- The Appellants were the registered proprietors of land situated at 538 Henley Beach Road, Fulham (“Lot 3“).
- The Appellants obtained planning approval to subdivide Lot 3 and build two townhouses. Lot 3 and 51 other allotments were part of a large parcel of land which was subdivided and sold in the 1960s as part of what the Respondents claimed to be a common building scheme.
- A Memorandum of Encumbrance (“the Memo“) was lodged for registration and recorded on the now cancelled Certificate of Title for Lot 3 in 1965 (when it was first sold). The Memo prohibited the erection of any building or buildings other than “a dwellinghouse“, and also prohibited erecting “multiple dwellings“. On the back of the Memo was a handwritten requisition by the Land Titles Office, stating “is the encumbrance part of a common building scheme? If not to what land is it appurtenant?“
- The Memo was relodged, with a typed statement by a land broker that “[t]his encumbrance forms portion of a common Building Scheme“. Neither the Memo itself nor the present Certificate of Title identified the other lots intended to be benefited by the restrictive covenants in the Memo.
- The Respondents commenced proceedings in the District Court of South Australia to prevent the construction on the basis it would infringe the encumbrance. The Court found that the Appellants were notified of the restrictive covenants and were bound by them. The Court held further that the terms of the Memo prohibited the Appellants’ proposed construction of the townhouses. The Full Court of the Supreme Court upheld these findings.
- The Appellants appealed to the High Court.
- Section 69 of the Act provides, subject to some exceptions, “The title of every registered proprietor of land shall, subject to such encumbrances, liens, estates, or interests as may be notified on the original certificate of such land, be absolute and indefeasible.“
- Were the Appellants sufficiently notified of the encumbrance?
- The High Court held that the appellants were not notified of the restrictive covenants in accordance with section 69 of the Act.
- A person is not notified of an encumbrance or qualification upon the title of the registered proprietor of land that cannot be ascertained from a search of the Certificate of Title or from a registered instrument referred to in a memorial on the Certificate of Title.
- In effect, a purchaser of property is sufficiently informed of encumbrances/covenants from a review of the Certificate of Title, absent any indications of fraud, etc.
- Accordingly, the Court held that the Appellants did not need to undertake any further inquiries than review the Certificate of Title to determine the extent of the common building scheme referred to in the land broker’s notation in the Memo.
“A person who seeks to deal with the registered proprietor in reliance on the State’s guarantee of the title of the registered proprietor disclosed by the certificate of title in the Register Book (or its electronic equivalent) is not to be put on inquiry as to anything beyond that which is so notified. A common building scheme can operate consistently with the scheme of the Act in relation to the enforceability of the benefit of a restrictive covenant only if those rights are notified on the certificate of title of the burdened land, or by express reference in a memorial on the certificate of title to other registered instruments which contain that information. Anything less is inconsistent with the natural and ordinary meaning of the text of s 69 and the purpose of the Act.”
The full text is available here: http://eresources.hcourt.gov.au/showCase/2020/HCA/39
Save this case