Deguisa & Anor v Lynn & Ors [2020] HCATrans 37 (20 March 2020)

Last Updated: 23 March 2020

[2020] HCATrans 037

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A27 of 2019

B e t w e e n -

NICK DEGUISA

First Applicant

TORI McKENZIE

Second Applicant

and

ANN LYNN

First Respondent

CHRISTINE EVANS

Second Respondent

RICHARD JOHN FIELDER

Third Respondent

Application for special leave to appeal

KIEFEL CJ
GAGELER J
TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO ADELAIDE

ON FRIDAY, 20 MARCH 2020, AT 9.30 AM

Copyright in the High Court of Australia

____________________

MR A.L. TOKLEY, SC: May it please the Court, I appear with MR H.M. HEUZENROEDER for the applicants. (instructed by Clarke Hemmerling Lawyers)

MR W.J.N. WELLS, QC: May it please the Court, I appear with my learned friend, MR R.D. ROSS‑SMITH, for the respondents. (instructed by (Lindbloms Lawyers)

KIEFEL CJ: Mr Tokley, our preliminary view is inclined towards the grant of special leave, so we might hear from Mr Wells in the first instance.

MR TOKLEY: Thank you, your Honours.

MR WELLS: May it please the Court. We would make three points in opposition. I have summarised them as follows. First, there can be little dispute that there is a building scheme, in fact, consisting of 52 allotments. The learned Chief Justice’s conclusions to the contrary were barely argued by the applicant and cannot be supported and the majority was right to uphold the finding of the trial judge in that respect in the light of there being the same encumbrances on all 52 allotments with the same covenants, all allotments being sold at or about the same time and all of them being listed together – that is, all 52 being listed together in the LTO alphabetical list.

The first point, I will come back to that if there is time. I propose to devote more time to the other two points. The second point is that the sufficiency of notice for the restrictive covenants to subsequent purchasers so as to bind them becomes, under the Real Property Act, a question of whether the estate or interest binding on the subsequent purchaser was notified on the certificate of title within the meaning of section 69 of the Real Property Act, which can be found in the application book, your Honours, at page 122, amongst other parts.

Your Honours will see that the provision which is, in a sense, central to the Torrens system is the provision in which appear also the exceptions to indefeasibility such as fraud, forgery and the like. Your Honours will see on page 122, paragraph 188 of Justice Peek’s judgment, the section set out and the relevant words:

such encumbrances, liens, estates, or interests as may be notified on the certificate of title –

I propose to come back to this, but I want to outline some short points coming out of that. That is a question, we submit, of giving notice, which is not informed by section 72 of the Real Property Act, which is the section which appears in most Real Property Acts and the like around the country, providing that notice of an unregistered interest is not itself evidence of a lack of bona fides. The Chief Justice considered that to be important, but for reasons we want to come back to, it is not important because the question of notification on the certificate of title is a prior question.

Wrapped up with this is that the notion of a certificate of title includes, under our Real Property Act, information recorded by the Registrar‑General pursuant to section 51B of the Act. Your Honours will find that at pages 208 and 209, but I will come back to it, so if I can just move on briefly now.

GAGELER J: Mr Wells, all of these points go to the merits of the arguments, I think, and are they really saying that the decision of Justice Peek is to be preferred to that of the Chief Justice?

MR WELLS: Not quite, your Honour. These points are directed not only to the insufficiency of doubt, but also to the unsuitability of this application ‑ ‑ ‑

GAGELER J: I see.

MR WELLS: ‑ ‑ ‑ for special leave. Section 51B ‑ ‑ ‑

KIEFEL CJ: What is the point that you make in that regard, Mr Wells?

MR WELLS: That the provisions of the Real Property Act, having introduced what we colloquially call “e‑Registration”, expand the notion of a certificate of title and in that respect expand the notion of the register book. That will vary from State to State, and moreover, that expansion has continued to take effect.

E‑Registration was introduced in 1990, and e‑Conveyancing was introduced in 2016, which was after these events, which occurred in 2008, but it makes the case unsuitable for consideration because the subsequent amendments make it abundantly clear that the certificate of title, which we used to see as being just simply a physical folio, is no longer a physical folio, it is an electronic or digital recording by the Registrar‑General along with the other information which includes not only plans of division, but plans of re‑subdivision.

KIEFEL CJ: But the question under section 69 remains what is notified on the register, does it not?

MR WELLS: Your Honour, undoubtedly and critically, that is so. But one only needs to pause for a moment to understand that even if we talk about ‑ the section actually talks about “notified on the certificate of title” rather than on the register.

KIEFEL CJ: Yes.

MR WELLS: But if one pauses for a moment and considers that, as was the case in Bursill in this Court, one understands that “notifying” means giving notice of, because only a small memorial is entered on the certificate of title itself. There is behind that usually a registered dealing which contains the full text and terms and we know that to notify, for example, in Bursill’s Case, an easement on the certificate of title, involves also going to the memorandum of the grant of easement to identify its full terms. Now, that is not itself on the certificate of title, the folio, although ‑ ‑ ‑

KIEFEL CJ: Mr Wells, why would not the question of whether or not an intending purchaser needs to search to the extent held by the majority be a wider question in any Torrens system ‑ the general question?

MR WELLS: Your Honour, for two reasons. One, as it were, something which is peculiar to this case and the other because of the provisions of the Real Property Act in the way that I have attempted to summarise them. The particular matter is this, that in this case the memorandum of encumbrance, the existence of which was memorialised on the certificate of title, when one goes to it, puts the intending purchaser and their prudent conveyancer on notice, on inquiry, of the existence of a building scheme.

The critical difference, in our respectful submission, between the learned Chief Justice’s approach in dissent and the majority is that, with great respect to his Honour the Chief Justice, his approach overlooked entirely that step, that is, that the existence of the endorsement on the memorandum of encumbrance identifying the existence of a building scheme put the prudent conveyancer on inquiry.

Now, that is a factual issue, that is, to what degree does a prudent conveyancer conduct such an inquiry and that itself will depend upon the statutory scheme which allows, or does not allow, as the case may be, access to what the Chief Justice insisted on calling the “Register Book” but which is, in fact, better described by reason of section 51B as “the Register”, that is, the collection of information which the Registrar‑General has recorded and has been required by either the Real Property Act or any other Act or law to record.

That includes the plans, whether they be plans of division or re‑subdivision, that is, because of the provisions of section 223LA of the Real Property Act which deals with the whole question of subdivision and prohibition on division other than with approval which requires either the deposit of a plan or the lodging of a plan. Now, all of that happened – sorry, your Honour.

GAGELER J: Sorry, Mr Wells, you mentioned section 51B - is that in our material. I am not sure I ‑ ‑ ‑

MR WELLS: Page 208, your Honour, of the application book, and perhaps if we can go to that because there are one or two things to be said about it. Does your Honour have that?

GAGELER J: Can you say the page number again, please?

MR WELLS: Page 208.

GAGELER J: Thank you.

MR WELLS: Page 208, it is right towards the back of the book. They are additional materials.

GAGELER J: Thank you.

MR WELLS: Your Honour will see that what is set out there is the provision of section 51B as it exists now. In 2008 it was very similar except that it dealt as well with the certificate of title, that is, the physical folio. So, for example, if your Honours will pardon me, it might be useful just to look at the first part of this:

Where the Registrar‑General is required by this or any other Act or any other law to register title to land or record any other information relating to land, the Registrar‑General may register . . . by an electronic ‑

or other means, my summary. Then, importantly, the two expanded definitions:

(a) the term Register Book will be taken to include the records maintained by the Registrar‑General pursuant to this section relating to the land;

(b) the term certificate or certificate of title will be taken to mean the records maintained by the Registrar‑General under this section relating to the land ‑

Now, as I say, there were additional paragraphs no longer in this section which existed at the time, but which I can tell the Court merely said we will include in that definition also the folio, the physical object, and it will mean one or other or both and there were other provisions about duplicate certificates of title, which are no longer relevant either.

Now, the point about that, your Honours, is if you then turn a few pages on in the application book, your Honours will see at page 216, Part 19AB of the Real Property Act, which replaced section 101 of the Real Property Act dealing with the deposit of division plans. The only important parts of those two provisions are on page 216, section 223LA, the definition of “allotment”, paragraph (e), means:

a separately defined piece of land delineated on a plan of division ‑

I do not read the rest. Then on the next page, page 217, your Honours will see the definition of “plan of division”, and (b) is the relevant one. It refers to a plan of division meaning:

a plan of division (whether described as such, or as a plan of subdivision or resubdivision) ‑

The learned Chief Justice seemed to place some emphasis on the fact that one of the ‑ the plan that incorporated Lot 3 was a plan of re‑subdivision, but (b) says that plan of division means a plan of such a description:

approved pursuant to the Planning and Development Act 1966 or a previous enactment and deposited, or accepted for filing ‑

Now, your Honours, that takes us back, because we are dealing with events in 1964, to the operative Act at that time, which was the Town Planning Act, and if I can hurry forward in the book to page 226, which is an extract from the Town Planning Act, and provides section 18 (2):

No person shall divide any allotment or parcel shown on a plan of re‑subdivision lodged . . . in the Lands Titles Registration Office or the General Registry Office, except in accordance with another plan of re‑subdivision ‑

The only difference between ‑ ‑ ‑

KIEFEL CJ: Mr Wells, how would you summarise the point that you are making?

MR WELLS: Simply this, your Honour, that the Register Book to which the endorsement on the memorandum of encumbrance directed a prudent conveyancer included the plans of division and subdivision which together constituted the subdivision which is exhibited in the agent’s plan which shows 52 of the allotments all with the same restrictive covenants.

That was discoverable by the prudent conveyancer by reason of being put on inquiry by the endorsement on the memorandum of encumbrance and a prudent conveyancer, being alerted to the existence of a building scheme, would go - and this is no doubt a matter of judgment, degree and ultimately fact – would go to the parent title, that is, the common vendor which is the crux of a building scheme and going to that title would identify all of the allotments and would be able to confirm that all of those allotments were the building scheme by reference also to the alphabetical list which your Honours will see also included in the book at page – starting at page 269 of the book.

KIEFEL CJ: But, Mr Wells, does not the question still come down to what is meant in section 69 by what is “notified on the certificate of title”?

MR WELLS: We would, with respect, your Honour, submit that the question comes down to not a question of meaning attached to section 69 but what, in fact, as a matter of prudent conveyancing, that would encompass.

KIEFEL CJ: That is the very point made against you in this sense. As I understand the applicant’s case it is that the majority in the Court of Appeal did not approach this by considering section 69 as the governing provision in the Torrens system but rather by looking at the general law to what a purchaser ought to do. That is the very point that they wish to agitate and which they say gives them a special leave point.

MR WELLS: I understand that, your Honour, but indeed, with great respect to my learned friend’s submissions in that respect, it is clear from the reasons of the majority, Justice Peek, that the consideration of the general law provided a background to his focus which became an intense focus upon the provisions of the Real Property Act.

I took your Honour to that part of his reasons where he focused on section 69 and then considered in some detail what consequences flow from notification rather than the word “entry” or “memorialise”. It is “notified” on the certificate which means give notice and that is what this Court held in Bursill.

We know from Bursill that notification, at least in that case entitled the prudent conveyancer to look at the memorandum of easement but Justice Windeyer’s expression of principle was not confined to the facts. His Honour talked about ‑ ‑ ‑

KIEFEL CJ: Was Justice Windeyer alone in the opinion that his Honour stated or is there a ratio in the Court in Bursill to the effect for which you contend?

MR WELLS: There is a ratio to that effect, your Honour, and that is because Chief Justice Barwick not only expressed his own views which were very similar but in the final paragraph of his Honour’s judgment expressed his concurrence with the reasons of Justice Windeyer. Justice Menzies was in dissent but there was a majority of two in favour of a principle which was expressed not in the narrow way that the learned Chief Justice in this case sought to express it, but was expressed in terms of what everything that a prudent conveyancer would find out upon a search of the register.

That, in our respectful submission, does not raise any question of law of any kind at all. It is simply a matter of whether in the particular scheme that we are working with, and section 51B being central to that, the prudent conveyancer is in a position to identify readily the necessary information to identify not only the building scheme but the lands to be benefited. Those are our submissions.

KIEFEL CJ: Mr Wells, I see the light but Justice Gageler has a question for you.

GAGELER J: Mr Wells, given your emphasis on section 51B, does it remain your position that the prudent conveyancer still needs to go beyond the material that is actually contained in the Register Book or not? Do you say everything was in the Register Book that the prudent conveyancer would look at in this case?

MR WELLS: Your Honour, subject to this - that was the proposition too widely put, in our respectful submission, by the learned Chief Justice. That is the reason why emphasis is placed on being put on inquiry. Yes, we do say the prudent conveyancer would be led on. It is not a matter of needing to go on, the prudent conveyancer would be led on by the endorsement of the existence of a building scheme and would not just simply, as it were, open up the Register Book notion.....looking at random but would be focused upon what would confirm the details of that scheme.

So, the first step the prudent conveyancer would then take, having been put on inquiry by the encumbrance, is to go to the parent title, the common vendor, from which all certificates of title and encumbrances flowed. That was a very simple process as Mr Morgan, in his evidence, made clear. So, in the end, it was an evidentiary factual inquiry but it comes down to this, your Honour. We would say the prudent conveyancer - it would not be a matter of needing to look through them, would be led further and that is what prudence would dictate.

GAGELER J: Thank you.

MR WELLS: May it please the Court.

KIEFEL CJ: Yes, thank you, Mr Wells. We do not need to hear you in response, Mr Tokley. There will be a grant of special leave in this matter. What is your estimate of time for the hearing?

MR TOKLEY: A half day to a day, your Honours.

KIEFEL CJ: Would you agree with that, Mr Wells?

MR WELLS: Yes, your Honour.

KIEFEL CJ: Yes, thank you. Would you ensure that your instructing solicitors obtain a copy of the timetable from the Deputy Registrar.

AT 9.51 AM THE MATTER WAS CONCLUDED