CLOS FARMING ESTATES P/L (REC. & MAN. APPT.) V. EASTON & ANOR [2001] NSWSC 525

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4378/00 CLOS FARMING ESTATES PTY LTD (RECEIVERS & MANAGERS APPOINTED) v. GRAHAM RUSH EASTON & ANOR

JUDGMENT 1 HIS HONOUR: These proceedings relate to the enforceability of a novel easement described in the Deposited Plan as Easement for Vineyard. Le Clos Verdun is an estate on the south bank of the Hastings River at Sancrox near Wauchope, New South Wales; the land in Deposited Plan 791199 is subdivided into 80 residential lots and 8 other lots. The Easement for Vineyard is the Fourteenth Restriction referred to in the Deposited Plan and its accompanying Section 88B Instrument. The plaintiff developed the estate and owned the land when the Deposited Plan was registered on 16 August 1989. The 80 residential lots have been sold off to various purchasers, Lot 86 has been retained by the plaintiff, and other lots have been dedicated as roads, or retained by the plaintiff and subjected to rights of way or easements for services such as water supply, electricity supply, telecommunication services, drainage, water storage and other uses. All the residential lots are burdened with restrictions as to user. The Deposited Plan and its Section 88B Instrument form an elaborate scheme of easements and restrictions directed towards creating and continuing an estate owned by many different proprietors but farmed for viticulture and crop farming under the control of whoever should be the registered proprietor of Lot 86, now the plaintiff but in the future any successor in title to Lot 86. 2 Lot 86 contains 5708 sq metres by plan and is situated in a generally central position in the estate; it is not a residential lot. There are permanent improvements on Lot 86; a metal machinery shed, a chemical shed and a brick farm office block. Lot 86 is being used for the storage of farm machinery. 3 The 80 residential lots are owned by various proprietors; the defendants Mr Easton and Mr Hibbert are the registered proprietors of Lot 27, which comprises two parts, Part A which by plan is 1542 sq m and has been described as the residential part, and Part B which by plan contains 1.537 hectares and has been described as the farming part. Each of lots 1 to 80 similarly comprises a Part A and a Part B; in no case is Part A contiguous with Part B, although Lot 27 is one of a few lots in which Parts A and B are separated only by a narrow strip subject to a right of footway; for Lot 27 the strip is 1 metre wide. The Development Zoning Plan Exhibit D says that the average farm is 1.38 hectares and the minimum net plantation exclusive of roads and waterways is 1.10 hectares. 4 The plaintiff lodged a caveat in July 1995, and in 2000 the defendants took steps to have the Caveat removed. The plaintiff in its Amended Summons claims a declaration that the plaintiff's interest as recorded in the Caveat is a caveatable interest, an order extending the caveat, and ancillary orders. In their Cross-claim the defendants claim a declaration that the Easement for Vineyard is not a valid easement, and alternatively a declaration which would establish that the right to deduct costs from proceeds of sale is not cumulative. They also claim removal of the caveat and ancillary orders. 5 When considering the validity of the Easement for Vineyard, Lot 86 should not in my opinion be taken in isolation, simply as the piece of land literally referred to in the Section 88B Instrument as the dominant land; the question whether the easement accommodates the dominant tenement should be considered in relation to Lot 86 with the benefit of all the easements and restrictions in its favour, not only over Lot 27, but also over other lots. These put the owner of Lot 86 in a position to conduct a single farming and viticulture operation on Le Clos Verdun estate, with overall control of tree preservation and removal, recreation and maintenance as well as farming and viticulture, and a skein of rights of way and other rights in aid of that control. The implications of this point of view are not uniformly favourable to the validity of the Fourteenth Restriction; it also has a place in appraising the novelty of the restriction and its inconsistency with proprietorship. 6 There was no conflict on the facts in evidence. There are conflicts as to whether some of the matters put in evidence are relevant, and as to the legal effects of the facts. The Agreed Statement of Facts and Issues (Exhibit C) is in the following terms: A. FACTS A1. The Defendants are the registered proprietors of certain land (Lot 27 in Deposited Plan 791199) at Sancrox in the Hastings local government area, Parish of Macquarie, County of Macquarie, New South Wales ("Lot 27"). A2. The Plaintiff is the registered proprietor of certain land (Lot 86 in Deposited Plan 791199) at Sancrox in the Hastings local government area, Parish of Macquarie, County of Macquarie, New South Wales ("Lot 86"). A3. Lot 27 and 86 form part of a residential and vineyard estate known as "Le Clos Verdun" developed in the 1980s by Gerard Cassegrain & Co. Pty Limited ("Cassegrain"). A4. In or about June 1988, the Defendants agreed to purchase Lot 27 from Cassegrain. A5. By agreement styled "Grape Sale and Purchase Agreement" dated 28 June 1988 between the Defendants and Cassegrain, the Defendants agreed to sell to Cassegrain all wine grapes produced on Lot 27 at certain prices, for a term of ten years commencing on 1 July 1988 and ending on 30 June 1998 ("the Grape Sale Agreement"). A6. By agreement styled "Farm Development Agreement" dated 30 June 1988 between the Defendants and the Plaintiff, the Plaintiff agreed to carry out certain works, including the establishment of grape vines, on Lot 27, by 30 July 1989. A7. By agreement styled "Farm Maintenance Agreement" dated 30 June 1988 between the Defendants and the Plaintiff, the Plaintiff agreed to maintain the grape vines so established on Lot 27, and carry out certain further services, for a term commencing on 1 July 1988 and ending on 30 June 1992 ("the Farm Maintenance Agreement"). A8. On 16 August 1989 there was registered pursuant to section 88B of the Conveyancing Act 1919 a Deposited Plan, numbered 791199, covering Le Clos Verdun. A9. Included in the Deposited Plan was a purported "Easement for Vineyard" which was expressed to benefit Lot 86 and to burden (among others) Lot 27, in the following terms: 13. Terms of easement or restriction fourteenthly referred to in the abovementioned plan:

Free right for every person in whose favour this easement is created and every person authorised by him and either with or without vehicles, farming implement and machinery, to enter, go, pass, repass, turn around and remain upon that part of the lot burdened marked "B" on the plan for the purpose of carrying out vineyard establishment works, the planting and replanting of grape vines and crops, the planting and harvesting of grapes and crops together with the right from time to time to sell the produce of such harvest and to deduct therefrom and retain the costs of farm maintenance, harvesting, packaging, freight, agents' commission, marketing and reasonable administration costs associated with such harvesting and the sale of such harvest. A10. On or about 20 September 1989, the Defendants completed the purchase contract and became registered as the proprietors of Lot 27. A11. At all material times: (a) the only permanent improvements on Lot 86 have been a metal machinery shed, a chemical shed and a brick farm office block. (b) Lot 86 has been used for the storage of farm machinery. A12. The Farm Maintenance Agreement expired on 30 June 1992 and was not renewed. A13. During each of the financial years ending 30 June 1994 to 1999 inclusive: (a) the Plaintiff, or a purported agent of the Plaintiff, has harvested grapes from Lot 27; (b) the Plaintiff, or a purported agent of the Plaintiff has claimed estimated future costs for farm maintenance, harvesting, packaging, freight, agents commission, marketing and administration costs associated with such harvesting and the sale of such harvest; (c) the Plaintiff, or a purported agent of the Plaintiff, has claimed that such costs have exceeded the proceeds of sale of such harvest; and (d) the Plaintiff, or a purported agent of the Plaintiff, has claimed to be entitled, pursuant to the "Easement for Vineyard", to carry forward costs claimed to have been associated with farm maintenance and harvesting of prior harvests against the proceeds of sale of subsequent harvests. A14. No maintenance has been carried out on Lot 27 by the Plaintiff, or a purported agent of the Plaintiff, since April 2000. A15. In or about July 1995 there was registered on Lot 27 a caveat by the Plaintiff in the following terms: The Caveator being the grantee of an easement pursuant to the "Easement for Vineyard" seventhly referred to in the Section 88B Instrument annexed to DP791199 and having by its duly authorised agent Gerard Cassegrain & Co. Pty Ltd entered upon the lot and carried out farm maintenance pursuant to the said easement the caveator is entitled to sell the produce of the lot and to deduct therefrom and retain the amount incurred by the Caveator from time to time and in respect of the cost of the farm maintenance, harvesting, packaging, freight, agents commission, marketing and reasonable administration costs associated with such harvesting and the sale of such harvest of the lot. A16. The Grape Sale Agreement expired on 30 June 1998 and was not renewed.

B. ISSUES B1. Whether the purported "Easement for Vineyard": (a) accommodates Lot 86, the purported dominant tenement; or (b) lies in grant. B2. If so, whether the "Easement for Vineyard" entitles the registered proprietor of Lot 86 to deduct from the proceeds of sale of grapes or crops harvested from Lot 27 the costs of farm maintenance and harvesting of that harvest only, or of any prior harvest. 7 The claim in the caveat should be understood, from the way the hearing was conducted, as making a claim that the right to deduct and retain costs is cumulative, so that if costs are not met from the proceeds of sale of a harvest they can be deducted and retained from the costs of a later harvest, as well (of course) as the costs relating to that later harvest. 8 Exhibit A is the Instrument under s.88B of the Conveyancing Act 1919 (NSW). This elaborate document sets out the terms of the easements and restrictions intended to be created, so as to give meaning and effect to statements of intention in the panel to the Deposited Plan. The scheme it creates is very elaborate. The First Restriction as to user is imposed on each residential lot in favour of all lots in the subdivision and relates to tree preservation, fire hazard, building construction materials and size and boundary fences. The Second Restriction relates to tree preservation on certain residential lots and is imposed in favour of Lot 86. The Third Restriction is imposed on each residential lot in favour of all other lots and prevents the erection of any building or fence on Part B of any lot. The Sixth Restriction burdens each residential lot in favour of the Hastings Municipal Council so as to require protection before the erection of any habitable dwelling. The Ninth Restriction burdens each residential lot in favour of Lot 86 in these terms: 9. Terms of easement or restriction ninthly referred to in the abovementioned plan: Full and free right for every person in whose favour this easement is created and every person authorised by him to enter upon that part of a lot burdened marked "B" and cut and remove timber therefrom, landscape the land, build paths, build trails and picnic areas, build structures, works or facilities for recreation and structures and works consistant with the enjoyment of the easement fourteenthly referred to in the plan.

The Tenth Restriction burdens each residential lot in favour of every other lot with an elaborately stated restriction which supports obtaining water by drainage, pumping and systems of pipes. The Fourteenth Restriction (at A9 of the Agreed Facts) is the Easement for Vineyard the validity of which is contested. 9 Many other restrictions affect various parts of the estate. Lot 87 is the site of a dam and is burdened in favour of every other lot with an easement to store water. There are elaborate rights of way supported by various restrictions. Some further restrictions are special to particular lots in favour of the Municipal Council, the Electricity Authority, and some or all other lots. The only ones of these which burden Lot 27 are the Fifteenth Restriction which creates an easement for electricity supply in favour of the Electricity Authority, the Eighteenth Restriction which creates a right of way in favour of every other lot over a strip of Part B three metres wide and the Twenty-Third Restriction which creates an easement for telecommunication services three metres wide over Lot 27 in favour of Lot 86. The plaintiff as owner of Lot 86, which bears no significant burden and no burden in favour of Lot 27, is given a very large measure of control over Part B of each residential lot by the Easement for Recreation and Maintenance (Ninth Restriction) the Easement for Vineyard (Fourteenth Restriction) and the cumulative effects of all restrictions. 10 For most restrictions, including the Ninth and Fourteenth Restrictions, the registered proprietor from time to time of Lot 86 is the person empowered to release, vary or modify the restrictions. For a small number the party empowered is a public authority and there are other minor exceptions. 11 Exhibit B is a copy of Deposited Plan 791199. When it was registered on 16 August 1989 the easements and restrictions came into existence and the various lots designated received the benefit and burden of the restrictions even though the plaintiff was the registered proprietor of them all. The subsequent transfer from the plaintiffs to the defendants is not in evidence. I infer that it did not contain covenants by the defendants agreeing that they would comply with the restrictions and imposing restrictions on their land; under the present statutory machinery, such covenants were not necessary for the creation of easements and the plaintiff did not give any evidence showing that there were any. The effect of the statutory machinery is that the easements and restrictions are imposed on the land while it is in the ownership of the registered proprietor who registered the Deposited Plan, and neither the original transferee from the person who registered the Deposited Plan nor subsequent assignees give personal covenants to observe them. Exhibit C is the Statement of Facts and Issues which I have set out. Exhibit D is a Development Design Plan which is useful as a general indication of the lay-out of the estate but is not a source of dimensions or other information in detail. 12 Exhibit E is the plaintiff's bundle of documents which was admitted in evidence over objection on terms which leave their relevance open to consideration. Document 3 in Exhibit E is the Agreement for Sale of land between Clos Farming Estates Pty Ltd as vendor and Mr Easton and Mr Hibbert as purchasers dated 30 June 1988. The defendants agreed to purchase the land in the then unregistered plan for $60,000. There were numerous special conditions dealing with the need for registration and events which may lead to modifications before completion. The plan of subdivision and the restrictions were identified by annexed drafts. Special Condition 12 was in these terms: The Purchaser acknowledges that the subject lot is sold subject to the Vendor's right to create and reserve the easements and restrictive covenants as shown in Plans A, and K1 and the draft Section 88B instrument annexed hereto and marked "C" and K2 ("the Encumbrances") and the Purchaser shall be deemed to buy with full notice of the proposed Encumbrances and will accept at completion a Certificate of Title describing the property with the Encumbrances duly noted thereon.

This provision is to be distinguished from a covenant given by the purchasers. 13 Document 4 is a tender by the defendants dated 30 June 1988 for purchase of the land for $60,000. Document 2 is a copy of a letter from the plaintiff to Mr Easton and Mr Hibbert's solicitors dated 28 June 1988 offering to carry out defined works of vineyard and farm maintenance until 30 June 1992 for $49,750 and a loan agreement to lend the defendant $100,000; these documents are endorsed with acceptances on behalf of the defendants. Document 5 is Farm Development Agreement dated 30 June 1988 between the plaintiff as contractor and the defendants as owners for carrying out various farm development works including construction of a dam on what became Lot 87 and works for irrigation and soil conservation, drainage control, trellis, electricity reticulation, fertiliser, fencing and hedges and other works. Document 1 is a letter from Cassegrain Vineyards Pty Ltd, which was in some way related to the plaintiff, making an offer to purchase grape production from a purchaser's lot; it was accepted that a similar letter (which has now been lost) was sent to the defendants and endorsed with their acceptance. Cassegrain Vineyards Pty Ltd thereby agreed to purchase all wine grapes produced on the lot until 30 June 1998. Document 6 is a pamphlet in the nature of a prospectus stating and commending the scheme for Clos farming at Le Clos Verdun. 14 These documents show the commercial context in which the defendants purchased Lot 27 subject to restrictions including the Easement for Vineyard. They are however commercial arrangements which were to operate for stated periods which have expired and their operation is now spent. In my view they do not and cannot add to or qualify the meaning and the legal effect of the restrictions. The operation of the Easement for Vineyard is not limited to any period of time or to any particular persons, and is to bind the land in the ownership of the defendants and all their successors in title perpetually, in favour of the land in the ownership of the plaintiff and all its successors in title perpetually. The Easement for Vineyard if effective is an incorporeal hereditament, a title to an interest in the land in Lot 27, and is altogether different in its nature and operation to a contractual obligation in which one identified party has given a binding covenant to another. Its meaning and its effect will be the same when all concerned now are dead and forgotten and their contracts have turned to dust. Its meaning and effect arise from what it says in its own terms, and are not affected by the operation of agreements inter partes which have now expired and appear to have covered, in different terms, somewhat the same ground as the Fourteenth Restriction. 15 The issues require consideration of the limits on the kinds of rights which may be created by easements and which may exist perpetually. The Common Law and its judges have for centuries favoured land being fully available for its owner to use and sell, and restricted the creation and operation of interests, including new classes of interests, which might have different effects. The enormous complexity of land law from medieval times onwards obscures this policy, but resistance to restrictions on use and alienation of land and on the wishes of property owners to limit the rights of their successors, to restrict alienation and to devise new forms by which to do so is of very long standing, and has included readiness to tolerate conveyancing devices and contrived litigation with the object of defeating medieval statutes which authorised conditional alienations. Relatively simple forms of easements relating to rights of way, the flow of water and natural light have long been known to the law. When in the Nineteenth Century more complex easements began to appear they were received with the same disposition against permitting the creation of new forms of landholding and new restrictions on ownership. Rules of law relating to easements and limits on the rights which can exist under them do not seem to have required or received much judicial attention before the Nineteenth Century. Attempts were made to embody relatively complex rights and restrictions in easements in the same era as restrictive covenants claimed attention. The judgments of Danckwerts J and the Court of Appeal of England In re Ellenborough Park [1956] 1 Ch 131 examined the development of the English law and stated the position reached, but not as an attempt to be exhaustive. The Court of Appeal's observations were carefully limited to the case before then, but they have had considerable influence by furnishing a starting point for later consideration. Counsel appearing were eminent and their arguments as reported were comprehensive. 16 At 163-164 Evershed MR speaking for the Court of Appeal said: For the purposes of the argument before us Mr. Cross and Mr. Goff were content to adopt, as correct, the four characteristics formulated in Dr. Cheshire's Modern Real Property, 7th ed., pp. 456 et seq. They are (1) there must be a dominant and a servient tenement: (2) an easement must "accommodate" the dominant tenement: (3) dominant and servient owners must be different persons, and (4) a right over land cannot amount to an easement, unless it is capable of forming the subject-matter of a grant. The four characteristics stated by Dr. Cheshire correspond with the qualities discussed by Gale in his second chapter, sections 2, 5, 3 and 6 and 8 respectively. Two of the four may be disregarded for present purposes, namely, the first and the third. If the garden or park is, as it is alleged to be, the servient tenement in the present case, then it is undoubtedly distinct from the alleged dominant tenements, namely, the freeholds of the several houses whose owners claim to exercise the rights. It is equally clear that if these lands respectively constitute the servient and dominant tenements then they are owned by different persons. The argument in the case is found, accordingly, to turn upon the meaning and application to the circumstances of the present case of the second and fourth conditions; that is, first, whether the alleged easement can be said in truth to "accommodate" the dominant tenement - in other words, whether there exists the required "connexion" between the one and the other: and, secondly, whether the right alleged is "capable of forming the subject-matter of a grant." The exact significance of this fourth and last condition is, at first sight perhaps, not entirely clear. As between the original parties to the "grant," it is not in doubt that rights of this kind would be capable of taking effect by way of contract or licence. But for the purposes of the present case, as the arguments made clear, the cognate questions involved under this condition are: whether the rights purported to be given are expressed in terms of too wide and vague a character; whether, if and so far as effective, such rights would amount to rights of joint occupation or would substantially deprive the park owners of proprietorship or legal possession; whether, if and so far as effective, such rights constitute mere rights of recreation, possessing no quality of utility or benefit; and on such grounds cannot qualify as easements. 17 The second and fourth characteristics referred to in this passage are also the subjects of the present case. What they involve is not fully expounded in the passage, and must be understood from review of case law. Their Lordship's views are further to be understood from passages in which they applied these characteristics. The characteristics or conditions in the brief formulation at 163 are not altogether easy to understand, or to distinguish from each other. Accommodation - the second of Dr Cheshire's conditions (though spoken of by Evershed MR as the first at 169) - was addressed at pp169 to 175, and the opening passage at 169-170 illustrates the concept of accommodation: For it was one of the main submissions by Mr. Cross on behalf of the appellant that the right of full enjoyment of the park, granted to the purchaser by the conveyance of December 23, 1864, was insufficiently connected with the enjoyment of the property conveyed, in that it did not subserve some use which was to be made of that property; and that such a right accordingly could not exist in law as an easement. In this part of his argument Mr. Cross was invoking a principle which is, in our judgment, of unchallengeable authority, expounded, in somewhat varying language, in many judicial utterances, of which the judgments in Ackroyd v. Smith (1850) 10 C.B. 164 are, perhaps, most commonly cited. We think it unnecessary to review the authorities in which the principle has been applied; for the effect of the decisions is stated with accuracy in Dr. Cheshire's Modern Real Property, 7th ed., at p. 457. After pointing out that "one of the fundamental principles concerning easements is that they must be not only appurtenant to a dominant tenement, but also connected with the normal enjoyment of the dominant tenement" and referring to certain citations in support of that proposition the author proceeded: "We may expand the statement of the principle thus: a right enjoyed by one over the land of another does not possess the status of an easement unless it accommodates and serves the dominant tenement, and is reasonably necessary for the better enjoyment of that tenement, for if it has no necessary connexion therewith, although it confers an advantage upon the owner and renders his ownership of the land more valuable, it is not an easement at all, but a mere contractual right personal to and only enforceable between the two contracting parties." 18 The easement was created when a residential estate was laid out in 1864, roads and a park or garden or pleasure ground were created and the conveyances to each purchaser of a residential lot created rights of way over the roadways and footpaths and rights to use drains "… And also the full enjoyment … at all times hereafter in common with the other persons to whom such easements may be granted of the pleasure ground set out and made in front of the said plot of land … in the centre of the square called Ellenborough Park which said pleasure ground is divided by the said Walliscote Road but subject to the payment of a fair and just proportion of the costs charges and expenses of keeping in good order and conditions the said pleasure ground And all the estate right title" etc. (at 165) 19 Their Lordships' decision on accommodation at pages 173-175 commences Can it be said, then, of the right of full enjoyment of the park in question, which was granted by the conveyance of December 23, 1864, and which, for reasons already given, was, in our view, intended to be annexed to the property conveyed to Mr Porter, that it accommodated and served that property?

After dealing with enhancement of value, which their Lordships said was relevant but not decisive, they went on at 173: " It appears to us that the question whether or not this connection exists is primarily one of fact, and depends largely on the nature of the alleged dominant tenement and the nature of the right granted." Their Lordships went on to review the facts and the arguments of counsel on the connection between the use of the dominant tenement as a house and the nature of the right to enjoy the garden which had been granted by the easement. In the course of stating their conclusion their Lordships said at 174-175: It is the collective garden of the neighbouring houses, to whose use it was dedicated by the owners of the estate and as such amply satisfied, in our judgment, the requirement of connexion with the dominant tenements to which it is appurtenant.

Their Lordships went on: The result is not affected by the circumstance that the right to the park is in this case enjoyed by some few houses which are not immediately fronting on the park. The test for present purposes, no doubt, is that the park should constitute a real and intelligible sense the garden (albeit the communal garden) of the houses to which its enjoyment is annexed. But we think that the test is satisfied as regards these few neighbouring, though not adjacent, houses. We think that the extension of the right of enjoyment to these few houses does not negative the presence of the necessary "nexus" between the subject-matter enjoyed and the premises to which the enjoyment is expressed to belong. 20 That is to say, their Lordships regarded it as necessary that in a real and intelligible sense there be a nexus between the subject matter of the easement and the dominant tenement. 21 Their Lordships went on to deal with Hill v. Tupper (1863) 2 Hurlstone & Coltman 121, 159 ER 51, and this passage is presently important. Mr. Cross referred us to, and to some extent relied upon, Hill v. Tupper , (1863) 2 H. & C. 121 but in our opinion there is nothing in that case contrary to the view which we have expressed. In that case, the owner of land adjoining a canal was granted the exclusive right to let boats out for hire on the canal. He did so and then sought to restrain a similar activity by a neighbouring landowner. He sought to establish that his grant constituted an easement but failed. Pollock C.B. said in his judgment Ibid. 127: "It is not competent to create rights unconnected with the use and enjoyment of land, and annex them to it so as to constitute a property in the grantee." It is clear that what the plaintiff was trying to do was to set up, under the guise of an easement, a monopoly which had no normal connexion with the ordinary use of his land, but which was merely an independent business enterprise. So far from the right claimed sub-serving or accommodating the land, the land was but a convenient incident to the exercise of the right. 22 In summary then their Lordships' view was that the question whether the right granted accommodated and served the dominant tenement was a question which required it to be shown that the right granted was connected with the normal enjoyment of the dominant tenement, and the question whether the connection existed was primarily one of fact and depended largely on the nature of the alleged dominant tenement and the nature of the right granted. The necessary nexus must exist in a real and intelligible sense. It is not enough that the land should be a convenient incident to the exercise of the right. 23 Evershed M.R. addressed the fourth condition at 175 to 187. Satisfaction of that condition was seen to depend on consideration of the three questions (the "cognate questions") referred to at 164. As with other parts of the subject the considerations raised by these questions are not sharply defined and it is not always easy to see them as aspects of the fourth condition, or as wholly distinguished from each other. Their Lordships saw the first question, whether the right conferred was too wide and vague, as one question and decided it on the interpretation of the deed by which the easement was created. In the present case the Fourteenth Restriction appears to me to be extremely wide, in a way which calls for consideration under the second question relating to inconsistency with the proprietorship or possession of the servient owners, but what is involved in it is reasonably clear and in my opinion it should not be said to be too wide and vague. There are elements of uncertainty in its meaning with respect to the right to deduct and retain costs, but these can be resolved as a matter of construction, as I do elsewhere in this judgment. 24 Their Lordships dealt with the second question at pp176-177 on the interpretation of the deed and on whether the right conferred amounted to a joint occupation of the park with its owners or an exclusion of the proprietorship or possession of the owners. Their Lordships pointed to acts of possession which remained open to the owners and said (at 176) "We see nothing repugnant to a man's proprietorship or possession of a piece of land that he should decide to make it and maintain it as an ornamental garden, and should grant rights to a limited number of other persons to come into it for the enjoyment of its amenities." Their Lordships considered and distinguished Copeland v. Greenhalf [1952] Ch 488. In that case Upjohn J had decided that the claimed easement really amounted to a claim to a joint user of the land and that that was not a claim which could be established as an easement. In the view of the Court of Appeal those facts bore no real relation to the case before them. In my view this question of inconsistency with proprietorship is of central importance in the present case. I will return to it. 25 The third question whether the right conferred is a mere right of recreation without utility or benefit required and received attention by the Court of Appeal at 177 to 187. The right purportedly conferred by the Fourteenth Restriction has no analogies to a mere right of recreation, and if effective its utility and benefit are clear. 26 As far as I am aware, easements which entitled the dominant owner to go on to the servient owner's land, cultivate it and take the grapes or crops so produced have never been subject of any judicial opinion favouring their validity; it would of course have been quite important for counsel to point out any such authority and I was not referred to any. This is a field where analogies in case law can be as illuminative as statements of principle, and close analogies would be particularly helpful. I asked counsel for references to judicial decisions which illustrate the concepts of accommodation and of exclusion of proprietorship. I was given many references, which I have considered, although not all of them call for observations in this judgment. On neither question were counsel able to refer to any decision which could be regarded as a close analogy. 27 Although the authorities preceding In re Ellenborough Park are a much trodden path, there are some to which I should refer. 28 Keppell v. Bailey (1834) 2 Mylne & Keen 517, 39 ER 1042 (Lord Brougham LC) appears to initiate the modern law of easements; earlier authorities are rarely cited. In Keppel v. Bailey the (leasehold) owners of ironworks called the Beaufort Works covenanted, for themselves their successors and assigns, to the owners of the Trevil Railroad that as long as they occupied the Beaufort Works they would procure all the limestone used in the Beaufort Works from the Trevil Quarry, convey all that limestone and also all ironstone along the Trevil Railroad and pay a toll of 5 pence per ton per mile (which was a high rate). The owners of the Trevil Railroad brought Chancery proceedings to enforce this covenant against an assignee of the Beaufort Works who purchased them with notice of the covenant. The case was presented and argued very elaborately: see pp524-527: in terms which illustrate that the law of easements had not assumed its modern form. Lord Brougham LC refused relief on a ground relating to departure of the arrangement from legislation regulating the railway. He rejected several other grounds and said (at 533) "… upon the best consideration which I can give to the nature of the covenant, it appears to me very clearly that the covenant does not run with the land, and therefore is not binding upon the assignees …". 29 The balance of the judgment 533 to 549 expresses some of the foundational ideas of the modern law. One is that there are limits on the kind of interests in land, including easements, which the law will allow to be created. What Lord Brougham LC said about this has not been the Common Law's last word on this subject, but it should be noted. At 535 Lord Brougham LC said: Consider the question first upon principle. There are certain known incidents to property and its enjoyment; among others, certain burthens wherewith it may be affected, or rights which may be created and enjoyed over it by parties other than the owner; all which incidents are recognised by the law.

His Lordship gave examples at 535-536. All these kinds of property, however, all these holdings, are well known to the law and familiarly dealt with by its principles. But it must not therefore be supposed that incidents of a novel kind can be devised and attached to property at the fancy or caprice of any owner. It is clearly inconvenient both to the science of the law and to the public weal that such a latitude should be given. There can be no harm in allowing the fullest latitude to men in binding themselves and their representatives, that is, their assets real and personal, to answer in damages for breach of their obligations. This tends to no mischief, and is a reasonable liberty to bestow; but great detriment would arise and much confusion of rights if parties were allowed to invent new modes of holding and enjoying real property, and to impress upon their lands and tenements a peculiar character, which should follow them into all hands, however remote. Every close, every messuage, might thus be held in a several fashion; and it would hardly be possible to know what rights the acquisition of any parcel conferred, or what obligations it imposed. The right of way or of common is of a public as well as of a simple nature, and no one who sees the premises can be ignorant of what all the vicinage knows. But if one man may bind his messuage and land to take lime from a particular kiln, another may bind his to take coals from a certain pit, while a third may load his property with further obligations to employ one blacksmith's forge, or the members of one corporate body, in various operations upon the premises, besides many other restraints as infinite in variety as the imagination can conceive; for there can be no reason whatever in support of the covenant in question, which would not extend to every covenant that can be devised. 30 The Common Law and its courts maintain public policy controls over the kinds of easements which may be created. 31 At 536-537 Lord Brougham LC went on to distinguish between restrictions imposed on freehold land and restrictions imposed under leases, which bind assignees of leases if they touch and concern the land; his Lordship gave several formulations of this test, which itself is not precise, and illustrated by reference to case law that the limits upon the restrictions which may be imposed on freehold land are narrower than the limits for leases. This distinction has become an established aspect of the law of easements, as later cases have not applied to freehold land the test relating to touching and concerning the land, or other formulations of the law relating to covenants which run with leases. His Lordship made an extensive review of ancient and recent case law, leasehold and freehold, and stated (at 546) that examination of the authorities confirmed the view which he had taken on principle, and that whether or not there was privity of estate, the covenant was not enforceable against an assignee. His Lordship also considered and rejected an argument which appears to have been a precursor of Tulk v. Moxhay (1848) 2 Phillips 774, 41 ER 1143. 32 Ackroyd v. Smith [1850] 10 CB 164, 138 ER 68 was referred to in Ellenborough Park at 170 as authority for the second condition relating to accommodation of the dominant tenement. A right to use a road over the grantor's land had been granted by a deed of conveyance of a parcel of land, but the right to use the road was not restricted to purposes connected with the occupation and enjoyment of the land conveyed but extended to using the road for purposes not connected for the enjoyment of that land. The Court of Common Pleas, relying principally on Keppell v. Bailey, held that the benefit of the right to use the road did not pass to a later assignee of the land conveyed. At 187 Cresswell J speaking for the Court referred to Keppell v. Bailey at 537 and Lord Brougham LC's statement of the test for covenants in leases to run with land and said (at 187-188): Upon the same principle, it appears to us that such a right, unconnected with the enjoyment or occupation of the land, cannot be annexed as an incident to it: nor can a way appendant to a house or land be granted away, or made in gross; for, no one can have such a way but he who has the land to which it is appendant … It is not in the power of a vendor to create any rights not connected with the use or enjoyment of the land, and annex them to it: nor can the owner of land render it subject to a new species of burthen, so as to bind it in the hands of an assignee. "Incidents of a novel kind cannot be devised, and attached to property, at the fancy or caprice of any owner:" per Lord Brougham C in Keppell v. Bailey . This principle is sufficient to dispose of the present case. It would be a novel incident annexed to land, that the owner and occupier should, for purposes wholly unconnected with that land, and merely because he is owner and occupier, have a right of road over other land. And it seems to us that a grant of such a privilege or easement can no more be annexed, so as to pass with the land, than a covenant for any collateral matter. 33 In Hill v. Tupper [1863] 2 Hurlstone & Coltman 121, 159 ER 51 (cited in Ellenborough Park: see my para.[21]) the Court of Exchequer decided against the validity of an easement granting the sole and exclusive right of putting and using pleasure boats for hire on a canal. The servient tenement was the canal. The plaintiff held a lease for seven years from the canal proprietor of a parcel of land adjoining the canal wharf containing 19 poles, a little under one-eighth of an acre or about 480 square metres, with a wooden cottage, boat house and other structures, and the lease also gave him sole and exclusive rights to put boats on the canal and let them for hire for pleasure. The defendant, an innkeeper, kept pleasure boats, used them on the canal and allowed inn customers to use them for fishing and bathing, to his pecuniary advantage. The plaintiff sued the defendant, it would seem for trespass; the canal proprietors were not parties. The Court of Exchequer held that the lease did not create such an estate or interest in the plaintiff as to enable him to maintain an action. Pollock C.B. at 127-128 said: "… I do not think it necessary to assign any other reason for our decision, than that the case of Ackroyd v. Smith 10 CB 164 expressly decided that it is not competent to create rights unconnected with the use and enjoyment of land, and annex them to it so as to constitute a property in the grantee …. A new species of incorporeal hereditaments cannot be created at the will and pleasure of the owner of property; but he must be content to accept the estate and a right to dispose of it subject to the law as settled by decisions or controlled by act of Parliament." Martin B said at 128: "To admit the right would lead to the creation of an infinite variety of interests in land, and an indefinite increase of possible estates" and referred to Ackroyd v. Smith and Keppell v. Bailey. In Ellenborough Park this decision was treated as a decision under the second condition: see 175, and the words of Pollock C.B. which were referred to seem to show the view that the rights to let out pleasure boats on the canal were unconnected with the use and enjoyment of the land leased. Pollock C.B. and Martin B also referred to novelty and the inadmissibility of new interests in land, which seem to direct attention to the fourth condition. 34 The citation of authorities by counsel for the plaintiff before me was very numerous. The citations included Manning v. Wasdale (1836) 5 Adolphus & Ellis 758, 111 ER 1353, which is an instance of an easement by prescription to take water from a pond; the decision relates to the effect of disuse. In Moody v. Steggles (1879) 12 ChD 261 Fry J decided that an easement acquired by prescription to hang a sign board on the wall of the defendant's house advertising a public house accessible down a narrow side street was effective. Moody v. Steggles should be seen as accepting that a commercial use to which the dominant owner's land is put can be relevant to the second condition and to accommodating the dominant land. Fry J rejected the contention that the easement was ineffective because it related not to the tenement but to the business of the occupants of the tenement; see 266. Fry J did not refer to Hill v. Tupper, although counsel had done so. His Lordship referred to several earlier decisions in which easements had related to trade or commercial use of the dominant tenement. 35 Counsel referred me to other cases on easements which benefit trade, including Clapman v. Edwards [1938] 2 All ER 507; I do not see this case as in point because it related to the terms not the existence of the easements. Counsel also referred to Frater v. Finlay [1968] 91 WN (NSW) 730 at 736; this decision relates to an easement for water for pastoral purposes; such easements have been recognised for many centuries and its citation was not helpful. Copeland v. Greenhalf [1952] 1 Ch 488 relates principally to the fourth condition but included a ruling by Upjohn J at 497-498 rejecting the submission that an easement must be for the benefit of land and not of a business and following Moody v. Steggles. 36 In my opinion it is established that the use to which the dominant land is put when the easement is created is relevant to the second condition and to accommodating the dominant tenement. However it has not been established that any facilitation of any business or commercial use in which the dominant land is involved is sufficient. I do not think it is a correct view of Hill v. Tupper that it was decided on the basis that uses involving a commercial element cannot be relevant to the accommodation of the dominant tenement, or are less readily seen as doing so than some other class of uses. Expressions in Ellenborough Park at 175 provide a clearer explanation for the decision in Hill v. Tupper than readily appears from its short judgments; that explanation is that there was no normal connection between a monopoly in pleasure boat business on the canal and the ordinary use of the small piece of land on its bank. It would have been wrong on the facts to see the boating business and its exclusivity as accommodating the leasehold of the land which was a minor part of the activities and events. The right granted in Hill v. Tupper was novel in respect of its lack of real connection with the land leased. The novelty, in the law of easements, of an exclusive right to let out pleasure boats is not a true expression of the difficulty. In Moody v. Steggles the perception that the inn sign accommodated the inn was, I would have thought, quite irresistible. 37 R v. Registrar of Titles; Ex Parte Waddington [1917] VLR 603 can in my opinion best be understood as relating to the second condition and the accommodation of the dominant land. A developer created a private street over land which he developed and sold; he provided each of his transferees with a right of way over another private street over which it was necessary for them to pass to reach a public street. To do this he used a conveyancing device; each of his transferees also received from him a small lot which was part of a strip of land which separated the private streets and was entitled to a right of way over the other private street. The strip was one link wide and 76 links long; each transferee from him received title to one square link and a right of way over the remaining 75 square links in the strip, and also obtained the benefit of the existing right of way over the other private street. His transferees thus had a right of way over the other private street, but for each transferee the dominant land was not his land in the new subdivision, but a tiny part of the strip. A link is 7.92 inches and a square link is 62.7264 sq inches or 0.040458 square metres. It is now practically impossible to use this strange conveyancing device because of statutory controls over subdivisions. Its effectiveness was not disputed by the owner of the servient land but by the Registrar of Titles. Hood J said to the effect that the transaction was not forbidden or illegal, and that it was perfectly honest. His decision turned on this sentence at 606: "In the present case I cannot say that this roadway must be used for purposes wholly unconnected with the land." (By "the land" he meant the one square link part of the strip.) His Honour also said at 607 "So long as it does not appear that the right claimed is wholly unconnected with the beneficial use of the land in question, that it is in no way connected with the enjoyment of the dominant tenement, it is, in my opinion a valid easement." His Honour's decision on the question of accommodation gave effect to a conveyancing device, convenient to the parties and harmless to nobody, and there was no novelty about the kind of easement he considered, which was a right of way. 38 Observations of Pollock CB in Hill v. Tupper appear to show that new classes of easements cannot be created. This is not the law; it was not the law when Hill v. Tupper was decided. In Attorney General of Southern Nigeria v. John Holt & Co. (Liverpool) Ltd [1915] AC 599 at 617 Lord Shaw for the Privy Council said "The law must adapt itself to the conditions of modern society and trade, and there is nothing in the purposes for which the easement is claimed inconsistent in principle with a right of easement as such. This principle is of general application, and was so treated in the House of Lords in Dyce v. Hay (1852) Macqueen 305 by Lord St Leonards LC who observed: 'The category of servitudes and easements must alter and expand with the changes that take place in the circumstances of mankind'". Lord Shaw spoke in relation to an easement to store goods involved in sea carriage on waterfront land; not a change in the circumstances of mankind, but a continuation of thousands of years of practice. 39 Novelty has been referred to in some cases which did not relate to activities which were in any way new. Novelty comes under consideration for the second condition, and also for the fourth condition and second question. Rights to store goods have been variously upheld - Attorney General of Southern Nigeria v. John Holt & Co. (Liverpool) Ltd [1915] AC 599 and Wright v. Macadam [1949] 2 KB 744 and held invalid - Grigsby v. Melville [1972] 1 WLR 1355 (affirmed on other grounds [1974] 1 WLR 80). Rights to park motor vehicles have been upheld in London and Blenheim Estates Ltd v. Ladbroke Retail Parks Ltd [1992] 1 WLR 1278 and held invalid in Copeland v. Greenhalf [1952] Ch 488. Parking vehicles and storing goods are probably older activities than creating easements. In my view these cases were well explained by Judge Paul Baker QC in the Chancery Division in London and Blenheim Estates. (Judge Baker's views were not disapproved when his decision was affirmed on other grounds [1994] 1 WLR 31). Judge Baker dealt with the right to use a car park at 1284-1288 and in doing so reviewed case law on storage of goods and car parking. Of Copeland v. Greehalf his Honour said at 1286 "The matter must be one of degree. A small coal shed in a large property is one thing. The exclusive use of a large part of the alleged servient tenement is another." At 1288 his Honour said: "That leaves the main point under this head, whether the right to park cars can exist at all as an easement … the essential question is one of degree. If the right granted in relation to the area over which it is to be exercisable is such that it would leave the servient owner without any reasonable use of his land, whether for parking or anything else, it could not be an easement though it might be some larger or different grant. The rights sought in the present case do not appear to approach anywhere near that degree of invasion of the servient land. If that is so … I would regard the right claimed as a valid easement." The validity of easements for storing goods or parking vehicles depends on the nature and circumstances of the servient tenement, the operation in detail of the purported easements and their effect on the servient tenement. 40 In the Commonwealth v. The Registrar of Titles for Victoria (1918) 24 CLR 348 Griffiths CJ referred to Dyce v. Hay and Attorney General of Southern Nigeria v. John Holt in the context of novelty in an easement. His Honour said at 354 "In the course of argument I referred to several possible easements novel in kind. For instance, an easement or servitude for the passage of aeroplanes through the superjacent air of the servient tenement to a landing place, for the passage of electric current through suspended wires passing through that air, for the free passage of the flash from a heliograph station." These observations illustrate that novelty has several aspects. An easement may be novel in that it accommodates the dominant land in a way which only became possible or useful because of some relatively recent invention; and the easements for electricity supply and telecommunications services furnish ready examples. Easements for services of kinds which arise from new technology are novel in the sense that technology is new and until it was invented land was not accommodated by it, but if the dominant land is accommodated and the servient land is burdened in ways analogous to the operation of easements which were earlier known novelty could not be an obstacle to the validity of the easement. Another aspect of novelty is novelty in respect of the manner and degree of intervention in the rights of the servient owner. Evaluation of the degree of intervention will be required. Novelty presents difficulty for the validity of an easement when the intervention with the servient tenement differs from interventions which are already known, and does so markedly as to bring under consideration the question whether it creates an interest of a new kind outside the known concept of an easement. What cannot be done is to create new kinds of interests in land. This cannot be done because it conflicts with the principle referred to by Lord Brougham LC in Keppel v. Bailey in the passages I have cited at para[29]. 41 In appraising the degree of intervention in the servient owners' opportunity to use the land attention must be directed to restrictions other than the Fourteenth Restriction, including the easement for recreation and maintenance which entitles the dominant owner to enter Part B, cut and remove timber, landscape the land and build riding trails and picnic areas, structures, works and facilities for recreation. In terms of reality the servient owner has no opportunity to do anything which is related to farming, except in a way which is altogether subordinated to and does not interfere with the rights of the dominant owner. The servient owners' opportunity for recreational activity, whether it is enjoyment of rustic tranquillity or anything more active, is merely nominal having regard to the dominant owner's entitlement to carry out vineyard establishment works, plant and replant grapevines and crops, plant harvest slash and spray crops, and carry out vineyard maintenance and harvesting. It is true that the owner will not be a trespasser provided that he keeps out of the dominant owner's way, but his rights are no more than a shadow of ownership and possession of a freehold and do not have any reality beyond the opportunity to experience a sense of proprietorship and the opportunity to receive and pay bills for municipal rates. 42 The plaintiff's written submissions included the following at paras.19.2 and 19.3: 19.2 In the present case, while the Easement for Vineyard may confer upon the farm manager the right to enter upon part B of each Clos Farm, it leaves to the farmer the benefit of the crop, subject to deduction of the costs of farm maintenance and harvesting. The grapevines remain the property of the Farmer. Thus the Easement for Vineyard does not leave the servient owner without any reasonable use of part B of the servient land; it leaves to the servient owner the ownership and benefit of the crops which grow upon part B, and additionally the ability to enter upon and enjoy part B for recreational purposes. 19.3 Accordingly, although the Easement for Vineyard gives CFE considerable rights in respect of the servient tenement, it does not give exclusive and unrestricted use amounting to joint possession of it, and is not invalid for that reason. 43 It will be seen how little it was contended that servient owners actually could do on their Part B. They can enter on and enjoy Part B for recreational purposes; but that is not an opportunity which appears to me to have any realistic utility, as the land is not recreational land. Part B is farming land, available to use for production of crops in addition to grapevines, and subject to the exercise by the dominant owner when and as the dominant owner thinks right of all the rights referred to in the Fourteenth Restriction, not only in relation to grape vines but also any summer crops or other crops which may be sown between the vines or elsewhere on Part B. Material in Exhibit E illustrates the prospect that cropping in addition to viticulture will be carried out. Opportunities for recreation are severely limited by the primacy of viticulture and cropping, and the need to refrain from any acts which interfere with them. The defendants as owners of Lot 27 do not in reality have any opportunity to carry out viticulture or other cropping activities on Part B, because they would have to desist from anything they were doing if it conflicted with any activity under the Fourteenth Restriction, and the plaintiff would be entitled to override anything the defendants did while exercising those rights. 44 In Ellenborough Park passages in the judgment of the Court of Appeal at 175-176 clearly show the view of the Court that a right is incapable of forming the subject matter of an easement, and is invalid as an easement, if it is inconsistent with the proprietorship or possession of the servient owners, and that if the right conferred amounted to a joint occupation with the owners, or excluded the proprietorship or possession of the owners it would be so inconsistent. In illustration of this the plaintiff's counsel referred to the passage in the judgment in Lopes LJ in Reilly v. Booth [1889] 44 ChD 12 at 26 which was approved by Lord Ashbourne in the House of Lords in Metropolitan Railway Co. v. Fowler [1893] AC 416 at 428. The Metropolitan Railway case turned on statutory construction and on whether the rights conferred on the railway company in respect of a tunnel under a highway in the City of London made the tunnel a hereditament for the purpose of a statute imposing land tax. The actual holding of the House of Lords is not of wide import, although in an oblique way it supports the view that a statutory right to exclusive possession of land including a stratum of land creates a freehold interest in the land. At 428 Lord Ashbourne said: I concur with Cave J. and the three judges of the Court of Appeal that the railway company took more than an easement; they took an interest in land - taking a practically perpetual right of exclusive possession in the tunnel. The case of Reilly v. Booth 44 Ch. D.26 supports this view - the words of Lopes L.J. there are in point: "The exclusive or unrestricted use of a piece of land,' "beyond all question passes the property or ownership in that land, and there is no easement known to law which gives exclusive and unrestricted use of a piece of land." 45 It appears from Evershed MR's observations in Ellenborough Park at 168 that an intervention less extreme than an exclusive and unrestricted use of a piece of land can invalidate a supposed easement. 46 At several points in his submissions the plaintiff's counsel put contentions of fact relating to the use of Lot 86 and its place in the functioning of the easement which were not supported by evidence. At one point he described Lot 86 as the place from which the plaintiff as dominant owner conducts its business of farm management; at another point he said that the easement accommodates the business of farm management carried out by the plaintiff from Lot 86 and at another point he said that Lot 86 was created for the specific purpose of enabling its owner to manage the Clos farms. At a further point he said that the Fourteenth Restriction makes Lot 86 a more convenient property for the farm manager. The evidence did not warrant these submissions. The most that can be said is that there are buildings on Lot 86 which it would be convenient to use in the conduct and management of farming operations over the estate. The evidence does not, for example, establish that there is any business or farm management operation conducted on Lot 86 which can be drawn into example for a comparison with the inn and the inn sign in Moody v. Steggles. 47 In my opinion there is no reality in the perception that the Easement for Vineyard created by the Fourteenth Restriction accommodates Lot 86. This is so whether or not some structures associated with viticulture and cropping stand on Lot 86. There is nothing in the Agreed Facts which ties the activities under the Fourteenth Restriction to the ownership of Lot 86 or to any activity which takes place there, or which shows any accommodation, advantage or enhancement in respect of Lot 86. If Lot 86 is considered as a piece of land, the use of Lot 86 is not enhanced and Lot 86 is not accommodated in any way by the fact that the owner of Lot 86 has a right to take vehicles, implements and machinery onto Lot 27 and carry out works there, or to take the harvest, still less by the right to sell the produce of the harvest and deduct some costs therefrom. Lot 86 could be a convenient incident to action under the Fourteenth Restriction: but that is not enough. The fact that the owner of Lot 86 is also the owner of the rights over Lot 27 is not an accommodation of Lot 86; it is only a coincidence that both sets of rights have the same owner. There is no analogy with the accommodation of the site of the inn in Moody v. Steggles by the sign board at the end of the alley. Lot 86 is a peg on which to hang dominant ownership and steer the Section 88B Instrument through the registration process. 48 When the course of argument required the plaintiff's counsel to tabulate the advantages of ownership which remain to the servient owners he submitted in written reply: It cannot be said that this leaves the servient owner with no reasonable user. That is more strongly the case given that when the Easement was created, it was with the purpose of facilitating the conduct of a Clos Farm by a single manager for the benefit of all the farmers. Nothing in the easement excludes the servient owner from using Part B. It must be remembered that, by the contract of purchase the servient owner contracted to purchase, the vines and have them installed on Part B. 49 This submission illustrates the sterility and nominal character of what remains to the servient owners; ownership of vines which are to be cultivated and harvested by someone else, produce of vines which they cannot take and cannot sell, the right to use Part B for other purposes when they cannot use it for the agricultural purpose for which it is suited, and the right to exclude other persons when few could have any inducement to be there, apart from persons drawn by the exercise of other rights of the plaintiff relating to recreational usage. The production of profits of use of land is something over which the servient owners are deprived of all control. Except when the bill for rates arrives, their proprietorship is no more than a historical relic. 50 On an overall view the Fourteenth Restriction is the keystone of a structure of restrictions which creates an estate in which lots are nominally held under freehold title but actually held subject to seigneurial rights which put all opportunities to carry out viticultural and agricultural activities in the hands of the dominant owner, for all the farming land in the estate, and leave the freehold owners in a servile powerless condition. This is a novel scheme of ownership with rights of ownership not known to the law. It is a re-invention, and an imposition on freehold title, of the substance of the scheme of manorial and copyhold title which existed in England centuries ago and has been abolished there, but was never introduced into Australia. In my opinion the law of easements cannot be used to change the nature of freehold ownership in this way and to create a substantially different kind of land title. The freeholders are neutralised and powerless, unable to control or in truth to influence what is to happen on their agricultural land. Putting the land to its highest and best use is impeded, to the detriment of the public interest as well as the interests of the freeholders. The scheme including the Fourteenth Restriction is radically novel and, goes beyond what the law of easements can achieve. The Fourteenth Restriction is invalid because it fails both the second condition and the fourth condition and second question referred to in Ellenborough Park. 51 In my opinion the Fourteenth Restriction does not create a valid easement, or any other interest in the defendants' land. 52 The dominant owner is entitled according to the Fourteenth Restriction to harvest grapes and crops, sell the produce, deduct the costs and (by implication) is obliged to pay the un-deducted balance of the proceeds of sale to the servient owner. The dominant owner is to harvest the grapes and crops and sell them, and this conveys the implication that after harvesting them the dominant owner will own them so as to be entitled to sell them and pass ownership to the buyer. There is no attempt to create an agency relationship and the exercise of the right to harvest under the Fourteenth Restriction would not depend on any authority conferred by the servient owner or on any agency relationship and would be independent of any consent of the servient owner such as it could create an agency relationship. The dominant owner has no discernible motivation to carry on operations under the Fourteenth Restriction in a way which would produce or maximise a balance payable to the servient owner; the dominant owner has no economic interest in the amount of money paid to the servient owner as the balance, and has no discernible strong motivation to carry on operations at all on a basis on which it is paid only the costs which are incurred. Any economic motivation the dominant owner had could only be indirect, relating to the opportunity to choose the buyer to which and the price at which it would sell the produce, and the opportunity to employ itself, at cost, in tasks of farm maintenance, harvesting, packaging and so forth. There are no express terms of the Fourteenth Restriction binding the dominant owner to carry out operations subject to reasonable restraints or limits. It is left altogether to the dominant owner to decide how much vineyard establishment works or other works will be carried out, what costs will be incurred for them, and similarly for all other costs. The only control which incorporates any reasonable limit relates to administration costs associated with harvesting and the sale of harvest; otherwise there is no requirement that the works or the costs be subject to reasonable limits. If costs wholly use up the proceeds of sale as a result of management decisions of the dominant owner and this continues year by year, the servient owner has no grounds for complaint. The plaintiffs have contended that if the costs exceed the proceeds of sale, they are entitled to carry forward the unpaid balance of costs and deduct it from the proceeds of the sale of a later harvest. Whether or not this is correct, the position of the servient owners as owners of agricultural land is reduced to a nominal relation with their property; there is no economic reality or other reality about their relationship with Part B. 53 The acts which the dominant owner may carry out from time to time form, for each time of exercise, a related cycle of sales of produce and deduction of costs. Association of costs with "such harvesting" and the sale of "such harvest" in the words used is inconsistent with relating the produce of a harvest back to costs associated with some earlier harvest which could not be deducted from the proceeds of that earlier harvest but exceeded them. It is from - "therefrom" - the produce of a harvest that the costs "associated with such harvesting and the sale of such harvest" may be deducted, not from the produce of any other harvest. The right referred to in the phrases of the Fourteenth Restriction relating to selling produce is a right to be exercised from time to time and the right to make deductions is related by the words used to deductions out of the produce of a particular harvest produced by the exercise of the right from time to time. In my opinion the Fourteenth Restriction according to its meaning and effect does not create a right to carry forward undeducted losses and charge them against the proceeds of a later harvest. 54 Interest in the nature of a profit a prendre. The plaintiff's counsel submitted that the Fourteenth Restriction is an interest in land in the nature of a licence coupled with a grant, of a kind called an interest in the nature of a profit a prendre or an irrevocable licence coupled with an interest; not being a true profit a prendre but a quasi profit. In illustrating this submission counsel referred to statements in case law which assist understanding what is meant by a profit a prendre. A modern statement was made by Winn LJ in Alfred F. Beckett Ltd v. Lyons [1967] 1 Ch 449 at 481-482: "The subject matter of a profit a prendre must be something which is capable of ownership, for otherwise the right would amount to a mere easement. With regard to the distinction between easements and profits, Halsbury's Laws of England, 3rd ed., Vol 12 (1955), p522, para.1129, states that an easement only confers a right to utilise the servient tenement in a particular manner, or to prevent the commission of some act on that tenement, whereas a profit a prendre confers a right to take from the servient tenement some part of the soil of that tenement or minerals under it or some of its natural produce, or the animals ferae naturae existing upon it." 55 In Bettison v. Langton [2000] Ch 54 at 60-61 Robert Walker LJ adopted a description of a profit a prendre as "a right to take something off another person's land", and cited authorities and a passage in Megarry & Wade, The Law of Real Property, 5th ed. (1984) at 834. His Lordship's judgment was affirmed, with approval, in the House of Lords in its unreported decision of 17 May 2001 [2001] UKHL24: see Lord Scott of Foscote at [36]. The nature and definition of a profit a prendre was not, however, the central question in that case. 56 The plaintiff's counsel said, apparently as a concession, that the present case is not a true profit because it is implicit in the concept of a profit that the thing taken should become the property of the person having the profit, and the Fourteenth Restriction does not give the plaintiff the right to take the harvest for its own use and benefit. I do not accept this because in my view the effect of the Fourteenth Restriction is that the dominant owner owns the grapes or other harvest when harvested; the dominant owner must own them if it is to sell them effectually and pass title, and does not have the authority of the servient owners to pass title to purchasers but acts as of its own right. 57 There are complexities about identifying what is meant in this context by natural produce. It has been established that water in a spring or pond is not natural produce for this purpose. In National Executors & Trustees Co. of Tasmania Ltd v. Edwards [1957] Tas SR 182 (which related to mineral ores) Morris CJ at first instance said at 187: " … one of the characteristics of a profit a prendre is that it must be something taken out of the soil …" and referred to Nineteenth Century authorities dealing with water including Race v. Ward (1855) 4 Ellis & Blackburn 702, 119 E.R 259, per Lord Campbell CJ at 709, 262 who said of water "This is no part of the soil, like sand, or clay, or stones; nor the produce of the soil, like grass or turves or trees. A right to take these by custom, claimed by all the inhabitants of a district, would clearly be bad; for they all come under the category of profit a prendre, being part of the soil or the produce of the soil …". 58 Plaintiff's counsel made submissions on whether grapes and other crops are the subject of a profit a prendre. Some plant products are part of the soil and natural produce of the soil and can be the subject of a profit a prendre; some are the product of cultivation and are not the subject of a profit a prendre. The distinction is marked by the terms fructus naturales for those which are subject to a profit a prendre and fructus industriales for those which are not. 59 It is in the nature of a profit a prendre that it cannot relate to any right to carry out a process of cultivation on the servient land and of harvesting the produce of cultivation. A profit a prendre cannot go beyond a right to go on another's land and take part of the land which is naturally there or which naturally grew on it, or animals ferae naturae. A right to go on to servient land, cultivate it, produce some crop and remove it is outside the concept. There are difficulties in stating the boundary between what is produced by such activity and the products of natural growth, and the difficulty is illustrated by forest timber, which may originally have been planted but requires a long period to mature. References in judgments in the High Court of Australia to profits a prendre were collected by Young J in Ellison v. Vukicevic (1986) 7 NSWLR 104 at 113. Some light is also thrown on the nature of a profit a prendre by his Honour's consideration at 116 of the distinction between a profit a prendre and a sale of goods, for the purpose of which his Honour referred to a text which identified profits a prendre as relating only to fructus naturales whereas agreements for sale of goods might refer to fructus naturales or fructus industriales. While contending for the importance of the division between fructus industriales and fructus naturales the plaintiff's counsel referred to this passage of Young J's judgment in Ellison v. Vukecivic; however to my reading this passage and the passage in the text there cited were directed to another matter, the distinction between a profit a prendre and an agreement for the sale of goods. In Permanent Trustee Australia Ltd v. Shand (1992) 27 NSWLR 426 at 434-5 Young J's consideration again throws some light on the nature of a profit a prendre. 60 In Corporate Affairs Commission v. ASC Timbers Pty Ltd (1989) 18 NSWLR 577 at 586-591 Powell J made an examination in terms of first principles of the distinction between the grant of a profit a prendre and a contract for the sale of standing timber coupled with a licence to enter, fell and remove the timber, with references to judgments in Marshall v. Greene (1875) LR 1 CPD 35 which expounded the intersection between an agreement conferring an interest in land, the law relating to sale of goods and the significance in this context of processes of growth. I stated what in my view is the effect of the law shortly in Myola Enterprises Pty Ltd v. Pearlman, (SC NSW Bryson J unreported 3 September 1993) in these terms: Produce of the soil grown in an annual or other recurring cycle as crops is not the subject of profits a prendre. The law on this subject was stated in and appears by the judgment in Corporate Affairs Commission -v- ASC Timber Pty Ltd (Powell J.) (1989) 18 NSWLR 577, particularly at 586 to 592. See too Permanent Trustee Ltd -v- Shand (1992) 27 NSWLR 426 at 434 and 435 (Young J.) In this branch of the law authority establishes that cultivated crops produced by human labour, referred to as fructus industriales , are not the subject of profits a prendre; they are contrasted with fructus naturales which are not produced by human labour, although timber produced in a long cycle would appear to fall outside the classification of fructus industriales . 61 That case related to a deed of licence which referred to the thing removed using the word "crop", and that word also appears in the Fourteenth Restriction. 62 It seems from observations of Mason J in Australian Softwood Forests Pty Ltd v. Attorney General of NSW and Corporate Affairs Commission (1981) 148 CLR 121 at 132-133 that his Honour was prepared to regard the interest in pine trees under the contractual arrangements there in question as "…something in the nature of a profit a prendre, if not a profit a prendre in the strict sense". The effect of the arrangement in that case was, in Mason J's view, that property in the trees passed to the grower before planting, their growth in the ground was for his benefit, he had an interest in land and a licence to enter the land in order to take possession of the fruits of his interest, and he had an obligation rather than a right to cut and move them at maturity. At first instance in Australian Softwood Forests Helsham CJ in Eq [1978] 1 NSWLR 150 was of the view that there was no profit a prendre. 63 It seems that literal translation does not establish the exact distinction between fructus naturales and fructus industriales. The exposition given by Campbell CJ in Race v. Ward & Ors (1855) 4 Ellis & Blackburn 702, 119 ER 259 at 709, 262 was not apparently an attempt at an exhaustive statement but it is of some use; his Lordship said, while distinguishing claims of a right in respect of water in a river and open running stream or in a spring: "This is no part of the soil, like sand, or clay, or stones; nor the produce of the soil, like grass, or turves, or trees. … they all come under the category of profit a prendre, being part of the soil or the produce of the soil: …". It seems unlikely that his Lordship was referring to trees produced as a process of plantation and cultivation. In Lowe (Inspector of Taxes) v. J.W. Ashmore Ltd [1971] 1 Ch 545 Megarry J, whose reputation in land law is very high, said at 557 "As for the definition of a profit as a right to take something off the land of another, it is clear that this, indeed, it is. But the converse does not hold: not all such rights are profits. To be a profit, the right must be a right to take part of the land or the creatures on it; what is taken must, when taken, be susceptible of ownership; and the right must be created by a transaction capable of creating an interest in land. A profit in the soil, giving the right to take sand, gravel and so on, is a well-known form of profit, and so is a profit of turbary, giving the right to dig and take turf or peat for fuel." 64 Although the use of Latin does not, in this instance, facilitate understanding, the concept that a tree or the fruit of a plant growing wild is a natural product of the soil or fructus naturalis, while a cultivated tree or plant or its fruit or product is not, relates fairly readily to the classic concept referred to in Race v. Ward and Lowe v. Ashmore. 65 In Commissioner of Corporate Affairs v. Nut Farms of Australia Pty Ltd [1980] ACLC 34,260 Brinsden J dealt with a marketing scheme which involved plantations of nut trees, some of which were grown to produce annual crops of nuts and some of which were grown to produce annual crops of nuts and also timber from the trees. At 34,266-7 Brinsden J appears to have assumed that identifying an agreement for sale as an agreement for sale of fructus naturales and not fructus industriales established that the agreement was not an agreement for sale of goods; and his Honour proceeded to conclude that it was a sale of an interest in land, in a context which suggests that the interest his Honour had in view was a profit a prendre. His Honour's consideration was directed to case law and statute law relating to the sale of goods, in which the distinction between fructus naturales and fructus industriales has been used for some centuries. His Honour did not, to my reading, state reasons for regarding the distinction as significant for identification of a profit a prendre. 66 The facts in Nut Farms related to an investment scheme which was not well conceived, as to the nature of the interests created for investors and as to whether there were agreements for the sale to them of interests in land. An investor was given a number of documents but the principal arrangements were oral; the effect is given by Brinsden J at 34262 and is very confusing. The investor was told that he would be the owner of nut trees, 60 established nut trees on the equivalent of one acre of land, but not an identified acre out of a large plantation, and was told that as an investor he would be like a lessee of the land, and at another point told that the relationship involved was similar to a share farming agreement for a wheat farm. The investor was also told that he could if he wished manage harvesting the trees and marketing the produce himself. 67 Any approach to the meaning of words in which fruit or nuts produced annually from trees which have been planted and cultivated are fructus naturales and not fructus industriales is very difficult to understand or apply; in reality, production of fruit or nuts requires continuing industry year by year if the trees are to remain productive. Still more clearly, the annual production of grapes even from vines which were established long ago, it may be decades ago, requires continuing work and labour, year by year and throughout the year, if it is to succeed. References to an untended vineyard as unproductive are familiar to the point of being proverbial. Any system of characterisation which regarded cultivation of vines and the production of grapes as a natural process as distinct from a process of industry would be unrealistic and incomprehensible. In my view while in Nut Farms it was significant to address the law of sale of goods in order to decide whether the agreement was a sale of goods, and in doing so to address and apply the concepts of fructus naturales and fructus industriales, close address to what those terms may mean and their application of the facts is not essential for determining whether a right is a profit a prendre; in the words of Megarry J "To be a profit, the right must be a right to take part of the land or the creatures on it …" [1971] 1 Ch 545 at 557. This is not a description which could possibly be applied to a right to carry out vineyard establishment works, plant and replant grapevines and crops, plant and harvest crops, including grapes and other crops. A right to carry out this process and take what is produced by it cannot be seen as a right to take part of the land. 68 In my opinion grapes on cultivated vines which are harvested annually are not the subject of profits a prendre, just as other crops which might also be sown annually on Part B and harvested annually are not, and the interest conferred by the Fourteenth Restriction is altogether outside the realm of profits a prendre because of the nature of the product which is cultivated and harvested, and also because of the nature of the other acts authorised by the easement, which could not on any view be seen as a right to take part of the land. 69 The ultimate contention by the plaintiff's counsel's written submission was that while it was accepted that the Fourteenth Restriction does not create a profit a prendre "… the right is sufficiently analogous with a profit a prendre to an amount to an interest in land. It is, in effect, a licence coupled with a grant. Unlike in Shand the instrument was plainly intended to create an interest in land. While not a "true" profit a prendre, the Easement for Vineyard creates an interest in land by conferring upon the dominant owner a licence, coupled with a grant." (at 20.5) 70 In my view the interest in land which it was intended to create by the Fourteenth Restriction can be understood fully and clearly from its terms and its place in a Section 88B Instrument; these establish clearly that the interest intended to be created was a legal interest, an easement over land. It was not an equitable interest, and it was not a licence. According to its terms the interest created was not a profit a prendre, and the rights which it created are not rights which would exist under a profit a prendre. The rights created are not analogous with a profit a prendre at all. They are quite different and an interpretation to the effect that, if they did not have effect as an easement, they were intended to have effect as a profit a prendre or a quasi profit a prendre would not be supported by their terms. The Fourteenth Restriction and the nature of an easement as a legal interest in land establish that the interest was not a licence; no licence, consent, action or intention of the servient owner is relevant to the exercise of rights under the Fourteenth Restriction, and there is no evidence of any licence. The servient owner's express prohibition would have no effect. Any characterisation of the rights created as a licence coupled with a grant fails because of the absence of the basis for viewing the arrangement as a licence. 71 Caveat. The plaintiff's Caveat 0362655 lodged on 6 July 1995 asserted that the plaintiff had entered on Lot 27 and carried out farm maintenance and was entitled to sell the produce and to make deductions, in terms echoing the Fourteenth Restriction.

The Estate or Interest claimed in the Caveat was said to be claimed by virtue of the Easement for Vineyard in the Section 88B Instrument. The action prohibited by the Caveat included: 1. The recording in the register of any dealing other than a plan affecting the estate or interest claimed by the Caveator and set out in Schedule 1. ….. 5. The recording in the Register of any dealing affecting the estate or interest of which the Caveator is the registered proprietor.

There were several other prohibitions in standard forms unlikely to have any practical effect. 72 These proceedings were commenced in response to a notice of the proposed lapsing of the Caveat under s.74J of the Real Property Act 1900 (NSW) initiated by the registered proprietors. The plaintiff in its Amended Summons claimed an order extending the operation of the Caveat, and obtained an interlocutory order extending the operation of the Caveat; that order was still in effect when the proceedings were heard on 12 April 2001. However the plaintiff did not claim any substantive relief, by way of injunction or otherwise, which might give effect to or protect the interest, whatever it was, which the Caveat was intended to allege. The proposition that the Caveat should continue in effect indefinitely, although the registered proprietors wished it to be withdrawn, without the caveator claiming any remedy which would protect the interest asserted in the Caveat was, on its face, a preposterous one. 73 The interest which the Caveat alleges is very difficult to distinguish from the terms of the Fourteenth Restriction. It contains further matter in that it asserts that farm maintenance pursuant to the easement had been carried out. There is no possible view on which this fact or notice of the fact could alter the binding force of the Fourteenth Restriction, whatever that force is, against the registered proprietors or any successors of the registered proprietors. They are fully bound by the Fourteenth Restriction if it is valid, because it is notified on the Certificate of Title; they could not be further bound or otherwise bound by the fact that the Caveat was lodged or by knowing anything stated in it. The rights of the dominant owner are legal, not equitable, they exist because they appear on the Register, and knowledge or notice of them by the servient owner is irrelevant for their binding force. A caveat would not add to the dominant owner's protection if it gave notice of its claim. When I asked the plaintiff's counsel what form of injunction could be made to protect the interest claimed in the Caveat he was, of course, unable to suggest any. When I asked what claim the plaintiff as caveator had to prohibit recording any dealings in the Register, counsel responded with submissions which, if they had a meaning, meant that the Caveat did not prevent the recording of any transfer. To my observation the Caveat, the claim to continue it and the submissions made in support of continuing it had no function but to be a nuisance to the registered proprietors. Unless a caveator wishes to protect, or to keep open the opportunity to protect some claim by a remedy which is or could include restraining dealings with the land, a caveator has no good reason to lodge a caveat and no good reason to resist its removal. 74 The right to lodge a caveat is greatly abused; I see examples of this very frequently. It is unfortunately easy to lodge a caveat. It operates as an injunction granted by the caveator to itself, without the imposition of terms. Although the potential of a caveat to cause trouble and expense to a registered proprietor is obvious, there is no requirement that any money be deposited or any security be given against loss imposed on registered proprietors, and although there are remedies according to terms of the Real Property Act, they are rarely availed of as they are somewhat technical and the pursuit of them would involve a successful registered proprietor in a further round of trouble and expense. In a just system the unsuccessful caveator would bear the onus of showing grounds on which he should escape liability for loss, inconvenience and costs caused by his caveat. In practical terms the opportunity to lodge a caveat offers an opportunity to cause nuisance to registered proprietors and to bring processes of manoeuvre and pressure to bear on them with something near impunity. I observe that the fee for lodging a caveat is far less than the fee for filing a summons claiming a court order to remove it. Many shabby manoeuvres involving abuse of caveats come under notice in the Equity Division. 75 Counsel suggested that a transfer which expressed itself to be subject to the crystallised right of the caveator to deduct proceeds would not be impeded by the Caveat and could be registered. However it could not be clearly understood from the terms of the Caveat that any crystallised right was claimed, or that claiming it was the point of the Caveat. As a practical matter it would be very difficult to prepare a transfer of which one could be confident that, when lodged, it would be readily registered on the basis that it did not affect the estate or interest claimed on the caveator. If there is any doubt or difficulty about the ready registrability of a transfer there are great difficulties in completing any sale of the registered proprietor's interests, because transferees and their financiers are very unlikely to complete a transaction if there is any doubt about registration. In truth, if the plaintiff has a claim to deduct farm maintenance costs of some earlier year from the harvest of some later year (which is what counsel's submissions suggested the Caveat means, although it does not clearly say so) that claim can and can only be given effect by making a deduction; no conduct of the registered proprietor is required or involved, and there is no equitable remedy which could be suggested which could require the registered proprietor to participate in the process or do anything about it. If the plaintiff had the right claimed, that right would exist no matter who the registered proprietor was and no matter how many times registered proprietorship had been transferred. 76 The plaintiff's counsel supported the Caveat by no more than shadows of arguments, and made an inappropriate use of the Court's time in defending the manifestly indefensible; it was quite obvious that the plaintiff did not have and had never had any arguable ground for a claim to impede dealings by the registered proprietors with their land. At the conclusion of argument I was of the view that there were no grounds upon which this Caveat could or should be extended further, that at all times it has been mischievous and indefensible and unjustified on its face, and in relation to the facts it should not be assisted in any way; and I made an order for its removal. My conclusion on the lack of effect of the Fourteenth Restriction now affords an additional ground for its removal. 77

(1) On the plaintiff's claim, give judgment for the defendants.

(2) On the cross-claim, declare that the "Easement for Vineyard" shown in Deposited Plan 791199 in so far as it purports to burden land in the said Deposited Plan is not a valid easement.

(3) Reserve further consideration of orders consequential on Order 2.

Last Modified: 09/20/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.