CARLIN & CARLIN v MLADENOVIC & JURISEVIC No. SCCIV-98-1537 [2002] SASC 90

Alternatively reliance was placed on section 48 of the Limitation of Actions Act 1936 (SA):

"(1) Subject to this section, where an Act, regulation, rule or by-law prescribes or limits the time for -

(b) doing any act, or taking any step in an action; or

(c) doing any act or taking any step with a view to instituting an action,

a court may extend the time so prescribed or limited to such an extent, and upon such terms (if any) as the justice of the case may require.

(2) A court may exercise the powers conferred by this section in respect of any action that -

(a) the court has jurisdiction to entertain; or

(b) the court would, if the action were not out of time, have jurisdiction to entertain.

(b) empower a court to extend a limitation of time prescribed by this Act unless it is satisfied -

(i) that facts material to the plaintiff's case were not ascertained by him until some point of time occurring within twelve months before the expiration of the period of limitation or occurring after the expiration of that period and that the action was instituted within twelve months after the ascertainment of those facts by the plaintiff; or

(ii) that the plaintiff's failure to institute the action within the period of the limitation resulted from representations or conduct of the defendant, or a person whom the plaintiff reasonably believed to be acting on behalf of the defendant, and was reasonable in view of those representations or that conduct and any other relevant circumstances,

and that in all the circumstances of the case it is just to grant the extension of time.

(6) This section does not derogate from any other provision under which a court may extend or abridge time prescribed or limited by an Act, regulation, rule or by-law."

The application was supported by an affidavit from the solicitor who had the care and conduct of the adjacent owner's action. It explained the reasons why the appeal was not set down for hearing. The affidavit included the following:

"Prior to the time of filing the appeal I had not been directly responsible for the prosecution of a civil appeal from a single judge of this Honourable Court. My only experience in the prosecution of appeals from this Honourable Court had been with respect to criminal appeals from the full court of this Honourable Court. In these appeals it was my experience and understanding that the Court first prepared a draft index and forwarded it to the parties to be settled. The Court would then advise the parties of the date by which the appeal books were required to be prepared.

In this case I assumed that a similar procedure would occur with respect to this appeal. I did not refer to the Supreme Court Rules to check the appropriate procedure. As a result, I took no steps following the lodgement of the appeal to comply with what I have since learned to be the requirement of Rule 95 of the Supreme Court Rules. In particular, I was not aware of the obligation to set down the appeal within a period of two months, or that the appeal would lapse automatically after a period of six months if this had not been done.

During the period from 16 June 2000 to 2 February 2001 I did not have any communication with my clients as to the pending appeal. It is my belief that they simply assumed that the matter was being properly attended to. Accordingly my clients were completely unaware of the matters to which I have referred in paragraph 10 of this affidavit until the meeting on the 5th day of February 2001."

In refusing the application to extend time the trial judge considered the solicitor's delay to be "quite inexcusable". He held that the delay did not amount to "special circumstances" within the meaning of Rule 95.11.

The trial judge also had regard to the prospects of the appeal. He considered that the adjacent owner's claim was "devoid of merit." He was of the view that this together with the delay required that the application be refused in the interests of justice.

When addressing section 48(1) of the Limitation of Actions Act the trial judge took the view that:

"Although s 48(1) does not require the appellants to show that special circumstances exist, it is implicit that it has regard to the requirements of the procedural rules. To decide otherwise would be to set the procedural rules at nought. Section 48(1) recognises that the interests of justice may require that a time limit be extended. It is a statutory recognition that procedural rules and efficient case management are not to be seen as ends in themselves and that the ultimate obligation of the court is the attainment of justice."

The trial judge found that the appellants had failed to discharge the onus of persuading the court to exercise its discretion in their favour.

Before this court the appellants advanced a number of contentions. It was submitted that the appeal had merit. The trial judge had made two errors of law. Undue weight had been attached to the solicitor's delay in circumstances where the adjacent owners were unaware of and were not directly responsible for the delay.

Counsel for the appellants submitted that the trial judge's order for the transfer of land from the adjacent owner to the encroaching owner was beyond statutory power. The decision conflicted with authority on the interpretation of comparable provisions in interstate legislation. Attention was drawn to section 4 of the Encroachments Act 1944 (SA).

(1) Either an adjacent owner or an encroaching owner may apply to the court for relief under this Act in respect of any encroachment.

(2) On the application the court may make such orders as it deems just with respect to -

(a) the payment of compensation to the adjacent owner;

(b) the conveyance transfer or lease of the subject land to the encroaching owner, or the grant to him of any estate or interest therein, or any easement, right, or privilege in relation thereto;

"that part of the land of the adjacent owner over which an encroachment extends"

"encroachment by a building, and includes encroachment by overhand of any part as well as encroachment by intrusion of any part in or upon the soil."

It was submitted that the trial judge acted beyond the powers given to him by the Encroachment Act. The order to transfer the ownership of a parcel of land went beyond the "subject land".

Reference was made to a decision of the New South Wales Supreme Court in Healam v Hunter[1]. There a house encroached on adjacent land. An application was made to have that portion of land together with a reasonable curtilage transferred. The court concluded that its power was limited to making orders with respect to the "subject land" being that land over which the encroachment lay. The Encroachment of Buildings Act 1922 (NSW) was in the same terms as the Encroachment Act.

"It is said that in the present case the encroachment extends only to the area of land on which the house and its eaves and gutters now stand. This being so, the power of the Court is limited to making an order with respect to the transfer of this land. However, no doubt for reasons of convenience, the defendants ask the Court to transfer to the plaintiff a larger area of land, namely a triangular portion, the northern boundary of which is aligned parallel to the northern side of the house and 675mm from its eaves and gutters or 900mm from the wall, whichever is the greater. This triangular portion would have an area of approximately 186 sq metres.

Counsel for the plaintiff answers this submission by suggesting that in a rural setting, or indeed even in an urban setting, a house or building should be regarded as encroaching to the extent of a reasonable curtilage around it.

In the present case it is submitted that the line of the existing fence would do no more than provide a reasonable curtilage.

In my opinion, this submission is inconsistent with the definition of 'encroachment' quoted above, which speaks only of encroachment by a building or by overhang of any part of a building. 'Building' is defined as meaning 'a substantial building of a permanent character' and as including 'a wall'. The definitions are inconsistent with the idea of there being encroachment to the extent of the curtilage of a building. This submission, therefore, fails."

In Tallon v Proprietors of Metropolitan Towers Building Units Plan No 5157[2] the Queensland Court of Appeal considered a similar issue. Section 185 of the Property Law Act 1974 (Qld) was in the same terms as section 4 of the Encroachment Act. The court took a narrow view of the statutory power to order transfer of land. Pincus and Davies JJ said:

"The question is whether the order requiring conveyance of the Tallon land up till line D is an order within the description in s. 185(1), as being 'with respect to ... the conveyance... of the subject land to the encroaching owner'. The simple answer made on behalf of the appellant Tallon is that the conveyance of the land up to line D would convey not only land over which an encroachment extends, but land (being that beyond point E) over which no encroachment extends. That appears to us to be correct. We were referred to various other provisions of the Act, but none of them is capable of extending the power given by s. 185(1)(b) in such a way as to enable the Court to order transfer of land other than that over which an encroachment extends. It may be that in many circumstances the Court might think it convenient to require transfer to the encroaching owner of additional land, for one purpose or another, but the statutory power to require transfer is confined as we have indicated; we think the confinement to be unambiguous."

In Amatek Ltd v Googoorewon Pty Ltd[3] the High Court held that the terms of the Encroachment of Building Act 1992 (NSW) did not support a wide meaning of encroachment. The court acknowledged the remedial character of the legislation but declined to extend its operation beyond what was held to be the proper meaning of the relevant provisions. Mason CJ, Brennan, Dawson, Gaudron and McHugh JJ said:

"The purpose of the Act is to be ascertained from its language. So far as one may define the purpose of the Act from its long title, that purpose does not extend to the conferring of a general power to change the boundaries between contiguous parcels of land. It is an Act 'to make provision for the adjustment of boundaries where buildings encroach on adjoining land; to facilitate the determination of boundaries; and for purposes connected therewith'. The twin purposes of the Act are to facilitate the determination of existing boundaries (provided for by s. 9) and to permit the adjustment of boundaries when, but only when, buildings encroach on adjoining land (provided for by s. 3). The language of the Act shows clearly that the encroachment to which it relates is not an encroachment by a person but an encroachment by a building: the definition of 'encroachment' in s. 2 explicitly says so. The term is defined by extension to include 'encroachment by overhang of any part' or 'by intrusion of any part in or upon the soil'. By the definition of 'subject land', the land of the 'adjacent owner' which the court may order to be conveyed, transferred or leased to the encroaching owner pursuant to s. 3(2)(b) is only 'that part of the [adjacent owner's] land over which an encroachment extends'. The subject land is thus identified as the land vertically under the encroachment. And in s. 9, which authorizes an application to the court by either of the owners of contiguous parcels of land to determine the true boundary between their parcels, the jurisdiction is limited to cases where a question arises 'whether an existing building encroaches or a proposed building will encroach beyond the boundary'.

The encroachment by a building of which the Act is speaking is a horizontal encroachment 'beyond the boundary' between the land of the encroaching owner and the land of the adjoining owner. The definition of 'encroaching owner' makes it clear that the encroaching building extends beyond the boundary of the encroaching owner's land. And in s. 5, which provides for the creation of a charge on the land of the encroaching owner, that land is described as 'the parcel of land contiguous to the boundary beyond which the encroachment extends, or such part thereof as the court may specify ...'. Thus an 'encroachment' under the Act is an encroachment by a building that traverses the 'boundary' between the contiguous parcels of land."

Counsel for the appellants also drew attention to an article "Conveyancing and Property"[4] where the decision of the trial judge in Carlin was discussed:

"By way of aside: the order realigning the boundary gave the defendants more land than actually occupied by the encroachment. This result seems logical in the circumstances of the case. However, it goes against authority in other States to the effect that, if the court orders a transfer of land to cure the encroachment, it can order a transfer of no more land than that actually encroached upon. For example, in Healam v Hunter (1991) NSW ConvR 55-569 it was said that the court had no power to order the transfer of a reasonable 'curtilage' around the encroaching portion of the building. And in Tallon v Proprietors of Metropolitan Towers Building Units Plan No 5157 [1997] 1 Qd R 102 it was held that thee was no power to transfer more land than actually occupied by the encroachment."

Another issue raised by the appellants was the proper construction of section 5 of the Encroachments Act.

(1) The minimum compensation to be paid to the adjacent owner in respect of any conveyance, transfer, lease, or grant to the encroaching owner shall, if the encroaching owner satisfies the court that the encroachment was not intentional, and did not arise from negligence, be the unimproved capital value of the subject land, and in any other case three times such unimproved capital value.

(2) In determining whether the compensation shall exceed the minimum, and if so, by what amount, the court shall have regard to -

(a) the value, whether improved or unimproved, of the subject land to the adjacent owner;

(b) the loss and damage which has been or will be incurred by the adjacent owner through the encroachment and through the orders proposed to be made in favour of the encroaching owner;

(c) the circumstances in which the encroachment was made."

It was submitted that it was mandatory for compensation to be paid. This was said to arise from sections 4(3) and 5 of the Encroachment Act. It was contended that section 5 set out a statutory regime for the payment of minimum levels of compensation when there has been an order for transfer or conveyance of the subject land. Counsel for the appellant submitted that at the very least the proper construction of section 5 was debatable and there were prospects that the appellants' contentions would be accepted.

The appeal is not without merit. Both issues of statutory construction are arguable. The trial judge erred in concluding to the contrary[5].

In Jackamarra v Krakouer[6] the High Court considered the proper approach to be taken to an application to extend time in which to set down an appeal. Brennan CJ and McHugh J said:

"In R v Secretary for the Home Department; Ex parte Mehta, for example, Lord Denning MR said:

'We often like to know the outline of the case. If it appears to be a case which is strong on the merits and which ought to be heard, in fairness to the parties, we may think it is proper that the case should be allowed to proceed, and we extend the time accordingly. If it appears to be a flimsy case and weak on the merits, we may not extend the time. We never go into much detail on the merits, but we do like to know something about the case before deciding whether or not to extend the time.'

These remarks of Lord Denning were made in the context of an application for an extension of time to lodge an appeal. In that class of case, the respondent to the application has a vested right to retain the judgment, the subject of the appeal. To grant the application for an extension of time is to put at risk a vested right of the respondent. When the application for an extension of time merely concerns the doing of an act in respect of an appeal already lodged, as the present case does, an even more liberal approach is justified. The court is dealing with a pure procedural question - should time be extended? The merits of the appeal do not furnish the criterion for granting or refusing an extension. The appeal is already filed in the court. In most, if not all cases, concerned with the doing of an act in respect of a pending appeal, the only issues would seem to be the length of time that the breach of the procedural rule has continued, the reasons for the breach, and most importantly whether the respondent or the administration of the court's business would be prejudiced by granting the application."

"Her appeal is as of right and was instituted within time but that right must be exercised subject to the limitations imposed by the rules. If exercising her right in accordance with those rules, she should not be denied the opportunity to present her appeal in the ordinary way except in a clear case. So, too, when an appellant has instituted an appeal within time, if all other things are equal, the bare fact that the appellant has failed to take some interlocutory step within the time fixed by the rules would not be reason enough to shut that appellant out from the pursuit of the appeal unless it were clear that the appeal would fail. Of course, the qualification 'if all other things are equal' is very important and it should not be permitted to obscure the fact that very often the fact that an appeal is pending may itself affect the respondent adversely in some way. For the moment, however, we leave consideration of adverse effects of delay on the respondent to one side and look only to the degree of satisfaction that the court must have that the appeal will fail."

"In Esther Investments, the Full Court of the Supreme Court of Western Australia embraced, as relevant to applications for an extension of time, the four 'major factors' which had been identified in Palata Investments Ltd v Burt & Sinfield Ltd, viz, the length of the delay, the reasons for the delay, whether there is an arguable case and the extent of any prejudice to the respondent. It was those principles which the Full Court applied in the present case. I would point out that Palata Investments was concerned with an application for an extension of time for appealing, not for extending the period within which an appeal, already lodged within time, might be entered for hearing. The distinction is important. In the latter case, the scope for review of the merits is necessarily more limited. The main object of the scrutiny is to obviate a hearing which would clearly be futile or to reinforce a preliminary view that a time default should be cured because of the apparent merits or arguability of the matter. I do not doubt that the four considerations mentioned in Esther Investments are relevant. But they are by no means exhaustive. Several others have from time to time been thought relevant. These include whether the delay was intentional or contumelious; or merely the result of a bona fide mistake or blunder; and whether the delay is that of the litigant or of its lawyers, with which the litigant should not be saddled. It may also be relevant, where the default is that of a party's legal representatives, to take into account any considerations personal to the party which might have affected its ability to safeguard its own interests, for example, by applying pressure to its lawyers. Similarly, the extent to which any such prejudice may be remedied by an appropriate costs order is another consideration that has sometimes been treated as relevant."

In Davies v Pagett[7] Morling, Beaumont and Wilcox JJ emphasised the fundamental duty of the court to do justice between the parties:

"The 11 month delay in making the application to set aside the interlocutory judgments - a matter which weighed heavily with his Honour - is even more inexcusable. Any competent solicitor would have been aware of the importance, in the interests of his or her client, of making such an application forthwith. But not only did the particular solicitor handling the matter in the appellant's solicitors' Alice Springs office - apparently an associate of the firm - neglect his obvious duty; no action - certainly no effective action - was taken by the partner in the Darwin office of the firm, who was aware that the application had not yet been made, to ensure that the omission would speedily be rectified.

It is, however, another question whether concern about the extent of delays, either in a particular case or generally, should, in the absence of prejudice in the particular case, be taken into account in exercising a discretion to set aside a default judgment. The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed. The temptation to impose a limitation through motives of professional discipline or general deterrence is readily understandable; but, in our opinion it is an erroneous exercise of the relevant discretion to yield to that temptation. The problem of delays in the courts, egregious as it is, must be dealt with in other ways: for example, by disciplinary actions against offending practitioners and by a comprehensive system of directions hearings or other pretrial procedures which enable the court to supervise progress - and, more pertinently, non-progress - in all actions."

Mullighan J considered the issue of a solicitor's delay in Langanis v Roberts[8]. He said:

"Despite the paucity of information in the affidavit of the appellant's solicitors in support of the assertion that the appellant has a reasonable excuse for not filing the Defence in time, it appears that he did instruct his solicitors, but they did not act, within time. Usually, in this context, a party will not have to bear the consequences of the neglect of his solicitor: Collins Book Depot Pty. Ltd. v Bretherton [1938] VicLawRp 11; [1938] VLR 40 at 44, Gamble v Killingsworth and McLean Publishing Co. Pty Ltd. [1970] VicRp 22; [1970] VR 161 and Kostokranellis v Allen [1974] VR 597, Taylor v Taylor [1979] HCA 38; (1979) 53 ALJR 629, Hill v Parke Davis & Co. Ltd. (1986) 41 SASR 349 at 354 and Davies v Pagett [1986] FCA 186; (1986) 70 ALR 793 are examples of neglect, and in some instances substantial neglect, on the part of legal practitioners and where the party in default has been permitted to prosecute or defend proceedings. Of course, these cases were not decided in the context of a threshold test before the exercise of a discretion is to be considered, but they do accept that the conduct to be excused is usually that of the litigant, not the solicitor. The delay of the solicitor, in the present case, although amounting to default, when measured in terms of time was only relatively slight and, in my view, the learned Special Magistrate was correct in her conclusion that the appellant had established a reasonable excuse for not filing the Defence within time. "

The remarks of Dawson, Gaudron and McHugh JJ in The State of Queensland v J L Holdings Pty Ltd[9] are also relevant:

"Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. In taking an opposite view, the primary judge was, in our view, in error in the exercise of her discretion."

The solicitor's conduct and the blamelessness of the appellants were relevant factors to be considered when deciding whether special circumstances existed within the terms of Supreme Court Rule 95.11. They were also relevant to the application of section 48 of the Limitation of Actions Act.[10] For these reasons the trial judge's exercise of discretion miscarried. It is necessary for this court to reconsider the exercise of discretion.

The solicitor for the appellants has accepted responsibility for the delay in setting down the appeal. In this matter the delay was not intentional or contumelious. The solicitor's affidavit establishes that there was a blunder. There was no suggestion that the appellants were aware of the delay. The delay was not a matter for which they were personally responsible. They were blameless. The fault lay solely with their solicitor "in circumstances with which the litigant should not be saddled"[11].

The prejudice to the appellants namely being precluded from exercising their right of appeal is self evident. There are arguable grounds to be advanced on appeal. The prejudice to the respondents is not so clear. It is true that they have to face an appeal that had lapsed. However the building continues to encroach as it has for 26 years. The status quo has been maintained. The prejudice to the respondents can be addressed by an order for costs.

Section 48 of the Limitation of Actions Act is not to be read down by the terms of Rule 95.11. The section operates within the context of the rules of court. As Lander J pointed out in Calvaresi v Rota Farma Pty Ltd v Lawson and Lawson[12] section 48 can operate to overcome the unfair and unjust consequences of the harsh application of a rule of court. In the circumstances the "blameless" appellants should be granted an extension of time. Any prejudice to the respondent can be adequately remedied.

The appellants have made out special circumstances which justify an extension of time pursuant to Rule 95.11. Additionally they have satisfied the onus under section 48(1) of the Limitation of Actions Act to enable the grant of an extension of time.

During the appeal, an issue arose as to the possibility of prejudice to the respondents by exposure to the expense of an appeal. The appellants submitted that the costs of the appeal following a grant of an extension of time should abide the event of that appeal. It was submitted that as the respondents would be properly protected by an order that they recover costs thrown away as a result of the failure to set down the appeal. I accept this submission.

The appeal should be allowed and time to set down the appeal should be extended by seven days from this date. The appellant must pay the respondent's costs of this appeal and any costs thrown away. If the appeal is set down within the extended time the appeal can be heard in the April 2002 sitting of this Court.

[2] [1977] 1 QdR 102

[3] [1993] HCA 16; (1992-1993) 176 CLR 471 at 477

[4] Butt P 75 ALJ 283 at 284

[5] Counsel for the appellant accepted that the trial judge's attention had not been drawn to the authorities advanced before this court either at the time of the trial or in the application to extend time

[6] (1998-99) 195 CLR 516 at [3-4]

[7] [1986] FCA 186; (1986-87) 70 ALR 793 at 799

[9] [1997] HCA 1; (1997) 189 CLR 146 at 155

[10] This is not an appeal devoid of merit

[11] Jackamarra v Krakouer (1998) per Kirby J at [66]

[12] (1995-96) 184 LSJS 147