Administrative Law - Judicial review - Grounds of review - Error of law - Difficult non-jurisdictional question of law not determined.

Local Government (Building and Miscellaneous Provisions) Act 1993 (Tas), ss103, 104.

Real Property - Torrens title - Restrictive covenants - Removal, extinguishment etc - Purported reservation to subdivider of powers to release etc - Whether valid.

Mayner v Payne [1914] 2 Ch 555; Jones v Sherwood Hills Pty Limited unreported Supreme Court of New South Wales 8 July 1975, referred to.

Judgment Number: [2008] TASSC 75

1 This is an application for judicial review of a decision made by a committee of the Burnie City Council concerning a piece of land owned by the applicant. The land was burdened by a series of restrictive covenants, including a covenant that prohibited the erection of more than one dwelling house per lot. The applicant wants to be able to build a second house on his land. Pursuant to the Local Government (Building and Miscellaneous Provisions) Act 1993 ("the LGBMP Act"), s103, he petitioned the council seeking an amendment of the covenant to remove the prohibition on building more than one house on his land. A committee of the council decided not to make the requested amendment. The applicant contends that the committee made reviewable errors in the course of its decision-making, particularly in relation to the status of a document signed by the successors in title of the man who subdivided the area in 1976 ("the subdivider"). By that document, they purported to release and waive the covenant in relation to the applicant's land.

2 Pursuant to the LGBMP Act, ss103 and 104, a number of individuals asked to be heard in opposition to the applicant's petition, and the council committee conducted a hearing. Those individuals were all served with the present application. Four of them opposed this application and were represented by counsel at the hearing before me. I will refer to those four as "the contradictors". The others took no part in the proceedings. The council, as respondent to the present application, filed a notice pursuant to the Supreme Court Rules 2000, r777G, stating that it would submit to any order that the Court makes.

3 In 1954 the subdivider took title to about 148 acres of land comprised in Conveyance 27/7453. In 1976 he subdivided part of that land into 39 lots pursuant to the Local Government Act 1962, s464. The applicant's land is the largest of those lots. The subdivision was effected by means of a sealed plan (SP 7755) which was accepted by the Recorder of Titles. The sealed plan included a schedule of easements which set forth a series of covenants, including the covenant to which this application relates. The list of covenants concluded with a proviso in the following terms:

"PROVIDED AND IT IS HEREBY DECLARED that nothing herein contained or implied shall prevent the said Edwin George Clarke [the subdivider] or his successors in title from time to time of the unsold residue of the said land comprised in Conveyance 27/7453 from

(a) Selling any Lot freed and exempt from any one or more of the restrictive covenants or stipulations contained herein.

(b) Modifying waiving releasing or allowing any departure from any of the said restrictive covenants in relation to any Lot or any portion of any Lot."

4 The subdivider's successors in title signed a document dated 4 July 2007 by which they purported to waive and release the relevant covenant, so that it no longer burdened the applicant's land. Counsel for the contradictors made a submission to me to the effect that the applicant had not established that, as at 4 July 2007, there still existed an "unsold residue" of the land comprised in the relevant conveyance. No such point was taken when the petition was before the council and its committee. The applicant therefore does not need to prove the continued existence of an "unsold residue" in order to establish any ground of review on which he relies.

5 The applicant's principal contentions in these proceedings can be summarised as follows:

• That the council committee erred in law by not treating the document signed by the subdivider's successors in title as a fully effective release or waiver.

• That the council committee erred by having regard to the expectations of purchasers of lots in the subdivision that the restrictive covenants would be complied with, without making allowance for the possibility that the subdivider or his successors in title would exercise the powers reserved by the schedule of easements. (That contention, of course, assumes the validity of the reservation and exercise of those powers.)

6 The contradictors' principal contentions can be summarised as follows:

• That they had indefeasible titles to their properties, which were not subject to any rights of the subdivider's successors in title.

• That the clause in the schedule of easements reserving powers to the subdivider and his successors in title was of no effect because there was no legislation authorising such a clause.

• That the document signed by the subdivider's successors in title purporting to waive and release the covenant was of no effect.

• That the council committee made no finding as to the status of that document, and had no duty to make such a finding.

• That, even if the subdivider's successors in title had powers pursuant to the schedule of easements, the council committee did not err by ignoring those powers or by attaching insufficient weight to them.

7 The Land Titles Act 1980, s40(2), provides that, subject to certain provisions that are not relevant to this case, "the title of a registered proprietor of land is indefeasible". The contradictors appear to be the registered proprietors of lots in the same subdivision as the applicant's land. I infer that, like the applicant's certificate of title, their certificates of title each bear a notation reading as follows:

Such a notation indicates that the land comprised in a certificate of title has the benefit of, and is subject to the burden of, whatever restrictive covenants are set out in the schedule of easements that forms part of the sealed plan. That schedule of easements is available on search. Any person searching the register could be expected to find the terms of the restrictive covenants and the accompanying reservation of power to the subdivider and his successors in title. If that was a valid reservation of power, no question of indefeasibility can arise because the notation is sufficient to incorporate the terms of the whole schedule of easements into the title of the registered proprietor.

The purported reservation of a power to release land from the covenants

8 The contradictors rely on the fact that, whilst Tasmania has legislation providing for the creation and recording of restrictive covenants in respect of Torrens title land, there is no legislative provision that makes express reference to the reservation of powers of release, waiver, modification or exemption to subdividers, vendors or others. In order to adjudicate upon their contentions, it is necessary to consider the effect of the acceptance of the sealed plan in 1976. That requires consideration of the history of restrictive covenants and the history of the Tasmanian legislation relating to restrictive covenants.

9 Restrictive covenants have been a feature of general law conveyancing for many years. The burden of such covenants ran with the land in equity, but not at common law, with the result that their restrictions were enforceable by injunction against the successors in title of a covenantor: Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143; Forestview Nominees Pty Limited v Perpetual Trustees WA Limited [1998] HCA 15; (1998) 193 CLR 154. Until 1930, the notation of restrictive covenants in Torrens title registers was not provided for in the legislation of any of the Australian States: Bradbrook and Neave_, Easements and Restrictive Covenants in Australia_, Butterworths, 1981, at 294. Since restrictive covenants confer only equitable rights, this was consistent with the policy that the register was not to record trusts or equitable interests: Real Property Act 1862, s66; Land Titles Act, s132(1). In Tasmania, the first legislation permitting the recording of restrictive covenants in the register was enacted in 1962. Provisions of that nature were made in two 1962 statutes. The Local Government Act 1962 provided for restrictive covenants to be created by inclusion in a schedule of easements forming part of a sealed plan: s464. The Real Property Act 1962 amended the Real Property Act 1886 by inserting new sections, ss27B to 27H, which provided for the registration of covenants made by purchasers with vendors.

10 Under the Local Government Act 1962, s464(5)(b), each proposal plan and final plan was to have attached to it a schedule of easements "setting forth in respect of each block or other portion of the estate ... the covenants the benefit or burden of which is to run therewith", and the schedule was deemed to be part of the plan. Under s464(17) a sealed plan, including the provisions as to restrictive covenants in its schedule of easements, took effect when the Recorder of Titles signed a notification that he had accepted it. Under s481 a corporation, ie a city or municipal council, was able to amend a plan that had taken effect under s464(17) on the application of any person having an interest in land subject to or affected by the plan. That provision was the predecessor of the LGBMP Act, ss103 and 104.

11 As a result of the 1962 amendments, the Real Property Act 1886, s27E, provided for the registration of instruments discharging covenants. If the land benefited by the covenant was held under the Real Property Act 1862, the instrument was to be signed by the registered proprietor of that land and any other persons having a registered interest in it: s27E(1)(a). If there was a general law title to the benefited land, the instrument of discharge was to be signed by "a person entitled wholly to discharge the covenant": s27E(1)(b).

12 Whilst Parliament legislated in 1962 to permit the recording of restrictive covenants in the Torrens title register, the relevant legislation was silent as to whether a developer or subdivider could, by including a proviso in a schedule of easements, preserve rights to exempt or release lots in a s464 subdivision from the burden of a covenant, or to modify the covenant. The reservation of such powers was a very common feature of English general law building schemes: Elliston v Reacher [1908] 2 Ch 665 at 672. In Reid v Bickerstaff [1909] 2 Ch 305 at 319, Cozens-Hardy MR referred to the covenants created by a building scheme as "the local law imposed by the vendors upon a definite area". In Mayner v Payne [1914] 2 Ch 555, Neville J had to interpret the provisions of a conveyance of land in a building scheme that was affected by a series of restrictive covenants which included a stipulation reserving to "the vendor" the right of allowing departures. At 564 - 565 his Lordship said the following:

"The land in question had been laid out as a building estate by Mr Webb, and I think that the best way of expressing the equitable view that is taken of the obligations of the subsequent owners of parts of an estate subject to such a plan is that adopted in Reid v Bickerstaff ... by the present Master of the Rolls, and I think other judges, that is to say, that it is a local law imposed by the vendor upon the holders of the land who have taken the land with notice of the existence of the local law. ...

What was effected by the deed was that the land was conveyed subject to stipulations set forth in the schedule, which were the local law that had been imposed by the original vendor. Then comes the covenant, which was both with the person who conveyed and also with the owners of any land to which the stipulations related, other than the land thereby conveyed, to observe, perform, and comply with the said stipulations. It seems to me that it is merely a covenant to obey the law of the locality as it stood, and when we examine what that law was we find it was a law which could be varied at the option of Mr Webb, the original vendor, who reserved by the sixteenth condition the right of allowing a departure from the stipulations in any one or more cases."

13 On the one hand, it might be thought that the reservation of powers of release and modification to developers and subdividers was so much a feature of general law building schemes that the enactment of provisions permitting restrictive covenants to be created in respect of Torrens title land implicitly made it possible for such powers to be reserved to a developer or subdivider. On the other hand, it might be thought that the inclusion of specific legislative provisions as to amendment and discharge indicated that Parliament intended to cover the field in this respect, and did not intend any other mechanism for the release or modification of covenants to be available. Expressio unius est exclusio alterius.

14 As far as I am aware there is only one Australian case relevant to this question: Jones v Sherwood Hills Pty Limited (unreported, Supreme Court of New South Wales, 8 July 1975). In that case Waddell J (as he then was) held that an instrument creating restrictions as to user pursuant to the Conveyancing Act 1919 (NSW), s88B - the equivalent of a Tasmanian schedule of easements creating restrictive covenants - had validly conferred powers of release, variation and modification on a company that did not have any interest in any land intended to be burdened or benefited by the restrictions. However that case is of no real assistance because the applicable legislation required every such instrument to indicate the persons (if any) having the right to release, vary or modify the restrictions. The case did not decide whether, in the absence of a statutory provision, powers of release and so forth could be conferred by the instrument. It concerned the scope of the operation of a statutory provision which has no equivalent in Tasmania.

15 Another factor that might be seen to weigh in the contradictors' favour is that, until the enactment of the Land Titles Act, s140, the Recorder of Titles had no statutory power to cancel recordings in the register that had ceased to affect land to which those recordings purported to relate. The fact that no such provision existed at the time of the enactment of s464 in 1962, and that the fact that the Local Government Act 1962 provided no mechanism for the updating of the register when a subdivider released or varied a covenant, might be seen as an indication that the reservation of such a power to a subdivider was not intended by Parliament to be possible. By contrast, s481(9), expressly provided for sealed plans to be amended by the Recorder of Titles to record amendments made pursuant to s481. That section applied to all amendments to sealed plans, including amendments to provisions in schedules of easements relating to restrictive covenants.

16 Counsel for the applicant relied on the Land Titles Act, s102(3), which provides as follows:

"(3) A covenant which runs with freehold registered land pursuant to subsection (2) may be enforced in equity notwithstanding any provision of this Act but has no greater operation or effect by the operation of this section than it would have if the land which it is intended to burden were not registered land and the registered proprietor of the land were affected in equity by express notice of the covenant."

17 From 1962 until the commencement of the Land Titles Act, there was a similar provision in the Real Property Act 1886, s27C, though that provision did not apply to covenants included in sealed plans. The words "notwithstanding any provision of this Act" are evidently intended to refer to provisions reflecting the policy that equitable interests are not to be recorded in the register: Land Titles Act, s132(1). It also seems that s102(3) is intended to preserve various rules of equity relating to the enforceability and unenforceability of restrictive covenants. For example, there is a rule that the benefit of a covenant will only run with the land if that land is truly capable of being benefited by the covenant: Re Union of London and Smith's Bank Limited's Conveyance; Miles v Easter [1933] Ch 611 at 631; Zetland (Marquis) v Driver [1938] 2 All ER 158 at 161. To take another example, there is a rule that only covenants relating to benefitted land, and not covenants personal to a vendor, will run with the burdened land: Fawcett and Holmes' Contract (1889) 42 Ch D 150; Formby v Barker [1903] 2 Ch 539. In my view the presence of s102(3) does not strengthen the applicant's case because s27C, which it replaced, did not apply to covenants included in sealed plans. The question of the validity of the purported reservation of powers to the subdivider and his successors in title has to be determined by reference to the legislative provisions that applied at the time of the subdivision in 1976, and s27C was irrelevant at that time.

18 Having considered the 1962 legislation and its context, I do not think one can confidently infer that Parliament gave any thought to the practice, in deeds creating covenants in respect of general law land, of reserving powers to subdividers and their successors in title. I certainly do not think that I can confidently infer that Parliament intended to cover the field by enacting provisions as to the amendment of sealed plans and the discharge of covenants in the Local Government Act 1962, s464(17), and the Real Property Act 1886, s27E(1). Because Parliament gave no thought to the sort of reservation of powers that this case is concerned with, and because that sort of reservation of powers was a common feature of the creation of restrictive covenants under the general law, I think the 1962 legislation should be interpreted as enabling restrictive covenants, qualified by the reservation of powers of exemption, release and modification to persons such as subdividers, to be created within the Torrens system. It is true that an instrument by which such a power was exercised would not itself have been registrable under the Real Property Act 1862, but the register was able to be updated whenever such a power was exercised through the mechanism of the local council amending the sealed plan pursuant to the Local Government Act 1962, s464(17). There is no reason why that provision should only have been used only to effect substantial changes to landowners' rights and obligations. It was also able to be used to amend a sealed plan to accord with changes to rights and obligations that had taken place outside the Torrens system, and I think the same situation now exists in relation to the LGBMP Act, ss103 and 104.

19 In my view the enactment of the Land Titles Act, s102(3), has made no difference to the situation. By virtue of that subsection, the covenant running with the applicant's land has no greater operation or effect than it would have had if his land were not registered land. If his land were not registered land, and if the provisions set forth in the schedule of easements had been set forth in a conveyance or deed of covenant, powers of exemption, release, waiver and modification could have been validly and effectively reserved.

20 It follows that, in my view, the powers of the subdivider's successors in title to release or waive the covenant were validly reserved and validly exercised.

The role and reasoning of the council committee

21 The applicant's primary contention is that the council committee erred in law by not treating the document signed by the subdivider's successors in title as a fully effective release or waiver. The applicant contends, in effect, that the council committee had a duty to decide that the powers of the subdivider and his successors in title had been validly reserved and exercised, and to determine the application before it on the basis that the relevant covenant had been released or waived. To reach a conclusion as to the validity or otherwise of the document signed by the subdivider's successors in title, the committee would have had to consider a number of very difficult questions of law. Did the enactment of s464 make it possible for powers of exemption, release and modification to be retained by subdividers and their successors in title? Did the conferring of powers to discharge covenants, and to amend sealed plans which included covenants, mean that no one was to have non-statutory powers to do such things in relation to Torrens title land? Did the indefeasibility of the titles to the properties with the benefit of the covenant prevent its release or waiver by non-statutory means? What effect did s102(3) have?

22 In my view the committee did not reach a conclusion one way or the other as to the validity of the purported release and waiver by the subdivider's successors in title. It did not accept the applicant's contentions as to that point, but it did not expressly reject them. It treated the situation as unclear. In par10 of its reasons, it said:

"What was not made clear to the committee was what right or power [the subdivider] had to modify a restrictive covenant. The committee accepts that [the subdivider's] successors in title are prepared to allow the modification of a restrictive covenant but do not accept that that act in itself either permits the modification or provides a sufficient reason for the Council to modify the covenant. The committee takes the view that it must assess the petition on its merits and determine whether it should exercise the power given to it to modify the sealed plan."

23 If, as the applicant contends, the subdivider's successors in title validly waived and released the relevant covenant so that it no longer burdened his land, he already had the right to build a second house on that land. If that were the situation, a successful petition to the council, whilst unnecessary, could have had two advantages for the applicant: (1) it would have eliminated the risk of anyone arguing that the covenant remained in force, and applying for an injunction to enforce it; and (2) it would have enabled the applicant to get the Recorder of Titles to make appropriate entries on all relevant certificates of title pursuant to the LGBMP Act, s104(5). That subsection enables her to "call in and cancel or correct any certificate of title affected by amendments" once a sealed plan, or a schedule of easements forming part of a sealed plan, has been amended.

24 The committee was in an unusual situation. It was being asked to amend a covenant so that it did not prohibit something which, according to a controversial submission made on the applicant's behalf, he already had the right to do. Given the situation in which the committee found itself, I am not persuaded that it had a duty to determine whether the covenant had been validly waived and released in respect of the applicant's land. The council still had the power to amend the sealed plan, whether the covenant had been validly waived and released or not, and whether or not the requested amendment would have had any practical or legal effect. The power to amend a sealed plan under the LGBMP Act, s104, is discretionary. The legislation is silent as to what factors are to be taken into account in relation to the exercise of that discretionary power. As far as I know, there are no reported cases suggesting that a statutory decision-maker with an unfettered discretion can have a legal duty to determine a difficult non-jurisdictional question of law.

25 The applicant also contends that, by not taking into account the waiver and release of the covenant, the committee failed to take a relevant consideration into account in the exercise of its power. By virtue of the Judicial Review Act, s20(b), such a failure results in an improper exercise of a power for the purposes of s17(2)(e), with the result that the Court is able to grant relief. However it is not sufficient for an applicant seeking review on that basis merely to show that something relevant has not been adverted to in a decision-maker's reasons. It is necessary to show that the consideration that was not taken into account is one which, by virtue of the applicable legislation, the decision-maker was obliged to take into account: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 per Mason J at 39. As the LGBMP Act is silent as to the matters that a council should or must take into account when considering a petition for the amendment of a sealed plan, I think it follows that the status of the purported release and waiver of the covenant was not a consideration that the council committee was required to take into account. The same applies to the possibility of purchasers of lots in the subdivision contemplating that such powers might be exercised.

26 The originating application in these proceedings lists a number of other grounds of review, some of which were not even mentioned by counsel in argument. It asserts that the council mistook the nature of its power by treating it as arbitral power, when it was bound to act judicially, but there is nothing in the committee's reasons to substantiate that suggestion. It asserts that the decision was contrary to law because the council failed to ascertain and enforce the respective rights of the applicant and the objectors but, for the reasons stated above, I do not think the council was under any such duty. It asserts that the council exercised its power so unreasonably that no reasonable person could so exercise it, but judicial review will be granted on that basis only in rare and extreme cases, and this is not such a case. See Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223; Clarence City Council v South Hobart Investment Pty Ltd [2007] TASSC 16; (2007) 16 Tas R 201 at 229.

27 I assume that the council committee was empowered to exercise the relevant powers of the council since there was no submission to the contrary. I accept the applicant's submissions to the effect that the subdivider's successors in title had the power to release or waive the covenant, and that they had validly done so. However I am not persuaded that the council or its committee was obliged to reach a conclusion on the very difficult question of whether that was the situation. No ground for judicial review has been established. The application is dismissed.