Fliegner v MNM Pty Ltd trading as Raine & Horne Glebe

Fliegner v MNM Pty Ltd trading as Raine & Horne Glebe - [2000] NSWCA 83 - NSWCA 2000 case summary — Zoe

[10]

1 PRIESTLEY JA: I agree with Heydon JA. 2 FITZGERALD JA: The circumstances giving rise to the appeal in this confused dispute are set out in the reasons for judgment of Heydon JA, in which the appellants are referred to as the plaintiffs and the respondent is referred to as the defendant. I will use the same terminology. 3 The plaintiffs are the owners of Lot 10 in DP 100, a property located at 14 Oxley Street, Glebe which they purchased in 1992. The defendant is the real estate agent which negotiated the sale of Lot 10 to the plaintiffs. 4 In advertisements and negotiations prior to sale, the defendant described Lot 10 as "waterfront land". The foundation of the plaintiffs' primary case is an allegation that the defendant's description of Lot 10 as "waterfront land" was misleading and deceptive Trade Practics Act 1974 (Cwlth), s 52 because Lot 10 is not "waterfront land". Alternatively, the plaintiffs submitted that the bare description of Lot 10 as "waterfront land" was misleading and deceptive and / or false and misleading Trade Practics Act 1974 (Cwlth), s 53A(1)(b) because it does not have all the characteristics of "waterfront land". 5 DP 100 and the certificate of title to Lot 10, Volume 10864 Folio 220, both depict its northern boundary as the mean high water mark of Rozelle Bay (formerly Johnston's Bay). That is in conflict with DP 711485, and, according to the plaintiffs, no longer correct. 6 Leichhardt Municipal Council is the owner of land described as Lot 1 on DP 711485. Lot 1 was previously owned by the Maritime Services Board and was part of the land in Certificate of Title Volume 5018 Folio 1. The current certificate of title to Lot 1 is not in evidence. However, it is appropriate to infer that the boundaries of Lot 1 described in the certificate of title to Lot 1 correspond to its boundaries as described in DP 711485. 7 DP 711485 depicts Lot 10 and Lot 1 with a common boundary. The northern boundary of Lot 10 and part of the southern boundary of Lot 1 is shown as a straight line 15.825 metres long at an angle of 198O 31' 30". As depicted in DP 711485, Lot 1 includes land which is between the northern boundary of Lot 10 and Rozelle Bay. 8 DP 711485 also depicts a line marked "FMHWM" which, the plaintiffs contended, probably correctly, signifies "Former Mean High Water Mark". The line marked "FMHWM" is, broadly speaking, north of the boundary between Lot 10 and Lot 1 depicted on DP 711485, i.e., closer to Rozelle Bay than the northern boundary of Lot 10 depicted on that D.P. 9 Survey evidence placed the material section of the mean high water mark of Rozelle Bay at the time when the plaintiffs purchased Lot 10 within the boundaries of Lot 1 as depicted in DP 711485, to the north of both the line marked "FMHWM" and the boundary between Lot 1 and Lot 10. 10 The plaintiffs accepted that Lot 10 was "waterfront land" when they purchased it if its northern boundary at that time was the then mean high water mark of Rozelle Bay. Their primary argument was that Lot 10 was not "waterfront land" when they purchased it because the mean high water mark of Rozelle Bay at that time was outside Lot 10's then northern boundary, irrespective of whether that boundary was the boundary between Lot 10 and Lot 1 depicted on DP 711485 or the line on that DP marked "FMHWM". 11 The plaintiffs' alternative argument that Lot 10 did not have the characteristics of "waterfront land" even if the mean high water mark of Rozelle Bay at the time when they purchased it was its northern boundary was based upon an assertion that the plaintiffs cannot obtain a mooring in connection with Lot 10, or would have more difficulty in obtaining a mooring, because of the Council's ownership of Lot 1. That was not proved. I agree with what Heydon JA has written under the heading "The Defendant's Silence". 12 I also agree with Heydon JA's reasons for rejecting the plaintiffs' contention that, in law, the northern boundary of Lot 10 at the time when they purchased it was the line marked "FMHWM" on DP 711485. Other considerations aside, there was no acceptable evidence to support such a claim, or even to explain that the ambiguity inherent in the word "former" in the phrase "Former Mean High Water Mark". 13 Although not put at the forefront of its argument, the plaintiffs' strongest case started from the proposition that, at the time when they purchased Lot 10, its northern boundary was no longer the current mean high water mark of Rozelle Bay, as stated in DP 100 and Certificate of Title Volume 10864 Folio 220, but the straight line shown on DP 711485 (and I infer in the certificate of title to Lot 1) as the boundary between Lot 10 and Lot 1. 14 One possible explanation for the discrepancy between, on the one hand, DP 100 and Certificate of Title Volume 10864, and, on the other hand, DP 711485 and the certificate of title to Lot 1 is that DP 711485 and the certificate of title to Lot 1 are incorrect. Another possibility is that DP 711485 and the certificate of title to Lot 1 are correct and DP 100 and Certificate of Title were originally correct but the northern boundary of Lot 10 might has altered since DP 100 (which is based on a survey in 1829) and even since Certificate of Title Volume 10864 Folio 220 was issued on 21 August 1968, which was 15 to 20 years prior to DP 711485. 15 For example, years ago, either the Maritime Services Board or its predecessor in title to the bed of the Bay up to the mean high water mark at that time attempted to "reclaim" land from the water of the Bay by the construction of a stone sea wall. The defendant conceded that it is legally possible that, at that time, or at some other time by some other means, the northern boundary of Lot 10 might have become fixed and might coincide with the material section of the southern boundary of Lot 1, and that, in that event, DP 100 and the certificate of title to Lot 10 no longer correctly designate the location of its northern boundary. However, the defendant argued that that had not been established by the plaintiffs. 16 In the present litigation, the plaintiffs are in the curious position of effectively asserting that, in a dispute between the Council and the plaintiffs, it would be held that the present evidence proves that DP 100 and Certificate of Title Volume 10864 Folio 220 are probably incorrect, that the northern boundary of Lot 10 is as depicted in DP 711485, and that the Council, not the plaintiffs, is the owner of the land between that line on that DP and the material section of the mean high water mark of Rozelle Bay at the time when the plaintiffs purchased Lot 10. 17 The plaintiffs did not submit that any provision of the Real Property Act 1900 would facilitate such a conclusion As pointed out by Heydon JA, s 42 of the Real Property Act might favour the plaintiffs in a contest with the Council. See also ss 3, 12, 31-33, 40, 136 and 138, which would not sit entirely easily with the Council's acknowledgment that Lot 1 was purchased from the Maritime Services Board "subject to the riparian rights of" Lot 10. 18 In my opinion, whatever the true legal position as between the Council and the plaintiffs, they failed to prove their case against the defendant that Lot 10 is not "waterfront land." No real attempt was made to demonstrate why DP 711485 and (I infer) the certificate of title to Lot 1 depict a common boundary between Lot 10 and Lot 1 which is to the south of the high water mark of Rozelle Bay at the time when Lot 10 was purchased by the plaintiffs, contrary to what is depicted on DP 100 and Certificate of Title Volume 10864 Folio 220. The plaintiffs succeeded in establishing no more than that Lot 10 might not be "waterfront land". 19 I agree that the appeal should be dismissed , with costs. 20 HEYDON JA:

[11]

In mid to late November 1991, Dr Joseph Fliegner, the first plaintiff, and his wife, Annette Fliegner, the second plaintiff, visited a property known as 14 Oxley Street, Glebe. It was open for inspection preparatory to being offered for sale. The property was Lot 10 in DP 100. The relevant Certificate of Title was Volume 10864 Folio 220. The plaintiffs attended as the result of seeing newspaper advertisements inserted by the defendant. The defendant was a real estate agent acting on behalf of the owner, the Richmond Fellowship of New South Wales, which wished to sell the property. The newspaper advertisements referred to Lot 10 prominently in two places as being "waterfront" property. There was other advertising published by the defendant which also referred to Lot 10 in that way. The first plaintiff gave evidence that Mr. Ware, the officer of the defendant responsible for offering Lot 10 for sale, in several conversations which are not in this respect controversial, described Lot 10 as a waterfront. 21 On 12 December 1991 an auction of Lot 10 was conducted. The plaintiffs attended it. Lot 10 was not sold. However, the first plaintiff made an offer soon after the auction. Negotiations proceeded over the ensuing months. On 4 March 1992 the plaintiffs instructed solicitors to act for them in relation to their intended purchase of Lot 10. On 5 March contracts were exchanged. After that date the plaintiffs formed the belief that the Leichhardt Municipal Council owned a strip of land between Lot 10 and a sea wall often submerged by water, known as Lot 1, and that the southern part of this strip ran above the mean high water mark. If this belief were correct, the result for the plaintiffs was that a strip of land not owned by them lay between them and the waters of what was once known as Johnston's Bay and is now known as Rozelle Bay. 22 Proceedings took place between the vendor and the plaintiffs in the form of a Law Society arbitration in an attempt to gain some compensation for the plaintiffs on the grounds of a misdescription of Lot 10. The vendor resisted the claim for compensation successfully. The plaintiffs then completed the purchase on 5 June 1992. 23 It is a curiosity of the case not explained in the evidence that the plaintiffs did this without propounding against the vendor, for whom the defendant was acting as agent, the claims now made against the defendant. 24 On a date which is not clear the plaintiffs commenced proceedings in the Federal Court of Australia. The only pleaded causes of action now relied on relate to claims for damages by reason of breaches of ss 52 and 53A(1)(b) of the Trade Practices Act 1974 (Cth). The Statement of Claim was not before the Court of Appeal, since it was replaced on the first day of the trial by an Amended Statement of Claim. Since the Defence to the Statement of Claim was filed on 31 October 1995, the proceedings would appear to have been commenced just within the three year limitation period created by s 82 of the Act. On some date which is unclear, but before the Defence was filed in the District Court on 31 October 1995, the proceedings appear to have been removed from the Federal Court to the District Court.

[13]

Structure of the Notice of Appeal 26 The Notice of Appeal was as follows: "1. His Honour erred in finding that the property, 14 Oxley Street, Glebe, New South Wales was waterfront. 2. It was not reasonably open for his Honour to conclude from the primary facts found by him that the property, 14 Oxley Street, Glebe was waterfront. 3. His Honour erred in finding that omission of the licensee in charge of the defendant to tell the plaintiffs of a number of matters adverse to the plaintiffs' impression they were buying waterfront land was inadvertent. 4. His Honour erred in law in finding that Mr Ware's omission to tell the plaintiffs about matters which made them less informed than they might be about the prospects of securing a mooring that he was not in breach of sections 52 or 53A of the Trade Practices Act [sic]. 5. In finding that as a result of the omission on the part of Mr Ware to inform the plaintiffs that Leichhardt Municipal Council had acquired lot 1 (of the relevant subdivision) the plaintiffs were less informed than they might have been about the prospects of securing a mooring the defendant was not a [sic] breach of sections 52 and 53 [sic] of the Trade Practices Act. 6. His Honour erred in law both in relation to the causes of action under the Trade Practices Act and in relation to negligence in effectively reversing the onus of proof as to who had the onus of satisfying the Court as to whether or not the defendant deliberately kept the plaintiffs in the dark about any problems created by the Council in having ownership to lot 1 in relation to obtaining the benefit of a mooring. 7. His Honour's finding that he was not satisfied the defendant deliberately sought to keep the plaintiffs in the dark without [sic] problems created by the plaintiff in having ownership to lot 1 in relation to obtaining the benefit of a mooring was contrary to the evidence or not supported by the evidence. 8. His Honour erred in not finding that the defendant had a duty to tell the plaintiffs of problems of which the agent was aware, or should have been aware of, both in relation to the Trade Practices counts and the count of negligence. 9. His Honour erred in finding that Mr Ware had an absence of recollection of what he was clearly aware of two months before speaking with the first named plaintiff, in relation to waterfront aspects of the property. 10. His Honour was in error in not finding that Mr Ware's silence in relation to matters of which he had knowledge or constructive knowledge in relation to the waterfront characteristics of the property or lack of waterfront characteristics was not in breach of section 52 or 53A of the Trade Practices Act or was not negligent. 11. As his Honour found that the first named plaintiff made it clear to Mr Ware that he wanted the property for the purpose of a mooring and in all the circumstances was not reasonably open for his Honour to find that Mr Ware was not aware of the problem in getting a mooring, at the time of his conversation with the first named plaintiff. 12. His Honour erred in not finding that the representations, written and oral, made by the defendant of and concerning the property that it was a freestanding waterfront were not misleading or deceptive. 13. His Honour erred as a matter of law in finding that the relevant issue was whether in advertising and promoting the sale it was false and misleading to describe the property as waterfront. The conjunction "and" was not correct, the conjunction should be "or". [sic] 14. His Honour erred in finding the plaintiffs did not rely upon the representations of the defendant that the property was waterfront. 15. In the light of his Honour's finding that in September 1991 Mr Ware advised the Richmond Fellowship that the property did not have access to the high water mark and that the Council had access from the high water mark to the stone sea wall and was aware that the access did not exist, his Honour should have concluded from this that there was a breach of section 52 and 53A of the Trade Practices Act and negligence on the part of the defendant as the defendant failed to advise the plaintiffs of this information and knowledge. 16. His Honour erred in finding that it was not in the defendant's mind at the relevant time of making the representations to the plaintiffs that the Council had acquired title to lot 1. 17. His Honour erred in not giving any weight to the defendant's own written description of the property as being waterfront "in name only". 18. In finding that the defendant had actual knowledge and imputed knowledge or problems associated with obtaining a waterfront mooring and not conveying this knowledge to the plaintiffs his Honour erred in not finding in the circumstances breaches of section 52 and 53A of the Trade Practices Act. 19. His Honour erred in not concluding on the facts found that the defendant had not been negligent in misleading the plaintiffs. 20. His Honour in finding that there were omissions in information that should have been conveyed to the plaintiffs and that these omissions were inadvertent should have found that the defendant was negligent." 27 The allegations of negligence in the Amended Statement of Claim were not pressed in final address at the trial, and though revived in the Notice of Appeal, were abandoned again in written submissions to the Court of Appeal. The fraud allegations were pressed in grounds 3, 6, 7, 9 and 16 of the Notice of Appeal, which attacked the findings of the trial Judge, Sinclair DCJ, that Mr Ware's omission to inform the plaintiffs of the existence of Lot 1 was inadvertent. To some degree the fraud allegations were also pressed in argument, but in relation to liability, not damages (about which little was said by the plaintiffs on appeal).

[16]

In fact that statement is incorrect. DP 100 appeared as part of the contract for sale: see paragraph 3 of the "short summary of undisputed facts" below. What was annexed to Mr Curtis' report was DP 711485. The "short summary of undisputed facts" continues as follows: "It is clear that the lower boundary of the land is, and has always been, the mean high watermark of the Bay which is shown quite clearly in further colour photographs tendered, Exhibit 24. At some earlier time, clearly many years ago, a stone sea wall was constructed, extending into the water of the Bay, probably for the purpose of reclaiming an area extending from the high watermark out into the Bay. 3. The property is described in the Certificate of Title, volume 10864 Folio 220 issued 21 August 1968 as being Lot 10 on deposited plan 100. A copy of DP100 was included in the contractual documents. It appears to have been made in about November 1829 and copied on 28 May 1979. It does not show Lot 1. There was also a sewerage service diagram annexed to the contract of sale which shows the subject land and also the other area described as reclaimed land, being part of Lot 1. The Certificate of Title, exhibit 3, included a sketch, obviously based on DP100, showing the waterside boundary of the land to be the high watermark of Johnson's Bay There is included in the agreement for sale of land to the [plaintiffs] dated 5 March 1992 a certificate of a survey carried out by a registered surveyor, Mr [Kinninmont] in September 1984 [in fact 1974] which does have marked on it beyond the high watermark the stone sea wall to which I have referred in what was then known as Johnston's Bay, the submerged sea wall being about 30 feet out into the Bay from the high watermark. However, the area is not marked 'Lot 1'. 4. In or about 1986 the Leichhardt Municipal Council was contemplating the possibility of constructing a walkway, or some other means of access, around the Bay. For this purpose the Council acquired title from the Maritime Services Board of an area of the land beyond the bottom of the subject property and other adjoining properties running down to the Bay. This area is designated Lot 1 on a survey carried out by the Maritime Services Board in 1985, shown in DP711485 in which this area to the north east of the subject property is described as 'reclaimed land' though it is quite apparent that for many years prior to 1985 any reclamation of land in the area bounded by the stone sea wall, had washed away. The stone sea wall itself is covered by water at high tide but the top of it is visible at low tide. No such area of reclaimed land or stone sea wall is shown in the original deposited plan 100. On the evidence before me it seems to be unlikely the Council did not notify the owners of land adjoining Lot 1 that it obtained title to Lot 1."

[17]

The next paragraph contains the following conclusion: "Accordingly it is clear that during the period, between the time the plaintiffs began negotiating with Mr Ware, in respect of the purchase of the land and the signing of the contract in March 1992, the subject property extended to the high watermark in the Bay and the Leichhardt Municipal Council had title to the area extending for a relatively short distance from the high watermark down the sandy beach shown in the photographs to the line of the old stone sea wall." 31 It is to be noted that the trial Judge stated in paragraph 2, as an undisputed fact, that it is clear that the lower boundary of the land is the mean high water mark of the Bay. The trial Judge in effect repeated that in concluding that at the relevant time "the subject property extended to the high water mark in the Bay". The trial Judge accepted a dictionary definition of "waterfront" as "land or buildings abutting on a river, a lake, the sea, etc." The trial Judge then said: "I find that, prima facie, the property the subject of the contract was a waterfront property. It is in my opinion, quite clear that the property physically abutted on the water, indeed the mean high watermark of the Bay. Accordingly insofar as the [plaintiffs'] case depends upon the advertisements, brochures and signs [it] fails." 32 If the trial Judge has correctly set out as "undisputed facts" facts which were in truth undisputed or suggested by the evidence on the balance of probabilities that conclusion appears incontrovertibly correct. Property which abuts on the mean high water mark of the Bay is for substantial periods physically abutting on the water. Indeed, in oral argument the plaintiffs accepted that if the boundary of Lot 10 extended to the present mean high water mark, Lot 10 would be a waterfront property. No challenge to the "undisputed facts" is explicitly made in any part of the Notice of Appeal. However, in oral argument the position of the plaintiffs was that the boundary of Lot 10 was not the current mean high water mark but something further south and further away from the Bay. Before examining that controversy, it is convenient to set out what the documentary evidence reveals as to the boundaries between Lot 10 and Lot 1.

[20]

(d) The controversy as to boundaries 41 In oral argument the plaintiffs submitted to the Court of Appeal that there were three possibilities in relation to the northern boundary of Lot 10. One was the straight line 15.825 metres long. A second was the Former Mean High Water Mark appearing on DP 711485. A third was the current mean high water mark. The plaintiffs submitted that if the first possibility were correct, the land would not be waterfront land, but they did not distinctly contend for the proposition that the first possibility was correct. 42 The plaintiffs accepted that if the third possibility was correct, the land was waterfront land. 43 The central contention of the plaintiffs was that the third possibility was not correct, but that the second possibility was, and that that caused the land not to be waterfront land at the time of exchange. 44 The plaintiffs' contentions raise a potential conflict between the Certificate of Title to Lot 10, which shows Lot 10 extending to Johnston's Bay, and (assuming that the Certificate of Title to Lot 1, which was not in evidence, corresponds with the readings of DP 711485 suggesting that Lot 10 ends either at the line 15.825 metres long or at the former mean high water mark) the Certificate of Title to Lot 1. The plaintiffs contended, not for the view that is most favourable to the Leichhardt Municipal Council (the straight line 15.825 metres long), nor for the view that is least favourable to the Leichhardt Municipal Council (the current mean high water mark), but for a view intermediate between the two (the former mean high water mark). It is perhaps regrettable that so far as the choice between the three possibilities might depend on deciding the legal question whether rights purportedly recorded in favour of the plaintiffs as proprietors of Lot 10 in Certificate of Title 10864 Folio 220 could validly be cut down by a later Deposited Plan such as DP 711485 or by a later Certificate of Title consistent with it, the parties paid no attention to the question before the trial Judge and little during the appeal. It is also perhaps regrettable that the issue of boundaries might be resolved positively in proceedings to which the Leichhardt Municipal Council is not a party, though no adverse answer can bind it.

[23]

51 On 12 February 1982 the solicitor for the Maritime Services Board wrote to Messrs Pike, Pike & Fenwick, solicitors for the Leichhardt Municipal Council, indicating that the Board was anxious to complete the sale to the Council of Lot 1. The letter said that though sale was dependent upon Council furnishing evidence that it had taken appropriate action to extinguish the riparian rights of the owners of the adjoining freehold lands, the Board acknowledged that that action was expected to take some time to complete, and was now prepared to proceed with sales subject to the inclusion of an indemnity clause in the sale contracts in the following terms: "The land is sold subject to the riparian rights of the Registered Proprietors of the lands comprised in Certificates of Title … on the frontages of which the subject lands are situated and the Purchaser shall make all necessary arrangements and satisfy all claims made against the Board by any persons whomsoever in respect of or arising out of the loss of or interference with any riparian or other rights and the Purchaser shall indemnify and save harmless the Board from and against all actions suits demands costs charges damages and expenses brought made or awarded against or incurred by the Board in anywise in relation thereto." 52 On 3 December 1982 Messrs Pike, Pike & Fenwick wrote to the solicitor to the Maritime Services Board suggesting that it was desirable to determine finally whether or not there were any riparian rights. 53 On 17 January 1983 the solicitor to the Board wrote to Messrs Pike, Pike & Fenwick. The letter said that the most important of the rights of the riparian owner was the right of access to the water from the land of the riparian owner, and that it was not expected that any reference to those rights would be found in the documents of title of the riparian owner. 54 On 22 March 1983 Messrs Pike, Pike & Fenwick wrote to the solicitor to the Board to advise that the Leichhardt Municipal Council had resolved to complete the transfer of Lot 1 on the conditions set out in the letter of 12 February 1982. 55 The contract for sale of Lot 1 of 20 September 1985 contained a clause of the type proposed in the letter of 12 February 1982, namely clause 32, and the Deed of Indemnity pursuant to clause 32 was executed on 10 December 1985. Accordingly, the riparian rights were never extinguished and the sale of Lot 1 was expressed to be subject to them. 56 The plaintiffs were thus correct in submitting that there was talk of a loss of riparian rights. However, that talk led to their preservation, not their destruction. 57 The plaintiffs did not further explain in submissions how this material, even if it were capable of determining the boundary issue, did so. 58 The third piece of evidence referred to by the plaintiffs is that on 5 May 1989 a temporary employee of the defendant was told by Mr Hudson of the Maritime Services Board that the Richmond Fellowship of New South Wales had title to Lot 10 "from the former mean High Water Mark to Oxley Street". This cannot be evidence of the boundary if only because, after objection, the evidence was not tendered for that purpose; it was tendered as going only to the mental state of the defendant. 59 The plaintiffs advanced one other argument for concluding that the former mean high water mark was the boundary. The argument was that even if otherwise the change in the mean high water mark over the years would have caused the boundary to Lot 10 to move by reason of the doctrine of accretion, since reclamation of the land had been effected when the sea wall was built, the doctrine of accretion did not apply. There was no evidence of precisely when the reclamation was attempted, by whom, pursuant to what power, after what consultation with the then owner of Lot 10, and with what degree of initial success. Indeed, in oral argument the plaintiffs appeared to accept that there was no basis on which any authority could by reclamation move the boundary as defined by the high water mark. In any event, the structures built as part of the reclamation were flooded by the sea at some uncertain date and no dry land was reclaimed. Thus the reclamation was ultimately a failure. Indeed, there is no distinct evidence that it ever succeeded. Accordingly, it does not advance the plaintiffs' case.

[27]

(g) Did the plaintiffs discharge the burden of proving that the boundary did not run along the current mean high water mark? 66 Whatever might be the force of these competing bodies of evidence, consisting as they largely do of the unreasoned opinions of surveyors, valuers and lay people, some of whom were not called, in resolving boundary disputes in a system of landholding other than the Torrens system, they have no materiality to the present dispute. 67 All that is material is Certificate of Title Volume 10864 Folio 220, and any expert evidence directed to explication of what it signifies. There was no such evidence. The evidence on both sides rather took the form of dogmatic assertions. It is possible that expert evidence might have been given to the effect that the wavy line on the Certificate of Title, which appears to represent the current mean high water mark, does not do so. That evidence was not given. The onus rested on the plaintiffs to demonstrate that that line represented something other than the current high water mark. This they did not do. 68 Had the evidence been different, issues may have arisen as to s 42(1) of the Real Property Act 1900 (NSW), which provides: "Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except: (a) the estate or interest recorded in a prior folio of the Register by reason of which another proprietor claims the same land; … (c) as to any portion of land that may by wrong description of parcels or of boundaries be included in the folio of the Register or registered dealing evidencing the title of such registered proprietor, not being a purchaser or mortgagee thereof for value, or deriving from or through a purchaser or mortgagee thereof for value." … 69 The effect of s 42(1) is that subject to the possible application of the exceptions in s 42(1)(a) and (c), the plaintiffs held Lot 10 free from any estates or interests (such as an estate held by the Leichhardt Municipal Council south of the present mean high water mark). 70 The exception in s 42(1)(a) would appear not to apply. Since the Certificate of Title to Lot 1 is not in evidence, it is not possible to conclude whether it records an estate or interest which conflicts with the plaintiffs' title as recorded in Certificate of Title Volume 10864 Folio 200. In any event, the Leichhardt Municipal Council's Certificate of Title must postdate Certificate of Title Volume 10864 Folio 220, which was issued on 21 August 1968. The Maritime Services Board presumably had a Certificate of Title predating 21 August 1968, but that Certificate of Title is not in evidence either. It is plain that there must be a Certificate of Title for Lot 1: the plan of Lot 1 in DP 711485 describes Lot 1, as at 4 July 1985, as "being part of the land comprised in Cert. Title Volume 5018 Fol 1"; the transfer of 7 April 1986 transferred the land in Identifier 1/711485; and the Computer Folio Search of 4 May 1993 revealed that there was a Certificate of Title to Lot 1 dated 10 April 1986. The exception found in s 42(1)(a) would appear not to depend on the drawing of inferences from subsequent transfers or Deposited Plans, but only on a prior folio of the Register. Section 114 of the Real Property Act can in certain circumstances make the lodgment of a Deposited Plan a necessary precondition of successfully applying to have land brought under the provisions of the Act, or of obtaining registration of a dealing or lodgment of a caveat, or of obtaining the creation of a folio of the Register or the issue of a Certificate of Title for the land comprised in the folio of the Register. But it would appear not to trigger the exception in s 42(1)(a), because that depends on a prior Certificate of Title which is not in evidence. If there were in evidence either a prior Certificate of Title or the Leichhardt Municipal Council's Certificate of Title, those documents might establish that there was in fact no conflict with Certificate of Title Volume 10864 Folio 220. It cannot be presumed that there is a conflict. 71 The exception in s 42(1)(c) would not appear to apply because the plaintiffs were purchasers. 72 However, because of the condition of the evidence it is not necessary to reach any conclusions in relation to these Real Property Act points. The position in short is that the plaintiffs bore the burden of proving that Lot 10 did not run to the current mean high water mark. Whether or not the defendant has called sufficient evidence to establish that it did, the plaintiffs did not discharge the burden resting on them of establishing that it did not. Accordingly, they did not discharge the burden of proving that their land did not physically abut the water, and of proving that in this sense the land was not waterfront land.

[28]

The Defendant's Silence 73 The trial Judge said that the principal issues for determination were whether or not the property was a waterfront property and, if it was not, reliance. Having concluded that it was a waterfront property, he turned to an apparently different issue which he analysed as follows: "It remains to consider whether there was a deceptive or misleading representation made by the defendant in the conversations concerning the prospects of obtaining a mooring some distance out from the shore and/or a ramp or boatshed to enable a small craft such as a light dinghy to be stowed to row out to the mooring. On this issue I find that - 1. That the Leichhardt Council had acquired Lot 1 was a matter that Mr Ware ought to have remembered at the time of his discussions with Dr Fliegner prior to the signing of the contract. As a result of this omission on the part of Mr Ware I am satisfied that the plaintiffs were less informed that [sic] they might have been about the prospects of securing a mooring. Nevertheless I am satisfied that Mr Ware did advise the plaintiffs to make inquiries as to whether they were likely to receive such permission, certainly from the Maritime Services Board and that the plaintiff did attend the Maritime Services Board and make inquiries and was referred to the Leichhardt Municipal Council to make further inquiries. I accept that the somewhat limited inquiry he did make from the Leichhardt Council failed to make him aware of the real possibility he was unlikely to get permission for such a mooring or for a boat shed or ramp and that his right of access from the bottom of his property at the high watermark to any such mooring that might be granted to him would probably be somewhat limited. This subject does not amount to any defect of the title he was acquiring or any physical defect of the land but merely the value of the prospects of obtaining a mooring and having access to it across Lot 1. I am not satisfied that the defendant deliberately sought to keep the plaintiffs in the dark about any problems created by the Council having title to Lot 1 would probably create in relation to obtaining the benefit of a mooring. I am not persuaded that the omission of the defendant amounts to conduct that was misleading or deceptive or was likely to mislead or deceive the purchasers." 74 The representation which the trial Judge discussed was not pleaded. The trial Judge's analysis ultimately turns on the finding that he was not satisfied that the defendant deliberately sought to keep the plaintiffs in the dark about any problems created by the Council having title to Lot 1 in relation to obtaining the benefit of a mooring. This suggests that he was in truth not dealing with misleading conduct based on a representation, but misleading conduct arising from silence. This was certainly the way the plaintiffs treated this part of the reasons for judgment in the Notice of Appeal, grounds 4, 5, 10, 16 and 18. In their written submissions, however, the plaintiffs took a different tack. The plaintiffs contended that in inquiring whether the defendant had deliberately sought to keep the plaintiffs in the dark about any problems created by the Council having title to Lot 1 in relation to obtaining the benefit of a mooring, the trial Judge had applied the wrong test. The question was simply whether the response of the defendant to inquiries was such as to mislead. They submitted that the allegedly misleading responses of the defendant were not "silence". 75 One difficulty with the plaintiffs' written submissions is that they did not identify which responses were allegedly misleading. In oral argument the plaintiffs pointed to evidence of conversations between the first plaintiff and Mr Richard Ware discussing moorings in which Mr Ware did not disclose that the plaintiffs would have difficulty in getting mooring rights because the land adjoining Lot 10 was not Maritime Services Board land. Thus the plaintiffs complained of the following conversation between the first plaintiff and Mr Ware: "I said to Richard that I was interested in it because it was a waterfront. I questioned him about the obtaining of moorings. He told me that he understood that the Maritime Services Board had been approached and were prepared to consider a mooring on its merits …."

[31]

That attempt succeeded, but the amendment was allowed only on the basis that the allegation went to damages. In final address the following exchanges took place between counsel for the defendant and the trial Judge: "McHugh: Now your Honour, what has been pleaded against my client is a representation that the land was 'waterfront'. And it may well be that other conversations have some bearing - for example about moorings and so on - have some bearing on a reliance issue or perhaps to give context, but should be quite clear that the case that's made against my client is one turning on the representation of the word, 'waterfront'. His Honour: Mm. McHugh: - and whatever flows from that. And not that there was - for example, there was an issue at one stage arose in the course of my friend's submissions about silence. No case of silence has been pleaded against my client, and - that is, that he should have said something - and the evidence may well have come out in a quite different way if that was the case that had been pleaded. So what I propose to do is to address your Honour on the case that's pleaded against my client. His Honour: Oh yes." 77 The defendant further submitted that it was not alleged that the express representation that the property was "waterfront" was in some way rendered misleading or deceptive by reason of any silence or omission. Rather, what was pleaded in paragraph 9 of the Amended Statement of Claim was simply an objective factual allegation that "the said property was not waterfront property." 78 Hence, the defendant submitted, Mr Ware's failure to remember that Leichhardt Municipal Council had acquired Lot 1 and his failure to speak about any problems which that would create in relation to the obtaining of a mooring were irrelevant, should not have been dealt with by the trial Judge, and could not constitute the basis of an appeal. 79 There is no doubt that the first plaintiff gave a quantity of evidence about his desire for a mooring and the fact that for him the description of land as "waterfront" signified that it had mooring rights. Read against the Amended Statement of Claim, however, this evidence appears to have gone to the terms of the conversations, to background circumstances, to contributory negligence, and to reliance rather than to a case explicitly based on non-disclosure of the ownership of Lot 1 and its consequences for the acquisition of mooring rights. 80 In short, the defendant's submissions appear to be correct. This part of the plaintiffs' argument on appeal propounds a case based on silence. That case was not pleaded. It was not permitted to be introduced in paragraph 20 of the Amended Statement of Claim, since the trial Judge allowed the amendment on the basis that it was "strictly confined to damages". Even if it were permissible to run the case, it could only succeed if Mr Ware refrained from speaking otherwise than inadvertently: Trade Practices Act 1974 (Cth) s 4(2)(a) and (c). The trial Judge found that it was not otherwise than inadvertent. One such finding, already referred to, was: "I am not satisfied that the defendant deliberately sought to keep the plaintiffs in the dark about any problems created by the Council having title to Lot 1 would probably create in relation to obtaining the benefit of a mooring."

[34]

Reliance 81 The defendant seized on ground 14 of the Notice of Appeal as a concession that the trial Judge had in fact made a finding of non-reliance. The defendant also advanced a number of evidentiary arguments pointing to the unlikelihood of reliance. These included the fact that Mr Ware advised the plaintiffs to make their own inquiries of the Maritime Services Board; the fact that they did make those inquiries of both the Maritime Services Board and the Leichhardt Municipal Council; the fact that the Leichhardt Municipal Council told them it would not approve moorings; the fact that the first plaintiff decided that because the land was zoned "waterfront industrial", the plaintiffs could have jetties and moorings; the fact that the first plaintiff had instructed a solicitor to act for him before exchange and was relying on him to protect his interests; and the fact that the second plaintiff was relying on the first plaintiff to make inquiries. A significant matter was that in final address, in the hearing of the first plaintiff, an issue arose as to whether the plaintiffs had given evidence of reliance, and the first plaintiff was recalled, over the understandable objections of the defendant, to deal with that topic. This must have weakened the evidence he then gave. 82 However, the trial Judge in truth did not make an express finding of non-reliance. He may have abstained from doing so because it can be hypothetical and abstract, after first finding that there was no misleading conduct, then to find that if there had been, it would not have been relied on. The trial Judge may have abstained from making an express finding on reliance for other reasons. The fact is that he did not make an express finding. Nor is it possible to extract from the trial Judge's reasoning, in particular his finding that Mr Ware advised the plaintiffs to make inquiries about the likelihood of receiving permission to secure a mooring, an implicit finding of non-reliance. Accordingly, though ground 14 of the Notice of Appeal is misconceived, the defendant's submissions about it are not valid. This Court is not in a position to reach a conclusion about subjective reliance, which is a matter in relation to which the evaluation of oral testimony can be very important, without the advantage of having heard the first plaintiff's evidence.

[35]

Notice of Contention 83 The defendant contended that the appeal could be dismissed on two grounds not dealt with by the trial Judge. In view of the proposed dismissal of the appeal by reason of the plaintiffs' failure to discharge their burden of proving that the land was not waterfront land, it is not necessary to deal with them at length. 84 The first ground on which the defendant contended that the appeal could be dismissed was that a puffing statement by a real estate agent that the property was "waterfront" property was not one which would be relied upon without further inquiry. However, reliance is a question of fact, and once a statement, however puffing, is held to be misleading, the issue of whether it was in fact relied on depends on an examination of all the relevant evidence and cannot be answered by the application of general rules of the type contended for. 85 The second ground not dealt with by the trial Judge related to damages. The defendant argued that the plaintiffs' valuer valued the land as a "waterfront reserve" at $550,000, whereas in fact it was "waterfront" rather than "waterfront reserve", because at high tide the water came up to the boundary. That was only so if the defendant's case on the location of the boundary was correct. Ex hypothesi the issue of damages would only arise if the defendant's case on the location of the boundary was incorrect. The defendant then pointed to the fact that Mr Dundas, its valuer, who was not cross-examined on the point, was of the view that the price paid equated to value, and that the value of the land could not be altered "by the ownership of the adjoining land below high water mark". The defendant submitted that the trial Judge preferred Mr Dundas. He did, but only on the issue of whether the land was waterfront land, not the issue of damages. Given that there are no findings by the trial Judge relevant to damages, given that this Court did not see the valuers, and given that their valuation opinions are put baldly, it is not possible for this Court to choose between them.

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