Williams v State Transit Authority of NSW & Ors [2004] NSWCA 179 (11 June 2004)

Last Updated: 17 June 2004

NEW SOUTH WALES COURT OF APPEAL

CITATION: WILLIAMS v STATE TRANSIT AUTHORITY OF NSW & ORS [2004] NSWCA 179

FILE NUMBER(S):

40679/03

HEARING DATE(S): 12, 13, 16 February 2004

JUDGMENT DATE: 11/06/2004

PARTIES:

Treve WILLIAMS v STATE TRANSIT AUTHORITY OF NSW & ORS

JUDGMENT OF: Mason P Sheller JA Tobias JA

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): SC 3409/03

LOWER COURT JUDICIAL OFFICER: Young CJ in Eq

COUNSEL:

Appellant: J R Sackar QC/ R G McHugh

1st Respondent: B A Coles QC/ L J Aitken

2nd Respondent: S Finch SC/ I M Khan

SOLICITORS:

Appellant: Mallesons Stephen Jaques

1st Respondent: Abbott Tout

2nd Respondent: Allens Arthur Robinson

CATCHWORDS:

REAL PROPERTY - Doctrine of lost modern grant - rights of way - easements by prescription - acquiescence - onus - whether doctrine of lost modern grant extends to the Torrens system - Conveyancing Act 1919, s178 - whether "grant of a way" a public right of way only - CONTRACT - implied terms - Fair Trading Act 1987 - whether misrepresentations misleading or deceptive - whether State Transit Authority relevantly the Crown (D)

LEGISLATION CITED:

Australian Jockey Club Act 1873, s4

Conveyancing Act 1919 ss88, 178

Crown Lands Alienation Act 1861

Interpretation Act 1987, s33

Local Government Act 1919, s4

Real Property Act 1886 (SA)

Real Property Act 1900 ss46-47

DECISION:

Appeal dismissed with costs. Cross appeals upheld.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40679/2003

MASON P

SHELLER JA

TOBIAS JA

Friday 11 June 2004

Treve WILLIAMS v STATE TRANSIT AUTHORITY OF NEW SOUTH WALES

BACKGROUND

In 1911 portion of Randwick Racecourse was resumed for use as a tramway. This land (the busway land) has been used since its resumption as a means of public transport access to the racecourse on race days. The current owner of the land is the State Transit Authority of New South Wales (STA). In March 2000 the STA invited tenders to purchase the busway land. Bids were received from Anson City Developments 1 (Australia) Pty Ltd (Anson) and the AJC. Following negotiations revised bids were received from each tenderer. On 28 May 2003 the AJC indicated that it would not accept the conditions for sale being offered by the STA. The next day the STA exchanged contracts with Anson.

The AJC then lodged a series of caveats claiming various easements over the busway land. STA commenced proceedings for the removal of the caveats. The AJC cross-claimed raising contractual claims relating to the tendering process and property claims relating to the busway land itself.

The AJC's claims were:

(1) It had entered into a tender process contract with STA containing express and implied terms for fair dealing and equal opportunity which had been breached when the STA refused to contract with the AJC unless the AJC committed itself to using the busway land for racecourse purposes.

(2) The implied contractual terms were also representations that were misleading or deceptive, in contravention of s42 of the Fair Trading Act 1987.

(3) Relying on the doctrine of lost modern grant, the AJC claimed rights of way and a sewerage easement over the busway land as a result of uninterrupted usage in excess of 20 years.

At first instance, Young CJ in Eq rejected the AJC's claims, except for the sewerage easement claim.

HELD per Mason P (Sheller and Tobias JJA agreeing):

(1) The Tender Process Contract Claim is rejected:

· Cl 8 does not contain an implied obligation of the nature pleaded and does not preclude negotiations.

· The asserted implied terms are inconsistent with the express rights reserved by STA.

(2) The rights of way claim is rejected:

· The primary judge was correct to hold that s 178 of the Conveyancing Act 1919 repels the doctrine of lost modern grant as well as any presumption of dedication of a public road against the Crown.

(3) The Fair Trading Claim is rejected:

· The primary judge's conclusion that the STA was to be treated as the Crown for the purpose of the Act was correct.

(4) The Cross Appeal in relation to the sewerage easements is upheld:

· The evidence establishes user for the requisite period and such user amounted to an assertion of a right to use.

· However, the doctrine of lost modern grant does not extend to the Torrens system. Such incorporation would stretch the doctrine to breaking point, contradict the fundamental principles of title by registration and displace long-established authority in this State.

Golding v Tanner [1991] SASC 3013; (1991) 56 SASR 482 distinguished.

ORDERS:

1. AJC's appeal dismissed with costs.

2. Cross appeals of STA and Anson upheld with costs.

3. Set aside order 4 made by Young CJ in Eq on 29 August 2003.

4. Set aside so much of order 6 made by Young CJ in Eq on 29 August 2003 as relates to costs of the proceedings in the Equity Division as between STA and the AJC. In lieu, order the AJC to pay STA's and Anson's costs.

***********

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40679/2003

MASON P

SHELLER JA

TOBIAS JA

Friday 11 June 2004

Treve WILLIAMS v STATE TRANSIT AUTHORITY OF NEW SOUTH WALES

JUDGMENT

1 MASON P: In 1911 portion of Randwick Racecourse was resumed for use as a tramway. It is a swathe running from east to west that debouches into Ascot Street. It bisects portion of the racecourse complex near its southern extremity. This land (hereafter, "the busway land") has been used since its resumption as a means of public transport access to the racecourse on race days. Initially there was a tramway. Latterly the busway has been used for racecourse access by buses and taxis. A grassy area of the busway land is also used as a carpark for Australian Jockey Club (AJC) members.

2 The current owner of the busway land is the State Transit Authority of New South Wales (STA). It is the statutory successor to governmental bodies that were earlier registered proprietors and that have used the land continuously for the abovementioned purposes (Chief Commissioner for Railways and Tramways from 1912, Commissioner for Road Transport and Tramways from 1945, Commissioner for Government Transport from 1953, Urban Transport Authority from 1985). The Urban Transport Authority (UTA) has been the registered proprietor since 1985. However, STA is a continuation of, and the same legal entity as, the UTA: see Transport Administration Act 1988, Schedule 7 cl 13.

3 In March 2003 the STA invited tenders to purchase the busway land. There were two bidders, Anson City Developments 1 (Australia) Pty Ltd (Anson) and the AJC. Negotiations ensued during which each tenderer revised its bid. On 28 May 2003 the AJC indicated that it would not accept the conditions for sale then being offered by STA. The following day STA exchanged contracts with Anson. That Contract for Sale is yet to be completed.

4 The AJC then lodged a series of caveats claiming various easements in the nature of rights of way over the busway land. STA commenced proceedings in the Equity Division for the removal of those caveats. The AJC countered with a cross claim against STA and Anson that became the principal vehicle for raising its contractual claims relating to the tendering process and its property claims relating to the busway land itself. (The AJC sued in the name of its Chairman: see Australian Jockey Club Act 1873, s4.)

5 The AJC's claims were:

(1) Contractual claim relating to tendering process

6 The AJC claimed that, by submitting two tenders to STA on 1 May 2003 it had entered into a "tender process contract" with STA and with its competing tenderer Anson. It pleaded that this contract contained express and implied terms for "fair dealing" and "equal opportunity" that STA breached in late May 2003 when it decided that it would not contract with the AJC unless the AJC committed itself to continue using the busway land for racecourse purposes. A similar stipulation was not imposed on Anson (for obvious reasons).

7 The AJC sought damages, declaratory and injunctive relief in its contractual claim. This included an injunction restraining the completion of Anson's contract to purchase.

8 STA and Anson denied that they had contracted as alleged and they disputed the allegation of breach. They also contended that the remedies sought by the AJC were inappropriate to the substantive contractual claims that it had raised.

(2) Fair Trading Act 1987

9 The factual sub-stratum for this claim was the same as for the contractual claim. The AJC pleaded in effect that the implied contractual terms were also representations that were misleading or deceptive, in contravention of s42 of the Act.

10 STA denied these allegations. It also raised the contention that s42 did not apply because it was "the Crown" and because the relevant activity did not involve carrying on a business (cf s3).

(3) Rights of way and sewerage easement

11 The AJC claimed various rights of way and a sewerage easement over the busway land, based upon uninterrupted usage in excess of 20 years. The claims are based upon the doctrine of lost modern grant.

12 STA and Anson denied that there had been the continuous user of the nature capable of leading to the creation of an easement through the doctrine of lost modern grant. They also contend that the doctrine is incompatible with the system of title by registration embodied in the Real Property Act 1900. As regards the right of way, they also invoked s178 of the Conveyancing Act 1919. Anson also contended that the AJC was disentitled for various reasons from asserting that any equitable right it relied upon had priority over Anson's equitable rights to enforce its contract to purchase.

Decision at first instance

13 Young CJ in Eq rejected the AJC's claims, except for its claim for a sewerage easement (State Transit Authority of NSW v Australian Jockey Club [2003] NSWSC 726).

14 The tender process contract claim was dismissed on the basis that there was never more than an invitation to treat prior to the formal contract for sale entered into between STA and Anson on 29 May 2003.

15 The fair trading claim failed because STA was "the Crown" for the purposes of that Act, in light of s20(2)(b) of the Transport Administration Act 1988 which stipulates that it is "for the purposes of any Act, a statutory body representing the Crown". His Honour held that the current transaction did not take place in the carrying on of a business, with the consequence that the Fair Trading Act 1987 was not engaged (see s3).

16 The claimed rights of way were 11 pathways criss-crossing the busway land and used by AJC employees. Some traversed the busway from east to west. Others crossed it from north to south as the employees moved between AJC buildings on either side of the busway. Young CJ in Eq accepted that the AJC employees had passed over the land for at least 20 years using more or less defined courses (at [55]-[59], [70]-[72]). He concluded that there was "just sufficient material to show that there was user for 20 years along each of the 11 paths" ([72[).

17 His Honour found, implicitly at least, that the AJC's user had been "nec vi nec clam nec precario" (neither by force, by secrecy, nor by licence or permission), thereby giving rise to the presumption of a grant that had become lost (see esp at [64]-[65]).

18 The learned judge then addressed the vexed issue whether prescriptive easements could be acquired over Torrens land in New South Wales. Citing Golding v Tanner [1991] SASC 3013; (1991) 56 SASR 482 and "after much soul-searching", he concluded that an easement flowing from a lost modern grant may be enforced in an in personam action despite the land being under Torrens system where there has been no change in the registered proprietor during the period of user (at [88]-[89]).

19 The claim to easements in the nature of rights of way nevertheless failed because of s178 of the Conveyancing Act 1919 (set out below).

20 The easement of sewerage related to a sewerage pipeline that bisected the busway land from north to south. The easement had a dual aspect, consisting of the right to pass drainage and sewerage under the busway and a right of access to inspect sewerage pits, such access being given through a manhole cover in the section of pipe crossing under the busway. The primary judge held that the right to go to the inspection pits was itself ancillary to the easement for sewerage and drainage.

21 The pipe had been laid underground since at least as early as 1982. The only visible sign of its presence under the busway land were two manhole covers.

22 The judge concluded that "all the requirements for a proper easement for sewerage are present" (at [99]). These reasons are challenged for their paucity as well as substantively on the basis that the facts did not enable the court to infer that user was other than with permission.

23 The AJC appeals against the rejection of its contractual and right of way claims. STA and Anson cross-appeal against the findings concerning the sewerage easement. The respondents to the various appeals raise several points of contention supporting the primary judge's conclusions on alternative bases.

The tender process contract claim

24 The AJC pleaded that the "tender process contract" was formed on about 1 May 2003. Its parties were said to be STA, the AJC and Anson, with the AJC and Anson entering into contractual relations between themselves through the principles discussed in cases such as Clarke v Earl of Dunraven [1897] AC 59 and Raguz v Sullivan (2000) 50 NSWLR 236.

25 The express terms of the contract were said to consist of:

(i) a Notice to Prospective Tenderers dated 21 March 2003, Tender Conditions, a draft Form of Tender and a draft Contract for the sale of the Busway Land all issued by the STA to the AJC and Anson (among others) on or about 21 March, 2003;

(ii) two forms of Tender, two Tender Conditions and two Contracts for the Sale of the Busway Land all executed by the AJC and submitted by it to the STA on or about 1 May, 2003;

(iii) a Form of Tender, Tender Conditions and Contract for the Sale of the Busway Land all executed by Anson and submitted by it to the STA on or about 1 May, 2003.

26 To the extent that it was implied, the contract was said to be implied from:

(iv) the execution and submission to the STA on or about 1 May 2003 of the documents described in particulars (ii) and (iii) above together with cheques for the Preliminary Deposit (as defined in the Tender Conditions) on behalf of each of the AJC and the STA;

(v) the fact that the documents described in particulars (ii) and (iii) above were (save as to matters such as price and deposit) in substantially identical terms;

(vi) the fact that the documents described in particulars (ii) and (iii) above and, in particular, clauses 9, 10, 11, 12 and 15.2 of the Tender Conditions, contemplated the conferral of rights by each tenderer on each other tenderer.

27 The Tender Conditions, clause 8 in particular, were said to give rise to implied terms of fair evaluation, good faith and equal opportunity more particularly pleaded in par 8 of the Amended Cross-Claim. A further implied term was pleaded, to the effect that the STA

would not vary the Tender Conditions, draft Form of Tender or draft Contract for the Sale of the Busway Land:

(i) later than three days before the Closing Date as defined in the Tender Conditions; and

(ii) without first giving written notice of the variation in identical terms to each tenderer.

28 On about 21 March 2003 STA sent to interested parties a Notice to Prospective Tenderers that included Tender Conditions, a draft Form of Tender and a draft Contract for the sale of the busway land.

29 The closing date for the receipt of tenders was 1 May 2003.

30 On 30 April 2003 Anson submitted two tenders, one of which was non-conforming.

31 On 1 May 2003 the AJC submitted two tenders, both non-conforming in that they proposed additional special conditions to the Contract of Sale.

32 As required by the Tender Conditions, each tender included:

(i) an undated Contract for purchase executed by the tenderer;

(ii) a copy of the Tender Conditions executed by the tenderer; and

(iii) a bank cheque for 1% of the tender price.

33 The presently relevant Tender Conditions were:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In these conditions and in the Notice to Prospective Tenderers and in the Form of Tender, the following terms will have the following meanings:

(a) "Acceptance Date" means twenty (20) Business Days after the Closing Date or such other date as may from time to time be nominated by the Vendor as the Acceptance Date.

...

(c) "Closing Date" means 9.30am on Thursday 1 May 2003 or such other date as may from time to time be nominated by the Vendor as the Closing Date.

...

(n) "Update Notice" means the notice referred to in clause 8.1(a) of these Tender Conditions.

2. INVITATION TO TENDER

The vendor invites any interested parties to tender for the right to purchase the Property pursuant to and in accordance with these Tender Conditions.

3. FORM AND METHOD OF TENDER

3.1 Form of Tender

The Tender must be accompanied by:

(a) an unendorsed bank cheque drawn in favour of the Vendor's Agent for the Preliminary Deposit;

(b) an undated Contract duly executed ...

(c) a copy of these Tender Conditions executed by the Tenderer and the Guarantor;

..

3.5 Waiver

The Vendor shall be entitled in respect of any Tender, and in the absolute discretion of the Vendor, to waive strict compliance with any of the matters referred to in this clause 3.

...

5. PRELIMINARY DEPOSIT

5.1 Holding of the Deposit

By making a Tender, the Tenderer acknowledges and agrees the Preliminary Deposit is (subject to clauses 5.2 and 5.3) to be held by the Vendor's Agent and will not be invested.

5.2 Application of Preliminary Deposit

If a Tender is accepted, the Preliminary Deposit paid by the Tenderer making the successful Tender will be treated as part of and shall be applied towards the deposit payable under the Contract.

5.3 Return of Preliminary Deposit

The Preliminary Deposit paid by any unsuccessful Tenderer will be returned to the Tenderer as provided for in clause 7.2.

6. ACCEPTANCE OF TENDER

6.1 Offer to Purchase

Each Tender lodged will constitute an offer to purchase the Property for the consideration set forth in the Form of Tender and subject in all respects to these Tender Conditions. The Tender will be irrevocable and open for acceptance by the Vendor at any time after the Closing Date and on or before 5.00pm on the Acceptance Date.

6.2 No Obligations

The Tenderer acknowledges and agrees that no legal rights or obligations will be deemed to have arisen between the Vendor and the Tenderer until a Tender is, if at all, accepted.

6.3 Acceptance of Tender

(a) The Vendor may accept any Tender by notice in writing to that effect and by forwarding that notice to the Tenderer at the address of the Tenderer as specified in the Form of Tender or, if delivery cannot conveniently be made at such address, then to the place of residence of the Tenderer or, if the Tenderer is a company, to the registered office of the Tenderer.

(b) The notice referred to in clause 6.3(a) will be accompanied by the Contract duly completed and dated and executed by the Vendor.

(c) On delivery of the notice referred to in clause 6.3(a):

(i) the contract will be binding upon the Vendor, the Tenderer and the Guarantor in accordance with the terms thereof; and

(ii) the successful Tenderer will thereupon be obliged to pay to the Vendor no later than 2.00pm on the third Business Day after delivery of such notice and counterpart Contract (in which respect time will be of the essence) ten per centum (10%) of the Price less the Preliminary Deposit by way of unendorsed bank cheque in favour of the Vendor's Agent.

6.4 Termination

(a) If the successful Tenderer fails to pay the balance of the deposit as required under clause 6.3, then the Vendor will be entitled in its absolute discretion by notice in writing to the successful Tenderer to terminate the Contract in which event the Vendor will be entitled, inter alia and without limiting the Vendor's other rights and remedies against the Tenderer and/or the Guarantor, to keep the Preliminary Deposit so paid by the Tenderer.

(b) The Vendor may, if it so wishes, accept after giving the written notice referred to in clause 6A(a) any other Tender on or before 5.00pm on the Acceptance Date.

6.5 Non-Complying Tender

(a) The Vendor may consider and accept a non-conforming tender, If the Tenderer wishes to amend any documents which are required to be submitted as part of the Tender Conditions it must provide such documents as marked up versions.

(b) Any unsuccessful Tenderer will not be entitled to any redress whatsoever against the Vendor in the event that the Vendor permits non-compliance with the requirements referred to in clause 6.5(a) or permits any amendment(s) or addition(s) to any Tender to sells the Property to any other person at any other time regardless of whether or not that person did or did not lodge a tender, lodged a no tender or lodged a tender out of time.

6.6 Vendor's discretion

The Vendor specifically reserves the right at any time in its absolute discretion:

(a) to accept or reject any Tender (whether complying or otherwise) in its absolute discretion, including the right to reject the highest Tender made, and without having to attribute reasons therefore or to be accountable in any way;

(b) to extend the Closing Date for notice in writing to the parties who submit Tenders or any other party;

(c) to nominate a new Acceptance Date by notice in writing to the parties who submit Tenders or any other party;

(d) to discuss any matter with and to deal with any Tenderer or any other party at any time before or after the Closing Date including but not limited to:

(i) if the Tenderer and/or Guarantor is a public company listed on an Australian Stock Exchange, full details of its corporate structure including full names of its officers and details of its market capitalisation,

(ii) if the Tenderer and/or the Guarantor is a company which is not listed on the Australian Stock Exchange, full details of its corporate structure, full names of its officers, audited financial statements for the last 3 years, details of its Australian and overseas property portfolio as well as bank references,

(iii) if the Tenderer and/or the Guarantor is a natural person, a statement of financial position, details of his/her Australian and overseas property portfolio, together with bank reference,

(iv) if the Tenderer and/or Guarantor is the trustee of a trust, a copy of the trust deed and any variations of that deed, and audited financial statements for the last 3 years of the trust,

(v) if the Tendered and/or Guarantor is another vehicle or consortium, a statement identifying the major participants, describing their roles and responsibilities and full details of all participants. A diagram should be included if this will clarify the relationships. Bank references should also be provided.

(vi) the financial structure proposed including sources of finance, and

(vii) details of the Tenderer's relevant experience, profile and capacity to acquire a property of the nature of the Property,

(e) to contact Tenderers after the Closing Date and seek additional information for the purpose of clarification of any matter contained in their Tenders, provided that this right is not mutual;

(f) to accept or reject any non-complying Tender in its absolute discretion, including the highest non-complying Tender made, and without having to attribute reasons therefore or to be accountable in any way;

(g) to call for new Tenders; and

(h) to exercise its rights under clause 6.5.

7. UNSUCCESSFUL TENDERERS

7.1 Notification

The Vendor will no later than seven (7) Business Days after the Acceptance Date notify each unsuccessful Tenderer that its Tender has not been accepted.

7.2 Repayment of Preliminary Deposit

The Vendor will no later than seven (7) Business Days after the Acceptance Date repay to each unsuccessful Tenderer the amount of the Preliminary Deposit lodged by it.

8. UPDATING TENDER DOCUMENTS

8.1 Update Notice

(a) Not later than three (3) Business Days prior to the Closing Date the Vendor may deliver in writing to the Vendor's Agent and to each Tenderer a notice attaching copies of relevant documents (where applicable) updating the Notice to Prospective Tenderers, Tender Conditions, Form of Tender, Contract or Pre-Contractual Material or any of them.

(b) For the purposes of this Clause 8, the expression "updating" includes altering, completing, adding to or deleting at the complete discretion of the Vendor the Notice to Prospective Tenderers, Tender Conditions, Form of Tender, Contract or Pre-Contractual Material and any annexures, schedules and attachments forming part of them.

(c) The Vendor shall be entitled to give more than one Update Notice.

8.2 Effect of Update Notice

(a) After any Update Notice has been given, the Notice to Prospective Tenderers, Tender Conditions, Form of Tender, Contract and Pre-Contractual Material shall operate and apply as varied in the manner and to the extent set out in the Update Notice.

(b) If an Update Notice has been given in accordance with Clause 8.1(a), any Tender submitted before that Update Notice is given:

(i) may be withdrawn by notice in writing delivered to the Vendor's Agent at any time prior to 4.00pm on the Closing Date; and

(ii) if not withdrawn pursuant to paragraph (i), shall be deemed to be submitted upon the basis of the Notice to Prospective Tenderers, Tender Conditions, Form of Tender, Contract and Pre-Contractual Material as varied in the manner and to the extent set out in the Update Notice.

34 On 6 May 2003 STA invited each tenderer to revise its offers by increasing them and making them unconditional.

35 Anson responded the following day by submitting a revised conforming and unconditional offer for $11,280,000.00.

36 The AJC responded the same day, submitting a revised non-conforming and conditional offer for $10,500,000.00.

37 On 22 May 2003 the STA's solicitor wrote to the AJC's solicitor as follows:

We refer to our telephone conversation with you and confirm that on 15 May 2003 the Board of the State Transit Authority endorsed, and the Minister for Transport Services approved, the sale of the above land to your client the Australian Jockey Club in accordance with the tender, and the following terms:

(i) payment of the full bid of $10.5million on settlement;

(ii) that a public transport facility be retained on the subject land or elsewhere within the grounds of Royal Randwick Racecourse;

(iii) that the subject land be used for racecourse purposes; and

(iv) that the conditions in respect of provision of a public transport facility and land use be secured by a covenant or other appropriate legal instrument.

We have been instructed to take all necessary steps to formally advise the Australian Jockey Club of the above terms and to promptly arrange an exchange of contracts on this basis. We seek to settle the contract by 30 June 2003.

38 Representatives of the AJC and STA met on 27 May. There were informal discussions spanning a couple of hours (Blue 68-9, 107-112). The STA's representative, Mr Dunn indicated preparedness to deal with the AJC even though it was not the highest bidder, but subject to terms and conditions to be agreed as to the use that the AJC would make of the purchased land. The negotiations endeavoured to reach agreement as to "racecourse purposes", but a consensus did not emerge. The AJC representative, Mr Bracks indicated that the AJC could not agree to a purchase of the land if there was a covenant (as stipulated by STA) restricting the AJC in the manner in which it would use the busway land.

39 Later that day the AJC wrote setting out the terms upon which it was prepared to purchase the subject land (Blue 439). The proposal included a condition that the subject land would be used for "racecourse purposes".

40 The following day STA forwarded a draft Deed proposed to operate (upon execution) as the side agreement whereby the AJC committed itself as to the manner in which the purchased land would be used. It stipulated that the land would "only be used for purposes in accordance with the Australian Jockey Club Act 1873 as amended".

41 Later that day the AJC's solicitor indicated that the AJC would not agree to these terms.

42 On 29 May STA accepted Anson's revised offer and exchanged formal contracts for sale.

43 Young CJ in Eq held that, in light of cl 6 of the Tender Conditions, no contractual rights of the type alleged by the AJC existed (at [24]-[25]). Indeed, he went a step further, holding that the tender was a mere invitation to treat (at [29]).

44 The AJC submits that his Honour erred in holding that there was a mere invitation to treat. It points to provisions that purport to confer rights and obligations upon tenderers who have submitted a tender in the form of an executed copy of the Tender Conditions accompanied by the Preliminary Deposit (see esp cll 5.2, 5.3).

45 This submission should be accepted, but it does not avail the AJC. The express terms of the Tender Conditions do not support, indeed they preclude, the implied promises of "fair dealing" and "equal opportunity" pleaded by the AJC against STA.

46 The AJC relies on cl 8 as the main springboard for the implied terms that it claims were breached in late May 2003. Its argument proceeds as follows: Clause 8 confers a power to vary the Tender Conditions and associated documents by the delivery to each tenderer of an Update Notice. The Notice must be given in identical terms to each tenderer not less than three business days before the Closing Date, ie 1 May 2003 in the events that happened. The AJC sought to draw from this the implication that, after Closing Date, STA could not deal separately and differentially with persons who had already submitted tenders.

47 This argument breaks down at several points.

48 First, cl 8 is in terms a power ("may") conferred on STA, being a power which (if exercised) triggers the limited conditional right stipulated in cl 8.2(b)(ii). Neither resort to the expressio unius maxim nor any other process of construction can convert cl 8 into an implied obligation of the nature pleaded.

49 Secondly, the power is exercisable not later than three business days before the Closing Date. This would preclude resort to it after that time, but it does not preclude negotiations, a fortiori negotiations responsive to proposals emanating from a tenderer. Clause 6.6(d) expressly reserves STA's authority to "discuss any matter with and deal with any Tenderer... at any time before or after the Closing Date". These words mean what they say. I reject the AJC's submissions that only technical or administrative matters may be discussed or that the "right" to discuss is limited to responding to approaches from tenderers.

50 Thirdly, the asserted implied terms are inconsistent with the express rights reserved by STA in cll 6.2, 6.5(a),(b), 6.6(a), (f) and (h).

51 In any event, the facts do not support any case of breach of the pleaded terms. It lies ill in the AJC's mouth to complain about the denouement of negotiations that it instigated, from its position as a tenderer whose revised non-conforming bid was well below the conforming bid from Anson. Be that as it may, it is fatuous to suggest that STA failed to deal fairly or equitably with the AJC when all that happened was that STA stipulated the terms upon which it was prepared to accept the AJC's markedly lower tender price. Those terms involved the AJC committing to use the purchased land for purposes within its incorporating Act.

The rights of way claims

52 The primary judge held that AJC employees had used pathways traversing the busway land in circumstances that created rights in the nature of easements, through the operation of the doctrine of lost modern grant. This finding is challenged by STA and Anson, but it is unnecessary to address it. Likewise with the challenge to the judge's conclusion that the doctrine was not antithetical to the Real Property Act 1900. These issues nevertheless resurface in the cross appeal concerning the drainage easements and they will be examined more closely there.

53 Young CJ in Eq held that the doctrine of lost modern grant could not be invoked to establish a right of way against the Crown because of s178 of the Conveyancing Act 1919 which relevantly provides:

No dedication or grant of a way shall be presumed or be allowed to be asserted or established against:

(a) the Crown; or

(b) persons holding lands in trust for any public purposes, by reason only of user... .

54 His Honour observed that, without a section such as s178, there could be a lost modern grant against the Crown (see Connellan Nominees Pty Ltd v Camerer [1988] 2 Qd R 248 at 254-5, Pekel v Humich (1999) 21 WAR 24. Cf however, Thwaites v Brahe (1895) 21 VLR 192). Nevertheless, his Honour concluded that the words "grant of a way" in s178 included grant of a private right of way.

55 In this Court the AJC repeats two arguments advanced at trial as to why this provision does not apply.

56 First, it is submitted that STA is not "the Crown" for the purpose of this section.

57 In my view, this submission must be rejected in light of the clear terms of s20(2)(b) of the Transport Administration Act 1988 which states that STA "is, for the purposes of any Act, a statutory body representing the Crown".

58 The AJC submits that s178 operates only in relation to land owned by the Crown, and that s20(2)(b) is inapt to pick up a provision like s178. Stronger language would have been required to achieve this result (cf Local Government Act 1919, s4 (definitions of "Crown", "Owner" and "Statutory body representing the Crown"). The AJC cited Wynyard Investments Pty Ltd v Commissioner for Railways (NSW) [1955] HCA 72; (1955) 93 CLR 376 at 382-3 where it is pointed out that the purpose of a provision stating that a body is to be regarded as agent or servant of the Crown is to endue it with the benefits, privileges and immunities of the Crown, including the so-called "shield of the Crown" when exercising statutory powers.

59 The AJC submitted, correctly, that a provision such as s20(2)(b) does not deem the Crown to be the owner of the land vested by statute in the corporate body (Galibal Pty Ltd v Chief Commissioner of Land Tax (1994) 96 ATC 4143, Chief Commissioner of State Revenue v Darling Harbour Authority (2000) 114 LGERA 97).

60 In my view, these submissions do not undercut the clear meaning of s20(2)(b) or preclude STA from taking the benefit of s178. Section 178 confers a certain statutory immunity upon "the Crown". Section 20(2)(b) ensures that STA shares in that statutory entitlement in circumstances where it would enure to the benefit of "the Crown".

61 The fact that the busway land is owned by the statutory corporation is neither here nor there on the present matter.

62 Secondly, the AJC submits that the phrase "grant of a way" in s178 relates only to a public right of way.

63 This argument based itself on the historical context in which the predecessor of s178 was first enacted.

64 The AJC submits that the word "way" is ambiguous in that it could mean either a public highway or a private right of way. In light of this ambiguity, it is submitted that the primary judge should have adopted a purposive construction (cf Interpretation Act 1987, s33). It was further submitted that the mischief to which s178 is directed was the presumed grant of a public road or highway by dedication and by use, not the grant of private rights of way.

65 In my view, the primary judge was correct to reject this argument. The language of s178 is too clear, and its legislative history does not support the narrow purposive argument invoked by the AJC. Section 178 repels the doctrine of lost modern grant as well as any presumption of dedication of a public road.

66 The side note to s178 states: "see 1902, no. 46, s.3.". This is a reference to s3 of the Dedication by User Limitation Act 1902. Commissioner Harvey's note in his report on the Conveyancing Act was that "clauses 177-180 are pure consolidation" (see Butterworths Conveyancing Service, vol 2, p3519). This only raises an additional difficulty for the AJC, because s3 of the 1902 Act relevantly stated that "no dedication or grant of a right-of-way shall be presumed or allowed to be asserted or established as against ... the Crown...". This was the language of the original enactment, namely s1 of the Dedication by User Limitation Act 1881.

67 The second reading speeches in relation to the 1881 Bill in both Houses of the New South Wales Parliament make it plain that the occasion for the enactment, and the mischief to which it was directed, was the decision of the Privy Council in Turner v Walsh (1881) LR 6 App Cas 636.

68 In Turner v Walsh, the Privy Council was addressing the question whether dedication of a road might be presumed as against the Crown from long-continued user by the public. The Crown argued that certain provisions in the Crown Lands Alienation Act 1861 meant that dedication could only occur by notice in the Gazette. The Privy Council held that the provisions relied upon did not displace the common law, which permitted dedication to be presumed from long-continued user by the public.

69 The Privy Council decision obviously caused consternation in New South Wales. There was great concern about the transposition to the different circumstances of the Colony of the English common law doctrine whereby dedication of a public road might be presumed from long user. The particular difficulty identified in the Parliamentary speeches was the impact of Turner's Case upon the Crown's capacity to sell Crown lands owing to the number of tracks across them.

70 It is true, and the AJC seeks to make much of it, that Turner's Case had involved the presumed dedication of a public road. But it does not follow that the mischief identified in the case was confined to that situation. Disputes about private rights of way over Crown lands, arising from prescription or the doctrine of lost modern grant, were equally capable of generating the difficulties for land sales by the Crown that are referred to in the speeches as the "inconvenience" exposed by Turner's Case (Hansard, Legislative Assembly 27 October 1881 pp1768-9; Hansard, Legislative Council 16 November 1881 pp 2000. See also the remarks of Mr Darley, who had moved the second reading in the Council, at the committee stage: Hansard, Legislative Council 6 December 1881 p2425).

71 The language of the 1881 enactment makes it plain that the Legislature perceived the mischief in this broader way. More to the point, the Legislature addressed it accordingly. There is a well-understood distinction between the "dedication" of a public road or way and the "grant" of a private right of way (see Delohery v Permanent Trustee Co of New South Wales [1904] HCA 10; (1904) 1 CLR 283 at 299-300). This distinction is made explicit in the language of the 1881 statute (re-enacted in 1902) and it has been carried over into the language of the 1919 consolidation (ie s178) which uses the terms "dedication or grant" compendiously and without tautology.

72 There is therefore no reason to read down s178 in the manner suggested by the AJC.

73 It follows that the AJC's appeal in relation to the rights of way should be dismissed regardless of the issues raised by the respondents' contentions.

The Fair Trading Act claim

74 The AJC's claim under the Fair Trading Act failed at first instance because STA was to be treated as the Crown for the purpose of that Act (in light of s20(2)(b) of the Transport Administration Act 1988); and because the current transaction was not part of an activity of the State carrying on a business (cf Fair Trading Act 1987, s3).

75 The conclusion that STA was to be treated as the Crown for the purpose of applying the Fair Trading Act, s3 thereof in particular, was correct for the reasons given above in relation to the application of s178 of the Conveyancing Act.

76 The AJC's grounds of appeal relating to whether STA was relevantly carrying on a business were not pressed.

77 It follows that this aspect of the AJC's appeal must be dismissed, without the necessity to address additional contention points raised by the respondents.

The cross appeal in relation to the sewerage easements

78 STA cross-appealed against the order requiring STA to execute a registrable instrument granting a sewerage easement. This cross-appeal and the AJC's response to it raised issues in relation to:

* the general scope of the doctrine of lost modern grant;

* its application to the facts;

* its capacity to apply where the servient tenement is land under the Real Property Act 1900.

(a) The doctrine of lost modern grant

79 At common law an easement may be created by twenty years uninterrupted enjoyment of the right claimed. This doctrine of "lost modern grant" requires the court to presume, even if contrary to the truth, the existence of an express grant which has been lost. The presumed grantor must have the legal capacity to have executed the grant.

80 The acts necessary to engage the doctrine must be of such a nature as to indicate to the mind of a reasonable person in possession of the servient tenement the fact that a continuous right to enjoyment is being asserted, and ought to be resisted if such right is not recognised, and if resistance to it is intended (Hollins v Verney (1884) 13 QBD 304 at 315, Hamilton v Joyce [1984] 3 NSWLR 279 at 289-90). The requirement of user with every appearance of exercise by right is encapsulated in the traditional phrase "nec vi, nec clam, nec precario".

81 The notion that user must have been "as of right" means that it is not enough to show that the servient owner failed to prevent the use said to have generated the prescriptive easement. Rather, it must be demonstrated that there was submission to the use in the knowledge that it was being exercised as of right (Gardner v Hodgson's Kingston Brewery Co Ltd [1903] AC 229 at 239, Mills v Silver [1991] Ch 271).

82 Mills v Silver demonstrates that the claimant must show (1) acts of user of the requisite character, ie indicative that the claimant is asserting a continuous right of enjoyment; and (2) consent, acquiescence or toleration by the servient owner. In Parker LJ's words (at 290):

The true approach is to determine the character of the acts of user or enjoyment relied on. If they are sufficient to amount to an assertion of a continuous right, continue for the requisite period, are actually or presumptively known to the owner of the servient tenement and such owner does nothing that is sufficient ....

See also R v Oxfordshire County Council, Ex parte Sunningwell Parish Council [1999] UKHL 28; [2000] 1 AC 335 at 350-1, 358.

83 Reference should also be made to the recent decision of the House of Lords in R (Beresford) v Sunderland City Council [2003] UKHL 60; [2004] 1 AC 889. In the course of what Professor Butt has described as a masterly exposition of this area of the law (78 ALJ 164), Lord Walker of Gestingthorpe, after observing (at 913) that "(a) landowner who wishes to stop the acquisition of prescriptive rights over his land must not acquiesce and suffer in silence", emphasised that "permission" that precludes the creation of prescriptive right (nec precario) requires the owner of the servient tenement to do something: it requires some overt act. On the other hand acquiescence, his Lordship said (at 913), "denotes passive inactivity". He continued in these terms:

The law sometimes treats acquiescence as equivalent in its effect to actual consent. In particular, acquiescence may lead to a person losing his right to complain of something just as if he had agreed to it beforehand. In this area of the law it would be quite wrong, in my opinion, to treat a landowner's silent passive acquiescence in persons using his land as having the same effect as permission communicated (whether in writing, by spoken words, or by overt and unequivocal conduct) to those persons. To do so would be to reward inactivity; despite his failing to act, and indeed simply by his failure to act, the landowner would change the quality of the use being made of his land from use as of right to use which is (in the sense of the Latin maxim) precarious.

Lord Walker (at 914) approved the reasoning in Mills. See also Lord Bingham at 894.

84 The onus lies upon the person claiming the prescriptive right to show enjoyment as of right (Gardner at 239, Thomas W Ward Ltd v Alexander Bruce (Grays) Ltd [1959] 2 Lloyd's Rep 472 (Eng CA), Jones v Price and Morgan (1992) 64 P & CR 404 (Eng CA). Cf Nelson v Hughes [1947] VLR 227 at 228).

85 If the servient owner has no knowledge of the user, a prescriptive right will not arise (cf "nec clam"). Knowledge may be actual or constructive. The test is objective: was the use of a kind that an owner, reasonably diligent in the protection of his or her interests, would or should have discovered? (Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557 at 571, Milne v James [1910] HCA 55; (1910) 13 CLR 168 at 178, Gangemi v Watson (1994) 11 WAR 505).

(b) Factual challenge to findings on sewerage easement

86 The evidence and findings on this topic were not extensive.

87 Mr Smith had been employed by the AJC as a plumber since 1982. Most of his evidence related to use of the contested pathways. He did however give limited evidence about maintenance work done since 1982 in relation to an "internal sewerage line" (Blue 65-66, 138). The line traverses the busway land approximately at right angles from north to south. It leads from "Tea Rooms" under the busway land to where it connects with a Water Board sewer line to the south. Mr Smith said that the internal line and its surrounding structure were "extremely old". There are inspection points in the nature of manholes used for maintaining the internal line. Two of them lie on the surface of the busway.

88 Mr Smith used one of the busway inspection points approximately four times per year, descending through it to clean the length of the internal line lying between the "Tea Rooms" and the point of connection with the Board sewer.

89 The primary judge concluded from this evidence that "all the requirements for a proper easement for sewerage are present" (at [99]). His Honour held that there was an ancillary right of access to inspect the sewerage pits that should not be classed as a right of way within the meaning of s178 of the Conveyancing Act.

90 Accordingly, orders were made requiring STA to execute and deliver a registrable Transfer Granting Easement. The easement was defined as an easement to drain sewerage over the site of an existing line of pipes that were depicted in an attached plan (Red 64-5).

91 Each of STA and Anson have cross-appealed against this order.

92 STA submits that the drain itself belongs to it, on the basis that it forms part of the busway land. This submission should be accepted, although it does not conclude the easement issue. STA further contends that the evidence does not support a finding of user as of right, with the consequence that STA's knowledge, actual or constructive, of the passage of sewerage along the pipe under its land is insufficient to establish an easement in accordance with the principles summarised above. If necessary, STA raises the legal proposition that the doctrine of creation of easement by lost modern grant has no place in land subject to the Real Property Act 1900.

93 STA invokes s178 of the Conveyancing Act in relation to any claim of a right of access to the pipe. In its written submissions it challenged the primary judge's conclusion that the right of access enjoyed by the AJC through Mr Smith was merely ancillary to the sewerage easement itself. The impression I got from the oral submissions was that this challenge was not pressed (cf CA Tr p93).

94 Anson's submissions were to similar effect. Anson pointed out that there is no evidence as to when the pipes were laid nor the circumstances in which they were laid. Anson also contends that its rights as a bona fide purchaser for value and without notice under the uncompleted contract for sale take priority over the easement right belatedly raised by the AJC. Unlike the rights of way, the sewerage easement was never the subject of a caveat. It was a claim raised late in the hearing of the proceedings before Young CJ in Eq.

95 In my view, the challenge to the primary judge's factual conclusion fails. The evidence establishes user for the requisite period, of which STA knew or ought to have known. The issue is finely balanced, but I am not prepared to dissent from the trial judge's conclusion that the AJC's user amounted to an assertion of a right to do so. That being so, STA's toleration or acquiescence never assumed an actively permissive nature. In other words, it acquiesced but did not by any overt act, do anything which would amount to a permission. Accordingly, its conduct (or lack of it), was of the nature capable of leading to the acquisition of title (to the easement) where the other elements of the doctrine of lost modern grant were satisfied.

96 There was at times a chicken and egg quality about the competing submissions as to whether the evidence indicated toleration capable of establishing a prescriptive right or whether the servient owner had in reality permitted user, thereby negating the right because the claimant has not established the "nec precario" element.

97 Very recently, in Bakewell Management Ltd v Brandwood & Ors [2004] UKHL 14; [2004] 2 WLR 955, Lord Scott of Foscote said (at 964 [27]):

The acquisition of easements by long uninterrupted user that has been open, free from force and not dependent upon any precatory permission from the servient owner serves a well recognised public policy. In Davis v Whitby [1974] 1 Ch 186 Lord Denning MR said at page 192, that

"... the long user as of right should by our law be given a lawful origin if that can be done."

And Stamp LJ, agreeing with Lord Denning, commented

"... if long enjoyment of a right is shown, the court will strive to uphold the right by presuming that it had a lawful origin."

More recently Lord Hoffmann in R v Oxfordshire County Council Ex parte Sunningwell Parish Council [1999] UKHL 28; [2000] 1 AC 335 said at page 349 that

"Any legal system must have rules of prescription which prevent the disturbance of long-established de facto enjoyment."

See also Handley JA in Dobbie v Davidson (1991) 23 NSWLR 625 at 670-1 (and passages cited).

98 These principles are applicable to the resolution of the factual issue in this part of the appeal. They explain why I have concluded that the cross appellants' challenge to the holding that the user was of the requisite quality is rejected.

99 It therefore become necessary to address the legal issues involving the question whether the doctrine has any application to Torrens land in this State.

(c) The doctrine of lost modern grant and the Real Property Act

100 At all material times the busway land has been under the Real Property Act 1900. STA and the statutory bodies that were its predecessors have been the registered proprietor for an estate in fee simple since the land was resumed.

101 There has never been a registered dealing recording any of the easements claimed by the AJC in these proceedings. There is no evidence that any such dealing was ever executed, let alone omitted from registration.

102 The Real Property Act 1900 (ss46-47) and the Conveyancing Act 1919 (s88) prescribe detailed and appropriate formalities for the creation and recording of easements over Torrens land in this State. In particular, s46 of the Real Property Act relevantly provides that "where any easement ... affecting land under the Act is intended to be created, the proprietor shall execute a transfer in the approved form". Section 47 provides for the recording of such a dealing and for later transactions (including extinguishment) touching such recorded dealing. These are consistent with the Act's general policy of conferring title by registration (cf esp ss36(11) and 41).

103 Until the present case, there was an unbroken stream of authority in New South Wales to the effect that easements by prescription could not arise over land subject to the Real Property Act where the acts of user occurred during the time the land was under the Act. In Jobson v Nankervis (1943) 44 SR(NSW) 277, Nicholas CJ in Eq followed and applied New Zealand decisions (especially Mackenzie v Waimumu Queen Gold-Dredging Co Ltd (1901) 21 NZLR 231) in holding that a memorandum of transfer must be executed and registered in order to create an easement over land under the Act. Nicholas CJ in Eq recognised that easements might come into existence by implication from a description appearing on the certificate of title or from estoppel (cf Dabbs v Seaman [1925] HCA 26; (1925) 36 CLR 538) but otherwise held that ss46 and 47 precluded the creation of easements by unregistered dealings or transactions.

104 Jobson was followed by Powell J in Kostis v Devitt (1979) 1 BPR 9231 and Dewhirst v Edwards [1983] 1 NSWLR 34 and by this Court in Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618 at 625. Each of the decisions, including Jobson itself, referred to s42(1) of the Act which states that the registered proprietor holds the registered interest "subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded". There are limited exceptions set out in the section.

105 Until 1995, the only exception to indefeasibility with possible relevance to cases such as the present was s42(b) [s42(1)(b) since 1979] which referred to "the omission or misdescription of any right-of-way or other easement created in or existing upon any land". Jobson held that this exception referred to easements in existence before the land was brought under the Act that were omitted or misdescribed in the certificate of title. In James v The Registrar-General (1967) 69 SR(NSW) 361 this Court disagreed with so much of Jobson as confined s42(b) to easements in existence before the land was brought under the Act. Wallace P (at 368-9) and Jacobs JA (at 379) held that an easement that had been properly created in accordance with s46, but which was omitted on a subsequent issue of a new Certificate of Title due to error in the office of the Registrar-General, fell within the express provisions of s42(b).

106 After James, it was accepted law in this State that s42(b) was not confined to easements predating the time when the relevant land was brought under the Torrens system (see Berger Bros Trading Co Pty Ltd v Bursill Enterprises Pty Ltd [1970] 1 NSWR 137 and Maurice Toltz Pty Ltd v Macy's Emporium Pty Ltd [1970] 1 NSWR 474).

107 In Australian Hi-Fi Publications, this Court held that s42 did not preclude the enforcement of rights existing personally against a registered proprietor. The Court also held that "omission" in s42(b), with reference to an easement, was limited to an easement brought forward for appropriate action by the Registrar-General. Section 42(b) did not therefore apply to Wheeldon v Burrows (1879) 12 Ch D 31 easements, because the scheme of the Act required such easements to be created by registrable instrument. This aspect of Jobson was upheld and applied.

108 Section 42 was re-cast subsequently. (I pass over the addition of subsection (2) in 1979 and the substitution of "easement or profit a prendre ...." for "right of way or other easement" in 1987.) In 1995, by Act No 71 of 1995 the reference to easements was taken out of s42(1)(b). A new paragraph 42(1)(a1) was added to deal exclusively with easements. The exception concerning easements now reads:

... in the case of the omission or misdescription of an easement subsisting immediately before the land was brought under the provisions of this Act or validly created at or after that time under this or any other Act or a Commonwealth Act.

109 This amendment was effected in light of and presumably responsive to this Court's decision in Dobbie. In Dobbie, the Court overturned so much of James as interpreted "omitted" as requiring some fault or neglect by the Registrar-General. The Court held that it was enough to show that the easement was "left out", in the colourless sense of being "not there" (see per Kirby P at 647, per Priestley JA at 656-660, per Handley JA at 670).

110 Since the enactment of s42(1)(a1) in 1995, it has been clear from the wording of the paragraph that the exceptions to indefeasibility extend to easements "validly created" (emphasis added) after the land was brought under the Torrens system. But there is still a reference to an "omission or misdescription" and a requirement that the omitted or misdescribed easement has been "validly created under this or any other Act".

111 Text writers have expressed the view that prescriptive easements based upon the doctrine of lost modern grant do not trump the registered proprietor's indefeasible title by means of the statutory exception in s42(1)(a1) (see Bradbrook and Neave, Easements and Restrictive Covenants in Australia 2nd ed at [11.16], Butt, Land Law 4th ed at [2071]). I agree.

112 In my opinion, this conclusion is supported by the reasoning in Jobson about scope of the old s42(b), being reasoning that has not been later doubted or discredited. In Dewhirst, Powell J referred to ss42(1)(b) and 46 and continued (at 48):

These provisions, so it seems to me - and I so held in Kostis v Devitt (1979) 1 BPR 9231 - make it clear that, with the exception of a prescriptive easement existing before the servient tenement was brought under the Act but omitted from the register on registration, the Act does not recognize the existence of easements alleged to have been acquired merely by the effluxion of time. It is true that the other authorities: see, for example, Jobson v Nankervis (1943) 44 SR(NSW) 277; 61 WN 76; Tarrant v Zandstra (1973) 1 BPR 9381; Australian Hi-Fi Productions Pty Ltd v Gehl (supra); Parish v Kelly (1980) 1 BPR 9394, since they appear only to decide that, in respect of Real Property Act land, easements cannot arise, otherwise than by instruments executed under the Act, so as to be enforceable against a subsequent registered proprietor, do not, in terms, support so absolute a position as I have suggested above; but unless the position be as I have suggested, the result would seem to contravene the underlying philosophy of the Act, namely, the conclusiveness of the register. I recognize that that philosophy is not impaired by the enforcement of personal rights against a registered proprietor, but it seems to me, first, that the mere use of an alleged easement for twenty years or more would not, without more, give rise to any personal rights against the registered proprietor even if he remained unchanged throughout the whole period; and, secondly, that, in those cases in which such rights are enforced, it is only as a consequence of the enforcement of rights in personam, by requiring the execution, delivery and registration of appropriate instruments, that estates or interests in, or over, the land are brought into being or transferred.

113 Further support for the reasoning in Dewhirst is drawn from the decision of Walsh J in Anthony v The Commonwealth (1973) 47 ALJR 83. Anthony involved the law of the Northern Territory incorporating the statute law of South Australia at a particular date. Walsh J held (at 90-91) that the Real Property Act 1886 (SA) was incompatible with recognition of easements arising from long user. He based his decision mainly on s88 of that Act, which authorised the Registrar-General to enter upon the title memorials of easements "granted or created". Section 84 of that Act also assumed that easements were "created by express grant or transfer". In 1985, s88 was amended by deleting its reference to the Registrar-General entering "the memorial of the instrument granting or creating such right-of-way or easement" and substituting "shall make such entry as the original and duplicate certificates for the dominant and servient lands as he thinks fit" (Real Property Act Amendment Act (No 2), 1985 (SA)).

114 Anthony did not involve 20 years user without change in registered proprietor, but I do not read Walsh J's reasons as turning upon that consideration.

115 The AJC accepts that s42(1)(a1) provides no basis for undermining the title of a registered proprietor through application of the doctrine of lost modern grant. But it submits that a right in personam can arise where there has been no change in registered proprietor in the 20 year period of use of the easement. This was the conclusion of the primary judge and bases itself largely on the reasoning in Golding v Tanner.

116 In Golding, the parties were the registered proprietors of adjoining parcels of land. Each had held the interest for over 20 years. The plaintiffs asserted that over this period they had used a road which traversed the defendant's land in order to gain access from their property to a public road.

117 The case threw up the issue whether the doctrine of lost modern grant applied to Torrens-title land, but (as will be seen) in a context where the South Australian statute is different to the Real Property Act 1900 (NSW). The Full Court of the Supreme Court of South Australia held that the doctrine applied in the limited sense that it could ground a personal right against someone who was registered proprietor throughout the period of prescriptive user. It was held that the doctrine of lost modern grant was not inconsistent with the terms of the Real Property Act 1886 (SA) unless there has been a change in the registered proprietor of the servient land during the period of adverse user, in which case s84 of the Act [the provision roughly corresponding with the old s42 of the New South Wales Act] will protect the title of the registered proprietor.

118 King CJ held that the fictitious grant that is part of the doctrine of lost modern grant can supposedly be a registrable instrument granting an easement (at 484), but that the non-registration of an easement which had never been submitted for registration could not be described as an "omission". In this his Honour followed the reasons of this Court in Australian Hi-Fi Publications. This was the reason why the doctrine could not be invoked to defeat the registered title of a later owner.

119 Nevertheless, it was held that an easement arising from lost modern grant could give rise to rights enforceable against a registered proprietor in personam. King CJ distinguished Anthony because s88 of the South Australian Act had been amended in 1985 to remove the reference to an instrument, thereby leaving the word "created" (in s84) freed of its association with the word "instrument". Section 88 was therefore apt to include an easement based upon lost modern grant arising in personam against the registered proprietor throughout the period of 20 years adverse user.

120 Cox J agreed with the reasons of the other members of the Full Court.

121 Debelle J emphasised that he was addressing a claim to enforce a right personally as against the defendant in consequence of the acts or omissions of the defendant himself (at 488-9). In this context, general principles as to indefeasibility and the objectives of Torrens title legislation did not stand in the way of the claim at issue. His Honour observed that easements by prescription had been upheld in Victoria, Tasmania and Western Australia, although not in New South Wales or the Northern Territory. As to the latter two jurisdictions he cited Jobson, Kostis, Australian Hi-Fi Publications and Anthony.

122 Debelle J then set out the relevant provisions of the South Australian Act and their legislative history. He observed (at 491) that the question whether easements by prescription can arise under that Act turned upon s88. In its current form (post-1985) it provided that:

Whenever any right-of-way or other easement appurtenant to land under the provisions of this Act over land also under its provisions shall hereafter be granted or created, the Registrar-General shall make such entry on the original and duplicate certificates for the dominant and servient lands as he thinks fit.

123 Debelle J observed that this enabled to be registered a right of way "granted or created" after the Act came into force. Further, the word "created" had a wider connotation than the word "granted" and it indicated an intention to signify rights of way coming into existence by means other than an express grant (at 491). His Honour referred to legislative history in South Australia indicative of the language used in that State to prohibit certain types of easements by prescription. The terms of s88 did not use that language and they were held wide enough to include a right of way arising by prescription. The same cannot be said for s42(1)(a) of the New South Wales Act which is confined to an omitted or misdescribed easement "validly created under this or any other Act". A right of way arising by prescription is not so created: see s46.

124 Debelle J accepted (at 492) that the Act precluded an easement arising by prescription where the adverse user had occurred over a period during which there had been successive registered proprietors of the servient land:

But there does not appear to be any provision which precludes an easement arising by prescription where the acts or omissions upon which the claim to the prescriptive right is grounded are the acts and omissions of the registered proprietor against whom the prescriptive right is claimed.

125 His Honour saw this conclusion as reinforced by the legislative history of s88 of the South Australian Act. That history enabled him to distinguish Anthony.

126 The AJC correctly points out that all of the earlier cases involved successive registered proprietors. But their essential reasoning did not turn on that consideration. Several cases (including Dewhirst) referred to provisions such as s46 of the New South Wales Act in support of their reasoning. The idea that a different situation might prevail if there was no change in the registered proprietorship for the 20 year period first seems to have surfaced for consideration in Golding.

127 I confess to very considerable unease about accepting the central reasoning in this South Australian decision. The doctrine of lost modern grant is a common law doctrine whereby a legal title to an interest in land is acquired. It did not arise in any context involving rights enforceable in personam backed up by equitable remedies. It did not lead to an order requiring the servient owner to take further steps to perfect an equitable title into a legal title. The very fiction upon which the doctrine proceeds presumes a "grant", ie a deed that would (if it existed) be immediately effective to confer the relevant legal interest. But the fiction is that the deed was executed and delivered, leaving nothing more to be done for the creation of an easement at law.

128 Young CJ in Eq recognised that the AJC's rights in personam were equitable in nature and he therefore addressed a priority dispute as between the AJC and Anson (see at [89], [106]).

129 In my opinion, it is to pile fiction upon fiction to extend the doctrine of lost modern grant into the Torrens system, because (assuming no relevant exception to s42 or its equivalents) that system contemplates title at law as arising only upon registration. To transpose the fiction of lost modern grant into a Torrens context one has to presume considerably more than the loss of an executed (and delivered) deed. At the very least, one would have to presume the execution and delivery of a registrable instrument. But logic suggests that one has to go further and presume delivery accompanied by certificate of title, since that is the normal way in which the person entitled to have an interest registered goes about perfecting such title so far as lies in the grantor's power. Indeed, the title is only perfected through the act of a third party (the Registrar General), and there is no basis for inferring that officer's acquiescence in the user giving rise to the common law doctrine.

130 In Scott v Davis [2000] HCA 52; (2000) 204 CLR 333, Gummow J remarked (at 376) that:

The spirit of the times is unfavourable to the preservation of existing legal fictions and hostile to the creation of new ones.

131 I therefore would not be prepared to extend the doctrine in the manner suggested in Golding unless driven by strong considerations of precedent. In fact, the legislation and precedential history in this State point in the opposite direction.

132 (STA spurned the suggestion that the Golding principle was unavailable because the UTA had been registered since 1985, ie for less than 20 years (see [2] above and CA Tr p110). It was conceded by STA that the period of UTA/STA ownership can be aggregated with that of the Commissioner for Government Transport (since 1953) to make up the period of 20 years unbroken ownership sufficient to trigger the application of Golding.)

133 The AJC submits that the policy of the law is to make every presumption necessary to give a legal origin to acts of long user. There are certainly statements of highest authority in support of that principle (see above). It does not follow axiomatically that the doctrine of lost modern grant must adapt itself to the context of the Torrens system, or that the Torrens system must adapt itself to the doctrine of lost modern grant. The Torrens system has its own policies, including the basal concept of title by registration. In any event, as I have endeavoured to show, the adaptation of the doctrine as the basis of a novel personal right involves piling fiction upon fiction. It goes beyond presuming the delivery of a certificate of title along with the presumptively missing memorandum of transfer (cf Golding at 484). Rather, it would involve adopting a common law doctrine as to the legal title as the basis of a novel and different concept, ie a personal right against the continuing registered proprietor.

134 To reject the incorporation into the Torrens system of the limited version of the doctrine of lost modern grant suggested by Golding is not to deny the effect of the well-established authorities, relied upon by the AJC, in support of in personam rights (Barry v Heider [1914] HCA 79; (1914) 19 CLR 197 at 213, Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604 at 653-4). Such incorporation would however stretch the doctrine to breaking point, contradict the basal principles of title by registration and displace long-established authority in this State.

135 The present case was not fought or decided on the basis of a personal right or equity based on consideration or equitable estoppel.

136 At the end of the day it becomes unnecessary for this Court formally to refuse to follow Golding, because the New South Wales Act is different to the Act considered in Golding. If anything, it is stronger than the original South Australian enactment construed by Walsh J in Anthony. Section 46 of the Real Property Act 1900 (NSW) stipulates that:

Where land under the provisions of this Act is intended to be transferred, or any easement or profit à prendre affecting land under the provisions of this Act is intended to be created, the proprietor shall execute a transfer in the approved form.

137 See also s47(1), which provides:

(1) When an easement or profit à prendre that burdens land under the provisions of this Act is created, the Registrar-General is to record particulars of the dealing creating the easement or profit à prendre:

(a) in the folio of the Register for the land burdened, and

(b) in the folio of the Register for the land benefited, if the easement or profit à prendre benefits land under the provisions of this Act.

138 In Golding, Debelle J (at 491) relied heavily on the provisions of s88 of the South Australian statute and, in particular, on the fact that, in his opinion, an easement by prescription was "created" within the meaning of that provision. He accordingly held that the legislature had not intended that easements or rights of way should only come into existence pursuant to an express grant or by transfer as contemplated by s84.

139 Section 88 of the South Australian statute has its equivalent in s42(1)(a1) of the New South Wales Act. Section 42 contains the only statutory exceptions to the indefeasibility of the title of a registered proprietor of Torrens title land in this State. It is clear that, unlike s88 of the South Australian statute, the exception referred to s42(1)(a1) does not extend to easements by prescription: see [123] above. In these circumstances, it follows that Golding is, at the very least, distinguishable from the present case.

140 I have already indicated that there is a relevantly unbroken line of authority in this State precluding the creation of easements after land comes under the Act except by way of registrable instrument. There are obvious reasons why a court should be cautious about any change to settled law in relation to real property.

141 The reasoning of the Full Court of South Australia placed substantial reliance upon the amendment to s88 of the South Australian Act that was effected in 1985. The absence of a similar legislative change in this State reinforces my conclusion that the doctrine of lost modern grant cannot be invoked to create an entitlement to an easement by virtue of user of the servient tenement after the land has come under the Real Property Act.

142 I have not overlooked the fact that s88 of the South Australian Act contains the words "granted or created" in both its old and new forms and that Walsh J said (Anthony at 91) that "an easement based upon prescription does not satisfy, in my opinion, the description of an easement `granted or created'". The AJC makes this point strongly in its most helpful written submissions. I observe however that other changes to s88 were also viewed as significant by the Full Court of South Australia.

143 Section 46 of the New South Wales Act was amended in 1970. (The amendment was detailed, but the significant change was from "may" to "shall": see Real Property (Amendment) Act 1970, s11(a).). In Anthony, Walsh J made some general comparisons between the South Australia and New South Wales provisions (at 91), but he did not discuss s46. South Australia has a provision similar to s46 (s96 the Real Property Act 1886), but it is not referred to in Golding.

144 It is arguable, but unnecessary to decide, that the express terms of s46 directly engage the principle that the doctrine of lost modern grant does not apply if the grant would have been in contravention of a statute (Neaverson v Peterborough RDC [1902] 1 Ch 557).

145 The AJC submits that Golding involves no "fusion" or other fallacy. It is said to be an entirely orthodox application of the maxim "equity regards as done that which ought to be done" to the presumed facts (ie the delivery of the (lost) transfer for the easement). For reasons already given, I think that considerably more is involved.

146 Alternatively, or consequentially, the AJC submits that equity would be acting to perfect an imperfect gift in circumstances where the donor has done all that needs to be done to effect a transfer of the legal title (cf Corin v Patton (1990) 169 CLR 540 at 559-60 per Mason CJ and McHugh J, at 582 per Deane J). These passages deal with the perfection of imperfect gifts, but this is not the current field of discourse. The doctrine of lost modern grant is not a branch of the law of voluntary transfers (gifts).

Disposition

147 It becomes unnecessary to consider the other submissions of STA and Anson.

148 I propose the following orders:

1. AJC's appeal dismissed with costs.

2. Cross appeals of STA and Anson upheld with costs.

3. Set aside order 4 made by Young CJ in Eq on 29 August 2003.

4. Set aside so much of order 6 made by Young CJ in Eq on 29 August 2003 as relates to the costs of the proceedings in the Equity Division as between STA and the AJC. In lieu, order the AJC to pay STA's and Anson's costs.

149 SHELLER JA: I agree with Mason P.

150 TOBIAS JA: I agree with Mason P.

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LAST UPDATED: 16/06/2004