In New South Wales you can become the owner of land by ‘adverse possession’; colloquially known as ‘squatters’ rights’ allowing someone to legally take ownership of land they have occupied exclusively for at least 12 years.
Lieselotte Kathe (known as Liese or Lisa) Pauperis, was born in Germany in about 1926 or 1927, she married Walter Pauperis, who had been born in about 1921. After the Second World War, Liese and her husband Walter migrated to Australia where they had three sons: Kurt, Ralph and John.
Leise and Walter knew Luise Stegis who was also a German immigrant related by marriage to Walter. Luise died intestate in 1969 leaving a house in Edward Street Bankstown and block of vacant land at Sanctuary Point, near Nowra on the south coast of New South Wales.
Following Luise death, Liese and Walter assumed control of the properties for the benefit of whoever was entitled to Luise estate; paying the rates and renting the Edward Street property out and referring to the properties among the family as the “Steigis estate properties”.
No-one has ever claimed the properties as Luise heir.
Leise or Walter never made a claim to ownership by way of adverse possession under the Real Property Act 1900 (NSW) (“RPA”).
Walter died in 2005. In her will, Liese left the residue of her estate to her three sons equally; appointing Kurt and John, as her executors and trustees. Liese died in 2012, John died not long after. Probate was granted to Kurt.
Kurt and his wife Judith have lived at the Edward Street property since about 1988 and have looked after the Sanctuary Point property for many years. In 2016 they successfully applied in their own names for registration of possessory title over the Sanctuary Point property under the RPA.
On registration, Judith obtained indefesible title to a one half share of the property under the RPA. However Indefeasibility can be set aside if it was obtained by performing a deliberate or dishonest act.
In 2017, Kurt and Judith put the Sanctuary Point property up for sale. Kurts brother Ralph, found out and placed a caveat on the property; the RPA entitles that any person who claims to have ‘caveatable interest’ (a legal or equitable estate or interest in land) may lodge a caveat against the title with the Registrar-General.
One third of proceeds of the sale (Kurt’s share if the property forms part of Liese’s estate) were placed in a joint bank account pending the outcome of the dispute.
Kurt and Judith remain in occupation of the Edward Street property. They have not pursued an application for possessory title over that property but have reserved their entitlement to do so. The property has also been caveated by Ralph.
Ralph submits that at Liese’s death, she was in legal possession of the Steigis estate properties. Kurt and Judith lived at Edward Street and looked after the Sanctuary Point property by arrangement with Liese; therefore at the time of her death, Liese had accrued an entitlement to obtain possessory title to the properties under the RPA.
Further, Kurt’s failure to apply for possessory title for the benefit of her estate was a breach of his duty as Liese’s executor. Registration of a possessory title of the Sanctuary Point in his and Judith’s names was a further breach of that duty. Similarly Ralph seeks to overcome Judith’s indefeasible title by alleging that her knowing participation in Kurt’s breach of duty as executor.
The Court held that at the time of her death, Liese had a possessory interest in the Edward Street and Sanctuary Point properties, which entitled her to apply for possessory title over those properties, this interest passed to Kurt as executor of the estate; if Kurt continues as executor, he must apply for possessory title over the Edward Street property, and then sell the property and distribute the proceeds to the benficiaries of Liese’s estate.
The Court also raised whether Kurt should continue as the sole executor and trustee of the estate given the conflict between his duties as executor and his personal interest as occupier of the property. Offering a solution to appoint Kurt and Ralph as joint administrators; or alternatively the more expensive and time consuming appointment of an independent administrator of the estate.
The Court dismissed Ralph’s claim that Judith acted with knowing participation in respect to the registration of possessory title over the Sanctuary Point property: on registration she acquired an indefeasible half interest in that property.