Castle Constructions Pty Limited v Sahab Holdings Pty Ltd & Anor [2012] HCATrans 223 (7 September 2012)

Last Updated: 12 September 2012

[2012] HCATrans 223

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S110 of 2012

B e t w e e n -

CASTLE CONSTRUCTIONS PTY LIMITED

Applicant

and

SAHAB HOLDINGS PTY LTD

First Respondent

REGISTRAR-GENERAL

Second Respondent

Application for special leave to appeal

HAYNE J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 7 SEPTEMBER 2012, AT 2.50 PM

Copyright in the High Court of Australia

MR M.L.D. EINFELD, QC: May it please the Court, I appear with my learned friend, MR J. HOROWITZ, for the applicant. (instructed by Domain Legal Pty Limited)

MR G.K. BURTON, SC: May it please the Court, I appear for the first respondent. (instructed by Kanjian & Company)

MR P.B. WALSH: May it please the Court, I appear for the second respondent. (instructed by Land & Property Information)

HAYNE J: We might, I think, be assisted by hearing first from Mr Burton.

MR BURTON: Your Honours, we respectfully submit that the matter is one of insufficient doubt that the Court of Appeal effectively followed its earlier decision and that was correct. Dobbie was a decision of long standing. Indeed, it was not changed; it was endorsed by the 1995 amendments that are the subject of discussion in the reasons and also are the subject of the second form of text in section 42(1)(a1) of the Real Property Act. Dobbie dealt with the meaning of “omission”, and that word did not change in the new amendment. What changed simply was to make it clear what had previously arguably not been clear that it applied to easements that had never been recorded; it now applied to easements that had been omitted after having being been validly created under the Act.

HAYNE J: Can I understand what the position is if the decision of the Court of Appeal remained unaffected? Is it the position that the Registrar-General can remove an easement wrongly, there could then be an intermediate dealing with the land and then the easement be put back on? Is that the consequence?

MR BURTON: Yes, that is the case, but that could be the case whether the easement was never recorded, because easements have a special protection under section 42, formerly (1)(b) as your Honour well knows, and 42(1)(a1).

HAYNE J: It does seem a rather odd result for a system of title by registration as distinct from a system of registration of title.

MR BURTON: We would respectfully submit to the contrary, because the system of title by registration, as Breskvar v Wall and all the other authorities have indicated, is on the basis that there are specified exceptions to indefeasibility. One of those specified exceptions, which the Court of Appeal focused on, is paragraph (1)(a1). Even a subsequent registered proprietor who is the subject of an application for reinstatement of an easement by a subsequent registered proprietor of the former dominant tenement, whether or not that easement was validly created under the Act, whether it was left off originally when the title was brought under – all of those situations are covered by the exception to indefeasibility.

That means that the special protection that easements gets makes this not only good principle but good policy because the reason that it is left off is not important. What is important, as the Court of Appeal pointed to in Dobbie, and again in our case, is that the status of indefeasibility in this central provision of the Act, the title provision, is one that is the focus – that is, the fact or whether it is there not, not the reason. As I have said to your Honours already, there are three potential reasons for it not being there – a deliberate decision of the Registrar-General, an inadvertent decision or the fact that it was never put on in the first place. But all of those, irrespective of whether it is the immediate registered proprietor or a subsequent registered proprietor on either side of the tenement arrangement, are within the exception.

That is what the Court of Appeal focused on, because the reason does not change that; it does not change the degree of risk or the balance of risk in the legislation from the reason. You can have a historical search and not pick up one that was never put on. You would still be liable for that easement.

BELL J: The Registrar-General submits that, whilst there are exceptions to the primary object of the Act, those exceptions should be, where possible, interpreted in a way that does not conflict with that object. That submission does not sit happily with a view that, omitted in the circumstances, embraces a decision to expunge an easement and thereafter the reinstatement of it.

MR BURTON: We would respectfully submit to the contrary, your Honour, because the very fact that this is in a statutory exception to indefeasibility in section 42 means that easements are treated in a special way. That is the focus of the Court of Appeal’s reasons. The reasons behind the fact that the easement is not there, that it has the status of not being there, are irrelevant to the fact that it is not there and therefore the subsequent registered proprietor, or the immediate one, is fixed with it. The policy behind why the provision is there is not really an issue in this case; it has always been there. Indeed, that is uniform across the jurisdictions.

HAYNE J: How does that proposition fit with title by registration rather than registration of - - -

MR BURTON: Because it fits within the system of indefeasibility. Within the system of indefeasibility there are recognised exceptions. Within section 42 there is a list of them, your Honour.

HAYNE J: Of course.

MR BURTON: Yes, and this is one of them. Therefore, if you are within the system - - -

HAYNE J: That seems to have the symmetry of circularity, I think, Mr Burton. Perhaps I am mistaken, but it does seem to.

MR BURTON: That is way the Act operates, your Honour, with respect.

HAYNE J: There are exceptions; this is an exception, therefore, this is what? I am not quite sure how this argument is running, but I think it begins there are exceptions, I assert this falls within it, therefore, is the question - - -

MR BURTON: The nature of the exception means, because one is looking at the status of indefeasibility one should really look at the status of the exception. That is what the Court of Appeal focused on – the status of whether it is there or not. The reason for it not being there is not something which will change the searches that a registered proprietor has to do. As I have already said to your Honour, the fact it may have never been there will still expose the registered proprietor to it being put on because it is within the exception. That is the Dobbie situation. Now, Dobbie in itself said that it did not need to overrule an earlier case of Gehl. Your Honours may be familiar with the text of the decision – I have given you the page numbers in the written submission – and also a case called Beck v Auerbach, which my friend, Mr Walsh, refers to.

In both of those the submission was that “omission” meant a deliberate leaving off by the Registrar-General in the course of his statutory duties, which is the exact opposite of our situation. It was said that that was the only meaning of “omission” and the Court of Appeal, in fact, said that is irrelevant. So on that basis my friends would fail. The Court of Appeal has broadened it to say the reason is not a matter of relevance. Indeed, in some of the jurisdictions it is even broader; the word is “any easement”, whether or not it is ever been recorded. So it is clear that there is a statutory policy to protect easements in this way.

BELL J: The Registrar-General in his submissions also points out, I think somewhat contrary to the tenor of a submission you made a couple of moments ago, that on this interpretation of the provision those searching the register would be required, when seeing that an easement had been cancelled, to then go and acquaint themselves with the Registrar’s reasons for that and form a judgment presumably about the likelihood of reinstatement. This is at application book 274, paragraph 10.

MR BURTON: Yes. We would say the exact opposite, with respect, because it may be, if there has never been an easement recorded, which is the Dobbie situation, because it was missed when the title was brought under the Act, that your search would never find it. You would never have a situation where it was removed, so you would not have any reasons to search. But the same situation would arise. As I understand it, my friends do not challenge the status or authority of Dobbie itself; what they say is the extension to this situation, and by parity of reasoning we would say the reasoning applies to this situation.

HAYNE J: If there is a deliberate cancellation, notice is given, is it not? If there is a proposal for the Registrar-General to deliberately cancel an easement, notice is given to - - -

MR BURTON: I am sorry to interrupt, your Honour; it depends on the situation or the provision which is used. If, as the Court of Appeal said, section 32(6) is used then there is no need for notice. Notice may be given under section 12A and that would require a judicial determination, an order, an interlocutory order, a final order restraining the Registrar-General from acting. The alternative provision, when you can prove actual abandonment or deemed abandonment by 20 years non-use, the Registrar-General has the administrative power under section 49 where notice would be provided.

HAYNE J: But in events of the kind that were thought to have occurred here, notice had to be given?

MR BURTON: The provision, section 12A, says “may” – notice may be given – and the Court of Appeal said that the relevant provision was section 32(6) that was used, not section 49. Under section 49, notice would have to be given, yes.

HAYNE J: The point of the questions I am putting being this: do we not end up with an unusual outcome of Torrens legislation? If the Registrar-General can deliberately remove, in cases other than abandonment, without notice to anyone and then after an intermediate dealing come along and say, “Well, that was wrong, I’ll put it back on”, is that not the outcome that is, at least, open under the Court of Appeal’s conclusions?

MR BURTON: But it would also be open by parity of reasoning, your Honour. If someone came along to the Registrar-General and said, “This easement, which predates the bringing of the land under the Act, was never put on and therefore we require you to put it on”, the Registrar-General accepts that it was a valid easement, it has not been destroyed in any way and therefore has to put it on, that would also affect – because it is within the regime of indefeasibility itself.

HAYNE J: But the notion that an easement validly created at or after the bringing under the Act, whether under the Real Property Act or another Act, can be dealt with in this fashion seems to create a circumstance that would not sit comfortably, or at least not sit easily, with a Torrens system of registration, would it? You would have to say of course it does.

MR BURTON: We would, yes – I am conscious that I am, to an extent, repeating myself –because it is built into the way that the Act works for easements. Indeed, if there was a misdescription of the boundaries, if there was a prior folio that the Registrar-General had overlooked and created a title for someone over the same land, the situation your Honour is putting to me could well occur well down the track after the original owners of both those parcels have departed the scene, and they are all within section 42 as exceptions. Easements are no different in that way.

HAYNE J: Now, it is said against you that if leave were to go, there should be leave on ground 8(c), at page 250 of the application book; the court of Appeal should have held that your client was not a person dissatisfied.

MR BURTON: Yes.

HAYNE J: Does that ground raise any separate or distinct set of questions about whether leave should go?

MR BURTON: We would respectfully submit so, yes, your Honour, for this reason: the matter was not raised until in the Court of Appeal; it was only raised in argument, this actual ground. It is a matter, we would say, that is not one susceptible of special leave because the Court of Appeal simply applied established principle and said you are estopped from raising this. The principles are not in dispute, it is the application and, in addition – and I have said this in the written submissions in more detail – we would say that this was not an interlocutory in the true sense of the word that my friend says it was because it was a precondition to us obtaining the first judgment from Justice Slattery that the Registrar had a duty to give us reasons. It was a precondition to our right of review being enlivened and it had not been challenged.

Justice Slattery heard full argument, determined that issue, we would say, on a final basis, it was not raised as a subject of submission in the final hearing which was the subject of his second reasons for judgment and then it was not raised in the appeal papers; it was simply raised in argument and the Court of Appeal dealt with it, we say, appropriately. Would your Honour wish to hear me on the other matters we would point out?

HAYNE J: You should make such submissions as you think are needed.

MR BURTON: Thank you. I have already dealt with why Dobbie dealt with the ordinary meaning of the words and is correct in principle and policy, we would respectfully submit, because of the special protection for easements. The explanatory memorandum says that when the power is extended to easements created under the Act it was to be consistent with the reasoning in Dobbie and the use of the words “administrative error” encompasses both advertent and inadvertent error. In other words, that is consistent with Dobbie.

We would respectfully submit the 1995 change, which is congruent with some of the matters that have happened in other jurisdictions in the wording, is not against Dobbie; it is actually endorsing Dobbie and the ordinary meaning of the term “omission”, which means, simply, “left out”. If we are right in that, there is no challenge to the application of the meaning of “omission” here to its meaning in section 12(1)(d). That is, again, a matter of established principle that one uses the word, if one can, the same way in other provisions and that does not seem to be the subject of challenge.

That gets us to the result to which the Court of Appeal came. If we need to go the further steps, I have already dealt with the estoppel point; 121 and 122 is simply an application of established principle, there are not sufficiently clear words in 12A to oust the jurisdiction of the Court. We have given your Honours a reference to Bhardwaj and the statement of principle. That does not seem to be challenged; it is simply the application of it. Section 12A in itself has a narrower meaning of the word “action”, but we do not really need to get to that stage because if we are correct on that matter of established principle the Court of Appeal came to the right view.

If I can go one step further, if my friends were right on section 118, which does not appear uniformly across Australia, whereas the other provision, section 42, has some degree of uniformity, which shows that it is the preeminent provision, as the Court of Appeal said – if my friends were right, one could not ever enforce any attempt to replace an omitted or misdescribed easement because you would not have the proceedings, even though there are express rights of review. In other words, it reinforces the point that there are established exceptions to indefeasibility built into the mechanism of the Act.

Section 138, again, the only challenge is to the meaning of the word “recovery”, and that is a matter of established principle which we say the Court of Appeal got right and is a matter of insufficient doubt. Section 12A cannot cover section 138; it does not apply to it. So one is left with a position that if we are right that there is insufficient doubt on the section 138 route, or the section 12, section 42 route, then one gets to the same outcome, which makes this an unsuitable vehicle for the debate that my friends wish to have because one can achieve the outcome in the Court of Appeal by several different routes. That, we respectfully submit, as I have already said, makes it an unsuitable vehicle.

This is quite a narrow case. It deals with an established exception to indefeasibility. This is not a matter of broad attack on the system of title by registration in any way, what the Court of Appeal has done, it is the exact opposite. The Court of Appeal in fact has restricted its reasons to saying, because easements are an express exception to indefeasibility, if they are misdescribed or if they are omitted then there are routes within the Act to review the Registrar-General’s decision, be it under section 138 or under section 12. In some of those the Registrar-General can give notice; in others he does not give notice. But the end result is the same: you end up with the situation and the outcome that the Court of Appeal came to.

HAYNE J: But whether or not an easement exists may be a matter having very large commercial consequences, may it not?

MR BURTON: It may well, yes.

HAYNE J: Not least for future development of the land, I would have thought. Perhaps I am unduly cynical, but I assumed from the continued warfare between the parties that this may have some more than academic interest to one or other of them.

MR BURTON: On my client’s side I can tell your Honour that the land that is the dominant tenement is a dry cleaning shop. It is a small one-up, one-down shop. There is no access to the top, and that is the extent of the commercial interest involved on our side. There may be other commercial considerations. The bottom line, though, is that if the Act allows for an easement to be dealt with in a certain way and gives it a special status unlike some other matters that could affect indefeasibility then that is what the Act says.

HAYNE J: So be it; yes, of course. But that is the question.

MR BURTON: Yes. We would respectfully submit that that is a question that the Court of Appeal, applying established principle, the ordinary meaning, the correctness of their approach, the reasons for it not being there

does not matter – you still have the same problem or the same risk under the Act of having to search and not necessarily getting the result – applies irrespective of the outcome on the meaning of the word “omission”. That is really the nub of why the Court of Appeal got it right. If they got it right on that then there is an unsuitable vehicle and insufficient doubt. May it please the Court.

HAYNE J: Thank you, Mr Burton. Mr Walsh, you are supporting the application.

MR WALSH: Yes, I am.

HAYNE J: Mr Einfeld, this question about ground 8(c). I know your side of the record, like the opposite side of the record, wants belt, braces and a piece of string around the trousers, but do we need 8(c)? What is the live issue about 8(c) if leave were to go?

MR EINFELD: The ramifications of the present judgment would permit, as your Honour was earlier foreshadowing, development of land over which an easement ran but which an easement, having been expunged, would not then appear on the register. A subsequent purchaser and a subsequent and subsequent and subsequent purchaser relying on the clear title would then be entitled to develop the land and develop a commercial building over it, yet years afterwards a later subsequent purchaser could come along and say, “Well, I’m dissatisfied with the original decision and therefore I want to have the easement restored”. So that in this case, for example, where Mr Burton’s client purchased with full knowledge, as the evidence disclosed, of the extinguishment of the easement, he comes along and says, “Well, I’m a dissatisfied person”. So it does have a broad potential ramification.

HAYNE J: Is not the immediate question under your proposed ground 8(c) whether there was an estoppel? It is that question particularly to which I am directing your attention.

MR EINFELD: The answer to that is short. Firstly it was truly an interlocutory process in which that issue was debated – that is, whether or not the Registrar-General should be required to give reasons. It is not truly an estoppel. The real issue, the stance adopted by the Court of Appeal, was you could have appealed against that decision but you did not, yet now you want to come along and argue it at the second stage.

The first thing is, because it was interlocutory, it was entirely open to wait until the final decision before any appeal was brought against the earlier decision and, indeed, the fact that it was not argued below but raised for the first time during the course of argument in the Court of Appeal is

precisely what may be said about the question of the meaning of the term “omission”. That too was not argued below; it was not part of any appeal ground. It was raised by the court during the hearing of the appeal and it ultimately was determinative of the appeal adversely to us. So the short point is, your Honour, it is not truly a question of estoppel. It was a question of our failure to appeal the interlocutory decision that was invoked against us.

HAYNE J: We looked at issues of a not greatly dissimilar kind, did we not, in Kuligowski v Metrobus in 220 CLR?

MR EINFELD: Yes, your Honour.

HAYNE J: If we were to apply that what would be the outcome? You should assume that we would be likely to apply that, I think.

MR EINFELD: In our submission, we are still left with a practical matter in the same circumstance. The first answer I have given your Honours. The second is that, essential to the debate as to whether the deliberate removal of an easement is capable of being described as simply left out or not there, in the very circumstances your Honour, the presiding judge, mentioned a little earlier – namely, that it could be sought to be overcome by a subsequent registered proprietor successor in title – the same issue will arise in the course of debate if special leave is granted on the other grounds.

HAYNE J: Exactly. It seemed to me that 8(c) was not a necessary bus stop on the tour that you would have us undertake.

MR EINFELD: That is so. The last matter I will say about it is that it does raise a purely legal question – that is, whether or not a person dissatisfied has to be someone with acquaintance, being a party to the decision rather than some successor in title. It is a purely legal question and not one that would have, in traditional terms, required evidence of a different kind during the course of the hearing or material of that nature. Therefore, the grant of leave extending to ground 8(c) would not disadvantage the parties, nor would it inconvenience the Court because the question is a purely legal one and one of construction of the effect of the provisions of the Act on the system of indefeasibility.

HAYNE J: I do not think we need trouble you further, Mr Einfeld.

MR EINFELD: If it please your Honour.

HAYNE J: Mr Burton, is there anything you would wish to say in reply? It is perhaps inverting the ordinary order of events, but there we are.

MR BURTON: Yes, your Honour. The only matter is that section 122 is clearly discretionary. Therefore, it is a matter where, if you had lots of people making the application, you would not necessarily get the remedy that you seek. If you apply that principle here, if the matter had been argued in the first place where it should have been, we may not have got the remedy that we sought under section 121. With respect, my friend should not really be in a position where, on the established principles, all he is asking for is an application of them in another way to have this reopened. It is not a case where the same arguments on the construction of the Act will apply because the Court expressly said 121(a) and (b) clearly apply. That is what we think. We note it really has not been challenged. So that creates a whole area of debate which was not debated before the court below.

HAYNE J: There will be a grant of leave in this matter. We would think it to be a day case; is that right, gentlemen?

MR BURTON: I would think so.

MR EINFELD: It may be a touch conservative, your Honour. There are quite a number of sections that would have to be examined. I would have thought there is a possibility it might go a little longer than a day, we must say.

MR BURTON: I would have thought it was a day.

HAYNE J: I must say, Mr Einfeld, it may be that the argument will proceed better if counsel assume that they have no more than a day between them. That may perhaps lead to a rather closer focus - - -

MR EINFELD: As your Honour pleases.

HAYNE J: - - - on is your journey really necessary?

MR EINFELD: One does not wish to expand to fill the vacuum.

HAYNE J: It is likely that the Registrar will give the parties directions which would have the timetable following the following path. Subject to anything that counsel may say, there will be directions as follows: that the appellant’s submissions are to be filed and served on or before Tuesday, 2 October, appeal books filed and served on or before Friday, 12 October, respondents’ submissions filed and served on or before Tuesday, 23 October, appellant’s reply filed and served on or before 30 October. Now, having regard, Mr Walsh, to the fact that the Registrar-General is, at least in part, I think, supporting the appellant, would it be appropriate that the Registrar-General’s submissions come on by Tuesday, 2 October?

MR WALSH: Yes, it would.

HAYNE J: Yes. Then Mr Burton’s client would be able to know the full range of submissions that is to be answered.

MR WALSH: We have foreshadowed a notice of contention in our written submissions. I assume that your Honour would wish us to file that before 2 October.

HAYNE J: Yes.

MR WALSH: The submissions would deal with both the appeal and the notice of contention by 2 October and then we would deal with those matters in response.

HAYNE J: I would ordinarily have thought that the appellant might deal with some of the contention matters by way of reply. I think we should leave it to the good sense of counsel in this matter to ensure that the written arguments are comprehensive and do lead to a true meeting of the particular propositions that each side needs to advance. I speak only for myself, but in a case like this where inevitably we are going to have to trek through quite a number of provisions of the Act, there is evident advantage if counsel on all sides focus upon the necessary distillation and ordering of argument that that calls for. But, gentlemen, I preach to the converted, I hope. There will be a grant of leave. There will be directions in the terms I have indicated. It will be fixed as a day case. The Court will adjourn to 10.15 on Tuesday next, 11 September, in Canberra.

AT 3.24 THE MATTER WAS CONCLUDED