Apartments
Legal23/11/2021 12:00:00 AM

Indefeasibility of title and the terms of a registered instrument

The South Australian Court of Appeal has recently held that the principle of indefeasibility of title does not prevent an easement becoming inoperative according to its own terms.

Facts
David Colovic (“the servient owner”) was the owner and occupier of a residential property in Tynte St, North Adelaide (“the servient land”). Peter and Jennifer Davey (“the dominant owners”) owned and occupied the property next door (“the dominant land”).

The dominant land had the benefit of a right of way over the servient land (“the right of way”). There was also a right of way burdening another property at the rear of the dominant land (“easement B”).

The right of way was registered on the titles of both the servient land and the dominant land. Each certificate of title referred to the memorial located in “GRO [General Registry Office] No. 8 Book 101”, being the memorial setting out the terms of the right of way. The memorial described the right of way as “a right of roadway … now used as a private road or, in the event of such road being discontinued stopped up and no more used as a road then along and across [easement B]”. In other words, the dominant owners’ right to use the right of way depended on it being not “discontinued stopped up and no more used as a road”. If the right of way did become “stopped up”, the dominant owners acquired the right to use easement B instead.

A previous owner of the dominant land had installed certain utilities on the right of way. Also, a first-floor balcony of the dominant owners’ house intruded into the right of way’s airspace. Also, the servient owner had built a garage at the end of the right of way.

The dominant owners commenced proceedings in the Supreme Court of South Australia, seeking relief for the encroachments on the servient land (ie, the utilities and the balcony).

The servient owner filed a cross-claim in the proceedings. In it, he claimed that the right of way had become stopped up. Therefore, the right of way had ceased to exist. The servient owner sought a declaration to that effect and an injunction restraining the dominant owners from using the right of way.

The dominant owners applied for an order for summary dismissal of the cross-claim. They argued that there was no reasonable basis for it. They said that they had a registered, indefeasible interest in the right of way. Therefore, the court had no power to order that it be extinguished. They noted that the Registrar-General has the power to extinguish an easement under s 90B of the Real Property Act 1886 (SA). However, the servient owner had not made any application to the Registrar-General under s 90B.

The trial judge upheld the dominant owners’ application. His Honour said that a determination whether the right of way had been stopped up involved an enquiry that was extraneous to the register book. And, on the authority of Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) NSW ConvR ¶56-196; [2007] HCA 45 and Deguisa v Lynn (2020) ANZ ConvR ¶20-141; [2020] HCA 39, the registered proprietor of an interest in Torrens title land is not affected by any encumbrance or qualification upon their title that cannot be ascertained from a search of the register. Therefore, the dominant owners’ indefeasible interest in the right of way could not be extinguished, except by the Registrar-General under s 90B.

His Honour followed the decision in Yip v Frolich (2003) 86 SASR 162, where Besanko J held that the court could not order the removal of an easement on the ground that it had been abandoned under the common law. So long as the easement appeared on the title, it remained enforceable.

Also, his Honour distinguished the decision in Barry v Fenton [1952] NZLR 990, upon which the servient owner had relied. In that case, the court gave effect to a limitation within the terms of a registered easement, holding that an easement for vehicular traffic could not used for foot traffic. His Honour said that the decision was not applicable because it did not concern the extinguishment of an easement.

The servient owner appealed against the trial judge’s decision to the Court of Appeal.

Decision
Lovell, Doyle and Bleby JJA unanimously upheld the servient owner’s appeal.

Reasons
Doyle JA, with whom Lovell and Bleby JJA agreed, delivered the main judgment. Lovell JA made some additional remarks.

Doyle JA said that the principle of indefeasibility does not prevent a court from giving effect to a limitation in the terms of an instrument that appears on the register.

His Honour said that the trial judge erred in relying on Yip v Frolich. In that case, the limitation or defect (abandonment) did not appear on the register. To have given effect to it would have directly undermined the principle of indefeasibility. However, the limitation in this case appeared in the terms of the right of way, which appeared in the register.

His Honour said:

“… the present case is analogous to the situation in Barry v Fenton, and distinguishable from the situation in Yip v Frolich. It does not involve any challenge to, or clash with, the indefeasibility of title that is essential to the operation of the Torrens title system. It involves an assertion of rights that is consistent with what appears on the Register, rather than an assertion of rights that do not appear on the Register. Indeed, it is the [dominant owners] who assert rights that are inconsistent with what appears on the Register, by relying upon a right of way that has, on the terms of the easement appearing on the Register, ceased to subsist. They seek to impose a burden upon the proprietor of the servient tenement beyond what was agreed, and beyond what the terms of the easement appearing in the Register contemplate”.

It followed that there was a reasonable basis for the servient owner’s allegation in the cross-claim that the right of way had ceased to subsist.

Lovell JA pointed out that, although the trial judge spoke of the cross-claim as seeking an extinguishment of the right of way, the servient owner was not seeking an extinguishment in the sense that the right of way would be removed from the title. He was simply seeking a declaration that the right of way, according to its own terms, was no longer operative.

His Honour said that the case did not give rise to a question of indefeasibility. The factual enquiry to be undertaken was not directed to the existence or terms of the right of way but only to the question whether the right of way was stopped up and, therefore, on its own terms, inoperative.

Editorial comment
In the recent NSW decision of Sheppard v Smith (2021) ANZ ConvR ¶21-164; [2021] NSWSC 1207, an argument was made that the registered proprietors of an easement were not affected by any abandonment that had occurred before they were registered. On the basis of the High Court’s decisions in Westfield Management Ltd v Perpetual Trustee Co Ltd and Deguisa v Lynn, the dominant owners said that their title could not be rendered defeasible by any defects not appearing on the register. While Parker J said that the argument had force as a matter of principle, his Honour did not have to rule on it.

The same argument was run in this case — that the registered proprietors of the dominant land were not affected by any defect or limitation not appearing on the register. However, the facts were different. In this case, the servient owner was not relying on a defect that was not ascertainable from the register or otherwise unobservable, such as abandonment. Rather, he was relying on the terms of the easement itself, which were incorporated by reference into the register and accessible on a search. The Court of Appeal held that there was no indefeasibility issue at all. It was not inconsistent with the foundational principle of the Torrens system to give effect to the easement according to its terms.

As the Court of Appeal said, the servient owner’s cross-claim would necessitate a “factual inquiry” as to whether the right of way had, indeed, been stopped up within the meaning of the terms of the right of way. However, the dominant owners, at the time they purchased the dominant land, surely were capable of making a preliminary assessment about the matter simply through observation. Surely the presence of structures on the right of way was strongly suggestive that the right of way was stopped up. The case illustrates the need for the terms of an easement to be communicated to the incoming dominant owners and for them to consider whether there is compliance with the terms.

Source: Colovic v Davey & Anor (2021) ANZ ConvR ¶21-165; [2021] SASCA 117, 21 October 2021.

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