Use it or lose it; a recent case on the law of adverse possession

In New South Wales law it is pos­si­ble for you to become the own­er of land by ​‘adverse pos­ses­sion’. Adverse pos­ses­sion, also known as ​‘squat­ters’ rights’, allows some­one to legal­ly take own­er­ship of land they have occu­pied exclu­sive­ly for at least 12 years. In oth­er words, it is essen­tial­ly a case of use it or lose it — to some­one who, under Tor­rens title, must then prove they should be reg­is­tered as the own­er instead.

Whilst adverse pos­ses­sion claims (in par­tic­u­lar suc­cess­ful ones) are rare and involve a high­ly tech­ni­cal process, a recent deci­sion of the New South Wales Supreme Court of
McFar­land v Ger­tos [2018] NSWSC 1629 demon­strates what can hap­pen if you do not ​‘use’ your land, in par­tic­u­lar when land has been over­looked by the rel­a­tives of a deceased prop­er­ty owner.

The facts

The pro­ceed­ings con­cerned a prop­er­ty sit­u­at­ed at Ashbury.

The reg­is­tered pro­pri­etor of the Ash­bury prop­er­ty was Mr Downie.

Mr Down­ie died in 1947, appar­ent­ly with­out leav­ing a will, with no rep­re­sen­ta­tive appoint­ed in respect of his deceased estate.

At the time of Mr Downie’s death, the Ash­bury prop­er­ty was sub­ject to a ten­an­cy in favour of a Mrs Grimes; she remained in occu­pa­tion of the prop­er­ty until short­ly pri­or to her death in April 1998. After her death the prop­er­ty remained vacant for a peri­od of time.

Mr Ger­tos took pos­ses­sion of the Ash­bury prop­er­ty in late 1998, after Mrs Grimes died.

In that regard, Mr Ger­tos, then an accoun­tant, was vis­it­ing clients in the street when he noticed the prop­er­ty, which he described as vacant and falling into disrepair.

He believed squat­ters were liv­ing in the ​“dark and smelly” build­ing, which had bro­ken win­dows, a ​“fouled” bath­room, a leak­ing roof that was drip­ping water, rub­bish in the rooms includ­ing a dirty mat­tress and no electricity.

The next day, he hired a builder who made the home water­tight, secured it and changed the locks. He con­sult­ed a lawyer about his legal rights, then began to ren­o­vate the prop­er­ty, incur­ring sig­nif­i­cant expense.

The home was then rent­ed out by Mr Gertos.

In 2017, Mr Ger­tos applied to be record­ed as the pro­pri­etor of the land rely­ing on the law of ​“adverse possession”.

The Reg­is­trar-Gen­er­al indi­cat­ed his appli­ca­tion would be approved, but Mr Down­ie’s sur­viv­ing rel­a­tives (i.e. Mr Down­ie’s daugh­ter and grand­chil­dren) com­menced pro­ceed­ings in the Supreme Court of New South Wales seek­ing, among oth­er things, an injunc­tion restrain­ing the Reg­is­trar-Gen­er­al from reg­is­ter­ing Mr Ger­tos as the pro­pri­etor of the prop­er­ty as well as a dec­la­ra­tion to the effect that Mr Ger­tos was not enti­tled to be reg­is­tered on the title to the Ash­bury property.

Deci­sion

The rel­e­vant evi­dence demon­strat­ed, among oth­er things, that Mr Ger­tos open­ly adver­tised the Ash­bury prop­er­ty as being for rent, paid coun­cil rates, and arranged for a real estate agency to man­age the property.

Jus­tice Darke then con­sid­ered the applic­a­ble pro­vi­sions of the Real Prop­er­ty Act 1900 (NSW) and the Lim­i­ta­tion Act 1969 (NSW) as well as the legal prin­ci­ples applic­a­ble to a claim based on adverse pos­ses­sion, includ­ing the well-known state­ment of Bowen CJ in Eq in Mulc­ahy v Cur­ramore Pty Ltd [1974] 2 NSWLR 464 at 475 where his Hon­our stat­ed (in rela­tion to a repealed lim­i­ta­tion statute that for­mer­ly applied in New South Wales):

Pos­ses­sion which will cause time to run under the Act is pos­ses­sion which is open, not secret; peace­ful, not by force; and adverse, not by con­sent of the true own­er…,

In light of that state­ment and the evi­dence referred to above, Jus­tice Darke stat­ed that he was com­fort­ably sat­is­fied that since about late 1998 Mr Ger­tos (who, in essence, had assumed the posi­tion of land­lord of the Ash­bury prop­er­ty) had been in fac­tu­al pos­ses­sion of the prop­er­ty with the inten­tion of pos­sess­ing the prop­er­ty and con­clud­ed at [70] that:

Mr Ger­tos’ pos­ses­sion of the land since about late 1998 can be regard­ed as open, not secret; peace­ful, not by force; and adverse, not by con­sent of the true own­er. It has con­tin­ued with­out inter­rup­tion to the present day. In my opin­ion it is pos­ses­sion by a per­son in whose favour the lim­i­ta­tion peri­od under the Act can run…

Jus­tice Darke also said he was unable to accept the sub­mis­sions of Mr Down­ie’s rel­a­tives that they were the right­ful own­ers of the Ash­bury prop­er­ty, includ­ing their sub­mis­sion that if a legal per­son­al rep­re­sen­ta­tive was now appoint­ed for Mr Downie’s estate, that per­son could bring and main­tain the cause of action to recov­er the Ash­bury prop­er­ty from Mr Ger­tos there­by inter­rupt­ing his (Mr Ger­tos’) pos­ses­sion of the property.

Accord­ing­ly, Mr Down­ies’ rel­a­tives’ appli­ca­tion for relief was refused by the Court and they were ordered to pay Mr Ger­tos’ court costs.

Con­clu­sion

Although adverse pos­ses­sion claims are rare and hard to prove the deci­sion in McFar­land v Ger­tos does high­light how land can be lost to such claims when, for exam­ple, it has been over­looked by execu­tors of a deceased estate.