Malter v Procopets [1998] VSC 79

5. It seems that in 1994, the defendant raised with the plaintiffs the possibility of replacing the fence between the two properties. The result of those discussions, which were originally unsuccessful, was that on about 22 September 1994 the plaintiffs signed a document in the following terms

We, S. MALTER and F. MALTER both of 20 Orrong Crescent, Caulfield North do hereby give our consent to Mr B. Procopets of 22 Orrong Crescent, Caulfield North to demolish the existing fence between our respective properties and to erect a new brick fence in the correct position in accordance with the attached certificate of title volume 4711 folio 036 marked with the letter A" "plan of survey marked with letter B "both signed by us.

12. We further undertake to pay the amount of two thousand dollars ($2,000) towards the cost of construction of the new brick fence after being advised that the actual cost of construction should be six thousand dollars ($6,000), the balance of the said cost to be paid by Mr Boris Procopets.

18. The document also bore the signatures of Mr and Mrs Malter beside the passage that was originally included but crossed out. The defendant alleges that Mr and Mrs Malter also signed a copy Certificate of Title and a plan of survey and signed at least one more set of documents. While the plaintiff denied these allegations initially, they have admitted them in the light of expert testimony and reports that were obtained by the parties.

21. In March 1995 the house at 22 Orrong Crescent was demolished together with the fence between the two properties. On about 28 March 1995, the first plaintiff observed preparation work being done for the construction of a new brick fence. A dispute escalated resulting in the plaintiffs obtaining an interim injunction from Nathan, J. on 5 April 1995. On 10 April 1995, at the adjourned hearing, the injunction was discharged. There is a dispute about what happened on that day.

24. It is common ground that the old fence was not built on the title boundary but encroached on to the defendant's land, as shown on his certificate of title, for a little over one foot for the length of the property.

29. The plaintiffs allege that they have been in possession and occupation of 20 Orrong Crescent North Caulfield for more than 30 years and that during their occupation and possession, until its demolition on 28 March 1995, there had existed a fence along the common boundary separating the plaintiffs property from the defendants property. They allege that they became the owners of the narrow strip of land in dispute between the parties on the basis that they had been in continuous adverse possession of it for a period of fifteen years. They allege that as a result, the rights of ownership if any, of the defendants and their predecessors in title in the disputed land have been extinguished by the Limitation Of Actions Act 1958. They claim to be entitled to appropriate declarations and an order amending the plaintiff's certificate of title and the defendants certificate of title.

32. The defendant denies that the plaintiffs have been in adverse possession of the disputed strip of land for the requisite period and denies the plaintiff's right to the orders sought.

36. In the alternative, the plaintiffs allege an agreement for the construction of a fence. This agreement was pleaded in the statement of claim in different ways. Ultimately, the agreement alleged by the plaintiffs was an agreement in very simple terms. It was that they agreed with the defendant that he would at his expense demolish the existing fence and replace it with a brick one on the site of the existing fence line. It is said that the agreement was constituted by a conversation to that effect and the above document headed "Consent" signed by the plaintiffs on the same day. The plaintiffs say that the agreement was reached on 22 September 1994. The defendant alleges a more detailed agreement which comprised the above consent document plus a copy of the Certificate of Title and a copy of a survey plan. He also alleges that it was agreed that the new brick fence would be erected upon his land at the title boundary, would be six feet high, would have double brick piers 2 - 4 metres apart, would be single brick between the piers and would be made of grey pressed bricks, which could be painted, similar to those employed in the units built on 20 Orrong Crescent. The defendant also, notwithstanding the pleading, alleges that the agreement was concluded on the 23 September 1994 not on the 22 September 1994, as pleaded and appears on the consent document. He says that the document was executed on the 23 September 1994. Thus it may be said, if that evidence be accepted, that the parties had agreed to date the agreement from the 22 September 1994, that being the date appearing on the document.

39. The defendant argues further that he acted on the plaintiff's promises or assumptions or expectations, created or induced by the plaintiffs, that, if the defendant erected a new brick fence along the title boundary at no cost to the plaintiffs, the plaintiffs would not object to the defendant demolishing the existing fence. He alleges that, as a result, it would be harsh or inequitable or unconscionable for the plaintiffs to deny that the defendant is entitled to erect a new brick fence along the title boundary and accordingly an estoppel arises. In light of the conclusions I have reached it is not necessary to consider this issue. The plaintiffs pleaded an estoppel arising out of the agreement but that issue has not been pursued.

42. The plaintiffs further allege that the agreement alleged by the defendant is voidable because of

(d) conduct of the defendant in trade or commerce contrary to s. 11 of the Fair Trading Act because the conduct was misleading, deceptive or likely to mislead or deceive.

49. The defendant joins issue with the plaintiff on the question of the effectiveness of the consent arguing that there was consideration, that it complied with s. 126 of the Instruments Act 1958, that it was not unconscionable on his part and refers to the fact that he discussed the consent with the plaintiff's son on 22 September 1994. Finally he specifically denies that there was any conduct on his part contrary to s.11 Fair Trading Act 1985.

52. The plaintiffs also allege that the defendant acted in breach of the consent agreement by erecting the replacement fence in a position different from the original fence line and in the middle of the disputed strip and by erecting a replacement fence made largely out of timber. They claim loss and damage in respect of that breach comprising loss of the use of enjoyment of the land enclosed within the defendants new fence, loss of value due to lack of access to the whole of the disputed strip and the erection of a cheaper timber fence rather than a brick fence. They also seek an order that the defendant replace the fence and erect a fence along the pre-existing fence line such fence to be a brick fence.

55. The defendant acknowledges that he erected a timber fence in approximately the middle of the disputed land but denies that he is in any way in breach of the consent agreement or that the result of that action has caused any loss or damage to the plaintiffs. He argues that it is a temporary fence erected pending the outcome of the proceeding and was not in breach of any order of the court or assurance given to Mr. Justice Nathan on 10 April 1995 by the defendant.

59. The plaintiffs also allege that the defendant's actions in attempting to erect a fence and subsequently doing so constituted a trespass on the plaintiffs' property and, in particular, on the disputed strip. The plaintiffs allege the following as acts of trespass; marking out the location of the fence, excavating the trench for the foundations for a garage, pouring the concrete into the trench, erecting the garage wall and construction of the timber fence into the disputed area. They allege loss and damage including emotional distress.

62. The plaintiffs also claim aggravated or exemplary damages on the basis firstly of alleged conduct since the proceedings were commenced including alleged wilfully false and misleading statements to the Court before Nathan J., behaviour which is said to be contumelious of the plaintiffs rights. They also pleaded allegations that the defendant mislead the relevant responsible authority but subsequently did not rely on that allegation. They also seek such damages on the basis that, if not awarded, the defendant will obtain a significant financial advantage which would otherwise not have been available to him.

65. It should be noted that the plaintiffs also claim that the abovementioned conduct of the defence and the making of an allegedly false tape recording of Mr Malter Senior, constituted abuse of process of the Court and that damages are recoverable on the basis of what is referred to as the tort of abuse of process. The plaintiffs claim exemplary damages or aggravated damages on the basis of alleged improper discouragement and deterrence imposed upon the plaintiffs by the production of the tape and the stress caused to them, including the emotional stress caused by the fact that they now fear at all times that they are under electronic surveillance. It is said that these matters constituted a contumelious disregard for the plaintiffs' rights.

68. The defendant denies the allegations concerning the tape recording and joins issue on the issues of damages and aggravated or exemplary damages. He alleges further that the pleadings raising the latter claims are an abuse of process.

72. In his counter claim, the defendant alleges that the plaintiff in bringing the proceedings has breached the agreement for construction of the fence and, as a result, the defendant has suffered loss and damage. He alleges that he has been unable to sell the land subject to the dispute. He alleges that a sale would otherwise have taken place sometime after 6 June 1996. He alleges that he has continued to incur financing costs since then and thus a loss of $72,047**.**94.

76. From the foregoing it will be apparent that there are several distinct areas of dispute. The first to be considered and resolved concerns the claim of adverse possession. It will then be necessary to consider the effect of the alleged agreement and its enforceability. In addition it is necessary to consider the plaintiff's claims alleging trespass and the tort of abuse of process, the claims for aggravated or exemplary damages and the claim for breach of the alleged fencing agreement. If the defendant succeeds in establishing his ownership of the disputed strip and the enforceability of the alleged agreement to fence, it will be necessary to consider his counter-claim for damages.

The plaintiff's rely on the provisions of the Limitation Of Actions Act 1958. In particular they rely upon Section 8 of that act provides as follows:

No action shall be brought by any person to recover any land after the expiration of 15 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person; ..."

83. Section 9 provides:

"9 Accrual of right of action in case of present interest in land

(1) where the person bringing an action to recover land or some person through whom he claims -

(b) has while entitled thereto been dispossessed or discontinue his possession - the right of action shall be deemed to have accrued on the date of the dispossession or discontinuance."

Section 18 of the Act is also relevant. It provides:

"18. Extinction of title after expiration of period

Subject to the provisions of Section 11 under this Act, at the expiration of the period prescribed by this Act for any person to bring an action to recover land ... the title of that person to the land shall be extinguished. "

93. The plaintiffs allege that they have been in possession of the disputed strip of land since 1960 and that that possession has been adverse.

96. The plaintiffs submit that at the time they acquired 20 Orrong Crescent, the predecessor in title was in adverse possession of the strip of land and that they as successors of title continued to adversely possess the strip of land. They further submit that that adverse possession continued and that by the end of 1975 no action could be brought by the owners of 22 Orrong Crescent to recover the land and that their title in the strip of land was also extinguished. The plaintiffs argue that they became entitled to be registered as proprietors of that land.

99. The defendant does not dispute that the plaintiffs have been in possession and occupation of the land described in the certificate of title volume 8462 folio 515. He also admits that until 15 March 1995 there was a fence separating 20 & 22 Orrong Crescent. He also admits his ownership of the other land for the period alleged by the plaintiffs. The defendant , however, raises a number of arguments on the basis of the events that transpired in 1971 and 1972 to which I have referred above. I will refer in due course to the issues raised. In setting out the plaintiffs' position, however, it is sufficient to note that in relation to those issues, the plaintiffs advance the alternative argument that as from the date of the transfer of the land to the Richardsons in 1972, time began to run again against the Richardsons and their successors in title in relation to the strip of land because it continued to be occupied by the plaintiffs and separated from the occupier of 22 Orrong Crescent by the above mentioned fence. On that alternative scenario, the plaintiffs submit that the right to bring proceedings to recover this strip expired in 1987 and title to the strip was extinguished at that time.

102. It was common ground that the plaintiffs must show they had been in "exclusive possession for the necessary period" and that "such possession has been continuous and unequivocal". The onus is on the plaintiffs to show that their possession was adverse - "that he intended to exclude the owner as well as the public generally." - (Murnane v. Findlay [1926] VicLawRp 11; 1926 VLR 80 per Cussen, J at 86).

105. The topic of adverse possession is dealt with in some detail in a recent text Australian Real Property, Bradbrook, McCallum & Moore, 2nd Ed (1997) The learned authors comment at para 6. 11:

"at common law, possession comprises two elements: first there must be factual possession which demonstrates the appropriate degree of physical control of the land in the circumstances and secondly, the animus possidendi, the intention to possess, must be present.

109. The law was stated by Gillard, J. in Riley v. Pentilla 1974 [V.R.] 547 at 561

"in this regard it is well to remember that, in order to rely upon the statutory provisions, it must be proved that Pizzey and his successors dispossessed the true owner and were intentionally in actual possession of the disputed area adverse to the possession of and with the intent to exclude the true owner."

Description of the requisite intent as being one to exclude the true owner has been questioned by Bradbrook, McCallum and Moore, (op.cit, 16.23). While acknowledging that there is a vast body of authority that has accepted that formulation, the authors suggest that the Privy Council in Ocean Estates v. Pinder [1969] 2 AC 19 may have adopted a test of whether there was an intention to exercise control and exclude strangers. They argue, inter alia, that a formula requiring an intention to exclude the true owners specifically does not take account of a situation that has been accepted as constituting adverse possession, namely, where the adverse possessor uses the land believing that he or she is the owner. The learned authors note a case of Bligh v. Martin [1968] 1 W.L.R. 804 where that was the factual situation and it appears to have been assumed by the parties and the court that adverse possession can arise in such a situation. The formula requiring an intention to exclude the true owner has been criticised also by Martin Dockray, "Adverse possession and Intention -1" [1982] Conveyancer and Property Lawyer 256. The situation where the adverse possessor died believing he was the owner of the land was considered by the Court Of Appeal of Alberta in Lutz v. Kawa 1980 112 D.L.R. (3) 271. In that case the relevant parties had assumed a fence to have been constructed on the title boundary line when in fact, it was not. The learned trial judge had ruled against the adverse possessor on the basis that, being ignorant that there was anyone to dispossess, she did not have the requisite intention to dispossess the true owner. On appeal this analysis was rejected. The analysis adopted was one that distinguished between motive and intent. Laycraft, J.A. who delivered the judgment of the court expressed the analysis in the following terms (at 282 - 3)

"in my view, however, it does not follow that the essentials of the case of adverse possession cannot be established if the person in possession thinks the land is his own. Indeed, in most cases, to show such a belief would be added support for the fact of his own possession. He excludes all others, including the person unknown to him who has the title to the land. That his motive for the exclusion is his belief in his right to ownership does not change the fact that he is in possession himself while the true owner is out of possession. If this were not so, the intentional trespasser would be in a better position in the law of adverse possession than would be the claimant who held the land in innocent error. The law cannot have intended any such advantage for deliberate as compared to innocent trespass."

In argument before me, the parties have not made an issue of the precise formulation of the test of intent or of the fact that both parties had assumed that the fence was on the title boundary. I will proceed on the basis that the solution offered by the Court of Appeal of Alberta is an appropriate one and that the traditional formulation applies in the circumstances of the present case where the alleged adverse possessors believed they owned the land in dispute.

The approach to be taken to determining whether the requirements are satisfied was discussed by Cussen, J. in Murnane v. Findlay. That discussion was distilled by Gillard, J. in Riley v. Pentilla 1974 [V.R.] 547 at 561-2. His Honour identified the following considerations which would be material:

" ...1. the possession of land in every case must be considered with reference to the peculiar circumstances of the case being considered. The acts implying dispossession in one case afford no assistance in another since the question of possession might be quite different in one case as compared with another. The character and value of the property, the suitable and natural mode of using it, having regard to all the circumstances, and the course of conduct which the proprietor might reasonably be expected to follow with regard to his own interest, varying as they will from case to case, must be taken into account.

2. Where possession or dispossession of land is to be inferred from equivocal acts, the intention with which they are done is all important: c.f. Clement v. Jones [1909] HCA 11; (1909) 8 CLR 133.

3. The nature of the property must be looked at. A person alleging rights accruing from possession must show that the acts were done which were inconsistent with the enjoyment of the land by the true owner for the purpose for which he intended to use it. As was held in Leigh v. Jack (1879) 5Ex.V.264: "acts of user committed upon land, which do not interfere and are consistent with the purpose to which the owner intended to devote it, do not amount to a dispossession of him."

Cockburn, C J at page 271 said: "if a man does not use his land, either by himself or by some person claiming through him, he does not necessarily discontinue possession of it". This statement would be peculiarly applicable to an owner of a reserve such as here.

4 Finally, His Honour emphasised a consideration which is relevant in the circumstances of this present case. He said ([1926] VLR at page 88):" where an act done is given a more limited effect than otherwise might have been the case by reason of the fact that it may be taken in the circumstances not as indicating an intention to exclude the true owner, but as indicating an intention merely to produce a particular special benefit to the person doing it".

I note that proposition 3 has been questioned (see Bradbrook, Mc Callum & Moore, op. cit, at 16. 14 to 16.17). It is unnecessary to consider the issue in this case, it not being raised on the facts of this case. Neither party sought to rely on the proposition.

123. In Riley v. Pentilla, the owner of land adjoining a common reserve which was set aside for the use and enjoyment of adjoining land owners as a garden or park or for recreation, built and fenced a tennis court on the common reserve but invited the other lot owners to use it. The owner of the reserve was the person who had created the subdivision and remained the registered proprietor of the common reserve. Applying the above Gillard, J. held that the evidence did not support the conclusion that there was an intention to take possession adverse to the possession of the true owner. Gillard, J held, amongst other things, that the fencing was erected to facilitate the use of the tennis court. The onus was not discharged in that case by the party seeking to establish adverse possession. Another case highlighting the importance of establishing the requisite intention is George Wimpey and Co Ltd v. Sohn [1967] 1Ch 487.

126. The defendant did not attempt to argue that the plaintiffs did not enjoy exclusive possession of the strip prior to the events of 1971 to the exclusion of the owner of the strip. This is understandable and would appear to be a proper concession. It appears that a substantial fence part corrugated iron and part asbestos cement sheeting, had been erected on a portion of the land owned by the owners of 22 Orrong Crescent effectively denying the access to the strip of land in question and that the plaintiffs had enjoyed exclusive possession of the area from 1960 to 1971. That strip of land was used by the plaintiffs in that an oil tank was located on it by them between twenty and thirty years ago, small stones were laid to create a pathway for use by the occupants of 20 Orrong Crescent and a corner of the garage at the rear of 20 Orrong Crescent intruded into the space. Looking at the character and value of the property in question and the suitable and natural mode of using it together with the conduct which a proprietor might reasonably be expected to follow having regard to his own interest, assuming that to be relevant, it may be said that, up to 1971, that possession was adverse. Further there was no evidence to suggest that the possession in some way might be equivocal or that the intention with which the land was held was in any way equivocal. The plaintiffs, however, are not able to show continued occupation prior to 1971 for more than 11 years.

129. The defendants argue that the events of 1971 and 1972 had a variety of consequences. The first argument advanced is that when the plaintiffs purchased the property at 22 Orrong Crescent, there occurred a merger of estates with the result that there was a disruption to any adverse possession. Reliance is placed on the authorities dealing with the doctrine of merger in relation to easements, restrictive covenants, leases and mortgages. Reference was made to the text, Meagher, Gummow and Lehane, Equitable Doctrines and Remedies, 3rd ed. at pages 857 to 859. Counsel concedes that there does not appear to be any authority in regard to adverse possession but submits that the principles are applicable. It is put that just as a person cannot have an easement over his or her own property so a person cannot adversely possess his or her land.

132. It seems to me that, assuming the doctrine can be applied, there cannot be a merger of estates in the circumstances of the present case because as at 4 May 1971 when the plaintiffs became the owners of 22 Orrong Crescent, they had not acquired an interest in the land capable of being merged. They were in the position of adverse possessors where the right of action to remove them had not been extinguished.

135. At the same time, it is difficult for the plaintiffs to maintain that the adverse possession continued when they owned both properties. Even though the premises at 22 Orrong Crescent, were apparently leased out by them, nonetheless, they remained the owners of both properties and they cannot demonstrate in my view that their possession of the land satisfied the requirements of the law relating to adverse possession. They would have to demonstrate that they held possession to the exclusion of themselves and with the intent to exclude themselves. In any event, whatever view is taken on these arguments raised by the parties their resolution cannot be decisive. What becomes critical is whether 15 years of adverse possession had accrued subsequently and prior to 1994 when the disputes broke out between the plaintiffs and the then owner of 20 Orrong Crescent, the defendant.

138. The defendant argues also that the transfer in 1972 to the Richardsons constituted an acknowledgement by the plaintiffs within the meaning of s.24 (1) of the Limitation of Actions Act. That section provides as follows

"24 (1) where there has accrued any right of action ... to recover land ..., -

(a) the person in possession of the land ... acknowledges the title of the person to whom the right of action has accrued;...

the right shall be deemed to have accrued on and not before the date of the acknowledgement or payment. "

Section 25 of the Act requires that:

" (1) every such acknowledgement as aforesaid shall be in writing and signed by the person making the acknowledgement. "

146. On 19 December 1972, the plaintiffs executed a transfer under which they transferred their estate or interests in the land in Certificate of Title Vol. 4711 folio 036. The land described comprised the land known as 20 Orrong Crescent and the strip of land between the fence and the title boundary.

149. The defendant submits that, assuming as argued by the plaintiffs, that there was no interruption to the continued adverse possession by the purchase of 22 Orrong Crescent by the plaintiffs, by executing the transfer, the plaintiffs acknowledged the title of the Richardsons to the strip , they being the person to whom the right of action had accrued.

The transfer is not placed in evidence before me. I proceed on the basis, however, that it was common ground between the parties that such a transfer existed, executed by the plaintiff which purported to transfer the estate and interest in the whole of the land described in the title.

153. It seems that no particular form of acknowledgement is required nor need there be an intention to make an acknowledgement. It has been held that an offer to purchase the land in dispute made by the adverse possessor to the true owner constitutes an acknowledgement of the title of the true owner ( Edgington v. Clark [1964] 1 QB 367). As pointed out in Cawthorn v. Thomas (1993) 6 BTR 13840, at 13845, one must consider the whole of the terms of the alleged acknowledgement and the surrounding circumstances.

156. In the present case, the transfer may be said to embody an acknowledgement by the plaintiffs that title to the strip of land in question was held by them as the registered proprietor of the Certificate of Title that related to 22 Orrong Crescent. In that sense it may be said that there was an acknowledgement of title for the purposes of the Act.

159. Again, however, while the success of that argument has the consequence that, if time had been a running, it ceased to run as at 19 December 1972, the question remains as to whether time commenced to run as from the date of that acknowledgement - or from some other date. Section 24 would have the effect that in that situation the right of action would be deemed to have accrued on and not before the date of the acknowledgement.

162. The next issue raised by the defendant is whether an estoppel by convention arose from the execution of the transfer such as would prevent the plaintiffs asserting adverse possession as from the date of the transfer to the Richardsons. The defendant submits that an estoppel by convention arises from the execution of the transfer not because of the operative words of the transfer but from the fact that the transfer was executed on the basis that the land to be transferred comprised the whole of the land in the Certificate of Title and thus included the strip of land which is the subject of dispute in these proceedings. In Spencer Bower, Estoppel by Representation, 3rd Editon, at 157

"This form of estoppel is founded, not on a representation of fact made by a representor and believed by representee, but on an agreed statement of facts the truth of which has been assumed, by the convention of the parties, as the basis of the transaction into which they are about to enter. When the parties have acted in their transaction upon the agreed assumption that a given state of facts is to be accepted between them as true, then as regards that transaction each will be estopped against the other from questioning the truth of the statements of fact so assumed."

The defendant relies on the discussion of the concept in Dabbs v. Seaman [1925] HCA 26; (1925) 36 CLR 538, at 549 - 552. Reference is also made to the article by Doctor R. Derham "Estoppel by Convention" (1997) 71 ALJ 860, 976

167. The plaintiffs raised a number of issues one of which is relevant and, in fact, critical - whether, accepting that estoppel by convention occurred, the estoppel operated in relation to the facts existing at the time of the transfer or whether they had operation which affected future rights.

170. In his defence, the defendant pleads that the estoppel prevents the plaintiffs from denying that the defendant and his predecessor in title owned the disputed strip "from the date of the transfer". For the estoppel to assist the defendant, the defendant must be able to demonstrate a prospective effect. It seems to me that the defendant cannot do that and, thus, he cannot demonstrate the pleaded result. The estoppel relates to a factual basis of the transaction - in particular, that the land transferred is the whole of the land in the Certificate of Title. The transfer does not embody any assumptions as to the future. Therefore it seems to me that the plaintiffs are correct in saying that if there be an estoppel by convention, its only effect is to estop the plaintiffs from denying that they transferred to the Richardsons the whole of the land in the Certificate of Title. In my view, the estoppel in those terms is made out but again this does not directly resolve the question whether time began to run again immediately after execution of the transfer.

173. The defendant also submits that from 19 December 1972 the plaintiffs were unable as a matter of law to assert adverse possession of the strip of land because to do so would involve a derogation from the grant made in the transfer. The argument was not developed to any great extent. There is a detailed discussion in Gaunt and Morgan, Gale on Easements, 16th , ed., 3/17 and following. The learned authors make the point that the doctrine of non derogation from grant is not confined to cases concerning easements. (See also Dabbs v. Seaman above al 551; Brown v. Fowler [1911] 1 Ch 225 at 226). The doctrine has been used to restrict the use of land by the grantor or lessor in a way which is not explicable by the implication of an easement. This applies particularly where the grant or lease is made for a particular purpose. Examples given are an obligation not to obstruct access of air to the sheds of the lessee, a timber merchant (Olden v. Latam at Clark, Muirhead & Co) [1894] 2CH. 437), limiting use to avoid vibration to the adjoining property (Grosvenor Hotel Co v. Hamilton)[1894] 2. Q.B. a.36) and precluding the grantor from diminishing the light to the windows of the grantee (Herz v. Union Bank of London [1859] EngR 1047; (1854) 2 Giff 686). The doctrine had also been relied upon in K.Harmer v. Jumbil (Nigeria) [1921] 1 Ch. 200. to prevent the grantor from constructing buildings on an adjoining site of the grantee's land where to do so would result in the withdrawal of the grantee's licences under the Explosives Act 1875. That licence had been given for the use of the land for the purpose of an explosives magazine. In that case Younger L.J. described the rule against derogation from grant as

"a principle which merely embodies in a legal maxim a rule of common honesty"

The learned authors make the point that the immunities acquired by virtue of the doctrine depend on common intention which is to be gathered either from the express words of the grant or the circumstances in which it was made. (at 3 - 37 citing Birmingham, Dudley & District Banking Co v. Ross (1881) 38 Ch. D. 295; Myers v. Catterson (1889) 43 Ch. D. 470; Corbett v. Jonas [1892] 3 Ch. 137; Lyttelton Times Co v. Warners Ltd [1907] A.C.476, 481; Johnston & Sons Ltd v. Holland [1988] 1. E.G.L.R. 264). They also comment that

"no act can be complained of, under the doctrine, which does not make the land granted unfit for the particular purpose for which it was granted or, at least, where the purpose can only be achieved at greater expense or with less convenience."

(Citing O'Cedar Ltd v. Slough Trading Co Ltd [1927] 2 K.B. 123 - 127, cited with approval in British Leyland v. Armstrong Patons [1986] A.C. 577). In the present case it may be said that the strip was a narrow one and that the land transferred could be used for the purposes intended being residential purposes. Nonetheless there would be less convenience for the grantee if the grantee is deprived of that strip of land so that a strong argument could be mounted that to permit the plaintiffs to assert any right to adverse possession would be to allow the plaintiffs to derogate from their grant.

The doctrine had been held to bind successors in title of both the grantor and the grantee (Gale on Easements ,above, 3.33 citing Cable v. Bryand [1908] 1 Ch. 259; Ward v. Kirkland [1967] Ch. 194 and Johnston & Sons Ltd v. Holland [1988] 1 E.G.L.R. 264.) In Johnston & Sons Ltd v. Holland, Nicholls L. J., said (at 267) that the broad principle to be applied was

"... if one man agrees to confer a particular benefit on another, he must not do anything which substantially deprives the other of the enjoyment of that benefit; because that would be to take away with one hand whatever is given with the other."

It is to be noted that the learned authors do not refer to any authorities which would deal with circumstances like the present.

In light of the above, a case can be put that the plaintiffs, having purported to transfer title in the strip of land to the Richardsons, could not be heard then or thereafter to assert rights of exclusive possession over the strip of land against the Richardsons, because to do so would be to derogate from the grant of title. The authorities referred to above would also support the argument that the doctrine would prevent them asserting adverse possession against the defendant as successor in title to the grantee. It might be argued, however, that the doctrine does no more than provide a further basis for resisting the claim to title based on adverse possession and that the Statute of Limitations will apply in the same way whatever legal argument might be relied upon by the owner to challenge the dispossession.

Counsel did not in the end address detailed argument to me on this aspect and relied on other issues. Accordingly, I propose to deal with the issues raised as to adverse possession without considering further the application of the doctrine of non-derogation from grant.

185. In light of the above, the events of 1971 and 1972 appear to have had the effect of interrupting and, therefore, disrupting the period of adverse possession and to have given rise to an acknowledgement of title by the plaintiffs and to an estoppel by convention estopping the plaintiffs from denying that they transferred title in the disputed land to the Richardsons. As a result, it is necessary for the plaintiffs to demonstrate that they have been in adverse possession of the strip of land since the transfer of the property to the Richardsons on 19 December 1972 or some later date up to but no later than about June 1979. They must be able to point to acts and circumstances from which the requisite possession and the requisite intention may be inferred.

188. The plaintiffs' counsel, accepting the above for the purposes of argument, submits that immediately following the execution of the transfer, time began to run again because the plaintiffs were in adverse possession of the strip. He submits that they continued to use the land as their own. The fence remained in position effectively excluding the Richardsons from the strip of land. That situation continued without interruption for 15 years. He argues that there was nothing inconsistent with the transferring of the title to the land for the transferor to immediately adversely possess part of the land. A distinction is drawn between the transfer of the legal title and the possession of the land in question. He argues that one can have an intention to transfer ownership while retaining an intention to possess.

191. The defendant submits that the circumstances as and from the execution of the transfer differ from the circumstances that existed in 1960. The defendant submits that the plaintiff cannot demonstrate the necessary intention to possess and unequivocal acts of possession required by law to establish adverse possession. He argues that the plaintiffs cannot demonstrate that they then and thereafter intended to exclude the owner. He relies upon the fact that on the 19 December 1972 the plaintiffs purported to transfer the ownership in the strip of land to the Richardsons in circumstances where they were in possession of it as a result of the then existing fence. He argues that that combination of circumstances creates an equivocal situation. He argues that something more needs to be done on the part of the plaintiff to demonstrate the necessary unequivocal act of possession and intent such as would demonstrate that the possession was adverse. He submits that this did not occur until June 1994 when Mr Malter refused, on the plaintiff's evidence, to consent to the moving of the fence.

194. The critical starting point, it seems to me, is whether the plaintiffs are able to demonstrate their requisite intention to possess on 19 December 1972 at the time of the execution of the transfer.

197. There is no evidence of discussion at the time. This is understandable because it appears that until recently the persons who have owned the relevant blocks of land believed that the fence was on the title boundary. It would seem that such direct evidence would be admissible if it existed. (See Bradbrook McCallum and Moore op cit at 16.21: see Riley v. Pentilla, above). As in many, if not most, of these cases, the issue is to be resolved on the basis of the inferences that should be drawn from evidence of the acts of the party in the light of the surrounding circumstances.

200. Two possible competing inferences arose at the time of the transfer:

(a) In the ordinary course, when an owner of land transfers ownership of that land to another, one would attribute to the transferor an intention to pass to the transferee the ownership of the whole of land and the benefits that flow from such ownership including exclusive possession unless there was some express reservation. In the present case there was no express reservation and thus the act of transferring the land to the Richardsons by the plaintiffs gives rise to the inference that they intended at the time of the transfer that the Richardsons would have the full enjoyment of the land transferred including exclusive possession of it.

(b) Against that, there are the circumstances that at the time of the transfer, the boundary fence that separated the transferred land from that retained by the plaintiffs prevented the Richardsons enjoying possession of the disputed strip of land and the plaintiffs continued to enjoy the exclusive use of it. The circumstances that the fence remained, and the use of the strip by plaintiffs continued, gives rise to an inference that they were claiming possession of that land to the exclusion of the Richardsons and the world at large at the time of the transfer.

205. At the time of the transfer, the plaintiffs evinced an intention to confer title and thus exclusive possession. Notwithstanding the fact that the strip of land was at the time in their exclusive possession, they cannot be heard to assert a contrary intention at that time. To do so would be contrary to the estoppel by convention. That intention would be presumed to continue for a reasonable time (see e.g Axon v. Axon [1937] HCA 80; (1937) 59 CLR 395). 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.

208. It might be argued that such new facts could be demonstrated after the plaintiffs had enjoyed exclusive possession for a substantial period of time. But the plaintiffs would have to demonstrate adverse possession prior to June 1979, a period of only four and a half years of possession, and adverse possession against the persons to whom they had themselves transferred title to the land in question.It might be argued that the inference arose out of the enjoyment of exclusive possession until 1987 and on the transfer to the defendant at the time and thus could be relied upon against the defendant. But time had not run against him by June 1994.

211. Alternatively, and at best for the plaintiffs, both inferences were open on the evidence at the time of the transfer to the Richardsons in 1972. On that assumption, the plaintiffs, to succeed, must demonstrate that the second of the two inferences is the inference that should be drawn as at the time of the transfer. It does not seem to me possible, however, to determine whether that inference should prevail over the other in the absence of further evidence of acts by the plaintiffs at the time of the transfer which would demonstrate an unequivocal intention to retain possession of the strip of land to the exclusion of the legal owner and the world. Because of the events of 1971 and 1972, they are in the position that they have to demonstrate an intention to dispossess the owners of the adjoining land. All they can point to is the continuation of circumstances which followed from a disrupted dispossession and a continued possession that occurred in the face of a decision by them to transfer ownership, and therefore possession, of the disputed land to the Richardsons. It seems to me that in those circumstances the situation is, at best for the plaintiffs, an equivocal one and that, as a result, the plaintiffs are not able to demonstrate the existence of the requisite intention to possess either at the time of the transfer or immediately after it. Again, it might be argued that, with the effluxion of time, a point was reached where it was clear that notwithstanding the initial intention to transfer ownership of the strip to the adjoining owner, nonetheless, the plaintiffs were unequivocally enjoying adverse possession of this strip with the requisite intention. I refer to my above comments. For reasons advanced above it is difficult to see how such a situation could arise so long as the Richardsons owned the property. Once the Richardsons had sold to a third party, in this case to the defendant, it might be that such an argument could arise. That event, however, occurred in 1987 and thus, as noted above, time has not run against the defendant.

214. The circumstances are most unusual and counsel have not been able to refer me to any case directly in point. The above application of general principles, however, leads me to the conclusion that the plaintiffs have failed to demonstrate that their use and occupation of the strip of land since the transfer of 19 December 1972 was such as would amount to adverse possession of that strip of land.

218. I turn to the alleged consent agreement. The evidence given by the parties differs. Mr. Stanley Malter in his witness statement stated that in the later part of 1994 he had a conversation with the defendant in the street in which the defendant casually raised with him the possibility of replacing the original fence between the properties and he told the defendant that he saw no need to do so. In his witness statement he then went on to say that on about 22 September 1994 the defendant came to his home without any notice and asked he and his wife to agree to demolishing the fence and replacing it. They told him they had no wish to do so. He then stated that, when told that the defendant would do so at his own cost, they agreed to the proposal. In his statement he also asserted that the defendant asked them to sign a single piece of paper for use with the Council which they did. He states that the defendant told them he would rebuild the fence in brick and they were agreeable to that. He asserted that at no time did the defendant say that he wished to claim or take any of the land occupied by the plaintiffs or say anything about resetting or repositioning the fence line. In the statement, he also asserted that after the document was signed, the defendant took it back and left with it leaving no copy with them. He stated that the whole visit took less than half an hour.

221. In the defendant's witness statement, he confirmed that there was an initial conversation with the plaintiffs but states that it was in June 1994. He stated that he informed the plaintiff that the original fence was not in the correct position and encroached on his land. He asserted that Mr. Malter told him that he had moved the fence when he had owned both properties to make room for an oil tank. He asserted that he asked the plaintiffs to agree to the fence being moved back to the correct position and that the plaintiffs said they would not. He asserted a further conversation in late August 1994 as they walked back from a local auction sale when again he requested Mr and Mrs Malter to give their consent to moving the fence. They refused to give it.

224. Mr Procopet in his statement told that, on about 20 September 1994 Mr Malter phoned him and asked him for help in fixing the ducted heating in his home which he could not start. Mr Procopets told that he did so and found a faulty thermostat which he replaced at no charge to him. I note that Mr. Malter on this issue gave oral evidence that he did not telephone Mr. Procopets and that Mr. Procopets happened to call and started the ducted heating by manipulating the equipment that was there. Mr Procopets said in his statement that, on this occasion, he asked the plaintiffs to consent to the fence being moved to the title boundary and told Mr. Malter that the cost would be $6,000 and that he would contribute $4,000. He stated that Mr Malter asked him to put the proposal in writing. Mr. Procopets' statement records that he prepared the consent agreement setting out that the plaintiffs agreed to the existing fence being demolished and the new fence being built on the title boundary and setting out the contributions that he had foreshadowed. In his statement he stated that on the 22 nd September he telephoned the plaintiffs and informed Mr Malter that he had prepared the necessary documents and asked Mr Malter if he could bring them around. Mr Malter told him to bring them around in half an hour which he did. He asserted that he gave the Malters the three documents in triplicate. He said that he left the documents with Mr Malter. That night he received a telephone call from the plaintiff's son who said he had several questions arising out of the consent agreements. Mr. Procopets asserted that he explained the fact that the existing fence was not in the correct position as shown and that he proposed to demolish the existing fence and erect a new one on the correct boundary as shown on the Certificate of Title and explained the contribution arrangements. He said that Mr. Jan Malter responded that everything was "o.k" and that he would speak with his parents and they would probably sign. Mr Procopets, in his statement, then stated that on the following day he called on Mr and Mrs Malter and asked whether he could collect the consent agreement. He said in evidence that he gave them and Jan Malter the details about the construction of the fence, its height, the piers and so on. The plaintiffs told him that they could not afford to pay $2,000 towards the construction of the brick fence and that they then crossed out the four lines setting out the contribution arrangements. Mr Procopets said he would bear the cost and the plaintiffs then signed the documents.

227. It may fairly be said that Mrs Malter has no recollection that assists in this area. Mr Malter Senior's recollection is open to serious doubt. He maintained that he had signed only the one document. That assertion was ultimately tested by handwriting experts examining the relevant documents and sample signatures. In light of that examination, counsel for the plaintiffs informed the Court that the plaintiffs accepted that they had signed the other documents. Mr. Malter Senior's recollection of events in the witness box proved to be hazy and unreliable and he, in the end, was unable to vouch for the accuracy of what he had stated in his witness statement. Mr Jan Malter, the plaintiffs' son denied that he had any conversation with Mr Procopets. I have come to the conclusion that I must view his evidence with the closest of scrutiny. He was plainly closely and personally involved in the litigation. It was he who alleged in his evidence that the signatures to the consent agreement had been forged when he had, on the evidence available, no proper basis for doing so. He demonstrated in the witness box a strongly partisan attitude.

In those circumstances it might be thought to be a simple matter to resolve any factual conflict. Mr Procopets, however, showed in the witness box a capacity to offer seemingly contradictory answers in some situations and had to accept that in the course of the unravelling of his relationship with Alla Giller, his former defacto partner, he behaved in a manner which was dishonest, deceptive and illegal. As to the latter one must bear in mind that people can be dishonest and deceptive in one situation but will not be in another. This particularly applies where one is looking at the conduct of someone who is in a state of emotional turmoil following the break down of a relationship. It has been known for people to behave out of character in that situation.

231. In determining what evidence to accept on this issue , the defendant has received some unlikely support from his former defacto partner Alla Giller. Ms Giller is currently employed as a court interpreter interpreting Russian and English. Plainly she has strong feelings of bitterness towards Mr. Procopets arising out of events that occurred following the break down of their relationship. In the case of her evidence, it would seem to me that while I need to scrutinise with some care evidence she gave against Mr Procopets, I could approach with reasonable confidence any evidence she gave which appeared to support his case. It is significant, therefore, that she gave evidence from her own recollection that she remembered him preparing some documents and that he had discovered that the fence between the two properties was not on the correct line. Further she recalled him going to the neighbours with these documents and collecting them from the neighbours the next day and recalled him being happy with them because they were signed. She also recalled that someone from the neighbours telephoned between the two visits. Her recollection of the telephone call she said was vague. She recalled that there was a male voice. She said that Mr Procopets had given the caller some explanation and that after the conversation he had told her that it was the neighbour's son. She believed that the call came through on the same day that he had taken the papers to the neighbours. She thought his first visit to the neighbours was longer than the second visit to the neighbours. Before Mr. Procopets went to collect the documents she believed he received a phone call saying that they were ready to be collected. She gave evidence that she had prepared a statement in late 1995 or early 1996 (Exhibit D 17). She described that document as summarising what had happened by that time and it contained the knowledge that they both had about the situation. She said it was written at Mr Procopets request. Asked about the reference in it to a conversation in approximately July 1994 when Mr Malter and Mr Procopets spoke about the location of the fence and his desire to move it, she said she had no independent recollection of that and she was unable to say whether what she recorded about it was what she remembered independently or what she had been told by Mr Procopets. She could not recall the details of the telephone conversation on the evening after the documents had been delivered except to say that she believed that Mr. Procopets was talking about the fence.

234. The statement prepared by Alla Giller was admitted into evidence absolutely. I think it appropriate not to rely upon it to make any findings additional to the facts that she has given independently in evidence in view of the fact that it would appear that it was a document that Mr Procopets helped her prepare and it combines their recollection at that time it was written.

237. The end result, however, is that Alla Giller gives strong support to Mr Procopets account of two visits and an intervening phone conversation. The documents themselves, exhibit D2 and D3, as noted above also support his account, the signatures having been authenticated and admitted by the plaintiffs after their allegation of forgery. While I have some reservations about Mr Procopets evidence on some issues in this case, he was, on the details of the discussions, not shaken and he appeared to me to be telling the truth on those matters. Having observed both Mr Malter Senior and Mr Procopets I am satisfied that they are both intelligent people and likely to have applied their minds keenly to all details that would need to be sorted out in a situation such as presented itself in late September 1994. Mr Malter, in particular, I believe would have been meticulous, paying close attention to detail. In fact, that proposition was strongly asserted by his counsel in the course of cross examining Mr Procopets. I am satisfied that Mr Malter was left with the documents for some 24 hours and that it is more probable than not that he discussed them with his son Jan Malter. It appears that Mr and Mrs Malter Senior had very frequent contact with their son who visited them often.

240. Having regard to these matters I am satisfied that so far as the alleged consent agreement is concerned I should accept the account given by Mr Procopets. Accepting that account of the agreement it seems to me that it may fairly be described as one that was partly oral and partly in writing. The evidence before me, however, does not support the conclusion that there was any discussion about the need to assign any title that might have been acquired by Mr and Mrs Malter over the disputed strip of land. Rather, the agreement proceeded on the basis that Mr Procopets owned that strip of land and the agreement was one simply to build a fence in the correct position - the title boundary.

243. In those circumstances it seems to me that the issues sought to be raised by the plaintiffs of an absence of a sufficient note or memorandum to record the agreement in compliance with section 126 Instruments Act 1958 are issues that do not arise. The agreement did not involve an interest in land. It was simply a fencing agreement. If I be wrong in that view, however, it seems to me that the plaintiffs submission is correct that there was no note or memorandum that adequately recorded the consideration advanced by Mr Procopets. The deletion of the last few lines which recorded the earlier offer had the result that the note or memorandum had no record of what the consideration was. Further, the basic details of the fence construction were material terms which defined the consideration proffered by Mr Procopets. In those circumstances, the statutory requirements have not been complied with - should it be necessary to have such compliance.

246. I note that the plaintiffs in the pleadings asserted there was no consideration to support the agreement. In the end the argument was not pressed. Instead the plaintiff's counsel argued, as noted above, that the failure to record the detail of the consideration moving from the defendant resulted in an insufficient note or memorandum of the agreement.

249. The plaintiffs also allege that the defendants conduct rendered the agreement unconsciousanable. It is put for the plaintiffs that they were disadvantaged by age and by their lack of English. Counsel puts that Mrs Malter was someone who was guided and directed by Mr Malter Senior. The argument proceeds upon the basis that Mr Procopets led them to believe that all that was involved was the replacement of the fence and that he managed to get them to sign what was a vague and ambiguous document drafted to mislead and deceive.

252. In my view, Mr Malter Senior, if asked to deal with the matter now, even though he is well into his eighties, would be well able to look after himself. I do not believe that he was disadvantaged by age nor do I believe that he was disadvantaged by the level of his command of English. I accept his counsel's proper concession that Mr Malter Senior's deafness is only of "slight relevance". I am satisfied that he would have been at pains to ensure he understood everything. He would also have looked after his wife's interests. I am satisfied that they were given adequate time to consider the documents and consult with others and did so with their son. Further, they were not visited by Mr Procopets. In any event, a reading of the documents would have brought home to them, if Mr Procopets had not done so orally, that what was involved was a building of a new fence on the title boundary and not upon the site of the old fence. It is true that that objective was not stated expressly but it would seem to me that anyone reading the documents would appreciate that what was proposed was that the brick fence be erected in what was described as the "correct position" in accordance with the Certificate of Title and Plan of Survey and that an examination of the Certificate of Title and Plan of Survey would have revealed that the existing fence was constructed a short distance to the north of the title boundary and was not in its correct position. The correct position revealed by the "attached" document was the title boundary.

255. I turn to the cause of action based upon alleged false and deceptive conduct by Mr. Procopets in procuring the agreement. It is necessary for the plaintiffs to establish that in his dealings with the plaintiffs over the consent, he was acting "in trade or commerce". The defendant alleges that he was not. It is true that this transaction, on the evidence before me, constituted the only transaction in which it might be said that Mr Procopets set out on a commercial venture to demolish a house, replace it with two units and sell those units. The transaction, to my mind, had a clear commercial flavour to it and as a result it would seem to me that the conduct of Mr Procopets might be described as conduct "in trade or commerce" even though he was not engaged generally in the business of property development. In O'Brien and Another v. Smologonof (1983) 53 ALR 107, the Full Court of the Federal Court considered the problem posed by the phrase "in trade or commerce" in the context of a sale of property owned by a person who was not a person said to be engaged in the business of buying and selling land. The court referred to a number of American authorities which highlight the fact that it is a matter of fact in each case as to whether there is the necessary business connection to attract the operation of the relevant statutory provision. In that case, the plaintiffs had acquired an area of 875 acres of land made up of 5 identifiable portions. The land was a conditional leasehold under the Crown Land Consolidation Act (1913) (NSW). The appellants after acquiring the land decided they would like to build on one of the portions and, to finance that, decided to sell two of the other portions. It was alleged that, in their advertising of the sale of those portions, statements were made which were false or misleading. The trial judge held that the Trade Practices Act provision relating to false and misleading statements applied. That decision was overruled on appeal. In their reasons, the Full Court referred to a number of decisions under similar legislation where the view had been consistently taken that a private sale of property by an individual was not conduct in trade or commerce for the purpose of that consumer legislation. The Full Court commented that the case before them was not one where the land had been acquired as trading stock by the appellants. In addition it was not a case where the appellants activities involved more than their realisation as a capital asset and constituted the carrying on of land development as such. In that respect the Honours referred to F C T v. Whitfords Beach Pty Ltd (1982) 39 ALR 921. The Full Court also commented that the land had not been used for farming or grazing. In the end the Full Court took the view that at most it could be said that the appellants had used the newspapers and the medium of public advertisement, as was done by persons engaged in commercial transactions, but took the view that that in itself could not create the business context required by the reference "trade or commerce" in s 53 of the Trade Practices Act (1974) (Cwlth). In FCT v. Whitfords Beach Pty Ltd above, the taxpayer acquired land to secure access to certain shacks occupied on an adjacent beach front for its original shareholders. In 1967, the shares in the taxpayer were bought by three companies with the intention of developing, subdividing and selling the very valuable land at a profit. The articles of association were changed to assist this course of action and extensive work carried on with managers appointed. The land was subdivided and sold between 1971 and 1975. The issue to be considered was whether the land had originally been acquired for the purpose of resale at a profit. Thus the point in question here is not one that was considered by the High Court in that case. I note, however that the sub-division and sale of the properties was regarded as a profit making venture by the court . The majority held that the taxpayers activities amounted to more than the mere realisation of a capital asset.

258. Views may differ but it seems to me that while Mr. Procopets was engaged in an isolated transaction, nonetheless he had embarked on what was a commercial venture - the redevelopment and sale of the property. It had attaching to it all the risks that attach to a commercial venture. In those circumstance it seems to me that I should treat the transaction as one engaged "in trade or commerce". It becomes necessary then to consider whether the defendants conduct was false or misleading in the manner asserted by the plaintiffs.

261. In that regard the plaintiffs rely upon two matters. The first is that it is said that the defendant represented that the consent was to enable him to demolish the existing fence and replace it with a new one and that nothing was said by him to indicate that the location of the fence would be on the title boundary. It is also said that the defendant did not include information on the plan of survey which would have indicated that a portion of the plaintiffs' garage was intruding into the disputed strip. As to the former I have indicated that I prefer the evidence of the defendant to that of the plaintiffs and am satisfied in any event that their perusal of the documents prior to execution by them would have brought to their attention the fact that it was intended to place the fence in a different position. It is true that the defendant omitted any reference to the plaintiff's garage in the plan of survey placed before the plaintiffs. It seems to me, however, that a fair reading of the plan of survey would indicate that it did not purport to be complete and the plaintiffs in making their decision would have been well aware of the close proximity of the corner of the garage to the side fence. I do not accept the plaintiffs' evidence, such as it was, that they were left with the impression that the site of the fence would not be moved.

264. In considering these matters it is relevant to consider why it was that the dispute broke out in March and April of 1995. The evidence on this issue is unclear. I regard it as incomplete. Mr Jan Malter, I accept, told his father that he had been "stupid" in signing the documents. I am also satisfied that the plaintiffs demanded payment of $5,000 by an instalment of $1,000 and a balance of $4,000. I accept that Mr. Stanley Malter left a message on Mr Procopets' answering machine asking for payment of $1,000 at about that time. Mr Procopets produced a tape recording of this message. I reserved my decision on its admissibility. It is true that a number of points adverse to Mr Procopets can be made about his explanations as to why he did not reveal this tape until late in the litigation. It does not reflect well upon him that he did not give discovery of the tape recording. I have, however, heard Mr Stanley Malter in the witness box and in the course of his evidence, heard the voice on the tape recording. While I believe I am conscious of the dangers implicit in any attempt at voice identification it did seem to me that the similarity was striking and what was said was consistent with the relevant context. It is true that Mr Procopets in his dealing with his former defacto wife appear to have engaged in secret video taping and sought to produce edited versions of their love making for improper purposes. It also appears that he secretly taped conversations with mutual friends for the purpose of obtaining evidence for the dispute with her. There is no evidence, however, that he has ever attempted to create a false visual or audio tape. As pointed out by counsel for Mr Procopets, it was always open to the plaintiffs to have experts called in to examine the tape and give evidence. This was not done and no explanation was offered for not doing it. In all the circumstances I accept the tape to be authentic. Accordingly, I formally rule that it should be admitted absolutely. Counsel for the plaintiffs submitted that Mr Procopets' evidence should be rejected because of his subsequent conciliatory conduct with Mr Jan Malter when they met at the Town Hall and later at the latter's house with his wife. It is said that such conduct was not be expected where the plaintiffs had reneged on the agreement and attempted to extract further money from him. I do not accept that argument. Mr Procopets had a choice. It would be perfectly understandable that he chose to behave as he did in the hope that the dispute that had arisen would be resolved.

267. Returning to the issue of why the dispute broke out, it may be that while Mr and Mrs Malter and their son were made aware of the fact that the new fence would be placed on the title boundary and not where the old fence stood, they may not have fully appreciated the aesthetic significance of that change until the old fence was demolished and the location of the new fence marked on the ground. It may be simply that they were motivated by the desire to obtain more financial benefits. It may be that they have simply not proceeded in a rational fashion.

270. Whatever be the cause of the dispute, I am not satisfied that the cause arises from any false or misleading conduct on behalf of Mr Procopets in relation to this particular transaction and the claim put on that basis is not made out.

Finally, there is the plaintiffs' claim for breach of contract in erecting the timber fence in a position other than the agreed position. I accept the defendant's evidence that this fence is a temporary one and not erected in attempted performance of the contract. Its erection did not constitute a breach of the contract. The relevant cause of action to consider is that alleging trespass.

275. In light of my findings on the question of adverse possession, the plaintiff is unable to point to any trespass on the part of the defendant. All the defendant's actions have taken plane on the defendant's land. Accordingly that claim must fail.

278. The next tortious cause of action to consider is that of collateral abuse of process. The plaintiffs seeks to rely on the conduct of the defence as the basis for this claim. I refer to the items mentioned above relied upon by the plaintiffs. Counsel for the plaintiffs relies upon the case of Hamer - Mathew v. Gulabrai (1994) 35 (NSW) LR 92. In that case the dishonest conduct of the defence was held to have constituted the tort of collateral abuse of process. In his judgment, Brownie, J. referred to some recent New South Wales authorities including the reasons for judgment of Clarke J A, in Hanrahan v. Ainsworth (1990) 22 (NSW) LR 73 . He commented that the plaintiff in that case

"had to demonstrate a dominant purpose which was improper and some overt act in the conduct of the proceedings, committed for that purpose "

(See also Fleming Law of Torts, 9th Edition at 687; Balkin and Davis, Law of Torts, 2nd Edition, 723 ). Brownie J found that the cross examination and the making of allegations concerning alleged forgery of painting and trickery were carried out as part of the plan to harm the plaintiff by obtaining publicity for the allegations and for the dominant purpose of putting pressure on the plaintiff to settle the dispute between the plaintiff and the defendant's brother. The defendant led no evidence to support the allegations. The defendant attempted to argue that what had been done was merely done to test the credit of the plaintiff and the plaintiff's witnesses. His Honour rejected that argument saying that the submission could not survive a reading of the transcript in light of the background to the case. He held the defendant's purpose was improper and was in abuse or misuse of the court's process. I note that His Honour held that as a matter of principle there was no reason why a defendant might not be guilty of abuse of process in the relevant sense although, most commonly cases would concern the action taken by the plaintiff.

283. The question in the present case is whether the plaintiffs have demonstrated that the defendant has committed the collateral tort of abuse of process in his conduct of his defence. They rely on alleged false and misleading statements allegedly made before Nathan, J. and listed in para 23 of the amended statement of claim. Most of the allegations are not made out. I have already found that the first named plaintiff did attempt to obtain a further $5,000 in return for permission to build on the disputed land (para (c)) and that the defendant did leave copies of the consent with the plaintiffs and that they had the opportunity to receive advice from their son before executing it. I am also satisfied that Jan Malter did advise them (part (f)). I also accept that it was correct for the defendant to say that he was by profession a tool maker and had never been a developer or builder (para (d)). I also accept that the defendant had not said that he would build a fence on the disputed property (para (b)). As to the remaining allegations, I think it likely that the defendant did say that he had never refused to give his address to anyone (para (a), and that that was strictly speaking inaccurate, and that he was probably mistaken in saying the first named plaintiff told him that he had shifted the original fence when the plaintiffs owned both properties - in view of unchallenged independent evidence of Marion Malter that the fence had not been moved since 1960. As to the case put on the basis of the alleged false tape recording, the plaintiffs have failed to establish its falsity.

286. I am not persuaded that the acts of the defendant in his defence that have been established are such as to warrant categorising his defence of the case as dishonest. The plaintiffs, also, face the difficult problem of identifying an improper collateral purpose. It seems to me that all that the defendant can be shown to have done is to seek to defend his position and pursue remedies in relation to the land in question and the fence in question. Accordingly, in my view this claim is not made out.

289. The plaintiffs having failed to make out any of their causes of action, it is not strictly speaking necessary to consider the question of damages and, in particular, the question of exemplary or aggravated damages. I note, however, that it follows, from the above conclusions about the conduct of the defence and the tape recording, that no exemplary damages or aggravated damages could properly be awarded. I note, also, that damages were sought for the stress and emotional stress allegedly caused by the conduct of the defendant to the plaintiffs. As to Mrs Malter, the medical evidence that was tendered, such as it was, did not support the conclusion that there were any symptoms caused by stress over and above that which Mrs Malter may have been suffering in any event. In the case of Mr Stanley Malter, it is likely that the stress of the dispute contributed to the ulcer problem diagnosed and treated in and between June 1995 and October 1995. I accept that both plaintiffs were stressed by the dispute. Thus, if damages are recoverable for stress and resulting illnesses , they would be minimal only. I turn then to the defendant's counterclaim.

293. The counter claim is based on the alleged breach of the fencing agreement. It is alleged that by bringing the proceedings to contest the right of the defendant to erect the fence as agreed, the plaintiffs have breached the agreement.

Counsel for the plaintiffs submits firstly, that if there was a contract for the demolition and erection of the fence, it was impossible to perform. It is said that the fence cannot be constructed as agreed because the plaintiffs garage blocks the path of the fence at the rear of the properties. The defendant, however, can rely on the term implied by law on parties to secure performance of a contract by the parties. I refer to Lord Blackburn's statement in McKay v. Dick (1881), 6App. Cas. 251 at 263:-

"... as a general rule... where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect."

Such a term should be implied in the contract in question. Each party should be regarded as having agreed to do all that is necessary to be done on his or her part to enable the fence to be demolished and the new fence to be constructed. In my view, such a term imposes an obligation on the plaintiffs to address any problem posed by the plaintiff's garage. Alternatively, it would always be open to the defendant to construct the fence up to and beyond the garage if the defendant is prepared to accept something less than the due performance of the contract. The defendant has expressed a willingness to do that. Thus it does not appear to me that ultimately any problem is posed by the fact that the garage protrudes into the disputed strip of land.

299. It seems to me that having found, as I have, that the parties did enter into the alleged fencing agreement, the plaintiffs are in breach of that agreement in refusing to permit the defendant to proceed and in taking legal action to prevent him doing so.

302. The defendant has produced evidence of the financing cost he has incurred since the date of practical completion totalling $72,047.94. The plaintiffs have not sought to challenge the figures supporting that financing cost. They have, however, argued that the defendant should have mitigated his loss by renting his premises in the interim or selling the premises be it at a price reduced because of the dispute over the boundary.

305. I think it unrealistic to suggest that the obligation to mitigate loss would have required the defendant to sell the property during the dispute. He could only have sold it at a discount, and probably a heavy discount, which would have given rise to a claim for the damages in a substantial amount but on a different basis. There is much force, however, in the proposition that Mr Procopets might have been expected to rent the premises. He said he did not wish to do so because of the value in being able to ultimately sell the unit as new even if this occurred some years after it was built. He called no expert evidence to support that view and was merely expressing the opinion of someone who at the same time resisted any suggestion that he was a developer. He may have a limited layman's knowledge of the property market but no more. It seems to me that a defendant in his position, acting reasonably to mitigate his loss, would have rented the premises. In doing so he would have had to face the prospect at some stage of having repairs and maintenance done to the property to restore it to the "as new" condition for sale but that would have been merely a monetary matter. He conceded in cross examination that he might have expected to receive $500 to $600 per week (T 717). That produces a range from $26,000 to $31,200 per annum gross rent. Taking the higher figure and working on a notional renting of 2 years, he could have received to date an amount from $52,000 to $62,400 gross rental on that basis. He would, of course, have had expenses associated with the tenancy and he may not have secured a tenant for the complete period. Bearing in mind that it was not in Mr Procopets' interest to admit a higher rental figure, and he would have been well aware of that in my judgement, it seems to me appropriate to assess the damages on the basis that the probability was that he would have been able to obtain the rent at the top end of the range that he admitted and that it would have been available. The difference between that figure and the financing costs is approximately $10,000. Having due regard to probable exigencies, some additional allowance should be made. Accordingly, I would assess the damages at $15,000.

For the above reasons, judgment should be entered for the defendant on the plaintiff's claim and for the defendant in his counter-claim for damages in the sum of $15,000.00.