as being illustrative only: Mitcalfe v Westaway (1864) 34 LJCP 113; Baxendale v North Lambert Liberal and Radical Club Ltd [1902] 2 Ch 427; Hammond v Prentice BrosLtd [1920] 1Ch 201 at 216. That primary rule clearly applies when the issue for decision concerns who is entitled to exercise the right. If this is properly a drainage easement only, no-one could successfully argue that the terms of the easement exclude a plumbing contractor, a works supervisor or a State government or council building inspector from entry upon the land, even though they are not specifically mentioned in the reservation.
However, that does not mean that the choice of an apparently restricted class carries no implication as to the purpose of the easement. Rather, it confirms the limited nature of the easement.
It is for these reasons that I consider that, on its proper construction, the easement is limited to a drainage easement and does not include a separate or additional right of way.
An ambiguity
The trial Judge went further than merely considering the words of the reservation and the plan, its shape, configuration and dimensions. He considered that those features, and in particular the fact that there are two limbs, raised “a doubt or ambiguity as to whether it was intended (viewed objectively) that rights of way be conferred”. In those circumstances he had regard to the surrounding circumstances, including the existence of physical features on the land at the time, and to other events which occurred at the time of the transfer. He therefore had resort to these surrounding circumstances, so far as they could be ascertained or inferred from the evidence, in order to resolve the ambiguity in favour of the respondents.
On the view I take of the proper construction of the reservation it is not necessary to resort to other aids to interpretation to resolve an ambiguity. However, if I am wrong in considering that there is no ambiguity, I consider that resort may be had to two other principles which yield the same result.
The surrounding circumstances as an aid to construction
Mr Wells QC criticised the approach taken by the trial Judge of having regard to surrounding circumstances in the case of an instrument registered under the Real Property Act. He submitted that to have regard to surrounding circumstances in order to construe the reservation is to derogate from the principle that, subject to exceptions involving fraud and related matters, a bona fide purchase for value from a registered proprietor is entitled to rely on the contents of the Register Book alone, and that persons who deal with the land can rely on the register for all facts relevant to title, and cannot be adversely affected by any infirmities in the vendor’s title which do not appear on the register: Breskvar v Wall (1971) 126 CLR 376. He submitted that persons searching the register should not have to undertake extraneous historical investigations to ascertain the nature of the interests that they are acquiring.
There is no doubt that one of the main objects of the Real Property Act, being to secure indefeasibility of title to all registered proprietors, is achieved by saving the trouble and expense of an enquirer going behind the register, in order to investigate the history of the title and to satisfy themselves of its validity: Gibbs v Messer [1891] AC 248 at 254.
The significance of the register is illustrated by the following passage in the joint judgment of four members of the Court of Appeal in New Zealand in Fels v Knowles (1906) 26 NZLR 604 at 620:
“The cardinal principle of the statue is that the register is everything, and that, except in cases of actual fraud on the part of the person dealing with the registered proprietor, such person, upon registration of the title under which he takes from the registered proprietor, has an indefeasible title against all the world. Nothing can be registered the registration of which is not expressly authorised by the statute. Everything which can be registered gives, in the absence of fraud, an indefeasible title to the estate or interest, or in the cases in which registration of a right is authorised, as in the case of easements or incorporeal rights, to the right registered”.
That passage was cited with approval by the Privy Council in Wamiha Saw Milling Co Ltd (In liquidation) v Waiome Timber Co Ltd (1926) AC 101 at 106 and by Kirby P in Hemmes Hermitage Pty Ltd v Abdurahman (1991) 22 NSWLR 343 at 344.
In Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 the High Court was concerned with an interest not completely disclosed in the endorsement on the certificate of title, but which was disclosed in an earlier memorandum of transfer of the land. Barwick CJ said, at 77-78:
“It seems to me that it was not intended that the certificate of title alone should provide a purchaser dealing with the registered proprietor with all the information necessary to be known to comprehend the extent or state of that proprietor’s title to the land. The dealings once registered became themselves part of the Register Book. It was therefore sufficient that their registration should be by statement of their nature recorded on the certificate of title … It is not necessary, in my opinion, to make a memorial effective as the registration of a dealing that the endorsement should particularize to any extent what the instrument does. It is sufficient to state whether it is a transfer or a mortgage etc. Thus, in my opinion, the endorsement on a certificate of title of a statement, “Memorandum of Transfer No. 7922 dated 15th May 1872 produced and entered the 15th day of June 1872 at 12 o’clock noon”, would be a sufficient memorial and upon its endorsement on the certificate of title, the memorandum of transfer would be duly registered and form part of the Register Book. There would be no need to state the subject matter of the transfer though the convenient practice is to state on a memorial of a memorandum of transfer etc. the fact that the whole or part of the land comprised in the certificate of title is the subject of the memorandum. But, in my opinion, the absence of such information will not render the memorial ineffective. Once the memorial is sufficient to effect registration of the instrument then the interest of the registered proprietor becomes subject to the registered instrument because of the words in the body of the grant on certificate of title describing the proprietor’s interest”.
Windeyer J said, at 92-93:
“The argument that the interest in the buildings is not notified on the certificate of title proceeded on the assumption that Bursill, when purchasing the land, could safely neglect to search transfer No. 7922, which was expressly referred to on the certificate of title. It is contended that this reference to the memorandum of transfer did not amount to constructive notice of its full operation, because it was described as creating an ‘Extension of the Right of Way’. Doubtless this description would have been better if it had read ‘extension of right of way and rights in buildings above the way’. But it seems to me that what is ‘notified’ to a prospective purchaser by his vendor’s certificate of title is everything that would have come to this knowledge if he had made such searches as ought reasonably to have been made by him as a result of what there appears …
It seems to me that, at any time from 1872 till today, a prudent conveyancer acting for a purchaser of the land that is now Bursill’s would have ascertained what it was that transfer 7922 referred to on the vendor’s certificate of title in law effected. True he might have been surprised to discover all that his search revealed. But surely no prudent person, seeing the reference to a right of way, would neglect to ascertain what exactly was the nature of the right of way, the land subject to it, the person who could avail themselves of it, for what purposes in what manner and at what times. The need to make such a search seems the more obvious if, by an inspection or survey of the land, the intending purchaser had become aware that there was a building over part of the land which was in the occupation of his neighbour. And it seems unlikely that a purchaser of this land in a built-up area of the City of Sydney would not be aware of the existence of the passage way and of the building above it. Whether he was so or not the reference on the certificate of title to transfer 7922 was I think constructive notice of what it provided, that is that the land was subject not only to a right of way but also to an interest of the adjoining landowner in the building above the way. I think that the registered proprietor of the land that is now Bursill’s held his title subject to that interest”.
Mr Wells QC argued that these cases, and others to the same effect, meant that the terms of any easement could only be ascertained from the register itself without reference to any surrounding circumstances where there is ambiguity. I disagree.
The effect of those cases is to stress the importance of the register and the conclusive nature of interests recorded on the register to the exclusion of interests claimed which are not so registered. Further, where the interest created is referred to, albeit inaccurately, on the certificate of title, a purchaser will be taken to have notice of the contents of the instrument creating the interest.
The memorandum of transfer which created the easement in this case is an instrument capable of registration: see Part 10, Real Property Act. Being an instrument as defined in s 3 of the Act, once registered, it is deemed to be part of the Register Book “and shall have the effect of and be deemed and taken to be a deed duly executed by the parties who have signed the same”: s 57 Real Property Act. A purchaser is therefore deemed to have notice of the content of the memorandum of transfer and of the description of the interest contained therein. That is as far as the cases go. They do not go as far as to say that where there is an ambiguity on the face of the instrument, extrinsic evidence is not relevant to its interpretation. Indeed, a person reading the instrument and encountering the ambiguity might well be put on notice that extrinsic evidence may be necessary to resolve the ambiguity.
No authority has been cited to the effect that merely because an instrument is registered under the Real Property Act, the recognised canons of construction do not apply. In Australia the recognised principle is stated by Mason J (as he then was) in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352:
“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible or more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed”.
Reference to surrounding circumstances at the time of the creation of an easement has frequently been made in cases of ambiguity. See for example Shannon Ltd v Venner Ltd [1965] Ch 682 at 691; Johnston v Holdway [1963] 1 QB 601 at 612; Cannon v Villars (1878) 8 Ch D 415 at 419, 420; Todrick v Western National Omnibus Co [1934] Ch 190 at 206; Nickerson v Barraclough [1981] Ch 426 at 440-442; St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No. 2) [1975] 1 WLR 468 at 477. The only difference between those cases and this is that in those cases the grant or reservation is contained in a deed which evidences the chain of title, whereas in this case the reservation appears in the Register Book. Both need to be construed according to the same principles. There is no reason why the same principles should not be applicable to an easement registered under the Real Property Act. Indeed, resort has been had to extraneous materials in such cases: Proprietors Strata Plan No 9968 v Proprietors Strata Plan No 11173 (1979) 2 NSWLR 605 per Needhan J at 611-612; Rodwell v G R Evans & Co Pty Ltd [1977] ACLD 510 (affirmed on appeal) [1978] 1 NSWLR 448 and SS & M Ceramics v Kin [1996] 2 Qd R 540.
In Gallagher v Rainbow (1994) 179 CLR 624 McHugh J said at 639-640:
“At common law the meaning of an easement conferred by a deed of grant is determined by reference to the language of the grant construed in the light of the circumstances. In Waterpark v Fennell, Lord Wensleydale said:
‘The construction of a deed is always for the Court; but, in order to apply its provisions, evidence is in every case admissible of all material facts existing at the time of the execution of the deed, so as to place the Court in the situation of the grantor.’
An easement over the Torrens system land is not created by deed. But a document registered under that system is deemed to be a deed. The principles of construction that have been adopted in respect of the grant of an easement at common law, therefore, are equally applicable to the grant of an easement in respect of land under the Torrens system.”
McHugh J was there speaking of the Real Property Act 1861 (Q). Section 57 of the Real Property Act 1881 (SA) is to the same effect. McHugh J in that case was also in dissent in the result. However, there is nothing in the reasons of the majority which would require any qualification on the passage quoted above.
Accordingly, I consider that, where there is ambiguity on the face of what the Real Property Act deems to be a deed, it is appropriate to have regard to relevant factual circumstances existing at the time in order properly to construe the deed.
Recourse to contemporary events at the time of the creation of the easement points to the creation of the drainage easement rather than a right of way. The trial Judge found that there was a dwelling on the dominant land at the time the easement was created, and a butcher shop on the servient land. There was no apparent reason at that time why a right of way was necessary and, in particular, why two points of access from the dominant land were required. The trial Judge also found that at the time of the grant of the easement access to the eastern limb of the easement was obstructed by a shed on the servient land. That would not make the laying of pipes impossible. Without substantial modification, it would effectively prevent the exercise of a right of way between George Street and the dominant land via the eastern limb.
Perhaps what is more significant is that it will be remembered that William Pullin died on 9 October 1933, and the land was transmitted to his executors on 8 December 1933. The memorandum of transfer containing the reservation was dated 1 December 1933 and was registered on 12 December 1933.
On 12 November 1933 the executors gave notice to the Corporation of the City of Adelaide under the Building Act 1923-1929 of their intention to alter a building. The notice concerned the building on the dominant land, the stated purpose being “for alterations and address to a dwelling”.
The accompanying plan showed a dwelling facing O’Connell Street and close to the butcher’s shop on the servient land. The proposed alterations were to the rear of the house. In the south-eastern corner of the house was a maid’s room into which protruded a small bathroom. The bathroom was to be demolished and the room converted to a kitchen with a new kitchen sink and drain board in the south-eastern corner of the room. The bathroom was to be moved to the rear room of the house on the northern side of the central passage of the house. There was also to be built an outside lavatory and wash house beyond the rear verandah at the eastern end of the house and almost, but not quite, in line with the southern wall of the house. There was a drainage line shown from the new bathroom, diagonally across the rear yard towards the eastern side of the new lavatory and wash house, which was then shown to be connected to the same drain, the drain continuing in a south-easterly direction towards the southern boundary of the dominant land.
Whilst the plan does not show the precise location of the buildings on the allotment, the drainage from the new kitchen and the production of the drainage line from the new bathroom, connected to the new lavatory and wash house, appear to be very close to if not right on what was to become the boundary between the dominant land and the servient land and at points which would not be inconsistent with the points at which the two upper limbs of the y of the easement adjoin the appellant’s land. The house on the dominant land was demolished in about 1970, and the evidence does not now reveal the precise location of the various improvements the subject of the Building Act application.
The application for approval was granted on 5 December 1933 by the Corporation of the City of Adelaide without amendment of the plan and subject only to some presently immaterial conditions.
These contemporaneous circumstances, namely the obstruction on the servient land and alterations to the buildings on the dominant land, all point to the fact that what was intended was a drainage easement and no more. They would tend to resolve any ambiguity in favour of the present defendant. They provide additional support for the conclusion that I have already reached on the proper construction of the reservation.
Construction of the grant against the grantor
Mr Wells called in aid, for the purpose of resolving an ambiguity, the principle that the grant of an easement must be construed “most strongly” against the grantor: Williams v James (1867) LR 2 CP 577 at 581. This is merely an application of the contra proferentem rule of construction. “The general rule of the common law is that the words of an instrument are to be taken most strongly against the party using them”: Mayor v Isaac (1840) 6 M&W 605 at 610, Baron Parke. It would obviously apply to an easement created by grant. However, Mr Wells argued that an easement would still be construed against the owner of the servient tenement even where the easement was created by reservation rather than grant. He pointed out that at common law an easement could not be created by reservation but only by regrant by the purchaser: Halsbury’s Laws of England (First Edition) Volume 11, paragraph 501. Where a conveyancer purported to create an easement by reservation in a conveyance of the servient tenement, it was nevertheless treated in effect as a grant of the tenement and a regrant of the easement: Durham and Sunderland Railway Co v Walker (1842) 2 QB 940 at 967; 114 ER 364 at 374. The reason for treating a reservation of an easement in this manner was summarised by Megarry J in St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No. 2) [1973] 1 WLR 1572 at 1586-1587:
“At common law three separate categories fell to be distinguished: see Sheppard’s Touchstone, 7th ed. (1820), pp. 78-80 and Doe d. Douglas v Lock (1835) 2 Ad.& El. 705. First, there was an exception, whereby the vendor excluded from the conveyance some existing part of what was conveyed, as where he conveyed an entire estate except a specified house or field. Second, there was a reservation in the strict sense, whereby the vendor created in his own favour some new interest which issued out of the property conveyed, as where he reserved a rent payable to himself. Third, there was the creation of some other new interest in favour of the vendor, such as an easement; and as a reservation stricto sensu was confined to the creation of an interest issuing out of the property conveyed, an easement in avour of the vendor could not strictly be created by reservation, but had to be created by means of a regrant by the vendor. Where mere words of reservation were used, the easement was nevertheless construed as having been created by regrant if the purchaser had executed the conveyance.”
In Durham and Sunderland Railway Co v Walker (supra), Tyndal CJ had expressed the position of a right of way in this manner (at 967):
“It is neither parcel of the thing granted nor is it issuing out of the thing granted, the former being essential to an exception, and the latter to a reservation.”
As Megarry J went on to point out in St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No 2), conveyancing practice did not observe that fine distinction, and practices grew up of using compound phrases like “excepting and reserving to the vendor …” and then inserting everything that might previously been covered by reservation, exception or regrant.
An exception in a deed of conveyance has always been construed against the grantor: Bullen v Denning (1826) 5 B and C 842 at 847 and 850; Savill Brothers Ltd v Bethell [1902] 2 Ch 523 at 537; Cordell v Second Clanfield Properties [1969] 2 Ch 9; Broomfield v Williams [1897] 1 Ch 602 at 615-616; Mill and Fenton v Duke of Devonshire (1882) 8 App Cas 135 at 149. That is not surprising, given that the grantor creates the exception, and in the case of ambiguity the exception should be construed contra proferentem.
So it came to be that, whereas an exception was construed against the grantor, as might also be a reservation in the strict sense, the reservation of an easement continued to be construed against the fictional grantor, even though the easement was created by the actual grantor of the reservation.
Against that background, s 65(1) of the Law of Property Act 1925 (UK) was enacted. That subsection provides:
“A reservation of a legal estate shall operate at law without any execution of the conveyance by the grantee of the legal estate out of which the reservation is made, or any regrant by him, so as to create the legal estate reserved, and so as to vest the same in possession in the person (whether being the grantor or not) for whose benefit the reservation is made.”
Similar provisions were enacted in some Australian States[2], but not in South Australia.
[2] See s 45A Conveyancing Act 1919 (NSW); s 9 Property Law Act 1974 (Qld); s 34C Conveyancing and Law of Property Act (1884) (Tas).
The effect of that section on the application of a contra proferentem rule has been a matter of some controversy. On the one hand, the section has been interpreted as allowing the regrant theory to survive it, thus requiring the reservation to be construed against the fictional grantor and in favour of the person creating the reservation: Bulstode v Lambert [1953] 1 WLR 1064 at 1068; Johnstone v Holdway [1963] 1 QB 601 at 612; Mason v Clark [1954] 1 QB 460 at 467. Megarry J defied this trend: see Cordell v Second Clanfield Properties Ltd [1969] 2 Ch 9 and St Edmunsbury and Ipswich Diocesan Board of Finance v Clark (No. 2) [1973] 1 WLR 1572. In the latter case at 1586-1591 he conducted an exhaustive analysis of the cases mentioned above and considered that s 65(1) of the Law of Property Act 1925 (UK) abolished the regrant theory. He said, at 1589-1590:
“First, it is plain that there is not a word in the subsection to support the view that it provides that a reservation is to operate by way or regrant. The reservation is to ‘operate at law’, but the section does not in terms say that it is to operate by way of regrant or in any other specified way. By force of the statute the reservation is to operate at law; and that is all. These words given positive effect to the reservation, so that it is no longer dependent on any process of regrant or anything other than the statute. Second, this is emphasised by the express provision that the reservation is to operate without two things. The first is any execution of the conveyance by the grantee. In the days when the reservation could only operate by way of regrant, such execution was essential to the theory of regrant. The second is ‘any regrant by him’, that is, the grantee. In those circumstances, I have great difficulty in seeing why a reservation should be construed as if it were a regrant. The reservation is to operate without there being any regrant and without there being one of the essentials for any regrant, namely, execution by the purchaser. Statute, of course, can do anything, and could have provided that despite the absence of any regrant or execution by the grantee, a reservation should still be construed as if it operated by way of regrant; but I can see nothing to suggest that Parliament has in fact done so, nor can I see any reason why Parliament would wish to make such a provision.”
… I do not see why … such a reservation should be construed as if it were a regrant when statute has provided for it to operate without any regrant. There can be little merit in seeking to preserve an anomalous relic of obsolete methods of conveyancing.”
Megarry J had previously said in Cordell v Second Clanfield Properties Ltd [1969] 2 Ch 9 at 15:
“I see little merit in seeking to preserve in the twentieth century an ancient distinction based upon an outmoded technicality abolished over 40 years ago”.
In my view, Megarry J’s discussion of the relevant cases and his reasoning are compelling. His decision has led the authors of Bradbrook and Neave “Easements and Restrictive Covenants in Australia” (Second Edition) at 73 to comment that the regrant theory “would appear to be dead” in Victoria, New South Wales, Queensland, Tasmania and the ACT. They do so, however, without mentioning the decision of the Court of Appeal on appeal from the decision of Megarry J in St Edmunsbury and Ipswich Diocesan Board of Finance v Clark (No. 2) [1975] 1 WLR 468.
The appeal against the decision of Megarry J was dismissed, but the Court of Appeal, in what their Lordships acknowledged was obiter dictum, disagreed with the trial Judge’s reasons and supported the notional regrant theory. If it were necessary to do so, I would not feel bound to adopt the reasoning of the Court of Appeal. Suffice it to say, it remains an open question in Australia in respect of those States which have enacted the equivalent of s 65(1) Law of Property Act 1925 (UK). The reservation/exception dichotomy has largely disappeared in the USA: Bruce & Ely: “The Law of Easements and Licenses in Land” (Warren, Gorham & Lamont 1988)¶3.05 [1] – [2]. That would appear to be without the aid of the equivalent of s 65(1) Law of Property Act 1925 (UK). The notional regrant theory has not been without its critics: see 1974 Cambridge LJ 52.
South Australia has not enacted the equivalent of s 65(1) Law of Property Act 1925 (UK). Therefore, in respect of any land which is not under the Real Property Act in this State, common law notions of regrant will probably prevail. However, what must be considered in this case is the position in respect of an easement created by reservation by an instrument of transfer under the Real Property Act 1886 (SA).
The Real Property Act rendered irrelevant most of the previous conveyancing law and practice, and in particular the method of creating and transferring various interests in land. For example, it abolished the need for a conveyance and reconveyance of the legal estate in land upon the granting and discharge of a mortgage of that land. From the outset, while recognising and giving effect to most forms of common law land tenure, it ceased to rely on fictional interests. Interests in land were to be created and transferred according to the terms of a registrable instrument which took effect according to its terms upon registration. In my view, the Act expressly recognised the ability to create an easement by reservation and not merely by grant, that the reservation itself , in whatever instrument it appeared, operated to create the easement without any need for a regrant and without creating the fiction of a notional regrant. In other words, it was the reservation which became registered in the Register Book. It was that which operated to define the easement created without more.
The Real Property Act 1861 (SA) made no provision for the registration of easements. That came with the enactment of the Rights of Way Act 1881. Section 3 of that Act provided that every certificate of title issued after the passing of the Act which contained a statement that the land described in the certificate had appurtenant thereto a right of way or other easement would be conclusive evidence that the right of way or easement existed. Section 5 provided that every application to bring land under the provisions of the Real Property Act after the commencement of the Rights of Way Act should include particulars of every right of way “whether such right of way shall have been acquired by grant or otherwise”. The term “or otherwise” could, of course, have included the acquisition of rights by prescription, implication or other means available at common law.
Sections 7 to 10 inclusive provided the means of registering existing rights of way on certificates of title already issued, and s 11 provided for the barring of rights of way if not entered on the certificate of title within a period of five years.
Section 15 provided that every certificate of title previously issued under the Real Property Act which contained a statement that the registered proprietor is seized of the land together with any right of way or easement described therein “shall be deemed to operate as grant or reservation, as the case may be, of such right or rights of way or other easements …” (emphasis added). There was thus a statutory recognition by 1881 that rights of way and easements could be created by reservation.
Section 16 provided that in respect of land subsequently brought under the provisions of the Real Property Act, or when any easement “shall hereafter be created or transferred”, the Registrar General was to enter the memorial of the instrument “granting, creating or transferring” such right of way or easement in the Register Book of both the servient and dominant owners.
The Real Property Act 1886 repealed both the 1861 Act and the Rights of Way Act 1881. Since then s 84 of the Real Property Act has recognised that an easement may be created “by express grant or transfer over or in respect of any servient land”. Section 87 repeats the effect of s 15 of the Rights of Way Act and has continued to recognise that the registration of an easement in the Register Book operates “as a grant or reservation, as the case may be” of a right of way or easement. Section 88, the equivalent of s 16 of the Rights of Way Act, has continued to recognise that the easements may be “granted or created”. Section 89A, enacted in 1994, continues to use the same language (“grant or create an easement …”).
Section 96 has continued to provide:
“96. When any land is intended to be transferred, or any right-of-way or other easement is intended to be created or transferred, the registered proprietor shall execute a transfer …, which transfer shall … contain … an accurate statement of the estate or interest intended to be transferred or created.”
The scheme of the legislation, at least since 1881, has therefore provided for the registration of easements in the Register Book, however created, without reference to fictional concepts. It has also recognised that an easement can be created by reservation and by memorandum of transfer, as was indeed the means by which the easement in this case was created. No-one has questioned the validity of the creation of the easement by that means.
As it was possible to create an easement by reservation in a memorandum of transfer, it was possible for an easement to be so created without even the signature or written acknowledgement of the transferee. As I have already mentioned, it was not until the enactment of s 96A of the Real Property Act in 1940 that it was necessary for a memorandum of transfer to be signed by the transferee, and even since then there have been exceptions.
The validity of the creation of an easement by this means under the Real Property Act is not inconsistent with anything said by this Court in Golding v Tanner (1991) 56 SASR 482 when it decided that easements registered under the Real Property Act could include easements arising by prescription and through the doctrine of the lost modern grant.
In those circumstances, it defies logic and commonsense that the reservation of an easement, where its terms are ambiguous, should be construed against the transferee who may never even have acknowledged the terms, let alone have played any part in their authorship. Rather, they should be construed contra proferentem the transferor who created the easement for the transferor’s own benefit upon terms devised by the transferor.
As it happens, the transferee of the respondents’ land, when the easement was reserved, happened also to be one of the four executors who in fact signed the transfer containing the reservation. However, he did not sign it in his capacity as transferee, nor does he appear to have negotiated the transfer for any monetary consideration. It was transferred to him in his capacity as a beneficiary under William Alexander Pullin’s will. Whether the reservation was required by the will or created by the executors to preserve or enhance the value of the remaining dominant tenement does not matter. It appears not to have been created by the transferee, and should not be construed against him and his successors in title where there is an ambiguity.
In respect of easements expressly created since 1881, it will be possible, by searching the Register Book, to find out how they were created and by whom, and whether by grant or transfer of the easement by the servient owner or by reservation of the easement by the dominant owner. It will therefore be possible to determine, for the purposes of construction, which party is the proferens, against whom the relevant instrument will be construed in the event of ambiguity.
Whatever may be the position in South Australia in respect of old system land, I consider that resort to the fiction of a notional regrant by the transferee of Real Property Act land subject to the reservation of an easement in favour of the transferor has never been part of the law applicable to the creation of easements under the Real Property Act. An enactment of the equivalent of s 65(1) of the Law of Property Act 1925 (UK) has not been necessary in this State in respect of land under the Real Property Act, and the authorities which have interpreted that section so as to require the perpetuation of the fiction of a notional regrant have no application in this State in respect of land under the Real Property Act.
I would therefore construe the reservation contained in the memorandum of transfer against the transferors, and therefore against their successors in title. On this basis, any doubts must be resolved against them and therefore against the present plaintiff, with the result that, in the absence of a clear indication that a right of way was intended, it must be held that the easement is a drainage easement only.
Costs
The appellant also appeals against the order of the trial Judge that there be no order as to the costs of the action. The respondents argue that this part of the appeal is incompetent because no leave has been obtained from the trial Judge.
Section 51 of the Supreme Court Act 1935 confers a right of appeal to the Full Court against every “judgment … order or direction” of a judge, whether in court or in chambers, and also from the refusal of any judge to make any order. Sub-section (1a) provides a number of exceptions to that general rule. Paragraph (b) of that sub-section provides that no appeal shall lie without the leave of the judge from any order “as costs only which by law are left to the discretion of the judge”.
The award of costs is discretionary: s 41 Supreme Court Act. However, the appellant’s appeal is not “as to costs only”, even though the appeal as to costs is a discrete ground in itself.
It was decided in Copping v ANZ McCaughan Ltd (1994) 63 SASR 523 at 528–529 that, where there was an appeal by a plaintiff against a substantive order and a cross appeal by the defendant as to costs only, even though there was also an appeal by the defendant against orders made on a third party notice, the defendant required leave to appeal and that the appeal was therefore incompetent. However, in this case, the plaintiff not only appeals against the refusal to award costs but against the failure to declare a right of way in his favour, even though the appeal against the refusal to award costs is a discrete ground of appeal. The fact of the matter is that the plaintiff’s appeal is not “as to costs only”. In my opinion, this ground of appeal is properly before the court.
In the action the plaintiff claimed a declaration that he was entitled to a right of way and a drainage easement, together with incidental relief. The defendant had denied that the plaintiff was entitled to any easement and sought an order that the easement recorded on the titles be extinguished. Neither party was successful in their claims. Each party was partially successful and partially unsuccessful.
The appellant claimed that more time was spent at the trial on issues upon which the respondent was unsuccessful than on which the appellant was successful, particularly as to issues relating to the alleged abandonment of the easement and on questions going to the exercise of the court’s discretion.
It is apparent that evidence was necessary on the question of the appellant’s claim for the right of way as much as it was on the issue of abandonment. It may be that upon close analysis, evidence led as to one issue involved more time than that led in respect of another. However, there were other factors which also influenced the nature and conduct of the parties’ respective cases. The trial Judge’s discretion was unfettered. Given the way in which the several issues were decided by the trial Judge it was within the proper exercise of his discretion to make the order that he did. In my opinion, there are no grounds on which this Court can or should interfere with the exercise of that discretion.
Conclusion
It follows that in my opinion the appeal by the appellant should be dismissed.
GRAY J: I agree that this appeal should be dismissed. I agree with the reasons of Bleby J.
10
7
1