Australia: 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.

For further information please contact:

Sean Greenwood, Associate
Phone: +61 2 9777 8315
Email: stg@swaab.com.au

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.