Malter & Anor v Procopets [2000] VSCA 11

Court of Appeal (Vic)|2000-02-03|Before: BROOKING, PHILLIPS and CHARLES, JJ.A.

REAL PROPERTY - Adverse possession - Fence departing from title boundary - Intention to possess land to exclusion of all others - Mistaken belief that fence on boundary.

The appellants, who are husband and wife, live at 20 Orrong Crescent, Caulfield, which has been their home since 1960. The adjacent property to the north is No. 22. Both pieces of land are under the operation of the Transfer of Land Act 1958. The fence between them was put up many years ago. It remained in position, it seems, until it was demolished by the respondent in March 1995. That fence encroached upon No. 22 by a short distance, 0.35 metres at the front and 0.48 at the rear. The misplaced fence has given rise to much costly and bitter litigation. This unhappy case shows us yet again how disputes between neighbours over encroachments tend to generate litigation and legal costs out of all proportion to the value of what they are arguing about. It was common ground at the trial that the prize - this narrow strip of land - was worth about $6,500. It has given rise to proceedings before the Administrative Appeals Tribunal; an application to the Supreme Court for an interim injunction; an application for an interlocutory injunction; the trial of an action extending over ten sitting days, in which the appellants as plaintiffs asserted a possessory title to the disputed strip and claimed damages in reliance on a number of diverse causes of action and the defendant claimed damages for breach of contract; two contested applications to the Court of Appeal, including one application to set aside the judgment for fraud; and an appeal which the parties said was estimated to take more than two days. Final addresses at trial took two whole days and they were supposed to have been shortened as the result of the furnishing of a number of sets of written submissions and other summaries. We have eight volumes of materials of various kinds. The prodigious and prodigal waste of public and private time and money can only be deplored.

In the end, we can dispose of the appeal and the associated application made by the appellants alleging that the judgment below was obtained by fraud by dealing only with the issue of adverse possession and by doing this on the material before the judge. And so I shall mention the facts and the pleadings and what happened during and after the trial very briefly, saying little more than is necessary to bring out the facts bearing on the adverse possession issue and the basis of the judge's decision on that. There is no point in trying to summarise all that has gone on.

Having bought No. 20 Orrong Crescent in 1960, the appellants bought the next door property, No. 22, in 1971, taking possession in May of that year. The following year, 1972, they sold No. 22 to persons named Richardson, who took possession in January 1973. In 1987 the respondent bought No. 22 from Marjorie Richardson, who had become registered as surviving proprietor. Although the dividing fence seems to have been erected long before 1960, the plaintiffs, for a reason which does not appear, did not either plead or seek to prove or contend at the trial that they were entitled to rely on adverse possession by their predecessor or predecessors in title as well as by themselves. They relied only on adverse possession said to have begun when they themselves moved into No. 20 in 1960. On this basis, the 15 year period required for a matured possessory title had not expired by 1971, when as a result of purchase they became registered as the proprietors of the whole of the land in the certificate of title relating to No. 22. The judge held that, once they became the owners of No. 22, the plaintiffs could no longer be in adverse possession of part of the land in that certificate of title, since one cannot be in possession of land adversely to oneself. The plaintiffs contended that time had begun to run against the holder of the paper title to No. 22 as soon as they gave possession of that property to the Richardsons, that is, in January 1973. Thus they contended that by January 1988 the necessary 15 year period had expired and the paper title had been extinguished and their possessory title to the disputed strip had come into existence. This date - January 1988 - was about six years before the defendant did any act which might have been put forward as stopping the running of time. So, the plaintiffs said, they had acquired a possessory title, in the sense of a matured title, in January 1988. But the judge held that they had not been in adverse possession of the disputed strip at any time after they gave possession of No. 22 to the Richardsons in January 1973. He reached this conclusion by adopting an argument advanced by the defendant which has been put again in this Court.

The respondent defendant seems not to have disputed at the trial, and certainly did not dispute before us, that the appellants were in adverse possession of the strip from the time they took possession of No. 20 in 1960 down to the time they became the owners by purchase of No. 22 in 1971. And before us Mr Kincaid, for the respondent, expressly conceded that, had it not been for his argument based on the transfer of No. 22 to the Richardsons in 1973, it would have been impossible to avoid the conclusion that the appellants had been in adverse possession of the strip from January 1973 until March 1995, when the respondent demolished the dividing fence. The submission put by the respondent to the judge and accepted by him was that, while the appellants were from 1973 until 1995 in actual possession of the disputed strip, the intention necessary to give rise to adverse possession had not been shown, in that they had not established that they intended to possess the disputed strip to the exclusion of all others.

The judge found - and this finding has not been attacked - that at all relevant times the appellants believed that the fence was on the title boundary. It follows from this that they believed themselves to be the owners of the disputed strip during the whole of the period in respect of which they claimed to have been in adverse possession of it. The judge accepted that this mistaken belief would not prevent the acquisition of a title by adverse possession. This view is, with respect, plainly correct. It is supported by the decision of Pennycuick, J. in Bligh v. Martin[1] and by decisions of the Court of Appeal, including Williams v. Usherwood[2]; Pulleyn v. Hall Aggregates (Thames Valley) Ltd.[3] and Hughes v. Cork[4]. In Lutz v. Kawa[5];, the Court of Appeal of Alberta observed, at (D.L.R.) 282-3, that usually "to show such a belief would be added support for the fact of his own possession". The most common case in which a possessory title is asserted in Victoria is, in my experience, one like the present, in which the fence dividing two residential allotments departs slightly from the title boundary and the adjoining owners have for many years assumed that there was no encroachment; in such a case it has never, so far as I am aware, been suggested that it is an answer to the possessory claim that the persons said to have been in adverse possession believed themselves to be the owners of the strip of land.

The basis of the judge's decision in the present case denying that there had been adverse possession was that, at the time when the adverse possession was alleged to have commenced - January 1973 - the plaintiffs had executed a transfer consequent upon their sale of No. 22 Orrong Crescent whereby they had transferred to the Richardsons the land in the relative certificate of title. His Honour said this:

"At the time of the transfer, the plaintiffs evinced an intention to confer title and thus exclusive possession. ... That intention would be presumed to continue for a reasonable time[6]. To rebut that presumption and to demonstrate that subsequently the requisite intent existed, the plaintiffs would have to point to facts that would support the inference that intent to claim exclusive possession came into existence after the transfer. At most, they can point to continued possession of the identical kind that existed at the time of the transfer. They would have to point to new facts which pointed unequivocally to the requisite intention."

I suppose it can be said that registered proprietors of land under the Act who sell it and then hand over at settlement a transfer of the land expect in the ordinary case that the purchaser will take possession of the land sold, either directly or through some other person, as is the purchaser's right. No doubt in the present case the appellants contemplated that the Richardsons would take possession of the land sold. But this contemplation does not seem to me to prevent, or even to render more difficult, the attribution to the appellants of the intention which would ordinarily be ascribed to them in consequence of their actual possession. From the time of the giving of possession of No. 22 to the Richardsons in 1973 until not long before the filing of the writ in 1995 the appellants - as is conceded by the respondent - were in actual possession of the disputed strip and continued to act in a way which - as is again conceded by the respondent - would make the attribution to them of an intention to exclude all others inevitable in ordinary circumstances. The offending fence was maintained in position and the appellants used the area that had been wrongly enclosed and manifested an intention to exclude all the world from it. In fact, they were ignorant of the encroachment and believed themselves to be the owners of all the land on their side of the fence. This does not prevent their possession from being adverse; if anything, it reinforces their claim to have had the necessary intention. But I do not found my view that the appellants were in adverse possession on their mistaken belief that they were the owners of the whole of the enclosed land: their possession would still have been adverse had they become aware, on the day after the Richardsons' purchase was settled, for example, that the fence encroached upon the Richardsons' land.

In my opinion, the judge was wrong in holding that a title had not been acquired by the appellants by adverse possession. Mr Kincaid conceded that, if this was so, the respondent had no defence to the claim for a declaration and in addition that the respondent's counterclaim would have to be dismissed. Both parties accepted that if the appeal succeeded on the adverse possession point it would be appropriate for this Court to assess damages on the appellants' claim for damages for trespass to land. I think these damages should be assessed at the sum suggested by Mr Kincaid, $400.

It was accepted by Mr Kincaid that if the judge had erred on the adverse possession point, steps would have to be taken to make the paper titles reflect the appellants' acquisition of a possessory title to the disputed strip. For the appellants, Mr Sharp invited us to make an order under s.103(1) of the Transfer of Land Act to achieve that end and Mr Kincaid did not oppose this. There was extremely brief reference to some authorities bearing on the exercise of the power conferred by s.103(1), but it was not possible for the question to be adequately discussed. It may be that the paper title position can be regularised by a transfer of the disputed strip by the respondent to the appellants, notwithstanding the caveat which we were told

has been lodged in respect of the title to No. 22. In the circumstances I think the best course is for liberty to apply to be reserved in the judgment which we substitute for the judgment below, so that if necessary a further order can be sought from a judge of the Trial Division.

Once it became apparent that the decision below on adverse possession would not stand, the parties reached agreement on what would be appropriate orders concerning the costs of the proceedings below and appropriate orders for stays of execution, although those orders are not strictly to be made by consent. That left only the question of the costs of the applications made by the appellants in relation to their contention that the judgment below should be set aside in consequence of evidence now available which was not led at the trial. We have found it unnecessary to determine the application to set aside the judgment in reliance upon this evidence, and it is not easy to say what order for costs should be made in relation to that application or the ancillary application made to this Court by summons filed on 12 August 1999. On the whole, I think that each side should be left to bear its own costs of those proceedings, but on the footing that the appellants, who are of course to be awarded the costs of the appeal, will be given, as part of those costs, the costs of the hearing in this Court on the first half day, notwithstanding that it was in large part concerned with the matter of further evidence. Thus they will have the costs of the whole hearing in this court.

I agree. I would only add, in relation to s.103 of the Transfer of Land Act, that as at present advised I am inclined to the view that an order might be appropriate under sub-s.(1) if only because the respondent's title to the disputed strip of land was extinguished by operation of a statute, the Limitation of Actions Act. But if an order were to be sought under s.103, I think notice to the Registrar might be needed in case the Registrar wished to make submissions about the meaning or operation of the section.

Moreover, an alteration to the register would, I suppose, require production of the relevant duplicate certificates of title for cancellation so that what the parties hold will not fail to correspond with the register.

Now that this long and sorry saga has been resolved, it is to be hoped that the parties will co-operate sufficiently to avoid further difficulty arising in the Land Titles Office .

I agree with the orders proposed by Brooking, J.A., and with His Honour's reasons. I also agree with what has been said by Phillips, J.A. In relation to s.103 of the Transfer of Land Act and as to what should occur if an order is sought under that section.

Gentlemen, we will hand down Minutes of Order which depart slightly from the minutes which were discussed the other day and we will also hand down the schedule which will form part of the Trial Division judgment which our order will substitute. That schedule colours in, both in the plan of the property and in the detail or enlargement, the disputed strip. It is not easy otherwise to indicate shortly the boundaries of the disputed strip.

From memory, I think the main alterations which we have made to the minutes are these.

We have tightened up 3(a) somewhat. We have identified what is meant by "the defendant's predecessor in title" by tying it to the land in the other title, and counsel will no doubt confirm we have the right volume and folio number in both cases and that all dates and numbers in these minutes or other particulars are correct.

We have called the "pillar", as it was called in 3 (d), a "pier". It is called a pier in the plan of survey and we have also tightened up, as my brother Phillips has said, 3(d). We have excluded - coming back to Minute 2 - paragraph 4 of the judgment below, which is the paragraph dealing with the costs specifically awarded to one party as mentioned in Minute 3(f), so that the judgment below will be a composite comprising, rather inelegantly because we have not renumbered 4, paragraphs (a) to (g), as set out in the Minute 3, and the vestigial paragraph 4 of the original judgment.

I think those are the main alterations, and we do intend to grant a certificate, as appears from the note in brackets, under s.13, but the appeal in respect of which that certificate is granted does not include either of the applications by summons and when a certificate is submitted for signature, it should define the appeal in a way which excludes the two applications by summons filed on those two dates mentioned in the minutes. If you like to take a little time in the light of that to read the proposed minutes.

It is also suggested, gentlemen, that we should modify Minute 3, the paragraph which is Minute 3(a) - I should say the last paragraph, which is not separately numbered. Presently - it runs: "the plan of survey hereinbefore mentioned, a copy which is scheduled to this judgment"; it may be preferable, and we think it is preferable, to make that run: "The plan of survey hereinbefore mentioned, a copy of which is scheduled to the order of the Court of Appeal made on the 3rd day of February 2000". The trial judge is showing remarkable prescience, but it does seem to get the schedule in as part of our authenticated order and then, as you will have seen, the plan is headed "schedule". The greatest care must be taken to ensure that the schedule is annexed to the authenticated order and that the plan is coloured pink and that a photocopy of the coloured plan is not used because that will not show the land as coloured pink, and we think it would be satisfactory if the draft authenticated order was submitted to Charles, J.A. who has gladly undertaken the task of vetting it. Are there any observations about these minutes?

Can we give the appeal its quietus, gentlemen, on this basis?

The Court makes an order in accordance with the minutes which have been prepared, the written minutes as amended as indicated in the discussion, and a copy of those minutes as amended and initialled by me and of the schedule initialled by me will remain on the file.

[6] (see e.g. Axon v. Axon [1937] HCA 80; (1937) 59 C.L.R. 395)

At a glance

Court

Decision date

Before

Source

Judgment (32 paragraphs)

Parties

Legislation Cited (2)