A Right Royle Result – Court of Appeal Rules in Favour of Adverse Possession and Clarifies the Law

October 7, 2020

The Western Australian Court of Appeal has ruled that adverse possession can arise where a land owner mistakenly encloses land they think belongs to them, even when their intention was not to do so and that a subdivision of land initiated under the Planning and Development Act does not extinguish existing title by adverse possession. This decision has important consequences for those involved or affected by subdivision of land in Western Australia.

In an article we published last year on the decision of Kenneth Martin J in the Supreme Court of Western Australia [in Ben-Pelech v Royle [2019] WASC 297], we outlined how His Honour’s decision had clarified several aspects of the property law of Western Australia with special reference to section 123 of the Property Law Act 1969 (WA) (PLA) and section 163 of the Transfer of Land Act 1893 (WA) (TLA) and the law of adverse possession.

The unsuccessful Plaintiffs, the Ben-Pelechs, appealed to the Western Australian Court of Appeal [in Ben Pelech v Royle [2020] WASCA 168].

On appeal, the Appellants argued that the trial judge ought to have found that the Respondents occupied the possessed land by consent and not adversely (consent ground) and that even if they did adversely possess the land, section 163 TLA operated to exclude any claim to the land after a subdivision had been registered, which subdivision included the adversely possessed land (section 163 ground).

In the result, the Court of Appeal found both grounds to be entirely lacking in merit and has now ruled authoritatively on two particular issues having specific significance to property lawyers in Western Australia.

The trial judge’s findings with respect to section 123 PLA and the circumstances in which a party may seek rectification of titles in cases of encroachment were not challenged on appeal.

Consent Ground

The Court of Appeal’s unanimous judgment provides a useful summary of the law relating to the basis for possessory title by adverse possession and the manner in which such a claim can be defeated on the grounds of consent.

The Appellants argued that because the parties intended and had agreed to erect a fence on a surveyed boundary and to remove a fence on the incorrect boundary line, there was an implied term in their agreement that if the new fence was incorrectly aligned, any land incorrectly enclosed would be occupied by consent of the true owner.

The Court held that: “it is only where the true owner knowingly permits the putative adverse possessor to occupy or exercise rights over land the owner knows to belong to him or her, and not the possessor, that the owner has consented so as to preclude an action for ejectment by the owner. In other words, in this context, knowledge is an element of consent.” At [59].

The Court further held that there was no necessity to imply a term to the effect contended by the Appellants in the circumstances of the case for the reasonable or effective operation of the agreement to erect a new fence.

The outcome on the Consent Ground ought not to surprise property lawyers who are used to claims for adverse possession arising on the discovery by land owners of the misalignment between cadastral boundaries and ancient fences. The Court affirmed this position at [69] and [70] of the reasons.

Section 163 Ground

On appeal, the Appellants again advanced their argument at first instance that section 163 TLA has general application to all land subdivisions to the effect that once a subdivision is registered (and a title issued), the possessory title of an occupier is extinguished and they are left to a possible claim against the Registrar of Titles.

In response to the section 163 ground, the Respondents filed a notice of contention that sections 160 – 165 TLA (including section 163 TLA) form an interlocking scheme and that these provisions apply to a very specific kind of subdivision instigated by the Commissioner of Titles and not to a subdivision initiated under section 146 of the Planning and Development Act (PDA) for which an application to create or register a certificate of title under section 166 of the TLA is made.

The Respondents further argued that the application under which the Appellants had registered their new sub-divided certificates of title was an application under section 146 PDA and section 166 TLA.

The Court undertook a textual analysis of sections 160 – 165 TLA and upheld the Respondents’ notice of contention and dismissed the section 163 Ground.

The Court awarded the Respondents the costs of the appeal and made an order for indemnity costs from 7 days after the filing of the Notice of Contention.

Takeaways and Significance

This case firmly reinforces the traditional view that the location of a fence and the exclusive use and occupation of the land behind it by a land owner will be treated as adverse possession even if the occupying landowner does not realise that they are occupying another’s land and even if their intention was only to occupy their own land.

The decision also usefully describes the proper operation of section 163 TLA and, most significantly, scotches any argument that the subdivision of a title somehow resets the adverse possession clock and extinguishes title already acquired.

From a practical perspective, the Court’s decision means that purchasers of all properties, including subdivided properties, should take care to ensure that the fences erected on the apparent boundaries of their land align with the boundaries depicted in the title.

In the subdivisional context, the survey carried out for the subdivision ought to identify any inconsistencies and the subdividing owner should negotiate with the neighbouring owner to reduce the potential for conflict before further disposing of the subdivided land.

Thomson Geer Lawyers acted for the Respondents in this case and Partner, Shane Sirett was counsel for the Respondents and instructed by Special Counsel, Adam Spitz.

For more information, or if you have any questions about adverse possession claims in Western Australia, please contact Shane Sirett or Hendrik van Aswegen.

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