Sidoti v Hardy

1. [1]

   BASTEN JA: The applicants are the owners of a terrace house in Redfern. Across the back of their land there is a right of way extending the length of the block between two streets. The right of way was recorded in a plan of subdivision created in 1953. On the other side of the right of way is a lot containing a house which extends along the length of the right of way. The owner of that house is the respondent, Luke Hardy.

2. [2]

   Commencing in about 2002, Mr Hardy and his then partner sought to extend their back garden into the right of way. They did so by pulling down the fence along their side of the right of way, opposite the rear fence of the property later acquired by the applicants. The applicants are now the registered owners of the land which extends to the boundary of the respondent’s land, including that part subject to the right of way. They have removed the back fence along the line of the right of way and rebuilt a more substantial fence against the respondent’s boundary. The respondent was thereby deprived of access to the part of the right of way upon which he had undertaken some improvements by way of surfacing and paving. He claimed that the work he had undertaken resulted in him acquiring the section of the right of way on the applicants’ land by adverse possession which was unchallenged for a period of 12 years. The applicants were therefore not entitled to recover possession in reliance on their registered title, because proceedings to enforce their documentary title had become statute-barred prior to them obtaining title.

3. [3]

   The trial judge accepted that the respondent had obtained a title in fee simple to 3.4m2 of the right of way in accordance with general law principles. The correctness of that finding is the subject matter of the present appeal.

The applicants’ title

1. [4]

   The applicants’ terrace house fronts onto Boronia Street, Redfern. The block runs in a north-south direction. It is one of seven houses constructed between Baptist Street in the west and Dalley Lane to the east. Along the northern border of the appellants’ land (and of all the terraces in the Boronia Street block) is the respondent’s home, which runs in an east-west direction, fronting onto Baptist Street in the west. Each of the Boronia Street terrace houses is shown on the 1953 survey plan as having an “outhouse” about one metre from the northern boundary, with the right of way running between the outhouses and the northern boundary. The original purpose for the reservation of the right of way, being to collect “night soil”, has long since gone; however, the right of way has not been extinguished, although its use may well have been abandoned long ago. [1]

2. [5]

   The applicants’ land was identified as lot E in the subdivision of 1953. Their predecessors in title obtained the lot by a deed of conveyance executed in 1958. The right of way was identified on the deed as an encumbrance. The purchasers were Mr and Mrs Theodorou. Lot E was transferred to three of their children in 1985. In September 2005 the Theodorous were notified by the Registrar-General that it was intended to convert their old system title to Torrens Title. Although the title was originally issued as a qualified and limited title, 12 years later (in October 2017) the qualification was withdrawn and it became a “limited title” subject to Pt 4B of the Real Property Act 1900 (NSW).

3. [6]

   On 18 April 2018 lot E was transferred by the Theodorous to the applicants, who became purchasers for value.

4. [7]

   In the course of January–October 2019 the applicants, pursuant to a development consent, removed the brick outhouse and the fence on the southern side of the right of way and constructed a new paling fence on the northern side of the right of way, thus incorporating the 3.4m2 of the right of way into their back garden.

5. [8]

   Some four weeks after completion of the works, the respondent commenced proceedings in the Equity Division seeking to recover the area of the right of way, claiming title by adverse possession for a period in excess of 12 years.

Issues on appeal

1. [9]

   There is a question as to whether the applicants required leave to appeal. There was no evidence before the Court as to the value of the thin strip of land 4.1m long and about 0.8m wide. However, although s 101(2)(r) of the Supreme Court Act 1970 (NSW) requires leave with respect to an appeal other than an appeal involving a question respecting any property of the value of $100,000, it is not entirely clear whether that qualification relates to the value of the whole property or the amount in dispute. There is no doubt that the respondent’s claim was for adverse possession of only a part of the applicants’ property, which, as a whole, was valued far above the threshold. In any event, as no objection was taken to the filing of an appeal rather than an application for leave to appeal, and because the issues raised involve matters of general importance as to the operation of various provisions of the Real Property Act, warranting the grant of leave if leave be required, there should be a grant of leave to the extent necessary.

2. [10]

   The claim by the respondent for a title created by adverse possession invoked a general law concept (“adverse possession”) in combination with the operation of the Limitation Act 1969 (NSW), s 27(2) and s 65. Section 65 provides that ownership of land which has been the subject of adverse possession by another person for a period of at least 12 years no longer provides a basis for proceedings to recover the land and the title itself is “extinguished”. However, the possibility that the purchaser of a property with registered title may be deprived of part of the land purchased by reason of an interest not recorded on the register is contrary to the fundamental rationale of a system of title by registration. [2] That being so, it is common ground that, to succeed, the respondent had to bring his case within a qualification of the general principle within the terms of the Real Property Act. That exercise required consideration of specific provisions within Pt 4B and Pt 6A of the Real Property Act, in terms identified below.

3. [11]

   Before turning to those issues, it is convenient to note the basis upon which the trial judge upheld a claim of adverse possession for a period of not less than 12 years. The first step taken by the respondent, in May 2002, was to take down a paling fence dividing his back yard from the right of way. That act cannot have constituted an act of possession of the Theodorous’ property. What then took place, and was completed by January 2005, involved the laying of a “weed mat” across the area of the right of way and the inclusion of some granite pavers and mondo grass on the right of way. That work, the judge found, had been undertaken prior to the Theodorous’ land being brought under the Real Property Act in September 2005. If that activity had constituted “adverse possession” then the possession had commenced prior to the land coming under the Real Property Act, although over a period of less than a year.

4. [12]

   Some activities undertaken by the respondent, such as the storage of garden equipment on the right of way, might have given rise to some form of easement. On the other hand, there was no submission that the activities undertaken were inconsistent with the use of the land as a right of way. How activities which were not inconsistent with the right of way could be a basis for depriving the owner of the servient tenement of a fee simple title was not explained. The activities undertaken were of the same kind as those which are commonly undertaken in suburban areas in order to render the “nature strip” outside people’s homes more attractive. Similar activities are not uncommonly undertaken on rights of way running between properties but over land which belongs to one of two neighbouring owners.

5. [13]

   Even with respect to title which is not obtained by registration, title by adverse possession is anomalous; unlike prescription, it depends not on an assumption of right, but on “possession as of wrong”. [3] A century ago Professor Henry W Ballentine suggested that “[t]itle by adverse possession sounds, at first blush, like title by theft or robbery, a primitive method of acquiring land without paying for it.” [4] Possession which is “adverse” to the owner may be demonstrated by acts inconsistent with shared occupation, and may include locking a gate or door to prevent access to the land. The evidence in the present case indicated that there was at all times a door in the corrugated iron fence on the Theodorous’ land where it adjoined the right of way. The evidence did not establish that the respondent took any step to block the door or otherwise prevent access to the right of way by the Theodorous. He made no attempt to exclude anyone; he merely sought passive enjoyment of the land as an adjunct to his back yard. He did not pay rates, nor fence the land against the owner. The actions relied on did not establish an intention to assert exclusive possession, as opposed to an opportunistic user. [5]

6. [14]

   Although there must be real doubt as to whether the minor steps taken by the respondent to provide access to the land for himself and to improve its amenity could constitute adverse possession, there was no challenge to the finding of the trial judge in that respect. Rather, the applicants’ case on appeal rested upon their entitlement under the Real Property Act, and the contention that the provisions relied upon by the respondent did not qualify that entitlement. It is necessary, therefore, to turn to the relevant statutory provisions.

Statutory scheme

1. [15]

   The applicants relied primarily upon two provisions of the Real Property Act, which provide for the scheme of land ownership reflected in the phrase “title by registration”. Section 42(1) relevantly provides:

2. [16]

   There is no suggestion that the appellants’ title was infected by fraud; nor was the exception in par (c) engaged, they being purchasers for value.

3. [17]

   They also relied upon s 45 which, as reinserted in the Act in 2000, states:

4. [18]

   The applicants contended that they obtained title to the land, including the area of the right of way now in dispute, as a result of registration, pursuant to s 42(1). Whatever other provision of the Act might have permitted a claim against them based on adverse possession, absent an express provision qualifying their title, nothing in the Act deprived them of their estate or interest in the land: s 45(1). Even if the persons from whom they purchased, who had owned the land for some 40 years, had lost title to the strip subject to the right of way and had become registered proprietors through error in a failure to record the respondent’s interest acquired by adverse possession, that would not, they submitted, diminish their title: s 45(2).

5. [19]

   The respondent’s case turned on a distinction as to the creation of folios in the register which record the details of land bought under the Real Property Act. The Act provides for three kinds of folio, namely a limited folio, a qualified folio and an ordinary folio, the last being those folios which are neither limited nor qualified. A qualified folio is commonly issued when land bought under the Act has been alienated from the Crown in fee, but has not previously been subject to registration. A qualified folio is accompanied by a caution warning persons dealing with the registered proprietor that the land may be subject to a subsisting interest which is not recorded: s 28J(1). The caution (and the qualification) will lapse, or be removed, in prescribed circumstances which need not be described. The Theodorous held a qualified title from September 2005 until October 2017, when the qualification was withdrawn, but it remained a limited folio.

6. [20]

   Part 4B provides for the issue of a “limited folio” where the boundaries of the land are not sufficiently defined to enable the Registrar-General to create an ordinary folio: s 28T(3). The relevant elements of limitation are found s 28T(2) - (4) and (8), which provide:

7. [21]

   Importantly, qualified and limited folios have different operations. With respect to qualified folios, s 28P (referred to in s 28T(8)(d)(ii)) provides:

8. [22]

   Section 12 of the Real Property Act confers powers on the Registrar-General to correct errors and omissions in the register, but not so as to prejudice or affect a right which has accrued from the uncorrected recording: s 12(3)(b). With respect to limited title, the following provision applies:

9. [23]

   The creation of a limited title is therefore a result of the “boundaries of land” being “not sufficiently defined”, it being assumed that further definition would result from a survey. Section 28U prevents the registered proprietor obtaining an indefeasible title with respect to land “incorrectly included” in a limited folio, as a result of “any wrong description of parcels or of boundaries”.

10. [24]

    It is also necessary to note the operation of Pt 6A of the Real Property Act, which provides for applications to be made to obtain possessory title to land under the Act. For present purposes, it is sufficient to have regard to the following provisions:

11. [25]

    There was no opportunity for the respondent to make an application for title by possession under s 45D(1), because it relates only to possession which commenced after the land was brought under the provisions of the Act by the creation of a limited folio. (His claimed possession pre-dated the creation of the limited folio.) However, in the course of the hearing, counsel for the respondent sought to rely upon s 45D(2). That approach recognised that s 45D(1) deals only with “a whole of parcel of land”: s 45(1)(a). Section 45D(2) applies where the person is in possession of “part only of a whole parcel of land”: s 45D(2)(a). However, s 45D(2), if applicable, would have permitted an application to be made for the whole of the land: that was no part of his claim. Further, it appears that subs (2) is only available if subs (1)(b) and (c) were complied with, which was not the case. Whatever the operation of that provision, it was of no assistance to the respondent in the present case.

12. [26]

    There is a further point to be noted with respect to s 45D(2), namely that the section refers to “any boundary that limits or defines the land in the person’s possession” as “an occupational boundary” which is said to represent or replace a boundary of the whole parcel: s 45D(2)(b). There is a qualification in relation to applications under that provision, namely that the part of which the person is in possession must not lie between the occupational boundary and the boundary that it represents or replaces. An “occupational boundary” is defined to mean, relevantly, “a fence … intended to coincide with or represent the boundary of the whole parcel”: s 45D(6)(a). The back fence of the appellants’ land was not so intended: rather, it was intended to separate that part of the property which was subject to a right of way from that which was not. There is no other reference to the concept of “occupational boundary” in the Real Property Act: it has no role to play in this case.

13. [27]

    Three further points may be noted. First, as Woodman and Butt have noted, with respect to s 45D(2) and (6): [6]

14. [28]

    Secondly, it is necessary to note a new provision, found in subs (2A) and (2B), not introduced until 2001: [7]

15. [29]

    Thirdly, satisfaction of a provision in s 45D would not confer title on the respondent: it would merely allow him to apply to the Registrar-General to be recorded as the proprietor of the land, and thus obtain title by registration. No such record could be made in respect of the land held by the applicants who obtained their title without fraud and for valuable consideration: s 45D(4).

16. [30]

    On no view was s 45D engaged. However, s 45C(2) appears to allow a title to be acquired, despite s 45C(1), by possession commencing before the creation of the folio. One question is whether that provision applies in the present case.

Application of s 45C(2)

1. [31]

   In order to consider the operation of the Act in relation to limited folios, the starting point is to note that the creation of a limited folio only arises where “the boundaries of the land are not sufficiently defined”. That provides the basis for the qualification of the principle of indefeasibility in s 42(1). As explained in s 28U(2), the principle of indefeasibility is not applicable where “by any wrong description of parcels or of boundaries any land is incorrectly included in a limited folio”.

2. [32]

   However, it is by no means clear in what sense the respondent can assert that the land subject to the right of way was “incorrectly included” in the limited folio issued to the predecessor in title of the applicants. There can be no contention that the Registrar-General, in undertaking conversion action in September 2005, made any mistake in the preparation of the title. As appears from the letter sent to the then owners, the title was to be issued on the basis the land was lot E in a deposited plan. That showed the land extending to the boundary with the respondent’s land, and subject to a right of way of variable width as shown on the title diagram. That expressly identified the area the subject of the respondent’s possessory claim. There was no “wrong description” of any parcel, nor of any boundary.

3. [33]

   The misdescription which may have arisen would have been one which could have been resolved by a survey defining the boundaries with precision. (The Registrar-General was apparently not satisfied with the survey on which the deposited plan was based.) There may have been imprecision in the boundaries, but that was irrelevant to the respondent’s claim. His case was that in 2005 he had an “inchoate claim” for a possessory title over the land subject to the right of way. In fact, he was at that stage no more than a trespasser. He had no interest in the applicants’ land.

4. [34]

   When the applicants obtained a transfer of the limited title on 18 April 2018, it remained subject to misdescription of the kind referred to. Otherwise the effect of s 42(1) of the Real Property Act was to confer on them a title absolutely free from all other estates and interests not recorded on the folio in the register.

5. [35]

   Although it is not entirely easy to establish an harmonious operation of the various provisions of the Real Property Act, qualifications to the principle of indefeasibility which forms the bedrock of a system of title by registration should not readily be accepted as a matter of statutory construction, in the absence of a clear intention to that effect. As counsel for the applicants correctly noted, so much was recently confirmed by the High Court in Deguisa v Lynn, [8] quoting the earlier decision of Westfield Management Ltd v Perpetual Trustee Co Ltd: [9]

6. [36]

   The Court concluded in Deguisa:

7. [37]

   Section 45C(1) operates to deny that a title in derogation of that of a registered proprietor may be acquired “[e]xcept to the extent that statutes of limitation are taken into consideration for the purposes of this Part”, being Pt 6A. The apparent purpose of that provision is to make Pt 6A an exclusive statement of the circumstances in which a possessory title may derogate from the title of the registered proprietor. The effect of s 45C(2) is to place a limit on the exclusive operation of Pt 6A with respect to qualified or limited folios. It does not, however, affect the operation of any other provision of the Act.

8. [38]

   As has been noted, s 28T(8) and s 28U(2) provide a confined exception to the protection given by an ordinary folio for the title of the registered proprietor, as applied to a limited folio. Thus, that which is not protected by a limited title is the consequence of a wrong description of parcels or boundaries of land. When created in 2005 the folio correctly described the parcel of land as including the area the subject of the right of way; that area was not “incorrectly included”, within the meaning of that phrase in s 28U(2). For example, the respondent then had no caveatable interest in the land; nor if it be relevant, did he then have a “subsisting interest”, for the purposes of s 28J(1), relating to cautions applicable to qualified title.

9. [39]

   No explanation was provided as to how a title which involved no wrong description of parcels or boundaries when created could fall within that description after it was created by maintaining unlawful possession for 12 years. (As has been explained, if his possession had commenced after the title was issued, he could not have made an application under s 45D.)

10. [40]

    Immediately one acknowledges a limitation with respect to the identification of boundaries, the possibility of a claim for adverse possession arises. Thus, where a title reflects the position of a fence or wall constructed many decades earlier, but extending on to land of an adjoining registered proprietor, the former owner may have a claim for adverse possession against the latter. If valid, that example does not assist the respondent. No claim for a possessory title was made before the applicants obtained their title for valuable consideration. No application under s 45D could have succeeded.

Conclusions

1. [41]

   In my view, the transfer to the applicants, for valuable consideration, of land contained in a limited folio, conveyed an estate and interest, on registration of the transfer, free of the respondent’s claim for a possessory title over that part of the land subject to a right of way.

2. [42]

   That requires orders setting aside the orders made by the trial judge, including that dismissing the cross-claim brought by the applicants. In their notice of appeal, the applicants sought the orders which were sought in the notice of cross-claim. One order, requiring the withdrawal of the respondent’s caveat, follows from upholding the appeal. However, no submissions were addressed to the other orders: it is not clear if they are still apposite, nor the evidential basis on which they were sought. As the cross-claim remains on foot, the appropriate course is to remit it to the Equity Division, where, if thought necessary, the applicants can reagitate any aspects they wish to pursue.

3. [43]

   Accordingly, the Court should make the following orders:

   1. (1)

      To the extent necessary, grant the applicants leave to appeal from the judgment and orders in the Equity Division.

   2. (2)

      Allow the appeal and –

   3. (3)

      With respect to the undetermined amended first cross-claim,

   4. (4)

      Order that the respondent pay the applicants’ costs in this Court.

4. [44]

   This, however, is a minority view. Dismissal of the appeal gives effect to a mechanism of the acquisition of land which, as noted above, has been described as “possession as of wrong”. [11] Ballentine’s description of obtaining title by adverse possession as “a primitive method of acquiring land without paying for it” [12] is not inapt in the present case. If one accepts that the acts of the respondent amounted to a taking of possession adverse to the owner (which must be doubtful), it was not a case of mistake, the identity of the holder of title was not in doubt, nor could the acts of the respondent have affected any person other than his neighbour. Whether he acquired title by this action turned not so much on the general law, devised in another age, but on a statute providing for title by registration. As explained above, I do not think that the Real Property Act permits the acquisition of title by adverse possession in this case. However, if the correct construction of the statute were uncertain, a construction which furthers the purposes of the Real Property Act should be preferred. [13] An interpretation which deprives a bona fide purchase for value of land identified in the register as vested in the vendor should not be frustrated absent clear words to that effect. No such language is found in the Real Property Act.

5. [45]

   BRERETON JA: The appellants Mr Sidoti and Ms Martinoski are the registered proprietors of land situate in Boronia Street, Redfern, and comprised in Lot E/928XXX, which is a limited folio of the register of land titles maintained under the Real Property Act 1900 (NSW) (“RP Act”). On it stands a terrace house. Its southern boundary fronts Boronia Street; and its northern (rear) boundary abuts the southern (side) boundary of the backyard of a terrace house in Baptist Street, Redfern, which is comprised in Lot 1/986ZZZ, also a limited folio, of which the respondent Mr Hardy is the registered proprietor. It is convenient to refer to these properties respectively as “Lot E” or “the Sidoti Property”, and “Lot 1” or “the Hardy Property”.

6. [46]

   The geographical relationship of the properties, and some of the key features referred to below, are depicted in the (not to scale) sketch plan attached to the primary judgment, [14] which is reproduced as an attachment to this judgment. Boronia Street runs east-west, there being four other terrace house properties (Lots A, B, C and D) between the Sidoti Property and its intersection, to the west, with Baptist Street, which runs north-south; and two other terrace house properties (Lots F and G) between the Sidoti Property and its intersection, to the east, with Dalley Lane. Dalley Lane provides the rear boundary of the Hardy property. The rear boundaries of all seven Boronia Street properties abut the southern boundary of the Hardy Property.

7. [47]

   A narrow strip of land at the rear of each of the seven Boronia Street properties, adjacent to the southern boundary of the Hardy Property and running between Baptist Street in the west and Dalley Lane in the east, is burdened by a right of way, created when those lots were originally subdivided at the end of the nineteenth century. Originally, this formed a narrow lane, running east-west, leading to Dalley Lane, the purpose of which was to enable access for the nightsoil carter to collect waste from the brick outhouses at the rear of the Boronia Street properties; in the vernacular, a “dunny lane”. In the proceedings below, Kunc J held that Mr Hardy had acquired title to that part of the lane – a strip approximately 3.81 metres long and 88cm wide, and thus comprising 3.35 square metres in all – that passes over the rear of the Sidoti Property (“the Yellow Land”, because it was so coloured in the attached sketch plan), by adverse possession for a period in excess of twelve years running from 2002 or, at the latest, from early 2005. Mr Sidoti and Ms Martinoski appeal to this Court, purportedly as of right, from that decision.

The facts

1. [48]

   The following account is based on the facts found by the primary judge, which were largely and are now entirely uncontroversial, and the documentary evidence.

2. [49]

   The Sidoti Property, and the other Boronia Street properties, were created by FP928XXX, entitled “Plan of Subdivision of Lots 4, 5, 6 and 7 Section A of Baptist’s Bourke Street Subdivision”; as its title indicates, that plan was a subdivision of an earlier subdivision. It bore a certificate that the boundaries of the Sidoti Property were accurately surveyed, in accordance with the Survey Practice Regulation 1933 (NSW), on 24 April 1956, and an endorsement that it had been approved by the City of Sydney Council under Local Government Act 1919 (NSW), s 327.

3. [50]

   By deed of conveyance dated 29 October 1958, the Perpetual Trustee Company (as administrator of the estate of William Aitcheson Haswell, who had died in 1925) as vendor conveyed the Sidoti Property to George and Despina Theodorou as purchasers. The deed contained a metes and bounds description of Lot E, including the Yellow Land which was expressed to be subject to the right of way. It also referred to the deed of conveyance by which Mr Haswell had acquired title in 1890, a subsequent mortgage by him, and a memorandum of its discharge in 1924.

4. [51]

   Four years later, by deed of conveyance dated 21 September 1962, the Perpetual Trustee Company as vendor also conveyed the neighbouring property to the east, Lot F, to George and Despina Theodorou as purchasers. This property, which as described below remains in the ownership of the Theodorou family, is referred to as “the Remaining Theodorou Property”. The strip at its rear affected by the right of way is referred to as “the Green Land”, again because it was so coloured in the attached sketch plan. In 1969, the Theodorou family vacated both Lot E and Lot F and let them to tenants, and tenants remained in occupation of the Sidoti Property until it was sold, as described below, to the appellants in 2018. Tenants continue to occupy the Remaining Theodorou Property.

5. [52]

   By deed of conveyance dated 18 March 1985, George and Despina Theodorou conveyed Lot E to their children Androula, Theodorou, Christopher and Jenny. This deed contained the same metes and bounds description as the deed of 1958, so that it included the Yellow Land. By another deed of conveyance of the same date, George and Despina Theodorou also conveyed Lot F to Androula, Theodorou, Christopher and Jenny.

6. [53]

   Mr Hardy and his then partner purchased the Hardy property at public auction in November 1997. A survey of the Hardy Property dated 16 December 1997, presumably obtained in connection with the purchase, states:

7. [54]

   By deed of conveyance dated 9 January 1998 and registered on 19 January 1998, the Hardy Property was conveyed to Mr Hardy and his then partner as joint tenants. The deed contained a metes and bounds description of the property, which did not include the Yellow Land.

8. [55]

   When Mr Hardy subsequently moved into his property, there was an old timber paling fence on the northern boundary of the Yellow Land and the Green Land (marked “B” on the sketch plan). This fence coincided with the boundary of the Hardy Property with, respectively, the Sidoti Property and the Remaining Theodorou Property. Gates in it provided access from the Hardy Property to the Yellow Land and the Green Land, indicating that, although the right of way does not legally benefit the Hardy Property, earlier occupants of the Hardy Property had accessed the lane. Along the southern boundary of the Yellow Land and the Green Land (that is, 88cm into the Sidoti Property), and aligned with the rear of the old brick outhouse on the Sidoti Property (marked “A” on the sketch plan), there was an old corrugated iron fence (marked “D” on the sketch plan). Gates in this corrugated iron fence provided access from the Sidoti Property and the Remaining Theodorou Property to the Yellow Land and the Green Land respectively.

9. [56]

   By January 1998, the lane, including the Yellow Land, was no longer used or usable as a right of way. It had been occluded at various points, including relevantly by paling fences across the western end of the Yellow Land and the eastern end of the Green Land (marked “C” on the sketch plan). [15] Previous owners of the Hardy Property appeared to have used the western end of the Yellow Land for storing garden tools, and Mr Hardy continued to do so in the area marked “G” on the sketch plan, and for that purpose entering the Yellow Land through the gate in the old paling fence. The water meter for the Hardy Property was also located on the Yellow Land.

10. [57]

    DP986532, which comprises only Lot 1, was registered on 7 August 1998, for the purpose of bringing the Hardy Property under the RP Act. It did not refer to or include the Yellow Land (or for that matter the Green Land). Pursuant to conversion action CA73069, qualified and limited folio 1/986532 was issued on the same date. The second schedule of the folio included notifications coded QG (“Qualified Title. Caution Pursuant To s28J Real Property Act 1900”), [16] and QL (“Limited Title. Limitation Pursuant To Section 28T(4) Of The Real Property Act, 1900. The Boundaries Of The Land Comprised Herein Have Not Been Investigated By The Registrar-General”). [17]

11. [58]

    Mr Hardy did not seek to enter the Green Land until about 2001, when he observed that the Green Land was so filled with rubbish and domestic waste from the tenants in the Remaining Theodorou Property that the old paling fence was leaning from the Green Land into the Hardy Property.

12. [59]

    Between October 2001 and June 2002, Mr Hardy and his then partner renovated their property and in the meantime resided elsewhere. In early to mid-May 2002, their builder removed the old paling fence on the northern boundary of the Yellow and Green Land, cleared out the rubbish from the Green Land, and levelled and tidied both so that they appeared to be part of the Hardy Property’s back garden. They continued to use the western portion of the Yellow Land (marked “G” on the sketch plan) to store garden equipment. Around this time, the water meter was also relocated from the Yellow Land to the front courtyard of the Hardy property.

13. [60]

    Between 2003 and early 2005, Mr Hardy and his then partner made further improvements to their backyard, landscaping it so that it incorporated the Yellow Land and the Green Land. By 31 December 2004, these improvements included: [18]

    1. (1)

       in or about August and September 2004, installing underground irrigation pipes for a watering system, including across the Yellow Land and the Green Land;

    2. (2)

       in or about September 2004, laying a weed mat across the entire backyard area up to the various boundaries, including across the Yellow Land and the Green Land up to the old corrugated iron fence on the southern side of the lane;

    3. (3)

       commencing in about September 2004, laying approximately five granite “railway sleeper” type slabs along the base of the old corrugated iron fence along the southern boundary of the Yellow Land and the Green Land, which then served as a footing for a reed matting screen that was installed alongside the length of the old corrugated iron fence to conceal it. This effectively closed off the access from the Sidoti Property and the Remaining Theodorou Property to the Yellow Land and the Green Land, which had been provided by the gates in the old corrugated iron fence; and

    4. (4)

       by early 2005, laying granite pavers to pave the garden. Although well- advanced by 31 December 2004 in the main backyard area, this was not completed in the Yellow Land until January 2005, when twelve granite pavers were laid in the Yellow Land and some mondo grass planted, up to the point where garden equipment continued to be stored at the western end of the Yellow Land (marked “G” on the sketch plan). The Green Land was not paved, but was landscaped with mondo grass and pine mulch.

14. [61]

    Meanwhile, on 14 March 2004, departmental dealing AA472866 was registered in respect of the Hardy property. That dealing was not in evidence and it has not been possible to ascertain its effect, but as it is not the title to the Hardy property that is in issue, it does not matter.

15. [62]

    On 21 September 2005, by conversion actions CA96563 and CA96565 respectively, the Sidoti Property and the Remaining Theodorou Property were brought under the provisions of the RP Act and qualified and limited folios E/928928 and F/928928 were created for them respectively. In each case, the second schedule of the folio contained notifications coded QS (“Qualified Title. Caution Pursuant to Section 28J Real Property Act 1900. This Title Was Created Using NSW Land Registry Services Records In Accordance With Section 28D Real Property Act 1900. Delivery Of The Title And/Or Registration Of Any Dealing Will Require Lodgment Of A Statement Of Title Particulars Supplying Complete Ownership Details”); [19] QG (“Qualified Title. Caution Pursuant to s28J Real Property Act 1900"); [20] and QL (“Limited Title. Limitation Pursuant To s.28T(4) Real Property Act 1900. The Boundaries Of The Land Comprised Herein Have Not Been Investigated By The Registrar-General”). [21] Following lodgement of a statement of title particulars, the QS qualification was removed, by departmental dealing AB800206, on 27 September 2005, but the QG Qualified Title caution and the QL Limited Title notification remained.

16. [63]

    In late 2006, Mr Hardy planted a magnolia tree in the middle of the Green Land (marked “I” on the sketch).

17. [64]

    In January 2007, following the termination of his relationship with his former partner, Mr Hardy became the sole registered proprietor of the Hardy Property by transfer.

18. [65]

    On 14 September 2015, departmental dealing AJ811575 was registered, removing the QG caution from the title of the Hardy Property, apparently on the basis that it had expired, presumably pursuant to RP Act, s 28M(3). [22]

19. [66]

    On 9 October 2017, by departmental dealing AM785629, the QG cautions were removed from the title to the Sidoti Property and the Remaining Theodorou Property, because they had expired after twelve years, again presumably pursuant to RP Act, s 28M(3).

20. [67]

    By contract for sale in April 2018, the appellants purchased the Sidoti Property from the Theodorous, for value. They did not obtain a survey, but had they done so it would have been apparent that while the Yellow Land was within the legal boundaries of the Sidoti property, it had been physically incorporated into the backyard of the Hardy Property. Transfer AN267888 was registered on 18 April 2018. Edition 2 of the folio, issued on 18 April 2018, contains the following notification:

21. [68]

    On 7 May 2018, Mr Sidoti lodged a Development Application with the Council of the City of Sydney, which relevantly stated, in respect of proposed alterations and additions to the Sidoti Property, that:

22. [69]

    As part of the renovation of the Sidoti Property, in accordance with the development consent which they obtained, the appellants demolished the old brick outhouse and old corrugated iron fence on the southern side of the Yellow Land and erected a new paling fence at the location of the former old paling fence on the northern side of the Yellow Land, and built a barbecue area on the Yellow Land, which was thereby “reclaimed” into the backyard of the Sidoti Property. Although the primary judge chronicled the subsequent dealings between the parties in 2018 and 2019 in connection with the renovations to the Sidoti Property, culminating in the commencement of the proceedings by Mr Hardy on 31 October 2019, it is not necessary to rehearse them for the purposes of the appeal.

23. [70]

    There are three important conclusions from this chronology. The first is that the Yellow Land has always been within the surveyed and described boundaries of the Sidoti Property, and outside those of the Hardy Property. The second is that both the Hardy Property and the Sidoti Property (and for that matter the Remaining Theodorou Property) were, when converted from old system to RP Act land, initially both qualified title and limited title. The Hardy Property appears to have ceased to be qualified title on 14 September 2015, and the Sidoti Property (and the Remaining Theodorou Property) on 9 October 2017 – before it was purchased by the appellants. All three properties, however, remain limited title. The third is that, on the facts found by the primary judge, the adverse possession by Mr Hardy of the Yellow Land commenced, on any view, before the Sidoti Property was brought under the RP Act by issue of a qualified and limited folio on 21 September 2005.

The primary judgment

1. [71]

   In the proceedings below, Mr Hardy claimed, in substance, a declaration that he was entitled to the Yellow Land by adverse possession, and orders restoring possession of it to him. On 28 February 2020, Mr Hardy lodged a caveat in respect of the Sidoti Property, claiming an “estate in possession in part of the land shown in DP1258823 and as further shown in the plan annexed to the Summons annexed hereto”, by virtue of “that part of the land described above has been in adverse possession by the caveator for about 21 years”. The relevant plan depicted the Yellow Land as the subject of the claim. The appellants filed a cross-claim, claiming removal of the caveat.

2. [72]

   The primary judge concluded as follows: [23]

   1. (1)

      the Sidoti Property is land under the RP Act;

   2. (2)

      possessory title to land under the RP Act can generally only be acquired in accordance with the provisions of Part 6A of the Act. If Part 6A applies, Mr Hardy’s case must fail;

   3. (3)

      part 6A does not apply, because Mr Hardy’s adverse possession of the Yellow Land commenced, if not by May 2002 (with the removal of the old paling fence as the commencement of the extension and landscaping of Mr Hardy’s backyard garden), then at the latest January 2005 (by which time landscaping was well advanced, including the laying of a weed mat covering the whole area including the Yellow Land and the Green Land, and the installation of granite pavers and mondo grass on the Yellow Land), and was extant as such when the Sidoti Property was brought under the Act in September 2005. By reason of ss 28U(2) and 45C(2) of the RP Act, Part 6A does not prevent Mr Hardy’s acquisition of a possessory title of the Yellow Land by adverse possession at common law;

   4. (4)

      pursuant to Limitation Act 1969 (NSW) (“Limitation Act”), s 27(2), the relevant limitation period for an action by the Theodorou family as then documentary title holders to recover the Yellow Land had expired no later than January 2017. At that time, their title to the Yellow Land was extinguished pursuant to Limitation Act, s 65(1). It followed that the appellants did not acquire title to the Yellow Land when they purchased the Sidoti Property in April 2018; and

   5. (5)

      Mr Hardy had therefore acquired possessory title at common law to the Yellow Land and was entitled to orders to recognise that ownership, including that the appellants cease to trespass upon the Yellow Land, and remove structures they had erected on it and relocate the fence they have built.

3. [73]

   His Honour made the following orders:

4. [74]

   The notice of appeal does not challenge his Honour’s factual finding that the Yellow Land had been in the adverse possession of Mr Hardy for the requisite twelve year period. It is therefore not necessary to consider what is required to sustain a claim to title by adverse possession of land which is subject to a right of way, which remains in existence for the benefit of others. In Braye v Tarnawskyj, [24] Darke J upheld a claim to have acquired land subject to a right of way by adverse possession, but the claimant was the dominant owner. The answer may be that while land subject to an easement can be acquired by adverse possession, including by a person other than the dominant owner, it would remain subject to the easement unless and until it is extinguished.

5. [75]

   However, the appellants dispute that, even accepting that factual finding, their title was able to be impugned. In substance, they say that they acquired an indefeasible title, subject only to the exceptions provided for by the RP Act, none of which were applicable. In particular, they dispute that their title could be displaced, in whole or in part, by adverse possession, except by a possessory application under Part 6A of the RP Act, which was neither invoked nor available.

Indefeasibility of a registered proprietor’s title

1. [76]

   RP Act, s 42, relevantly provides (emphasis added):

2. [77]

   At least at first sight, this well-known provision, which is a cornerstone of the Torrens system, would apparently mean that, absent any suggestion of fraud against them, the appellants, as registered proprietors of the Sidoti Property, hold it subject only to such other estates and interests and such entries, if any, as are recorded in that folio, and absolutely free from all other estates and interests that are not so recorded. [25] Because they were purchasers for value, even the exception in par (c) would not affect the indefeasibility of their title. The interest of Mr Hardy by way of adverse possession is not recorded in the relevant folio, and accordingly the appellants would hold the Sidoti Property “absolutely free” of it. However, that assumes that s 42 applies, without qualification, to land in a limited folio.

3. [78]

   Section 45 provides (emphasis added):

4. [79]

   This provision protects bona fide purchasers for value from being deprived of their estate or interest in RP Act land in respect of which that purchaser is the registered proprietor, “[e]xcept to the extent to which th(e) Act otherwise expressly provides”. Cases in respect of which the Act “otherwise expressly provides”, in exception to s 45, for a bona fide purchaser for value to be deprived of their estate or interest, include:

   1. (1)

      where any of the exceptions provided in s 42(1)(a)-(d) apply (but noting that the exception in s 42(1)(c) in respect of a portion of land included in the folio by wrong description of parcels or boundaries does not apply where the registered proprietor is a purchaser for value);

   2. (2)

      where the registered proprietor’s title is a qualified title, in which case the title is subject to any subsisting interest in existence when the qualified folio was created, whether or not it was recorded on the folio (ss 28J(1) and 28P(1)(d)); and

   3. (3)

      where possessory title is acquired in accordance with the provisions of Part 6A of the Act (noting that, by s 45D(4), a possessory application cannot be made adverse to a registered proprietor who became registered without fraud and for valuable consideration, unless the whole of the period of adverse possession claimed occurred after that proprietor became registered).

5. [80]

   Section 45(1) therefore means that, unless the case can be brought within some express exception to be found in the Act, nothing in the Act is to be construed so as to deprive the appellants, being purchasers bona fide for valuable consideration, of their estate in the Sidoti Property in respect of which they are registered, which is the whole of the land. Section 45(2) means that proceedings for the possession or recovery of land, such as Mr Hardy’s claim in these proceedings, do not lie against the appellants, being purchasers bona fide for valuable consideration, merely because of fraud or error affecting the title of their predecessors the Theodorous, or because their predecessors may have procured the registration of the relevant transfer to the appellants by means of a void or voidable instrument (such as if they could not convey title to the Yellow Land because it was no longer in their ownership by reason of Mr Hardy’s adverse possession).

6. [81]

   Reference should also be made to s 118 which, subject to some exceptions, bars proceedings against a registered proprietor for the possession or recovery of land:

7. [82]

   The appellants submitted that the effect of the above provisions is that the appellants hold the Sidoti Property “absolutely free” of any unregistered interest of Mr Hardy by way of adverse possession (s 42(1)), all the more so as they were purchasers of the Sidoti Property (including the Yellow Land) for value (s 42(1)(c)); that in the absence of any relevant express exception, nothing in the RP Act is to be construed so as to deprive them of their registered estate in the whole of the Sidoti Property (s 45(1)); that even if the Theodorous’ title was affected by fraud or error, or the transfer by them to the appellants was void or voidable, that would be insufficient to sustain a proceeding against the appellants by Mr Hardy to recover the land (s 45(2)); and that proceedings did not lie against them as registered proprietors for recovery of the Yellow Land (s 118).

8. [83]

   In order to uphold Mr Hardy’s claim, the primary judge relied on s 28U(2) and s 45C(2). Those provisions are not unrelated, and to comprehend their operation in this context it is necessary to examine in some detail the legislative history, which encompasses the introduction of qualified title, limited title, and possessory title. However, before doing so, it is necessary to say something about possessory title in the context of the RP Act.

Possessory title and the RP Act

1. [84]

   Apart from the RP Act, title to land may be acquired by adverse possession for a period of twelve years. That is because the owner’s cause of action to recover land becomes statute-barred after that period, and the owner’s right is thereupon extinguished. Limitation Act, s 27(2), provides that (subject to an exception for the Crown or a person claiming through the Crown), “an action on a cause of action to recover land is not maintainable by a person … if brought after the expiration of a limitation period of twelve years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims”. By s 28, “[w]here the plaintiff in an action on a cause of action to recover land or a person through whom the plaintiff claims (a) has been in possession of the land, and (b) while entitled to the land, is dispossessed or discontinues his or her possession, the cause of action accrues on the date of dispossession or discontinuance.” By s 65(1) and Schedule 4, on the expiration of the applicable limitation period for a cause of action to recover land, “the title of a person formerly having the cause of action to the [relevant land] … is, as against the person against whom the cause of action formerly lay and as against the person’s successors, extinguished.”

2. [85]

   Section 8(1)(a) provides that nothing in the Limitation Act affects the operation of s 45C of the RP Act. Section 45C resides in Part 6A (“Possessory titles to land under the Act”), which commenced operation on 1 June 1979. Prior to its insertion, former s 45 prevented title to RP Act land being acquired by possession:

3. [86]

   Part 6A now makes provision for the acquisition of title to RP Act land by adverse possession. In place of the prohibition in former s 45, Part 6A now relevantly provides (emphasis added):

4. [87]

   Whereas former s 45 meant that title to RP Act land could not be acquired by adverse possession, s 45C(1) now means that title to RP Act land cannot be acquired by adverse possession, except pursuant to an application under s 45D. [26] However, s 45C(2) preserves the right of an adverse possessor to acquire possessory title to land which is brought under the Act in a qualified or limited folio “by reason of possession of the land for any length of time commencing before the creation of the folio”. In doing so, it does not revive a right which had previously been abolished by (former) s 45, because the land to which it applies, being limited title land, was until brought under the Act in a qualified or limited folio, always amenable to a claim for title by adverse possession. Although, in South Maitland Railways Pty Ltd v Satellite Centres of Australia Pty Ltd, [27] Tamberlin AJ appears to have construed the words “by reason of possession of the land for any length of time commencing before the creation of the folio” as qualifying the preceding phrase “land brought under the provisions of this Act by the creation of a qualified or limited folio of the Register”, I respectfully disagree, and consider that they relate back to the words “the acquisition of a title”. This view is supported by comparison with sub-s (1), which provides that (emphasis added) “no title to any estate or interest in land adverse to or in derogation of the title of the registered proprietor shall be acquired by any length of possession”, and by contrast with s 45D(1)(c), which stipulates that in the case of a qualified or limited folio, a possessory application can be made only where the possession relied on commenced after the land was brought under the provisions of the Act by the creation of the qualified or limited folio of the Register. In s 45C(2), the words “any length of time” mean that the exception in s 45C(2) is engaged if the adverse possession has commenced when the qualified or limited folio is created; it does not require that the documentary titleholder’s cause of action to recover possession has been extinguished by expiry of the limitation period at that time. In other words, the exception applies both to crystallised possessory claims, and to inchoate claims in respect of which time has commenced to run but has not yet expired. However, if the adverse possession had not commenced before conversion of the land to a qualified or limited folio, then any claim could be brought only under s 45D, as contemplated by s 45D(1)(c).

5. [88]

   In the present case, the essential issue is whether s 45C(2) has the effect of providing an exception to the indefeasibility of the appellants’ title. Although the Court encouraged counsel for both parties to focus their submissions on the effect of s 45C(2), which appeared to be central to the appeal, it is not easy to summarise their submissions in that respect. I have not been able to identify, in Mr Doyle’s written or oral submissions for the appellants, any clear articulation of what is supposed to be the effect of s 45C(2), beyond the contention that it could not have been intended to undermine the indefeasibility of the registered proprietor’s title, and that it does not remove the application of Part 6A of the Act, but is to be read sensibly to operate in conjunction with that Part. At one point, he toyed with a submission that it meant no more than that “s 45C(1) does not prevent the acquisition of a title under Part 6A”, but rightly recognised that if so construed, s 45D(1)(c) would deprive it of any work. For the respondent, Mr Van Aalst at first appeared also to submit that s 45C(2) meant that his case could be brought within s 45D – and thus, at least implicitly, that s 45C(2) meant that in cases to which it applied, an application for a possessory title could be made under s 45D.

6. [89]

   In my view, a construction of s 45C(2) to the effect that, in cases to which it applies (that is, cases of adverse possession of land brought under the provisions of the RP Act by the creation of a qualified or limited folio of the Register, where the possession relied on commenced before the creation of the qualified or limited folio), s 45C(1) does not prevent an application for possessory title under s 45D, is not tenable. Section 45D(1)(c) has the effect that a possessory application cannot be made in respect of land comprised in a qualified or limited folio unless the possession relied upon commenced after the land was brought under the provisions of the Act by the creation of the qualified or limited folio. That necessarily excludes the class of cases to which s 45C(2) applies, because they are cases where the possession commences before the creation of the qualified or limited folio. Compliance with s 45D(1)(c) is also required in the case of an application under s 45D(2), as the concluding words of sub-s (2) expressly state.

7. [90]

   Moreover, even if, contrary to my opinion, s 45C(2) permits an application under s 45D in cases to which s 45C(2) applies, that would not avail Mr Hardy in this case. Section 45D(1) is not available, because the subject land – the Yellow Land – is not a “whole parcel of land”, as required by s 45D(1)(a). Section 45D(2) is not available, because even if one regards the corrugated iron fence along the southern side of the lane as an occupational boundary that represents or replaces a boundary of the whole parcel (Lot E), the part of Lot E of which Mr Hardy is in possession lies between that occupational boundary and the (true legal) boundary of the whole of Lot E – and so the “unless …” clause in sub-s (2) is engaged. No attention was paid to sub-s (2A), although it was enacted with the facilitation of the acquisition of possessory title to parts of service lanes similar to the lane in question here at the forefront of the mischief to be remedied. [28] However, sub-s (2A) refers to land which is “part of a residue lot”, where “residue lot”, by sub-s (2B), means (emphasis added) “an allotment consisting of a strip of land” that “was intended for use as a service lane”. As the second reading speech and explanatory memorandum confirm, it is engaged where a subdivider has created separate lots for the purpose of being service lanes. It would have been engaged here, had the lane been created not as a right of way over other allotments, but as a separate allotment in its own right. But here, the Yellow Land is not part of an allotment consisting of a strip of land that was intended for use as a service lane; rather, it is part of Lot E.

8. [91]

   Ultimately, Mr Van Aalst’s submission appeared to be that s 45C(2) has the effect that notwithstanding s 45C(1), a title can be acquired, adverse to that of a registered proprietor, of land in a qualified or limited folio, by adverse possession commencing before the issue of the qualified or limited folio; and that title can be acquired in those circumstances by lodgement of a delimitation plan under s 28V.

The legislative history

1. [92]

   The legislative history which informs an understanding of s 45C(2) commences with the Real Property (Conversion of Title) Amendment Act 1967 (NSW), which introduced Part 4A (originally “Qualified Certificates of Title”, now “Qualified folios of the Register”). Although concerned with qualified as distinct from limited title, it provides crucial background to and context for provisions, including s 45C(2), which were later expanded to apply to limited title in addition to qualified title.

2. [93]

   Essentially, a qualified folio permits old system land to be brought under the RP Act, but so as not to obliterate or postpone any subsisting interests in the land. The original Part 4A included, in s 28A, the following definition of “subsisting interest”:

3. [94]

   That definition has since been slightly amended, but is to the same effect:

4. [95]

   Section 28J requires the recording of a caution on a qualified folio, to the effect that the land comprised in it is held subject to any subsisting interest, whether or not it is recorded in the folio:

5. [96]

   Section 28M(1), as originally enacted, prohibited the registration of an instrument dealing with land in a qualified folio of the Register unless the instrument was made subject to subsisting interests. In practice, instruments were made subject to subsisting interests by an appropriate note in the memorandum of prior encumbrances. The chief purpose of this provision was to guard against persons taking interests in the land without realising that it was not a conventional Torrens title. In reality, however, persons acquiring, or otherwise dealing with, land in a qualified folio have no option but to take subject to "subsisting interests". For this and other reasons, former s 28M(1) and (2) (a consequential provision) were omitted in 1979.

6. [97]

   In its original form, s 28M also included the following provisions for lapsing and cancellation of the caution:

7. [98]

   In its current form, s 28M sets out two ways in which a caution may lapse:

8. [99]

   Section 28M(3) thus provides for a caution to lapse automatically twelve years from the date the qualified folio of the Register was created. That period of twelve years corresponds with the period specified in the Limitation Act, s 27(2), after the expiration of which a cause of action to recover land is not maintainable.

9. [100]

   Section 28P(1) originally provided that “except as otherwise provided by sub-s (2) of this section and any other provisions of this Part”, land in a qualified folio was subject to the provisions of the RP Act, that the provisions of the Act relating to ordinary folios and land comprised in them related to qualified folios and land comprised in them, and that (emphasis added):

10. [101]

    To substantially the same effect, in its current form, s 28P(1)(d) provides that a qualified folio of the Register, so long as it remains qualified, is "subject to every subsisting interest in the land comprised therein, whether recorded in the Register or not".

11. [102]

    Subsection (2) originally provided that “for the purposes only of subsection one” the provisions of the Act were deemed to be modified in various respects. These deemed modifications were called “unincorporable provisions”, because they were not actual but deemed amendments to the other provisions of the Act, and applied only in the context of a qualified folio. Relevantly, s 28P(2)(a) provided that the following provisions were deemed to be inserted in s 14, with the consequence that the existence of a qualified folio was no bar to a primary application in respect of the land comprised in it:

12. [103]

    Section 28P(2)(e) was to the effect that nothing in ss 43, 43A(2)-(3), or 44 should operate to defeat any claim based on a subsisting interest. Section 28P(2)(i) deemed the following provision to have been inserted, having the effect of modifying (then) s 124 (cf now s 118(4)(a), which has been set out above):

13. [104]

    However, of utmost importance for present purposes, is former s 28P(2)(f), which provided that the provisions of the Act were deemed to be modified:

14. [105]

    As has been noted, s 45 was the predecessor of current s 45C(1), so the effect of s 28P(2)(f) was that in its application to qualified title land, it was to be read as follows:

15. [106]

    In the 1974 edition of Baalman’s The Torrens System in New South Wales (“Baalman”), Woodman & Grimes observed, in commentary on s 28M: [29]

16. [107]

    The authors explained that possessory claims may arise by virtue of adverse occupation which had matured into an estate or interest prior to issue of the qualified certificate of title; by virtue of adverse occupation by which an estate or interest was in the course of being acquired when the qualified certificate of title issued; and by virtue of adverse occupation which both commenced and crystallised after the issue of the qualified certificate of title. The interests in the first two classes are subsisting interests, while those in the third class are not. Then, in commentary on s 28P, they wrote: [30]

17. [108]

    Thus an estate or interest arising from adverse possession which has matured prior to the creation of a qualified folio in respect of the subject land, and also an estate or interest which as at the issue of the qualified folio is in the course of being acquired – that is, where the adverse possession has commenced but not run the entire limitation period – are subsisting interests, which prevail against the registered proprietor of a qualified folio. This means that if, when a qualified folio of the Register is created in respect of Whiteacre with White as registered proprietor, Black has already been in adverse possession of Whiteacre (or part of it) long enough to have acquired a possessory title, then Black's right prevails against White's title, and that of anyone taking from White. Similarly, if when the qualified folio was created with White as registered proprietor, Black was in possession but had not yet been for long enough to have acquired a possessory title, the creation of the qualified folio would not prevent time continuing to run in Black's favour; so that if Black's adverse possession were to continue for the limitation period, Black's possessory title would then crystallise as effectively as if no qualified folio had been created.

18. [109]

    It is quite clear from the context that the purpose of the unincorporable provisions in s 28P(2), including the predecessor of s 45C(2), was to ensure that subsisting interests, including possessory claims, which existed when the subject land was converted to qualified title, prevailed against the title of the registered proprietor. In particular, the predecessor of s 45C(2) had nothing to do with potential claims under Part 6A, which did not then exist. Its purpose was to make clear that, notwithstanding that s 45 had formerly absolutely precluded a claim to acquire title to RP Act land by adverse possession, it was not to do so in the case of land comprised in a qualified title. The view expressed in Baalman that the exception extended to claims that were inchoate and had not yet matured by the passage of twelve years would later be expressly reflected in the statute, as will be seen below.

19. [110]

    The next significant development was the introduction, in 1976, of the notion of limited title. [31] Essentially, a limited folio permits old system land to be brought under the RP Act notwithstanding that the location of its boundaries has not been confirmed. The 1976 provisions, as originally enacted, were never implemented, for reasons which will be explained later. [32] The circumstances in which they authorised the issue of a limited title were broadly similar to those under the present legislation. [33] However, rather than requiring endorsement of a notification on the folio (as the current regime does), s 28T then required (emphasis added):

20. [111]

    Section 28U provided for the adoption, for the purpose of issuing a limited certificate of title, of an occupational boundary as the boundary between the land comprised in that certificate of title and adjacent land:

21. [112]

    Section 28V provided for the cancellation of a delimitation condition (defined, by s 28S(1), as a condition referred to in s 28T(4)(a), which refers to conditions relating to the definition of boundaries) or the withdrawal of a limitation caveat, upon compliance with the conditions, or upon agreement between adjoining landowners to ratify the definition of a common boundary and evidence that there was no person who had an unregistered proprietary interest in the subject land, with safeguards to avoid prejudicial effects on persons with unregistered proprietary interests:

22. [113]

    These provisions, which predate any notion of possessory title in respect of RP Act land, bespeak a recognition that, in the context of limited title where the boundaries have not been fully investigated, occupational boundaries may not accord with the legal boundaries, and that occupational boundaries may reflect possessory rights. They provided for the adoption of an occupational boundary, after due notice to those affected, the result of which would be to give effect to possessory rights.

23. [114]

    Then came the introduction, by Real Property (Possessory Titles) Amendment Act 1979 (NSW), of Part 6A (“Possessory Titles to Land under the Act”). The work formerly done by s 45 (as set out above) was given to s 45C which, as originally enacted, was as follows:

24. [115]

    While there was then no express sub-s (2), the reference in s 28P(2)(f) to s 45 was amended so as to refer to s 45C, and the words "in respect of which possession commenced before the land was brought under the provisions of this Act" were inserted, so that s 28P(2)(f) now deemed the following new subsection to be inserted at the end of s 45C:

25. [116]

    This made clear that, as had been explained in Baalman, the exception was not confined to cases in which the possessory title had matured when the land was brought under the Act, but extended to cases where there was an inchoate claim in the sense that adverse possession had commenced as at that date.

26. [117]

    In its original form, s 45D(1) was as follows:

27. [118]

    It will be observed that, unlike the current version, s 45D(1)(c) did not refer to limited title, but it did refer to qualified title. In respect of land under qualified title, there is a clear dichotomy between cases where “the possession by virtue of which the title to that estate or interest would have been extinguished as provided in paragraph (b) commenced after the land was brought under the provisions of this Act by the issue of the qualified certificate of title”, as referred to in s 45D(1)(c), and those where “possession commenced before the land was brought under the provisions of this Act”, as referred to in s 45C as modified by s 28P(2)(f) as amended. The former could be the subject of a possessory application under Part 6A. The latter could not, but s 45C, as so modified, did not operate to preclude the acquisition of title based on such a claim dehors Part 6A. It is clear that the intention was to preserve the position that had obtained since the introduction of the concept of qualified title, namely that qualified title was subject to possessory interests arising before the qualified title issued, including both possessory claims which had matured, and inchoate claims which were being acquired through an adverse possession which had commenced, and that such claims were to be excluded from the operation of Part 6A.

28. [119]

    The references to limited title were introduced into s 45D(1)(c), and s 45C, in 1984, when extensive amendments were made to the earlier limited title legislation in order to facilitate its use, by Real Property (Conversion of Title) Amendment Act 1984 (NSW) (“1984 Amendment Act”). The second reading speech, by the Hon BJ Unsworth MLC, explained why the earlier version of the limited legislation had not been implemented: [34]

29. [120]

    The Minister proceeded to explain the 1984 amendments (emphasis added): [35]

30. [121]

    Relevantly, as the emphasised passage above shows, it was contemplated that removal of a limitation would, in an appropriate case, require evidence negating adverse possession. According to the Explanatory Note, the amendments concerning limited title had the object (emphasis added): [36]

31. [122]

    Provision for and in respect of the creation of limited folios of the register is made by Part 4B of the RP Act. Section 28T provides for the creation of limited folios in four cases:

32. [123]

    Subsection (1A) makes provision concerning land to which Part 3 applies, which is Crown land, in respect of which, but for uncertainty as to the boundaries, the Registrar-General might otherwise have created an ordinary folio. Subsection (1) makes provision in respect of land described in a registered deed – that is to say, old system land – which but for uncertainty as to the boundaries, the Registrar-General might otherwise have been created a qualified folio under s 28C (“Qualified folio may be created on subdivision”) or s 28D (“Qualified folio may be based on registered deed”). Subsection (2) makes provision for land in respect of which, but for uncertainty as to the boundaries, the Registrar-General might otherwise have created a qualified folio pursuant to a notice under s 28E(1) (“Qualified folio may be created upon investigation by Registrar-General”). Subsection (3) makes provision for land in respect of which, but for uncertainty as to the boundaries, s 28EA (“Ordinary folio may be created in certain cases”) would have authorised the creation of an ordinary folio in lieu of a qualified folio under ss 28C, 28D, or 28E. [37]

33. [124]

    In each case, the Registrar-General is authorised to create a folio of the type which could have been created but for the uncertainty as to the boundaries. The lack of sufficient certainty as to the boundaries is addressed by sub-s (4), which requires that the limitation be recorded in the folio:

34. [125]

    Section 28T(8) provides that, except as otherwise provided in the Act, a limited folio is equivalent to an ordinary folio, with the exception that the certification of title is not conclusive as regards the definition of the boundaries of the land comprised in it:

35. [126]

    Relevant exceptions are provided by s 28U, as follows:

36. [127]

    Section 28U(2) means that, notwithstanding s 42(1), the estate of a registered proprietor in limited title land – even one who was a purchaser for value – is subject to an adverse interest in land which has been incorrectly included in a limited folio, by any wrong description of parcels or of boundaries. That exception reflects that limited title admits of uncertainty about the boundaries of the subject land, so that if land has been incorrectly included in the limited folio, by any wrong description of parcels or of boundaries, then the person with an interest in the land wrongly included does not lose that interest to the registered proprietor by reason of the indefeasibility provisions. It will be necessary to return to the notion of wrong description of parcels or of boundaries.

37. [128]

    Part 4B does not exclude the application of Part 6A to land comprised in a limited folio, so that by operation of s 28T(8)(a), Part 6A, including s 45C, applies in respect of land comprised in a limited folio. [38]

38. [129]

    The 1984 Amendment Act made amendments to Part 4A (in respect of qualified title), as well as to Part 4B (in respect of limited title), and other parts of the Act that required modification to accommodate the new concepts. Among other things, the former unincorporable provisions in s 28P(2) were replaced by direct amendments to the Act. Thus, in place of former s 28P(2)(a), [39] s 14 (which makes provision for primary applications to bring land under the RP Act) was amended, by inserting:

39. [130]

    The potential classes of applicants referred to in sub-s (2) include possessory applicants; they are:

40. [131]

    Subsection (10) was novel; it made specific provision for a primary application in respect of qualified title land which was also limited title, and in that situation required evidence relating to any adverse possession “of the whole or any part of the land”. In addition, s 14A was inserted, as follows:

41. [132]

    According to the Explanatory Note, the purpose of s 14A was: [40]

42. [133]

    This means that on a primary application by the owner of Whiteacre for title by adverse possession to a strip of the adjoining property Blackacre (being limited title land), White could be required to consolidate the claimed strip of Blackacre with his own property Whiteacre. However, it applies only to an application under s 14, relevantly s 14(8), and an application under s 14(8) can be made in respect of land under limited title only if it is also held under qualified title. Reading ss 14 and 14A together, there is no authority for a primary application in respect of land held under limited title which is not also under qualified title. In particular, there is nothing which deems land comprised in a limited folio which is not also a qualified folio to be "land not subject to the provisions of this Act" for the purposes of s 14.

43. [134]

    In place of the former provisions for withdrawal of a limitation caveat, removal of the limitation notification was, and is, provided for in Part 4B, Div 2, by registration of a “delimitation plan”: [41]

44. [135]

    Nothing in s 28V, or its context, appears to require that only the registered proprietor can lodge a delimitation plan. Nothing appears to preclude, for example, an adjacent owner doing so.

45. [136]

    Significantly, under s 28V(1)(b), registration of a delimitation plan requires not only a plan of survey that adequately defines the boundaries of the land in the limited folio, but also evidence relating to any adverse possession of the whole or any part of the land comprised in the folio. This is indicative that, as mentioned in the second reading speech, negativing an adverse possessory title was intended to be an element of removing a limitation notification.

46. [137]

    The 1984 amendments introduced provisions for the lodgement of caveats against delimitation plans, and proceedings to substantiate claims in them:

47. [138]

    It seems that under those provisions, a person claiming a possessory title to land in a limited folio of which another person was the registered proprietor could have lodged a caveat claiming that interest, and brought proceedings under s 28Z(a) to establish that interest. Those provisions were repealed, by Real Property (Caveats) Amendment Act 1986 (NSW), but s 28Y was replaced by s 74F(4), which provides:

48. [139]

    The work formerly done by s 28Z was assumed by s 74K, by which the Supreme Court on application for an order extending the operation of a caveat may, if satisfied that the caveator’s claim has or may have substance, make an order extending the operation of the caveat concerned, and when making such an order may make such ancillary orders as it thinks fit.

49. [140]

    Section 45D(1)(c) was amended by inserting references to limited title in addition to qualified title, and s 45C was amended to its current form, by the insertion of sub-s (2):

50. [141]

    Notably, this amended its predecessor unincorporable provision by adding the reference to a limited folio. The then s 124 was also amended, by inserting:

51. [142]

    These provisions are now contained in sub-s (4) of current s 118, which has been set out above. [42] Both the original s 124(2)(b), and the current s 118(4)(b), mean that a limited title does not bar a claim to recover land that has been included in a limited folio by reason of misdescription of other land or its boundaries.

52. [143]

    As it seems to me, the position can be summarised as follows:

    1. (1)

       under ss 14 and 14A, a primary application based on adverse possession can be made in respect of qualified title land. Such an application can be made in respect of limited title land only if and so long as it is also qualified title land;

    2. (2)

       under s 28P(1)(d), qualified title is subject to subsisting interests, which include both crystallised and inchoate adverse possessory claims existing at the date of conversion to qualified title. Under ss 28T(8)(d) and 28U(2), limited title (when it is not also qualified title) is subject only to any estate or interest that has been included in the limited folio by “wrong description of parcels or of boundaries”;

    3. (3)

       under s 118(4), the bar on proceedings for the possession or recovery of land against the registered proprietor does not apply, in the case of qualified title, to proceedings based on a subsisting interest, which includes crystallised and inchoate adverse possessory claims existing at the date of conversion to qualified title. In the case of limited title, the bar does not apply to proceedings brought by a person deprived of, or claiming, land that has been included in a limited folio by reason of the misdescription of the land in the limited folio or its boundaries; and

    4. (4)

       by s 45D(1)(c), a possessory application under Part 6A cannot be made in respect of land in a qualified or limited folio, if it depends to any extent on possession commencing before the qualified or limited folio was created. However, in those circumstances, under s 45C(2), acquisition of title by adverse possession to both qualified title and limited title land is not precluded by s 45C(1).

53. [144]

    Prima facie, the 1984 amendments placed land in a limited folio in an analogous position to land in a qualified folio in respect of vulnerability to possessory claims which predated the creation of the relevant folio. That this was the intention is supported by the circumstance that s 45D permits possessory applications under Part 6A in respect of ordinary title, qualified title, and limited title land, but in respect of both limited title and qualified title land only if the possession relied on commenced after the creation of the limited or qualified folio. If s 45C(2) did not preserve a pre-existing general law possessory claim to limited title land, that would mean that while there was a way to make a possessory claim, by one means or another, in every other situation – as to ordinary title land, by possessory application under s 45D, whether in respect of a period of possession commencing before or after the land was brought under the Act; as to qualified title land, by possessory application under s 45D if the possession commenced after the land was brought under the Act, and by primary application under s 14 if the possession commenced before the land was brought under the Act; and as to limited title land, by possessory application under s 45D if the possession commenced after the land was brought under the Act – yet in the unique case of limited title where the possession commenced before the land was brought under the Act, there would be no provision. The reason why s 45D provides that possessory applications cannot be made in respect of qualified title and limited title land where the possession relied on commenced before the relevant title issued, whereas such applications are not precluded in the case of ordinary title land, is that in respect of qualified and limited title, the effect of the Limitation Act is not excluded in those circumstances, because of s 45C(2).

54. [145]

    However, the analogy with qualified title is not perfect. As it seems to me, a person (White) claiming to be entitled, by way of adverse possession, to land included in a limited folio of which another (Black) is the registered proprietor, can lodge a caveat under s 74F(4) claiming an estate in Blackacre, and if a delimitation plan is lodged or a lapsing notice served, approach the Court for an order extending the operation of the caveat and ancillary orders. It may well be that White could lodge a delimitation plan propounding boundaries that reflect the adverse possession. If Black lodged a delimitation plan, evidence negating adverse possession of all or any part of Blackacre would be required.

55. [146]

    However, White could not make a primary application, because the RP Act does not contemplate a primary application in respect of land which is in a limited but not qualified folio. Moreover, by s 42(1), Black’s title would be paramount, except in respect of land incorrectly included in Blackacre by any wrong description of parcels or of boundaries (s 28U(2)); and proceedings against Black for recovery of the land would be barred by s 118, except as to land that by reason of the misdescription of Blackacre or its boundaries had been included in the limited folio for Blackacre. These obstacles could be overcome, other than in a case of misdescription of the parcel or its boundaries, only by construing s 14A as implicitly authorising a primary application in respect of land which was in a limited but not qualified folio; by importing a concept of a subsisting possessory interest into s 28U(2); and by disregarding the precise and limited nature of the exception that was introduced to s 124, now s 118. Such a construction would be so strained as not to be tenable.

56. [147]

    However, no such difficulty arises in a case where the land the subject of the claim has been incorrectly included in a limited folio by wrong description of the land or its boundaries. It follows that what must have been contemplated by the reference in s 45C(2) to limited title was pre-existing possessory claims to land which had been included in a limited folio by wrong description of the land in the folio or its boundaries. That would be consistent with the circumstance that whereas qualified title is concerned with uncertainty as to the registered proprietor’s title to the subject land which may be affected by subsisting interests, limited title is concerned with uncertainty as to the description and boundaries of the land. It would be consistent with the qualifications that are inherent in limited title, including the terms of the limitation notification.

57. [148]

    That then directs attention to the concept of a wrong description of parcels or of boundaries.

Misdescription

1. [149]

   The phrase which appears in s 28U(2), “by any wrong description of parcels or of boundaries”, reflects the phrase “by wrong description of parcels or of boundaries” in s 42(1)(c), to which it is addressed by way of exception, and it should therefore be understood to have the same meaning as in s 42(1)(c). Moreover, given the relationship between these provisions, the phrase in s 118(4)(b), “by reason of the misdescription of other land or its boundaries” should be regarded as bearing the same meaning.

2. [150]

   In Hamilton v Iredale (“Hamilton”), [43] the defendant had obtained a certificate of title to the subject land in 1868. There was no other evidence of his title. The plaintiffs, on the other hand, showed a complete documentary title from the time of the Crown grant in 1799, had admittedly been in possession since 1878, and had erected houses on the land. They had received notice of the defendant’s certificate of title in 1901, and immediately commenced proceedings for rectification of the certificate of title, arguing that in the circumstances the defendant’s certificate of title was no bar to their claim. At first instance, the plaintiffs succeeded. AH Simpson CJ in Eq said: [44]

3. [151]

   His Honour’s judgment was overturned on appeal to the Full Court, which held that “wrong description” is where an applicant, intending to describe Blackacre, describes Whiteacre, or so describes Blackacre as to make it include Whiteacre; and that it is not “wrong description” where the applicant correctly describes the land he is applying for, though the land is not his. It is then a case of no title, and the efficacy of the certificate of title depends upon the bona fides of the applicant. Stephen ACJ said (emphasis added): [45]

4. [152]

   Owen J said (emphasis added): [46]

5. [153]

   Walker J said (emphasis added): [47]

6. [154]

   In Michael v Onisiforou (“Onisiforou”), [48] Rath J held that “wrong description of boundaries” under then s 42(c) of the RP Act occurred, where a certificate of title has been issued on a primary application, if and only if by reason of the description a portion of land is included in the certificate of title which the applicant did not intend to have included; and that in cases of certificates of title issued after transfer, s 42(c) applied only if neither transferor nor transferee intended the portion in question to be included in a particular certificate of title, proof of which required evidence to the standard that would be expected in a rectification suit. His Honour referred to Hamilton, and in particular to Walker J’s statement that: [49]

7. [155]

   Upholding the plaintiffs’ claim to a declaration that they were entitled to be registered as proprietors of the land in question, Rath J said (emphasis added): [50]

8. [156]

   In the present matter, counsel for the appellant referred to Quach v Marrickville Municipal Council (No 1) (“Quach”), in which Young J (as he then was) considered the meaning of “error” in the more restrictive context of (then) s 135 of the Act (see now s 45), as follows (emphasis added): [51]

9. [157]

   Counsel also referred to the consideration of Quach, and of the meaning of “error” in the context of the RP Act as some defect in the registration process itself, by the Court of Appeal in Sahab Holdings Pty Ltd v Registrar-General (“Sahab Holdings”): [52]

10. [158]

    However, while the word “error” appeared in (former) s 135 (considered in Quach) and now in s 45, and also in s 136(b) considered in Sahab Holdings, it does not appear in ss 28U(2), 42(1)(c), or 118(4)(d). The engagement of those sections, unlike ss 45 and 136(b), does not depend on “error”. The authorities on “error” do not assist, and the attempt to invoke them to colour ss 28U(2), 42(1)(c) and 118(4)(d) as requiring something in the nature of “administrative error in the Registry” are a distraction.

11. [159]

    The authorities which are relevant – Hamilton and Onisiforou ­– support the following propositions:

    1. (1)

       there is “wrong description” if, where it is intended to describe Blackacre, Blackacre is so described as to make it include Whiteacre, or part of Whiteacre;

    2. (2)

       in the context of a folio created pursuant to a primary application, it is not “wrong description” where the applicant correctly describes the land applied for, though the land is not the applicant’s. There is a “wrong description of boundaries” if and only if by reason of the description a portion of land is included in the certificate of title which the applicant did not intend to have included; and

    3. (3)

       in the context of a certificate of title issued after transfer, there is a ““wrong description”” only if neither transferor nor transferee intended the portion in question to be included in a particular certificate of title.

12. [160]

    These cases do not deal directly with the context of a folio created by the Registrar-General pursuant to conversion action, and in particular one that is a limited folio. It is significant that uncertainty as to boundaries is inherent in limited title, and that in both iterations of the limited title legislation concern at resolving uncertain boundaries was evident. In the 1976 version this was dealt with by providing for the adoption of “occupational boundaries”, which would necessarily reflect possessory interests. In the 1984 version (which post-dated the introduction of Part 6A), it was dealt with by preserving pre-existing possessory claims. Sections 28U(2) and 118(4)(b) clearly enough contemplate claims in respect of land wrongly included in a limited folio. The provision for possessory claims in respect of such land makes sense if these provisions are understood as contemplating that a description in a limited folio which, though it might accord with the legal metes and bounds description, does not reflect the occupational boundaries, may have the effect of incorrectly including in the limited folio land which should not be included in it because of an adverse possessory interest. The intention was that because the description of the parcel and boundaries in a limited folio might not accord with the actual occupational boundaries, a purchaser of limited title land would take subject to crystallised or inchoate adverse possessory claims existing when the limited folio was issued.

13. [161]

    In my view, in the context of a limited folio created by the Registrar-General pursuant to conversion action, there will be a “wrong description” if the description of the land in the limited folio does not reflect the occupational boundaries with the result that it includes land in which a person other than the registered proprietor has an existing possessory interest – whether that claim is crystallised or inchoate. In such a case, Blackacre is described in such a way as to include Whiteacre (or part of it), which is a “wrong description" as explained in Hamilton. If land subject to an existing adverse possessory interest is included in a limited folio for other land, then it is included in that limited folio “by wrong description of parcels or of boundaries”.

Was the Yellow Land included in the Sidoti Property by “wrong description”?

1. [162]

   If – as the primary judge found, which is unchallenged on appeal – Mr Hardy had been in possession of the Yellow Land, to the exclusion of the owners of Lot E, for in excess of twelve years commencing before the limited folio was created for the Sidoti property in late 2005, then, when the limited folio was created:

   1. (1)

      regardless of the metes and bounds description, according to which the boundary was the northern edge of the Yellow Land, the occupational boundary was provided by the old corrugated iron fence on the southern side of the Yellow Land; and

   2. (2)

      Mr Hardy had an inchoate possessory interest in the Yellow Land.

2. [163]

   In those circumstances, the Yellow Land was incorrectly included in the limited folio for the Sidoti property, by “wrong description of parcels or of boundaries”.

3. [164]

   For the appellants, it was submitted that the northern boundary of the Sidoti Property as recorded in the registered plan was not and could not have been a relevant misdescription because, even if Mr Hardy had acquired a possessory interest in the Yellow Land, there was no “wrong description of boundaries”, as the true boundary was still the boundary between that land and the Hardy property; it aligned with the straight east-west southern boundary of the Hardy property and with the northern boundary of each of the adjoining terrace houses along Boronia Street, being Lots A, B, C, D, F, and G; and it delineated the northern side of the right of way, which ran east to west through the rear of the properties along Boronia Street, being Lots A, B, C, D, F, and G, on the titles of each which the right of way remains recorded. However, these submissions overlook that the occupational boundary was the southern edge of the Yellow Land, in which Mr Hardy already had an inchoate possessory interest. The description of the Sidoti Property in the limited folio was wrong insofar as it included the Yellow Land: in the formula used in Hamilton, the Sidoti Property was so described as to wrongly include the Yellow Land. Although it was submitted, for the appellants, that there could have been no “wrong description” as the limited folio was created long before any possessory title could possibly have vested in Mr Hardy, this overlooks that at the time of creation of the limited folio, the adverse possession had commenced, giving rise to an inchoate interest, the enforceability of which was preserved by s 45C(2). The Yellow Land, subject as it was to Mr Hardy’s inchoate possessory claim, was included “by wrong description of parcels or of boundaries” in the limited folio for the Sidoti property.

4. [165]

   Mr Doyle emphasised the well-established approach to the RP Act concerning indefeasibility and the conclusiveness of the register, and to the statement of the High Court in Deguisa v Lynn that: [53]

5. [166]

   Those principles are not in doubt. But they are not contravened to the extent that the Act makes exceptions to infeasibility in the case of limited title, in circumstances where the fact that the folio was a limited one was notated in the second schedule, of which the appellants must be taken to have been on notice (a matter which they did not seek to dispute). Section 42(1)(c) does not avail the appellants, because, just as for qualified title land the operation of s 42 is modified by s 28P(1)(d) which, as has been noted, provides that “a qualified folio of the Register shall be evidence as to title in all respects as if it were an ordinary folio of the Register, except that it shall be subject to every subsisting interest in the land comprised therein, whether recorded in the Register or not”, so for limited title land such as the Sidoti Property, its operation is modified by s 28U(2), which provides that their limited title is, notwithstanding s 42(1), subject to an adverse interest in land which has been incorrectly included in a limited folio by any wrong description of parcels or of boundaries. For the same reason, it does not avail them that their title is derived from the register, rather than from their predecessors: because it is limited title, it is still subject to an adverse interest in land which has been incorrectly included in the folio by wrong description of parcels or of boundaries. Nor does s 45(1) assist them, because ss 28U(2) and 45C(2) “otherwise expressly provide”. As to s 45(2), this is not a case in which it is sought to deprive the appellants of their title to the Yellow Land “merely” because the vendor to them (the Theodorous) became registered, or may have derived their right to registration as proprietor, from or through a person who had been registered as proprietor through fraud or error, or by means of a void or voidable instrument: rather, it is sought to deprive them of that title because their title is a limited one, of which they were on notice, and thus subject to an adverse interest in land which has been incorrectly included in it by any wrong description of parcels or of boundaries. Section 118 does not protect them, because Mr Hardy’s claim is one brought by a person claiming land (the Yellow Land) that by reason of the misdescription of the Sidoti property or its boundaries has been included in a limited folio of the Register for the Sidoti property, within the exception in s 118(4)(b).

Notice to mortgagee

1. [167]

   The appellants submitted that the summons should have been dismissed because the National Australia Bank (“the Bank”), as registered mortgagee of the Sidoti Property, was a necessary party to any proceedings in which orders might be made affecting its interest in its mortgage over any part of the Sidoti Property, including the Yellow Land.

2. [168]

   This issue was not raised below, until after judgment when orders were made. When it was raised, the primary judge reserved “for further consideration” the rights of existing encumbrancees. That has not been pursued.

3. [169]

   It may well be open to the Bank, if so advised, to apply to set aside the orders made in its absence. [54] 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 (as is specifically provided for by s 42(2)), 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.

4. [170]

   It would also be relevant that, given the size of the Yellow Land (3.35 square metres) relative to the Sidoti Property as a whole (86.3 square metres), its location at the very rear of the property, and the absence of substantial improvements on it, its impact on the value of the mortgagee’s security would appear to be de minimis.

5. [171]

   In those circumstances, where no application has been made by the Bank, and where there has been a reservation of further consideration but no application has been made in pursuance of it, absence of notice to the Bank does not require that the appeal be allowed.

Leave to appeal

1. [172]

   An appeal to this Court from a final judgment requires leave unless, relevantly, the appeal involves (directly or indirectly) a claim, demand or question to or respecting property of the value of $100,000 or more. [55] In this context, the relevant value is that of the claim, rather than of the property to which it relates. [56] There is nothing to indicate that the claim to title of the 3.35 square metres that comprises the Yellow Land is worth $100,000 or more. Leave to appeal is required.

2. [173]

   However, the issues raised are questions of principle, and not without importance to the operation of the Torrens system in this State. In circumstances where they have been fully argued, I would not refuse leave to appeal.

Conclusion

1. [174]

   My conclusions may be summarised as follows:

   1. (1)

      the title of the registered proprietor of a limited folio is subject to an adverse interest in land which has been incorrectly included in the folio by wrong description of parcels or of boundaries (s 28U(2));

   2. (2)

      in the context of a limited folio, a portion of land will have been incorrectly included in the folio by wrong description of parcels or of boundaries if, at the time when the folio was created, that portion was subject to a crystallised or inchoate possessory interest of a person other than the registered proprietor of the limited folio; and

   3. (3)

      in such circumstances, the person with the possessory interest is not precluded from enforcing it, dehors Part 6A (s 45C(2)).

2. [175]

   Applied to this case, the limited folio for the Sidoti Property incorrectly included the Yellow Land, in which Mr Hardy had an inchoate possessory interest, by wrongly describing the Sidoti Property as including the Yellow Land. In those circumstances, the Sidoti title was subject to the adverse interest of Mr Hardy, who was entitled to enforce it, as he has, in these proceedings.

3. [176]

   In circumstances where no application has been made by the mortgagee Bank to set aside the orders, where it is far from clear that such an application must succeed, or if it did that it would ultimately result in a different outcome, and where there has been a reservation of further consideration but no application has been made in pursuance of it, absence of notice of the proceedings to the mortgagee does not require that the appeal be allowed.

4. [177]

   Leave to appeal should be granted, but the appeal should be dismissed with costs.

5. [178]

   I propose orders that:

   1. (1)

      Leave to appeal be granted; and

   2. (2)

      The appeal be dismissed, with costs.

6. [179]

   SIMPSON AJA: This appeal and cross appeal involve consideration of provisions of the Limitation Act 1969 (NSW) and the Real Property Act 1900 (NSW). Since these provisions have been reproduced, and the relevant facts stated, in the judgments of Basten JA and Brereton JA I will confine my references to the minimum necessary to permit an understanding of my reasons for the conclusions I have reached.

Relevant legislative provisions

1. [180]

   Section 27(2) creates a limitation period of 12 years for actions to recover land: it provides that an action to recover land is not maintainable after the expiration of 12 years from the date on which the cause of action arose. By s 65(2) and Schedule 4, on the expiration of that limitation period, the title to the land of a person who would formerly have had a cause of action to recover land is extinguished as against the person against whom the cause of action formerly lay.

2. [181]

   However, while those provisions permit the acquisition of title to land under common law, or Old System title, and, from the expiration of the 12 year limitation period, effect the extinguishment of the title of the owner of such land, they do not have the same effect in relation to land under the provisions of the Real Property Act: Van den Bosch v Australian Provincial Assurance Association Ltd [1968] 2 NSWR 550; (1968) 88 WN (Pt 1) (NSW) 357, at 363-365; Spark v Meers [1971] 2 NSWLR 1, at p 13.

3. [182]

   That was the effect of s 45 of the Real Property Act as it then stood, the terms of which are set out at p 3 of Spark, and which, subject to a qualification to which I will come, are essentially re-enacted in s 45C(1). Section 45C(1) provides:

4. [183]

   However, s 45C(2) provides:

5. [184]

   Part 4 of the Act provides for applications to bring Old System land under its provisions. The essential feature (at least for present purposes) of land under the Act is that, on the inclusion of land in the Register, the registered owner has the advantage of the indefeasibility of title conferred by s 42 and s 45. The relevant provisions of s 42 and the whole of s 45 in its current form are set out at [15] and [17] of the judgment of Basten JA (see also [76] and [78] of the judgment of Brereton JA). The qualification to which I referred above is that statutes of limitation may be taken into consideration for the purposes of Pt 6A.

6. [185]

   Part 4A (ss 28A-28R) provides for the creation of qualified folios of the Register. By s 28E the Registrar-General may initiate the process and, by subs (2) thereof, may create a qualified folio. The qualification (as expressed in s 28J(1) appears to be that the title is held subject to any subsisting interests, whether or not recorded in the Register. Part 4B (ss 28S-28ZD) provides for the creation of “limited folios” where the boundaries of the land in a registered deed are not sufficiently defined to enable the creation of a qualified folio. By subs (4) of s 28T, when creating a limited folio of the Register, the Registrar-General is required to make in the folio a recording to the effect that the description of the land comprised therein has not been investigated by the Registrar-General. Subsection 8 of s 28T relevantly provides as follows:

7. [186]

   Section 28U provides as follows:

8. [187]

   Part 6A (ss 45B-45G), inserted in 1979 (by the Real Property (Possession Titles) Amendment Act 1979, Sch 1, cl 9), provides for the acquisition, in limited circumstances, of possessory title to land under the provisions of the Act. The key provision is s 45D. As s 45D has been set out in its entirety in the other judgments, it is sufficient to summarise its relevant provisions, as I understand them:

The relevant facts

1. [188]

   As the relevant facts are comprehensively stated in the judgments of Basten JA and Brereton JA and in the judgment of Kunc J at first instance (Hardy v Sidoti [2020] NSWSC 1057), I can be brief. The following assumes familiarity with the judgments of Basten JA and Brereton JA.

2. [189]

   The salient facts, which are not, for the purposes of the appeal, in dispute, are:

3. [190]

   Mr Hardy then commenced proceedings claiming possessory title to that part of Lot E that is subject to the right of way (referred to in the pleadings and primary judgment as “the Yellow Land”). His claim was ultimately formulated in a Second Amended Summons filed in court on 30 July 2020 (the second day of the hearing). He claimed declarations to the effect (in the interests of clarity, I have taken the liberty of reformulating the declarations sought):

4. [191]

   By amended cross-claim also filed in court on 30 July 2020 the appellants claimed:

5. [192]

   The primary judge initially stated his conclusions in [11] of the primary judgment. The effect of his stated conclusions (again, I paraphrase and reformulate, but for brevity) is:

6. [193]

   After reviewing the evidence and the applicable legal principles the primary judge (at [128]) again summarised his conclusions, relevantly (for the purposes of the appeal) to the following effect;

7. [194]

   The primary judge rejected a contention made on behalf of Mr Hardy that Pt 6A of the Act does not apply to land contained in a limited folio of the Register, and explained why, if it did, Mr Hardy’s claim would fail (at [111]). However, he accepted an alternative proposition, that s 45C(2) applied to preserve Mr Hardy’s common law claim to possessory title (at [112]).

8. [195]

   The primary judge found, on the application of common law principles, that Mr Hardy had established his claim to possessory title as a result of his assertion of proprietorial rights. Although a ground of appeal asserted that possessory title at common law “could not and did not ‘arise at common law’” no submissions were directed to that proposition.

The application of the Real Property Act

1. [196]

   It was not in issue on the appeal that, once the limited folio was issued, the land comprising Lot E became subject to the Act (s 28T(8)(a)) and the appellant had the benefit of the indefeasibility provisions (s 42, s 45), subject to any relevant exceptions in the Act. The relevant exceptions are to be found in s 28U and Pt 6A.

2. [197]

   Part 6A provides the avenues (limited to two) by which land under the provisions of the Act may be the subject of claims for title by adverse possession. Those avenues are provided in s 45D (and outlined above).

3. [198]

   None of these was applicable to Mr Hardy’s claim. Subsections (1) and (2) of s 45D require the claim to be for the whole parcel of land (although, for a subs (2) application, it is not necessary that the adverse possession be of the whole parcel). Mr Hardy’s claim was never for the whole parcel of land, and, accordingly, s 45D(1) and (2) provide no avenue by which he could claim possessory title. Subsection (2A) provides for title of “residue lots” which are the subject of separate folios. Although in this case, the laneway was created as a “service lane”, it was part of each of Lots A-G of the Boronia Street properties, and was not contained on a separate title. Subsection (2A) provided no avenue for Mr Hardy to claim possessory title.

4. [199]

   Mr Hardy was not entitled to claim possessory title under Pt 6A.

5. [200]

   As indicated above, the appellants acquired the benefit of indefeasibility subject to any relevant exceptions contained in the Act. The primary judge found that subs 28U(2) provided an exception. It is worth repeating subs 28U(2), which provides:

6. [201]

   The primary judge found that that exception applied because the Yellow Land had incorrectly been included in the limited folio when it was created in September 2005 (at [128 (4)]). His explanation for that conclusion is puzzling. The limited folio was created in 2005. The primary judge said that, at the date of creation of the limited folio, Mr Hardy had possessory title of the Yellow Land. In the previous paragraph, however, he had said that, by September 2005, Mr Hardy had been in possession of the Yellow Land (for the purposes of s 45C, to which I will come) since at least January 2005, and as early as May 2002. That is well short of the 12 years necessary to enliven the relevant provisions of the Limitation Act.

7. [202]

   In those circumstances, Mr Hardy could not have had possessory title to the Yellow Land at the time the limited folio was created in September 2005. There was no wrong description of any parcel or boundary at that time. Section 28U(2) did not operate to counter the effect of s 42(1).

8. [203]

   Again, it is worth repeating the relevant provision:

9. [204]

   The primary judge found that s 45C(2) applied in such a way as to preserve Mr Hardy’s common law claim to possessory title. That was because Mr Hardy had (on the primary judge’s factual finding) been in possession since at least January 2005 (that is “for any length of time commencing before the creation of the [limited] folio of the Register”), as a result of which subs (1) did not prevent Mr Hardy’s acquisition of possessory title. In my opinion, having regard to the primary judge’s factual findings which are not subject to challenge, that conclusion is inescapably correct.

10. [205]

    Grounds 2 and 3 of the amended Notice of Appeal are relevantly in the following terms:

11. [206]

    The written submissions advanced in support of Ground 2 were limited to the following propositions:

12. [207]

    No submissions were advanced in support of Ground 3.

13. [208]

    The grounds as expressed ignore the exceptions provided for by s 28U(2) and s 45C(2). Section 45C(2) excludes the indefeasibility otherwise provided by s 45C(1) where the adverse possession of land commenced before the creation of the folio. As indicated above, that possession was found to have commenced prior to the creation of the folio.

14. [209]

    The effect of subs (2) is that subs (1) does not prevent the acquisition of possessory title to land under the Act by reason of possession of the land for any length of time commencing before the creation of the folio. That is precisely this case.

15. [210]

    The primary judge was correct to hold that s 45C(2) operated to exclude the provisions of Part 6A, and entitled Mr Hardy to claim possessory title at common law.

16. [211]

    For these reasons I agree with the orders proposed by Brereton JA.