Smith v Central Coast Council

Supreme Court of NSW|2024-07-30|Before: Peden J

Judgment

The proceedings concern neighbouring rural land in Ravensdale in New South Wales. Mr Kenneth Smith seeks a declaration that he is entitled to legal title of part of his neighbours', Mr and Mrs Evans', land, described as the "contentious land", by reason of adverse possession for many decades.
It appears that, until very recently, the parties did not realise there was a discrepancy between the way the contentious land had been used and the descriptions on the titles.
In 1946, Mr Smith's grandfather, Harry Smith, bought Lot 1 and Lot 2 in DP 744640 from Bridgette Perry. In 1963, Harry Smith sold the lots to Keith Smith. On 29 June 1987, the sale by Keith Smith to his nephew, Mr Smith, was stamped.
In 1979, the legal owners of the Evans' land, Lot 41, were brothers, Leonard and Collin Fernance, who were also Mr Smith's cousins. They sold Lot 41 to the Evans in 1999. The Evans accept that Mr Smith is entitled to that part of the contentious land, on which the Smith house has been located since 1949, but not otherwise.
To resolve the dispute between Mr Smith and the Evans, it is primarily necessary to make factual findings about the Smiths' historical use of the contentious land, and any legal entitlement he had to that land when the Evans' land was converted to qualified and limited title under the Real Property Act 1900 (NSW) on 29 June 1999.
Central Coast Council is also a defendant in relation to a "paper road" Mr Smith claims has vested in him, which may otherwise belong to, or be controlled by, the Council. The Council has filed a submitting appearance and did not appear at the hearing. The Evans do not contest that Mr Smith's predecessors in title obtained title to the paper road.
For the reasons that follow, I consider that Mr Smith has demonstrated he is entitled to declarations that he is the legal owner of both the contentious land and the paper road.

The contentious land

The parties' land is depicted in the aerial and survey pictures below. The markings on the pictures are approximate only.
As noted above, Mr Smith owns Lot 1 and Lot 2. He claims legal title to the "Unformed Road R2590-1603" (paper road) and the contentious land.
The contentious land is that portion of Lot 41 between the "Unformed Road" and the "Proposed Road R2590A-1603". The Smiths' home is located on the contentious land, near the Proposed Road. The contentious land has been fenced by the Smiths along the boundary of the Proposed Road and Ravensdale Road. There is no fencing separating that land from Lot 1, on which is situated the Smiths' disused timber mill and a shed. The contentious land is not fenced where it meets Wyong Creek.

Adverse possession principles

The principles concerning adverse possession, drawn from older authorities, has been summarised in detail in various cases, including for example in Whittlesea City Council v Abbatangelo [2009] VSCA 188 at [5]-[6] (Ashley and Redlich JJA and Kyrou AJA) (Whittlesea); Australian Retirement Holdings Pty Ltd v Tracey Anne Higgins in her capacity as administrator of the estate of the late Monica Mary Pritchard (2021) 20 BPR 41,633; [2021] NSWSC 1158 at [231]-[260] (Robb J) (Australian Retirement Holdings) and Braye v Tarnawskyj (2019) 19 BPR 39,213; [2019] NSWSC 277 at [31]-[44] (Darke J). Not intending to depart from the earlier decisions, I emphasise the following principles particularly relevant here: 1. A plaintiff has the onus of proving that the registered proprietor does not have possession of their land: Australian Retirement Holdings at [253]. 2. A court will not quickly find that a plaintiff has sufficient possession of the paper title holder's land. What is required is clear evidence of both factual possession and an intention to possess ("animus possidendi") before the paper title holder will be deprived of his or her title: see eg Cooke v Dunn (1998) 9 BPR 16,489 at 16,493 (Santow J); Powell v McFarlane (1979) 38 P & CR 452 at 471 (Slade J) (Powell). 3. Factual possession requires an appropriate degree of exclusive physical control. What will be sufficient to demonstrate sufficient control depends on the totality of the circumstances and the facts of the case, in particular the nature, characteristics and position of the land and the manner in which land of that nature is commonly used or enjoyed: Powell at 470-1; Whittlesea at [6(c)]. 4. While enclosure of land is the strongest possible evidence of adverse possession, it may not be enough in itself: Whittlesea at [5]; Riley v Penttila [1974] VR 547 at 565-6 (Gillard J). 5. Absolute physical control is normally impracticable in the case of open land, since it is ordinarily impossible to secure all parts of a boundary so as to prevent trespassers from gaining access: Powell at 471. 6. The requisite intention to possess entails an intention on one's part to exclude the world at large, including the paper title holder if he or she is not the possessor, to the extent that this is reasonably practicable and permitted by law: Powell at 471-2. 7. The intention to possess must be made known to the world, such that it is clear that the plaintiff intended to exclude the owner from the land in question: Powell at 472. The requisite intention may, however, be found through objective acts of factual possession: Whittlesea at [6(b)]. 8. A plaintiff may rely upon the factual possession and intention to possess manifested by his or her predecessors in title. If there are no gaps in the periods of possession, they may be aggregated: Whittlesea at [5]; Australian Retirement Holdings at [239].

Length of possession?

The length of time necessary for an adverse possession claim is determined by the applicable limitation period, because, after a certain amount of time, the paper title holder's cause of action to oust the adverse possessor is extinguished.
Since the operation of the Limitation Act 1969 (NSW), after 12 years of adverse possession, the legal proprietor's title cannot be maintained.
However, Mr Smith claims possession of the contentious land commenced (at the latest) in 1949, and therefore before the operation of the current Limitation Act. The parties submit, and I accept, that the relevant limitation period is found in 8 Will IV, No 3 (NSW), the colonial statute referred to as the Real Estate (Limitation of Actions) Act 1837 (NSW) (repealed), or the Imperial Act Adoption Act 1837 (NSW) (repealed). As with the Limitation Act, time under the 1837 Act is calculated from the time the cause of action accrues, which is on the commencement of the adverse possession: see eg Rogers v Registrar General of NSW [2024] NSWSC 590 at [34] (Kunc J).
Section 17 of the 1837 Act created an ultimate bar to the legal owner's cause of action after 40 years. Further, s 34 of the 1837 Act abolishes the paper owner's title upon expiry of the 40 year period.
Therefore, the parties agreed that if Mr Smith can establish the requisite possession, in terms of fact and intention, from 1949 to 1989, then the paper title owner's title to the contentious land was lost at that point in time.

Adverse possession where registered title is qualified

Despite lengthy oral and written submissions, the parties ultimately agreed that the relevant principles applicable to the proceedings concerning the Evans' qualified registered title of the contentious land, should Mr Smith prove adverse possession, were explained in Sidoti v Hardy (2021) 105 NSWLR 1 (special leave refused) (Sidoti). There, Mr Hardy had used a nightsoil carter's lane in Redfern adjacent to his property for some time and sought an order that he was entitled to legal title, rather than the paper title holder, the Sidotis. Mr Hardy had started occupying the relevant land before the parties' title had been converted to the register, and had continued thereafter, while registered title was "limited".
The trial judge found that Mr Hardy was entitled to the order he sought, by reason of ss 28U(2) and 45C(2) Real Property Act 1900 (NSW), because he could demonstrate possessory title by adverse possession that commenced before and continued after registration of the limited title.
The appeal against the trial judge's decision was dismissed (Brereton JA and Simpson AJA, Basten JA dissenting. Brereton JA and Simpson AJA agreed that the effect of s 45C(2) Real Property Act was to preserve a claim for possessory title by adverse possession in circumstances where possession commenced before the land was brought under the Real Property Act in a qualified or limited folio: [87] (Brereton JA), [204], [208], [209] (Simpson AJA).
Brereton JA held further that there would be a "wrong description of parcels or of any boundaries", for the purposes of s 28U(2) Real Property Act, if someone other than the registered proprietor had a crystallised or inchoate possessory interest in the land when it was brought under the Real Property Act: [161]. Simpson AJA disagreed on this point, finding that an inchoate (as opposed to a crystallised it seems) claim to possessory title would not suffice for a "wrong description" under s 28U(2): [200]-[202]; see also [33], [38] (Basten JA).
Ms Chan made lengthy submissions as to why she considered Brereton JA's reasoning was incorrect and contrary to the legislation. However, she stated that "this is a question for another day", submitting that a trial Court "may consider itself bound by the Court of Appeal decision" and therefore follow either approach of the majority and apply s 28U(2) and/or s 45C(2). No submission was made as to an alternative approach.
Therefore, the real issue is whether, and if so when, Mr Smith and his predecessors in title demonstrated "possession" of the contentious land, as a matter of fact and intention.

Can Mr Smith demonstrate adverse possession?

As noted above, Mr Smith submits that possession commenced at the latest in 1949, when his uncle owned the land and the family home had already been built on the contentious land. Further, Mr Smith submits that because the Evans concede he is entitled to title to the land on which the house stands by reason of adverse possession, a finding of adverse possession in relation to the rest of the contentious land ought to follow; the argument is that that land has been used as part of Lot 1.
The Evans submit that the Court would err in finding there were sufficient acts of factual possession and intention to possess the rest of the contentious land for the requisite period, and therefore Mr Smith ought to fail.
For the reasons that follow, I consider on the balance of probabilities that Mr Smith and his predecessors possessed and intended to possess the contentious land.

Factual possession

I am satisfied that there is the requisite quantity and quality of evidence to demonstrate sufficient factual possession of the contentious land for the following reasons.
The following findings are made in circumstances where there was no challenge to any of the evidence of Mr Smith's witnesses through cross-examination or submission. I considered them all witnesses of truth, and I accept their evidence. The Evans led no evidence.
Construction on land: The current house on the contentious land was "pretty new" in 1949. Over the years, the Smith family has made alterations to the house. As noted, the Evans accept Mr Smith can demonstrate adverse possession from 1949 to 1989 in relation to the house. That is a material consideration in relation to the claimed possession of the rest of the contentious land surrounding the house and fenced as part of Lot 1. There was a previous house on the contentious land also, which had been demolished by 1983.
Keith Smith had built a large shed on the contentious land in the 1970s, which was later demolished. He also built various fences internally on the contentious land from time to time.
Usual use of this type of land: Photographs in evidence showed the contentious land is predominantly a grassed area, with minimal trees. There is no evidence that it has ever been used for agriculture or farming, beyond the paddocking of the Smiths' dairy cow or a few horses.
In more recent times, on occasion the Evans have sought permission from Mr Smith to graze some cattle on the land. However, because the Evans did not purchase Lot 41 until 1999, their conduct in relation to the land is not specifically relevant. However, the fact that the Evans also behaved as if Mr Smith owned the contentious land is consistent with the conduct of the previous owners of the contentious land.
Therefore, the land has been used as land surrounding the home and near the mill. Obviously, the Smith family has accessed their house across the contentious land. Further, work has been carried out on the land and the grass has been maintained. I consider that these are the natural and obvious uses, to which such land around a home in a rural area would be put.
Fences: By 1949, there were fences along the boundary of the contentious land and the Proposed Road and Ravensdale Road. The Smith family carried out repairs and modifications to those fences from time to time over the years. For example, John Curtis gave unchallenged evidence of the fence-work he carried out for the Smiths between 1966 and 1987.
I do not accept it was necessary for the Smiths to padlock the fences around their home and land in the neighbourly rural setting. This was not a situation where there was any evidence of strangers traversing the land that needed to be kept out by way of locked gates and signs warning off trespassers: see for the contrary situation eg Australian Retirement Holdings at [272].
I consider the fences here were clear and cogent evidence that the Smith family were possessing and asserting an intention to possess the land.
Attitude of others: All other persons who gave evidence or were referred to in the evidence considered the contentious land to belong to the Smith family. The former owners of the contentious land, the Fernance brothers, never interfered with the Smith's use of the land, of which they were aware, being the direct neighbours and relatives. They also never told any person that the contentious land was part of their Lot 41. I consider this to be important evidence: see eg Whittlesea at [82].
Contrary to the Evans' submission, I do not accept that Clement v Jones (1909) 8 CLR 133 (Griffith CJ) is an analogous case that assists them. This is not a case where there has been common use of the land by the Smiths, together with the paper title owners.
Further, the fact that the use of the land by the Smiths is inconsistent with the paper title owner's potential use of the land supports the finding of possession and intention: see Whittlesea at [6(i)]. Here, all others were excluded from the land, unless they sought permission to enter and use the land or were invited in by the Smiths.
I do not consider it relevant that various documents have indicated that Lot 41 does not include the contentious land, or that Lot 1 does include the contentious land. For example, in evidence was a 1963 valuation from the Department of the Valuer General prepared for Harry Smith of the land he wanted to sell. Obviously, he was only the paper owner of Lots 1 and 2. However, the description on the valuation includes the house located on the contentious land. While that valuation is consistent with the other evidence, it does not determine the matter, because there is already agreement that there is adverse possession in relation to the house.

Intention to possess

I consider that the evidence of factual use establishes more than "mere use", which would be insufficient for the purposes of adverse possession. Further, I consider that the acts identified above demonstrate the requisite intention to possess and exclude the paper title owner.
I reject the Evans' submission that Mr Smith's evidence was lacking in relation to intention, because there was no evidence of the reason for the erection of the fences. I note that the authorities warn against reliance on statements of intention by a putative adverse possessor as they may be self-serving: see eg Whittlesea at [6(f)]. Further, I consider the only logical reason for erecting and maintaining fencing was to signify publicly the asserted boundary of the Smiths' land and contain their home and property, including the contentious land, from the roads and to prevent uninvited access.
A number of acts may be "considered collectively, unequivocally evidence the requisite intention": Whittlesea at [6(e)]. This case involves more than occasional equivocal uses, and based on the findings of factual possession, I also accept there was the requisite intention to possess.

Conclusion

I am satisfied that Mr Smith has demonstrated that the Lot 41 paper title owners lost title to the contentious land in 1989. Therefore, the Evans cannot assert title to that portion of land.

Paper Road

Mr Smith also seeks an order that he is the legal owner of the Unformed Road, marked on the survey. The Council has filed a submitting appearance and does not assert that it is entitled to the land. The Evans have no standing to oppose the order sought by Mr Smith, but also accept that Mr Smith's predecessor in title became the owner of the Unformed Road before 1900.
I accept Mr Smith's submissions that he ought to have legal title over that land, by reason of the operation of historical legislation and the factual history of that piece of land. I am grateful for the helpful submissions of Mr Maconachie on this issue.
On 28 August 1833, it appears 4 Will IV, No 11 (NSW), known as the Roads and Streets Act 1833 (NSW) (1833 Act), came into force. It was an Act for, inter alia, "making altering and improving the roads and ways in the Colony of New South Wales".
Section 1 of the 1833 Act provided that any proposed road was to be published in the Gazette, such that interested persons could object. Sections 2 and 3 required a particularised map to be made available for public examination.
Section 16 provided (relevantly): … when any such road as aforesaid shall be altered diverted or turned and the new road shall be made and completed such new road shall be in lieu of the old road and be deemed to be a public road or highway and be subject to the like laws as other public roads or ways in the said Colony and the old road shall cease to be a public road and the property in the ground and soil thereof shall vest in and be held by the owners or proprietors of the lands or grounds immediately adjoining thereto and may be stopped up …
Section 17 of the 1833 Act provided: Provided … That all public roads or ways heretofore made altered diverted or turned in lieu of any other roads or ways shall be deemed to be highways and such other old roads or ways shall no longer be deemed to be public roads or highways but may be stopped up in like manner subject to such and the like limitations and regulations as hereinbefore lastly provided with respect to old roads.
The 1833 Act remained in force until it was amended by the Public Roads Act 1897 (NSW) (1897 Act), which appears to have received assent on 30 June 1897.
Sections 4 and 5 of the 1897 Act provided for a similar regime for notification and confirmation of proposed road as those in the 1833 Act. By s 7 the 1897 Act provided (relevantly) that: In cases where- … (II) a road not yet proclaimed has been formed by the expenditure of public funds, and is in use, the Governor may, without any such notice as aforesaid by notification in the Gazette, resume the lands required for the road, and the land so resumed or any part thereof may by the same or a subsequent notification be dedicated as a road; provided that before notification of resumption notice of the proposed resumption be posted by registered letter to the owners or occupiers of the land through which the proposed road will pass …
Section 19 of the 1897 Act provides, in effect, that land comprising roads that are closed becomes Crown land, but may be distributed to adjoining owners by agreement. However, that section provides a carve-out for: … a road opened or made under the Act fourth William the Fourth number eleven, and roads which have been or may hereafter be granted at Quarter Sessions under the twenty-first section of that Act as an access road, in which cases the lands comprised therein shall vest in and be held by the owner of the adjoining land …
With the enactment of the Public Roads Act 1902 (NSW), there was little work for the 1833 and 1897 Act to do.
However, that 1902 legislation is not relevant here for the following reasons. The Unformed Road was notified in the Gazette on 12 February 1884, confirmed in the Gazette on 4 July 1884, and 'opened' in the Gazette on 1 May 1885.
There is no evidence that a road was ever constructed on the Unformed Road. Instead, on 6 September 1889, a deviation of part of the road (that had been gazetted as confirmed on 4 July 1884) was published in the Gazette. The description of the deviation corresponds with the Proposed Road that separates the contentious land from the rest of the Evans' Lot 41.
At least between 1884 and 1896, the owner of all of the relevant land was Aaron Walters Junior. Therefore, the deviation needed only to be notified, because the land burdened by the road was already burdened, just in a different location.
On the evidence, it is appropriate to find that the construction of the Proposed Road completed in 1889. The operation of the 1833 Act then vested the Unformed Road in the adjoining owner, Mr Walters. In 1896, he sold what is Lot 1, and therefore the Unformed Road, to Mr Perry, who later sold it to Mr Smith's grandfather.
Therefore, I am satisfied that the Unformed Road is vested in Mr Smith.

Other

I note for completeness that a claim by Mr Smith for trespass and an injunction were abandoned. Further, Mr Smith raised a vague argument based on estoppel or proprietary estoppel, but did not advance it orally and estoppel was not an issue raised by the parties to be determined. Therefore, I have not considered it.

Appropriate relief

Applying the reasoning in Sidoti concerning the operation of s 28U(2) and s 45C(2) Real Property Act (in particular, [174]-[175] per Brereton JA, and [200]-[208] per Simpson AJA), because, based on the material before the Court, Mr Smith has demonstrated possessory title that extinguished the paper title owner's rights in relation to the contentious land before Lot 41 was converted to the register, the register for lots 1 and 41 must be corrected in relation to the contentious land.
Further, in relation to the Unformed Road, I also accept that the land vested in Mr Smith's predecessors and therefore belongs to him.

Mortgagee of Lot 41

The Evans' mortgagee bank of Lot 41 was not joined as a party to the proceedings. A mere 7 days before the commencement of the hearing, Mr Smith's solicitors notified the mortgagee of the proceedings, but had not received a response before the conclusion of the hearing.
In Sidoti, the trial judge reserved for further consideration the rights of existing encumbrances, including the registered mortgagee bank of the paper owner's land, which had not been joined to the proceedings. Brereton JA noted on appeal at [169] that: It may well be open to the Bank … to apply to set aside the orders made in its absence. However, that does not mean that the application would inevitably succeed, nor if it did that the ultimate result would be any different. It would be relevant that, although a registered mortgagee obtains the benefits of indefeasibility … in the case of land in a limited folio its interest is subject to the same exceptions as those of the registered proprietor, including in particular to an adverse interest in land which has been incorrectly included in the folio by wrong description of parcels or of boundaries. On that basis, the intervention of the mortgagee would not appear likely to result in a different outcome.
I consider it appropriate to reserve the mortgagee's rights to apply in relation to the orders being made, and for Mr Smith to notify the mortgagee of the orders.

Cross-summons

The Evans filed a cross-summons seeking a declaration that Mr Smith did not have possessory title over the contentious land. There was no utility in such a declaration; the same result would have followed, had Mr Smith's claim failed.

Orders

For the above reasons, it is appropriate to make the following orders: 1. A declaration that the plaintiff is the rightful owner of so much of the land (the contentious land) in Lot 41 DP 1003436 as is to the north-east of the road with catalogue number R2590A-1603 and identified with cross-hatching in the plan drawn by registered surveyors Barry Hunt Associates, dated 17 April 2023. 2. A declaration that so much of the land (Paper Road Land) designated as part of a road with catalogue number R2590-1603 as is adjacent to Lot 1 DP 744640 and Lot 41 DP 1003436 is not a public road and not a public road reserve. 3. A declaration that the plaintiff is the rightful owner of Paper Road Land. 4. A declaration that so much of the land in Lot 41, DP 1003436 as forms a road with catalogue number R2590A-1603 is a public road within the meaning of the Roads Act 1993 (NSW). 5. Plaintiff to notify the mortgagee of the second and third defendant of these orders on or before 5pm on 9 August 2024. 6. Grant liberty to the mortgagee of the second and third defendant to apply in relation to these orders. 7. Second and third defendants to pay the plaintiff's costs as agreed or assessed. 8. No order as to costs between the plaintiff and first defendant. 9. Cross-summons dismissed with the cross-claimants to pay the cross-defendant's costs as agreed or assessed. 10. Grant liberty to the parties to apply for an alternative costs order within seven days of today's date, setting out the application and any evidence and submissions of no more than 3 pages upon which they rely. 11. Should such an application be made for an alternative costs order, the responding party is to provide evidence and submissions of no more than 3 pages opposing any alternative costs order within seven days of receiving the first application. 12. The Court will determine any such alternative costs application on the papers, if appropriate.

Amendments 08 August 2024 - Indentation amended 12 August 2024 - Orders amended pursuant to slip rule DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 August 2024

Adoption Act 1837(NSW)

Public Roads Act 1902(NSW)

Public Roads Act 1897(NSW)ss 4-5, 7, 19

Real Estate (Limitation of Actions) Act 1837(NSW)

Roads and Streets Act 1833(NSW)ss 1-3, 16, 17

Real Property Act 1900(NSW)ss 28U(2), 45C(2), 45D(2)

At a glance

Court

Decision date

Before

Source

Judgment (16 paragraphs)

Parties

Legislation Cited (8)

Cases Cited (6)