Court of Appeal delivers judgment in adverse possession stoush in City Beach

As readers may recall, in our 19 November 2019 Litigation Update ‘Tear down the wall! Adverse possession’, we reported on the Supreme Court of Western Australia’s decision in Ben-Pelech v Royle [2019] WASC 297. 

The Facts

• Adjoining lots 238 and 239 on Hesperia Avenue, City Beach were both owned by Mrs Jean Freeth (Mrs Freeth);
• Mrs Freeth put the properties on the market;
• Lot 238 was purchased by Boaz and Hannah Ben-Pelech (the Ben-Pelechs) and their son;
• Lot 239 was purchased by Glenn and Rosemary Royle (the Royles);
• However, before the properties were sold it became evident that the fence dividing the lots (the old fence) had been erected entirely within the boundary of lot 238, instead of having been erected on the correct dividing boundary line between lots 238 and 239;
• The parties attempted to mitigate this by including special conditions in the purchase contracts and engaging licenced surveyors to prepare a report to show the true position of the boundary; 
• In 1993 the parties agreed to, and then subsequently demolished the old fence and erected a new fence (the replacement fence) on the ‘correct’ boundary;
• The Ben-Pelechs gradually purchased other land adjoining lot 238, demolished the existing houses and in 2017 subdivided four adjoining lots to create seven new lots;
• In mid 2017 it came to light that in 1992 the surveyor had wrongly placed the front corner survey peg 0.53 m from the correct position, which had caused an increase in the frontage for lot 239 and a consequent decrease for lot 238. 

The trial decision

The Ben-Pelechs sought a declaration that the boundary between the two adjoining lots conform to the certificate of title, and permission from the court to:

• tear down the replacement fence and retaining walls; and 
• erect a new fence and retaining walls on the correct boundary.

The Royles opposed this and counterclaimed that they held possessory title over the disputed area (through adverse possession) due to their continuous use and possession of the disputed area.

Ultimately, the Ben-Pelechs failed in their claim relief for a court ordered demolition of the replacement fence. The trial judge found that:

• the Royles had adversely possessed the portion of the disputed area enclosed by the side gate and replacement fence (rear area);
• the Royles had not adversely possessed the remaining disputed area, namely the front of the lots which had not been fenced.

The trial judge also rejected the Ben-Pelechs’ technical arguments raised in relation to:

• the ‘cleansing effect’ of s 163 of the Transfer of Land Act 1983 (WA) (TLA); and
• the Ben-Pelechs’ allegation that that the Royles had consented to the possession. 

The appeal

The Ben-Pelechs raised two grounds of appeal:

Ground 1:

Essentially, this was a re-agitation of their s 163 TLA arguments, that:

• the section’s effect was that upon verification of a plan of subdivision, any estate or interest in the land the subject of that plan which is not noted on that plan is determined; and
• any person, who has an estate or interest in land that is injured by the operation of s 163, is entitled to compensation in the form of damages only.

and further to this,

• the Ben-Pelechs' plan of subdivision was verified on 1 November 2017 – this plan included their new subdivided lot 200;
• and consequently, at that date, the Royles' interest in lot 200, claimed by way of adverse possession, was determined.

The Court of Appeal rejected this ground on the basis:

• s 163 is confined to a situation where the Commissioner of Titles has prepared a subdivision scheme under s 160, which ‘had no application to the present case’¹;
• it was ‘plain beyond dispute’ that ss 160-165 form an interlocking scheme, accordingly s 163 could not be read in isolation as the Ben-Pelechs invited, but had to be read in the context of the sections which surround it. The judgment lists 11 indicators that support this construction.²

Ground 2:

The Ben-Pelechs claimed that the trial judge erred in finding the Royles' possession of the rear area was adverse for the purposes of an adverse possession claim, on the basis that in making their agreement as to the construction and location of the fence, the parties impliedly agreed that to the extent that the fence was not located on the boundary, each party consented to the other party's use of the land behind the fence that belonged to the consenting party. This implication was said to arise as a matter of fact.
 
The Court of Appeal found the Ben-Pelechs did not consent in any relevant sense to the Royles' occupation of their land, and that ground 2 failed. In summary, this was because:

• the test to imply a term – namely, that it is ‘necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case’ was not satisfied;³ and
• there was no basis to suppose that the parties contemplated the part of the land belonging to one party would be on the other party’s side of the replacement fence;⁴

Lavan comment

While land values continue to rise more people are finding that the costs to bring an adverse possession claim are merited by the potential gain, especially when opportunities to subdivide are factored in.
 
If you have any questions in relation to this article, or require tailored advice to fit your particular situation please do not hesitate to contact Lavan’s Litigation and Dispute Resolution team.