The Owners - Strata Plan No. 91016 v Upright Builders Pty Ltd

Relevant legislation

1. It is convenient to begin by saying something about the relevant legislation, the applicable legal principles and the decision in Pesic.

The EBA

1. Section 3(1) of the EBA provides: Either an adjacent owner or an encroaching owner may apply to the Court for relief under this Act in respect of any encroachment.
2. "Adjacent owner" is defined to mean "the owner of land over which an encroachment extends". "Encroachment" is defined to mean "encroachment by a building, and includes encroachment by overhang of any part as well as encroachment by intrusion of any part in or upon the soil". "Encroaching owner" is defined to mean "the owner of land contiguous to the boundary beyond which an encroachment extends". "Owner" is defined in the following terms: any person entitled to an estate of freehold in possession: (a) whether in fee simple or for life or otherwise, (b) whether at law or in equity, (c) whether absolutely or by way of mortgage, and includes a mortgagee under a registered mortgage of a freehold estate in possession in land under the Real Property Act 1900.
3. Section 3(2) of the EBA provides: On the application the Court may make such orders as it may deem just with respect to: (a) the payment of compensation to the adjacent owner, (b) the conveyance transfer or lease of the subject land to the encroaching owner, or the grant to the encroaching owner of any estate or interest therein or any easement right or privilege in relation thereto, (c) the removal of the encroachment.
4. Section 3(3) provides that the Court "may grant or refuse the relief or any part thereof as it deems proper in the circumstances of the case". It sets out various matters the Court may consider including, among others, the character of the encroaching building and the circumstances in which the encroachment was made. Under s 3(5), the section applies to encroachments made either before or after the commencement of the Act.

The Local Government Act 1919 (NSW) and the Public Roads Act 1902 (NSW)

1. At the time the EBA was passed, public roads were principally regulated by Pt IX of the Local Government Act 1919 (NSW) (the LGA 1919) and the Public Roads Act 1902 (NSW) (the PRA).
2. The LGA 1919 contained detailed provisions for the mapping, alignment and registration in a roads register of public roads. Section 232(1) provided that, except as otherwise expressly provided, every public road was to vest in fee simple in the council where the road was located and provided that the relevant council was entitled to be registered as the proprietor of the road under the provisions of the Real Property Act 1900 (NSW) (RPA). Section 232(3) relevantly stated that unless expressly provided nothing in s 232 shall be deemed "to authorise the council to grant, demise, dispose of, or alienate the road or the soil or materials thereof".
3. Division 8 of Pt IX vested the care, control and management of public roads in the council and contained extensive provisions setting out the powers of a council. Section 252 provided that, notwithstanding the provisions of the PRA, no part of a public road could be closed without the consent of the council. Division 12 dealt with obstructions and encroachments on roads. Section 267 gave the council power to order that any obstruction or encroachment on a public road be removed. Where the encroachment existed before the Act came into existence, the council was required to pay reasonable compensation.
4. The PRA dealt with the resumption of land for the purpose of building a road and the declaring of roads as public roads by the Minister. It also contained provisions for the closure of public roads. The power to close a public road was vested in the Minister. Before closing a road, the Minister was required to publish notice of the proposed closure in the Gazette which called for any objections. The Minister was only entitled to close the road after considering those objections. On closure, the road could be dealt with in various ways including being treated as Crown Lands or being granted to the owners of adjoining lands on payment of its value.

The Local Government Act 1993 (NSW) and the Roads Act 1993 (NSW)

1. The LGA 1919 and PRA were replaced by the Local Government Act 1993 (NSW) (the LGA 1993) and the Roads Act 1993. One consequence of that change was to move all provisions regulating public roads into the Roads Act 1993.
2. Section 7 of the Roads Act 1993 relevantly provides that the council of a local government area is the roads authority for all public roads within that area, other than certain roads, such as freeways and Crown roads. The Act contains provisions relating to the creation of public roads and the resolution of doubts concerning the status of certain roads. Like the predecessor Act, s 145(3) of the Roads Act 1993 provides that "[a]ll public roads within a local government area (other than freeway and Crown roads) are vested in fee simple in the appropriate roads authority". However, s 146(1)(e) states that dedication of land as a public road "does not authorise the owner of the road to dispose of any interest (other than an easement or covenant) in the land".
3. Part 4 of the Roads Act 1993 deals with the closing of public roads. Under s 38A, a council may close a public road for which it is the roads authority if the road is not reasonably required for use as a public road. Under s 38B, the council must give notice of the proposed closure in a local newspaper, to notifiable authorities and to owners of adjoining land. Formal objections to the closure may be made by a notifiable authority (which includes the Secretary of the Department of Planning and Environment, the Secretary of the Department of Industry, Transport for NSW, Sydney Metro and the State Transit Authority), in which case the road may not be closed except following a successful appeal by the council against the objection to the Land and Environment Court. A notifiable authority and an adjoining landowner also have a right of appeal against closure to the Land and Environment Court: s 38F. A council is given power to dispose of land that was a former public road. If the land is sold, the proceeds of sale must be used by the council for acquiring land for public roads or for carrying out road work on public roads: s 43.
4. Section 138 of the Roads Act 1993 provides that a person must not, among other things, erect a structure or carry out a work in, on or over a public road otherwise than with the consent of the appropriate roads authority. If consent is given, it may be revoked at any time for any reason: s 140. Section 107 gives a roads authority power to direct any person to remove an obstruction or encroachment on a public road. However, s 107(4) provides "This section does not apply to an obstruction or encroachment on a public road if its presence on the road is authorised by or under this or any other Act".

Relevant legal principles

1. The principles relating to the construction of legislation were recently summarised by Bell CJ (with whom Meagher and Kirk JJA agreed) in Greylag Goose Leasing 1410 Designated Activity Company v P T Garuda Indonesia Ltd [2023] NSWCA 134 at [14]ff (Greylag Goose Leasing). The legal meaning of a statutory provision is to be derived "from a full consideration of the language of the statute viewed as a whole and the context, general purpose and policy of the statute or a provision within it, to the extent that that is separately discernible" (at [14]). As his Honour explained (at [15]): "Context" is to be understood in its widest sense to include such matters as the existing state of the law and the mischief which the statute was intended to remedy, to the extent that that is discernible … The purpose of the statute may be stated expressly or may be discerned from an examination of the legislation as a whole or from the context in which the statute was enacted or from secondary materials, including reports of law reform bodies whose recommendations led to the statute: at [17]-[18].
2. A Court should strive to read later statutory provisions in a way so that the later provisions operate harmoniously with earlier ones. Only where it is apparent after a careful examination of the relevant provisions that the later provisions are inconsistent with the earlier ones should it be found that the later Act impliedly repeals the earlier one: Ferdinands v Commissioner of Public Employment (2006) 225 CLR 130; [2006] HCA 5 at [18] per Gummow and Hayne JJ; Commissioner of Police (NSW) v Eaton (2013) 252 CLR 1; [2013] HCA 2 at [48]-[49] per Crennan, Kiefel and Bell JJ; Firebird Global Master Fund 11 Ltd v Republic of Nauru (2015) 258 CLR 31; [2015] HCA 43 at [82] per French CJ and Kiefel J, with whom Gageler J agreed on the point. Where the inconsistency only arises in respect of both Acts' application to cases of a particular type, the repeal only operates in respect of cases of that type: Goodwin v Phillips (1908) 7 CLR 1 at 7; [1908] HCA 55 per Griffith CJ (with whom Barton J agreed).
3. An example of the application of some of these principles, which bears some resemblance to the present case, is to be found in Aussie Skips Recycling Pty Ltd v Strathfield Municipal Council (2020) 103 NSWLR 834; [2020] NSWCA 292 (Aussie Skips Recycling). The question in that case was whether the Court should grant an easement in favour of the appellant over land owned by the respondent council under s 88K of the Conveyancing Act 1919 (NSW), which gives the Court power to impose an easement over land "if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement". The land over which the easement was sought was "community land". The LGA 1993 contains extensive provisions regulating the use and management of community land, one consequence of which was that it appeared that the council did not have power to grant the easement in question, although that issue had not been raised in the court below.
4. The Court of Appeal, dismissing an appeal from the Land and Environment Court (to which the first instance proceedings had been cross-vested), held that the rights sought by the appellant could not amount to an easement because their effect was to exclude the servient tenement (the council) from any use of the land. However, it went on to consider the apparent inconsistency between the LGA and s 88K of the Conveyancing Act. It expressed the tentative view that that inconsistency should be resolved by reading down the power conferred by s 88K. As Basten JA (with whom Gleeson JA and Preston CJ of LEC agreed) explained (at [48]): While it is true that there is no express provision in the Local Government Act which limits the powers of the Supreme Court under s 88K, and whilst it is true that there is a general principle of statutory construction which militates against reading implied limitations into a conferral of power on a superior court, some powers will contain inherent limitations, constitutional or otherwise, which a Supreme Court is required to observe. [footnote omitted]
5. Basten JA pointed to four factors that suggested that the power conferred by s 88K should be read down in this case. One was the following (at [49]): First, the fact that the local council in which the land is vested has no power to grant an easement suggests that, for the court to do so, would be to undermine the purpose and operation of the detailed statutory scheme found in the Local Government Act. The two statutes should be read so as to operate harmoniously together, not so that one undermines the other, and certainly not so that the earlier general power undermines the effect of the later more specific power. [footnotes omitted]
6. It is not entirely clear what his Honour is saying in this passage. The footnote at the end of the passage refers to P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Lawbook Co), pars 11.120-11.160. There the relevant principle is stated in para [11.140] in these terms: It is presumed that where there are general words in a later Act capable of reasonable and sensible application without extending them to a subject specially dealt with by an earlier Act, the later Act does not impliedly repeal the earlier Act. Rather, the later Act is read down to accommodate the earlier one.
7. In Aussie Skips Recycling, the later Act was s 88K of the Conveyancing Act. That section was inserted in the Act in 1995, whereas s 45 of the LGA 1993, which states that a council "has no power to sell, exchange or otherwise dispose of community land", was included in the original version of that Act. What Basten JA must be understood as saying, consistently with the principle stated by Herzfeld and Prince, is that the general power conferred by s 88K of the Conveyancing Act should be read down so that it did not displace or undermine the limitation on the power of councils to deal with community land.
8. There is a suggestion in some of the written submissions of the Owners Corporation that later legislation can be used to interpret the provisions of earlier legislation, and that that approach is justified by the principle that legislation is generally to be construed as "always speaking": for discussion of that principle, see Herzfeld and Prince at [2.30]ff. However, as Herzfeld and Prince point out, that principle does not mean that the meaning of a statute can change over time. A statute, and its provisions, have one legal meaning which is to be determined in accordance with the principles summarised by Bell CJ in Greylag Goose Leasing. That meaning cannot change as a result of subsequent changes in the law. However, the application of a statute may change as a result of a change in circumstances. So, for example, language used to describe and regulate a technology in existence at the time the statute was passed may be interpreted as covering a new technology that performs the same function. That principle is sometimes explained on the basis that the meaning or connotation of the words of a statute do not change but the denotation of the words, or the things that they describe, may.

The decision in Pesic

1. In Pesic, the outside wall of a brick cottage encroached four to six inches on to the footpath that formed part of Septimus Street, a public road owned by the defendant council. In addition, the eaves and guttering of the cottage overhung (and therefore encroached onto) the footpath by one foot, two inches for a distance of 25 feet. The encroachment had existed for 80 to 100 years. The current owners initially sought an order under the EBA that that part of the road which was the subject of the encroachment be transferred to them. During the hearing, they amended their claim to seek an easement, or a licence for the life of the cottage. In refusing that relief, Holland J held that the EBA "has no application to an encroachment by a building upon a public road vested in a council by the Local Government Act [1919], and that neither the encroaching owner nor the council in question is entitled to apply to the Court for relief under that Act in respect of any such encroachment" (at 139).
2. His Honour reached that conclusion on the basis that "the legislature in dealing in the [EBA] with "land" upon which a building encroached did not intend to include land which was part of a public road vested in a council" (at 139). That was because Pt IX of the LGA 1919 treated public roads as a special class of land and provided a code for dealing with land falling within that class. His Honour also relied on the fact that the council had no power to grant the rights claimed by the owners: … I cannot find in the Local Government Act, or the ordinances to which have referred, any title or power in the council to pass to an encroaching owner any title to the part of the public road on which a building encroaches or any of the less rights sought by the plaintiffs in the present case. It would seem to me that the only means by which ownership of a part of the road could become vested in the plaintiffs would be through the closing of the relevant part of the road under the Public Roads Act and that method is entirely under the control, and at the discretion, of the Minister under that Act. (at 141)
3. It appears that Pesic, so far as it concerns the scope of the EBA, has not been considered or applied in any subsequent case.

The Owners Corporation's case

1. In final oral submissions, the Owners Corporation accepted that it must persuade the Court not to follow the decision in Pesic. Generally, that requires a "strong conviction of the later court that the earlier judgment was erroneous and not merely the choice of an approach which was open, but no longer preferred" and further that "[the error] can be demonstrated with a degree of clarity by the application of correct legal analysis": Gett v Tabet (2009) 254 ALR 504; [2009] NSWCA 76 at [294]-[295] per Allsop P, Beazley and Basten JJA; and affirmed by AC v R [2023] NSWCCA 133 at [24]ff per Bell CJ (with whom Adamson JA, Ierace and Chen JJ agreed).
2. It has been suggested that the test may be even stricter in cases concerned with statutory construction. For example, in Telstra Corporation Limited v Treloar (2000) 102 FCR 595; [2000] FCA 1170 at [27]-[28] Branson and Finkelstein JJ put the test in these terms: The problem is very real when what is at issue is the construction of a statute. For one thing, statutory language is often ambiguous. Courts can struggle to determine the legislative intent. It is often impossible to discover any legislative intent. In many instances the generality of the statutory language is deliberate and allows the courts to develop a body of law to fill the gaps. This may lead to disagreement among judges about what the statute means. It would be sound policy that once that intent has been discerned by an appellate court then that should be the end of the matter. The view which we prefer is that unless an error in construction is patent, or has produced unintended and perhaps irrational consequences not foreseen by the court that created the precedent, the first decision should stand. In other areas of the law a precedent may be reconsidered if its underlying reasoning is outdated or is inconsistent with other legal developments. Perhaps, with some modification, in some instances these factors could also be applied to cases concerned with the construction of statutes. Accordingly, we venture to suggest it would be on a rare occasion that an intermediate appellate court (contrast the position of the High Court, as to which see Babaniaris v Lutony Fashions Pty Ltd (1987) 163 CLR 1) will allow an issue concerning the construction of a statute, past and closed and especially a repealed statute, to be thrown open, producing as it clearly will, uncertainty, disruption to the conduct of affairs, a sense of grievance in those who may consequently receive treatment less favourable than that received by others under the same statute and additional cost and expense. In this case, the number of individuals who will relevantly be affected by the construction of the statute may be assumed to be, by reason of the passage of time, relatively small. See also Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v FAK19 (2021) 287 FCR 181; [2021] FCAFC 153 at [18] per Allsop CJ (with whom Kerr and Mortimer JJ agreed).

Consideration

1. Holland J essentially gave two reasons for the decision he reached. One was that the LGA 1919 treated public roads as a special class of land and contained a code with respect to land falling within that class. The second was that the orders for which the plaintiffs contended undermined the limitations contained in the LGA 1919 on the power of councils to deal with public roads. The only means by which title to a public road or part of a public road could be transferred to an encroaching owner was if the road was closed under the PRA, and closure of a road was within the control of the Minister, not the council. The legislature could not have intended to undermine those restrictions by conferring on the Court the broad discretion contained in s 3 of the EBA.
2. There is, however, a difficulty with Holland J's first reason. It does not appear to be correct to say that the LGA 1919 treated public roads as a special class of land and contained a code with respect to land falling within that class. The LGA 1919 specifically says that the land on which a public road is situated was to vest in fee simple in the council and that the relevant council was entitled to be registered as the proprietor of the road under the provisions of the RPA, with the result that the land became the subject of the provisions of that Act. The PRA contained important provisions relating to the closure of public roads. It would be more accurate to say that the thrust of the LGA 1919 was to treat public roads as a form of land like any other, but to place limits on the disposal of that land, subject to the provisions of other statutes including the PRA.
3. Moreover, the word "land" appears to be used in the EBA in its ordinary sense. It is used to describe both the real property from which the encroachment extends as well as the real property affected by the encroachment. As the Owners Corporation pointed out in submissions, if the legislature had intended to exclude land of a particular type from the operation of the EBA, it is to be expected that it would have said so specifically.
4. The second reason advanced by Holland J has much more force. However, it is not clear why that reason would justify reading "land" in the way that Holland J did. Rather, it suggests that s 3(2) of the EBA should be read so that it does not confer on the Court a power to do what the person the subject of the Court's order could not - in the case of an encroachment on to a public road, a power to order a council to do what it was not permitted by the LGA 1919 to do. Read in that way, the limitation on the scope of the EBA is aligned to the reason for the limitation. The LGA 1919 restricts what a local council can do with land that forms part of a public road. The power conferred on the Court by the EBA contains an implied limitation which prevents the Court from making orders that exceed the restrictions placed on the council. That approach is consistent with the approach that was suggested by the Court of Appeal in Aussie Skips Recycling and gives a harmonious operation to the two pieces of legislation. In addition, it seems to me to be more natural to read the power conferred by s 3(2) as being subject to an inherent limitation on the Court not to make orders requiring a person to do what the person cannot lawfully do, rather than to read the word "land" in the definition of "adjacent owner" to exclude a public road.
5. As Basten JA pointed out in Aussie Skips Recycling, there is a general principle of statutory construction which militates against reading implied limitations into a conferral of power on a superior court. However, in the case of the EBA, the Act assumes that both the adjacent owner and encroaching owner have proprietary rights in respect of the relevant land. Section 3(2) confers broad powers on the Court to make such orders as it deems fit with respect to, relevantly, "the conveyance transfer or lease of the subject land to the encroaching owner, or the grant to the encroaching owner of any estate or interest therein or any easement right or privilege in relation thereto". But those orders must be understood as orders that the adjacent owner take particular steps to transfer or create the relevant interest. That is made clear by s 7 which provides that "where the adjacent owner is not an owner beneficially entitled to the fee simple free from encumbrances, the Court may determine … by whom the conveyance transfer or lease of the subject land or grant in respect thereof is to be made".
6. These considerations suggest that Holland J was wrong to conclude that the word "land" should be interpreted as excluding a public road. Instead, the correct approach is to read s 3(2) of the EBA as containing an implied limitation on the power of the Court so that it does not give the Court power to order a person to do what by legislation that person cannot lawfully do.
7. The question remains whether I should nevertheless follow the decision of Holland J. I have concluded I should not. There are a number of reasons.
8. First, for the reasons I have given, I think that the conclusion his Honour reached on the correct interpretation of the EBA was wrong and was not supported by at least one of the reasons his Honour gave.
9. Second, the interpretation I prefer is consistent with the actual decision in Pesic and addresses the concern that Holland J had about giving a broad interpretation to the EBA and the effect that that would have on the limitations contained in the LGA 1919. On the approach I prefer, the Court in Pesic had no power under s 3(2) of the EBA to make any of the orders sought by the plaintiffs in that case. It is conceivable that the Court did have power to make orders requiring the council to apply to the Minister for the Minister to exercise the powers conferred by the PRA to close the relevant part of the road. However, that order was not sought, and it is doubtful that the Court in the exercise of its discretion would have made an order in those terms.
10. Third, it appears that the interpretation I prefer was not raised in Pesic. On the other hand, the interpretation is consistent with the approach suggested by the Court of Appeal in Aussie Skips Recycling.
11. Fourth, although Holland J's decision has stood for in excess of 45 years, it does not appear to have been applied or considered during that time at least n relation to the issue currently before the Court. The circumstances in which the issue has arisen in this case are unusual and could not have been anticipated at the time that Pesic was decided.
12. Fifth, although the choice between the alternative interpretations is likely to have had little practical consequence at the time Pesic was decided, it may have practical consequences now. On the approach I prefer, the power of the Court will vary depending on the nature of the legislative prohibitions to which the person against whom the orders are sought is subject at the time the application is made. As I have explained, at the time Pesic was decided, the council had no power to grant any rights in respect of public roads. Councils were given a power to grant a lease of up to 5 years on any part of a public road which the council considered was not needed for public use: LGA 1919, s 276A. Holland J referred to that provision. However, that provision was not inserted into the LGA 1919 until 1927 and was therefore irrelevant to the construction of the EBA. Consequently, at the time Pesic was decided, the most the Court could relevantly have required the council to do was ask the Minister to exercise the Minister's power to close the road. As I have explained, it is doubtful that the Court would have exercised its discretion to require the council to do that. Now, the limitations on the power of councils with respect to public roads are contained in the Roads Act 1993. That Act does give councils power to close public roads, but only in certain circumstances and following certain procedures. Perhaps more significantly, it does not prevent a council from granting an easement over a public road. It also permits a council to consent to a person erecting a structure on a public road, although that consent may be withdrawn at any time and for any purpose. To say that the Court may now have power under the EBA to require a council to take steps in respect of a public road that are now available to it (for example, the granting of an easement) does not involve a change in the meaning of the EBA. Rather, it is an example of where the application of a power conferred by the Act varies over time as a consequence of other legislative changes.

Implied repeal

1. The Council advances an alternative argument that the Roads Act 1993 impliedly repealed the EBA insofar as the EBA applies to public roads. That implied repeal is said to arise from the detailed provisions contained in the Roads Act 1993. However, that submission depends on identifying an inconsistency between the EBA and the Roads Act 1993 that arises from the fact that the EBA gives the Court a broad discretion which would circumvent the limitations imposed by the Roads Act 1993. For the reasons I have given, that inconsistency does not arise. For example, the Court could not under the EBA order that the Council close the relevant part of Nancarrow Avenue and sell it to the Owners Corporation. The Court may have power to order the Council to follow the procedures set out in the Roads Act 1993 for the closure of the road and to sell the relevant parcel of land to the Owners Corporation if the requirements of the Roads Act 1993 are satisfied. There is a question whether the Court in exercise of its discretion would make orders of that type. However, none of that gives rise to an inconsistency.

Orders

1. Given the way the separate question is phrased, the answer to the question must be "yes". However, that answer must be qualified in the way that I have explained.
2. The parties should bring in short minutes of order that give effect to these reasons for judgment and any agreement between the parties on the costs of the separate question. A timetable for resolving any outstanding issues between the parties on those matters can be dealt with at the next directions hearing.
3. Accordingly, the orders of the Court are: 1. Direct that the parties bring in short minutes of order to give effect to these reasons for judgment and any agreement in relation to costs; 2. If the parties cannot reach agreement on those matters, direct that at the next directions hearing the parties provide the Court with proposed directions for resolving the issues that remain in dispute; 3. Stand the matter over for directions on 11 August 2023 or such other date as is agreed between the parties.

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: 26 July 2023