Unregistered Easements
It is a well-publicised fact that Victoria uses the Torrens system of title registration of land (with a few remaining exceptions of general law land where the grant preceded the establishment of the Torrens system). The main advantage of the Torrens system is that any member of the public is able to search the centrally-maintained register and discover ownership, mortgages and other details affecting the title of the land. This makes dealing with land a much cheaper and less risky activity, because members of the public can be confident of the accuracy of the register. If any interest in land is not registered, that is generally the problem of the person holding that interest, and not a problem for a member of the public acting in good faith in reliance on the register.
For example, if Mr Smith holds an unregistered mortgage over land belonging to Mrs Jones, and Mrs Jones sells that land to Mr Brown, Mr Brown’s purchase is not subject to Mr Smith’s mortgage if he had no knowledge of the mortgage. So Mr Smith, by failing to register his mortgage, has lost the benefit of his security. His mortgage is void against Mr Brown’s ownership of the land, and all he can do to recover his debt is sue Mrs Jones, who may dissipate the sale proceeds before the debt is able to be enforced, and further the sale proceeds might not even have been enough in the first place to pay out the debt.
However, there are exceptions to the above general rule that only registered interests in land prevail. A very important exception is that any “easement”, even if unregistered, is absolutely valid, even against persons with no knowledge of the easement. An easement is a legal concept which can take many forms, but the easiest illustration of an easement is a “right-of-way” held by a neighbour (i.e. not a public right-of-way) over adjoining land for the sake of access to the neighbour’s property. It can be acquired by the neighbour being given permission to use the shortcut. It can also be acquired, not by any agreement between the two neighbours, but simply by the one neighbour using the shortcut over the other neighbour’s land with some sort of regularity over a period of at least 20 years (note that the 20-year period only applies if no permission is given – if permission is given, the neighbour has an easement instantly and does not need to wait 20 years). Once acquired, an easement can be enforced through the courts unless it is found to have been abandoned.
The potential cost of an unregistered easement is illustrated in the Supreme Court case of Ausbal Pty Ltd v Grandsea Holdings Pty Ltd [2014] VSC 625, where Grandsea, a registered owner of land, sought to develop the land. Unfortunately for Grandsea, a driveway entirely situated on Grandsea’s land was used by petrol tankers and other vehicles to access Ausbal’s neighbouring land, which was a service station. The driveway was not to be entirely eliminated, but its size was to be reduced, making it difficult for petrol tankers to manoeuvre into the service station. The Court upheld the easement, scuppering Grandsea’s development plans on its own land so that Ausbal’s unregistered easement could be upheld.
The danger of unregistered easements can particularly surface when purchasers look to acquire a property. The purchaser may not be aware of an unregistered easement over land, and yet the purchaser’s interest will be subject to that easement being enforced. Whenever purchasing a property, the possibility of unregistered easements must be considered and investigated and their potential impact on the planned use of the land assessed.
If you require advice or representation in relation to issues surrounding an unregistered easement, please do not hesitate to contact Samuel McMahon or a member of our Property team.
