Re 313 Investments & Holdings Pty Ltd [2025] VSC 9 (28 January 2025)

EQUITY - Equitable elements for enforceability of restrictive covenants - Covenant must be negative, intended to run with the land, and given for the benefit of identifiable land - Rectification as an equitable remedy - Standing and requirements for rectification considered - Where original covenantee lacks standing due to absence of any material interest or disadvantage - Rectification, variation and correction of restrictive covenants under equitable principles and ss 88 and 103 of Transfer of Land Act 1958 (Vic) - Principles of indefeasibility preclude amendments or corrections impinging on rights of current registered proprietors - Sahab Holdings Pty Ltd v Registrar-General (2011) 15 BPR 29627 and Sahade v Owners Corporation SP 62022 [2013] NSWSC 1791 referred to - Practical and legal significance of covenant unenforceability - Covenant incapable of binding successors in title - No practical benefit to the continued existence of covenant.

1 On 17 December 2024, I made the following orders ('17 December orders'):

1. A declaration is made that the restrictive covenant contained in Instrument of Transfer No AN598078M in the Register kept by the Registrar of Titles under the TLA does not burden the lands situated at 29-31 Ravenhall Way, Ravenhall, more particularly described in Certificates of Title Volume 12175 Folio 013 and Volume 12175 Folio 014, and further is unenforceable because there are no beneficiaries of the covenant.
2. The restrictive covenant contained in Instrument of Transfer No AN598078M in the Register kept by the Registrar of Titles under the TLA be wholly discharged from the Certificates of Title Volume 12175 Folio 013 and Volume 12175 Folio 014 pursuant to s 84(1)(a) of the Act on the basis that it is obsolete.

2 I made the following observations in 'Other Matters':

1. This application is brought under s 84(2) of the Property Law Act 1958 (Vic) ("Act") which empowers the Supreme Court to declare:

(i) whether or not in any particular case any land is affected by a restriction imposed by any instrument; or

(ii) what, upon the true construction of any instrument purporting to impose a restriction, is the nature and extent of the restriction thereby imposed and whether the same is enforceable, and if so, by whom.

1. The plaintiff seeks a declaration from the Court that the restrictive covenant contained in Instrument of Transfer No AN598078M registered in the Register Book at the Office of Titles upon the land known as 29-31 Ravenhall Way, Ravenhall, more specifically described in Certificates of Title Volume 12175 Folio 013 and Volume 12175 Folio 014 kept by the Registrar of Titles under the Transfer of Land Act 1958 (Vic) ("TLA") does not burden the Land and is unenforceable because it does not benefit any land.

2. At the hearing, the plaintiff sought leave to amend its Originating Motion to also seek an order pursuant to s 84(1)(a) of the Act discharging the covenant on the basis that it is obsolete.

3. The Court is satisfied that the restrictive covenant is unenforceable, as there is no land which benefits from the restrictive covenant. The restrictive covenant refers to land within a lot, the title for which was cancelled seven years prior to the transfer of land containing the restrictive covenant. As there are no beneficiaries, it is not necessary or appropriate to make orders for notification under s 84(3) of the Act, or generally.

4. More detailed reasons will be published in due course.

3 My reasons for making the 17 December orders follow.

4 This proceeding was commenced by the plaintiff, 313 Investments Pty Ltd ('owner') on 3 October 2024 seeking relief largely in the terms of the 17 December orders, that is, a declaration that a restrictive covenant ('subject covenant') is unenforceable, and orders for the discharge of the subject covenant. This proceeding is somewhat unusual, in that the owner's property, which is on two separate titles ('subject land'), is a commercial property, being an office/warehouse space located in the Orbis Business Park ('business park'), which is adjacent to the Western Freeway in Ravenhall in the outer north-western suburbs of Melbourne. The building on the subject land seems to have been built quite recently and is attached to neighbouring commercial/industrial premises on both sides. The subject land was purchased by the owner in August 2023.

5 Even more unusually, the subject covenant is quite recent in origin, being registered on the titles of the subject land on 24 February 2017, when the subject land was part of a single lot ('parent land'). The subject covenant was registered when the title to the parent land was transferred to the registered proprietor preceding the owner by Pincove Pty Ltd ('Pincove'). It seems that Pincove was the developer of the business park, which was developed in a piecemeal fashion from about 2007.

6 On 21 March 2007, Lot 1 on Plan of Subdivision 604907F, a large lot comprising 34.5 hectares ('ancestor lot'), was created. Pincove became the registered proprietor of the ancestor lot on 1 October 2008. The title of the ancestor lot was cancelled on 24 November 2010, more than six years prior to the registration of the subject covenant. As a consequence of sequential subdivisions of the land within the ancestor lot, there are now 222 lots in the area within the ancestor lot, including the two lots that make up the subject land.

7 As noted above, the subject covenant was registered on 24 February 2017. The subject covenant provides as follows:

The transferee hereby for himself, herself or themselves his, her or their heirs executors administrators and transferees the registered proprietor or proprietors for the time being of the land hereby transferred ("Land") covenants with the transferor and the registered proprietors from time to time of the land in Lot 1 on Plan of Subdivision 604907F[1] (other than the Land) and separately covenants with the registered proprietor or proprietors from the time being of the land in Lot 1 on Plan of Subdivision 604907F whether transferred thereout before or after the Land that the transferee will not and will not suffer cause or permit:

(a) the use of the Land wholly or partly for the retail sale of food and/or beverages;

(b) The use of the Land for any of the following purposes

(i) brothel;

(ii) concrete batching plant;

(iii) concrete panel plant;

(iv) recycling plant;

(v) vehicle wreckers;

(vi) junk yard;

(vii) panel beaters;

(viii) place of worship;

(ix) place of assembly;

(x) adult bookshop;

(xi) agriculture;

(xii) caretakers residence;

(xiii) circus;

(xiv) carnival;

(xv) crop raising;

(xvi) animal husbandry;

(xvii) mining;

(c) the Land or any building on the Land to become unsightly or in a state of disrepair;

(d) any signage to be erected or displayed on the Land which does not directly relate to the business activities being carried out by the transferee on the Land or allow any third party signage (such as commercial advertising signage) to be erected or displayed on the Land;

And it is intended that this covenant shall appear as an encumbrance affecting the same and every part thereof on the Certificate of Title to be issued in respect of the lot hereby transferred and further that this covenant shall forever run at law.

8 The owner proposes to develop the subject land as a place of worship, which is prohibited by the subject covenant.[2]

9 However, the subject covenant is expressed as being for the benefit of the registered proprietors of the land within the ancestor lot, which was cancelled prior to the registration of the subject covenant. Since the title of the ancestor lot was cancelled, the lots within the ancestor lot within which the subject land is located have undergone eight separate subdivisions. Therefore, while it is tolerably clear from the language of the subject covenant and the location of the subject land within the business park that the drafter of the subject covenant intended to benefit the land originally within the ancestor lot other than the parent land, that land no longer existed at the time the subject covenant was registered. It is for that reason that the owner says that the subject covenant is unenforceable, because there is no land that enjoys the benefit of the subject covenant, and the subject covenant should be discharged. For the same reason, the owner says that the Court is neither required to nor should it, exercise its power under s 84(3) of the Property Law Act 1958 (Vic) ('PLA') to direct the owner to notify the registered proprietors of any or all of the properties within the business park of the owner's application to discharge the subject covenant.

10 After some consideration and exploration of the issues in the proceeding with counsel for the owner, I accepted the owner's submissions both with respect to the enforceability of the subject covenant and the requirement for notification. I shall explain further below why I reached the conclusions that I did.

11 Restrictive covenants have been traditionally deployed as a form of private planning control. In Re Hunt,[3] a decision in a more commonplace case (a covenant said to have burdened a property in a residential subdivision since 1911), Lansdowne AsJ made the following observations regarding the purpose and common features of restrictive covenants:

Restrictive covenants were in common use at the time of this Covenant, as a form of planning control designed to retain value for the transferor in respect of land he or she had not yet transferred out of a larger parcel. Such covenants commonly restrict construction on the transferred land to one dwelling and in some cases require that the construction be of brick or stone and of a certain value. In the common case, the land being transferred is identified as part of a parent title, and the restrictions are expressed to be for the benefit of the land remaining untransferred out of that parent title. Conveyancing practice at the time was to cancel that part of a parent title being transferred, and issue a new certificate of title for the transferred land. Successive transfers out of parent title would eventually lead to the cancellation of most, or all, of that parent title. It follows that where these words are used in a covenant to identify the benefited land, the benefit of the covenant is annexed to land not yet transferred out of the parent title as at the date of the covenant, and is not annexed to land already transferred out of the parent title. As a consequence in the case of covenants drafted in these terms, there is reducing field of benefited land, depending on the point in time at which the subject land was transferred out of the parent title. Often a similar form of restrictive covenant had been imposed in every earlier transfer, and so a network of covenants in similar terms was created on land out of the parent title, although the land burdened and benefited in each case differs.[4]

There are three ways by which a person who is not the original transferor/covenantee may obtain the benefit of a restrictive covenant. These are:

(a) By becoming the owner of land to which the benefit of the covenant has been annexed;

(b) By express assignment of the benefit of the covenant in respect of land which he or she owns; or

(c) By virtue of the land in question being part of a building scheme, which imposes reciprocal rights and obligations (i.e. benefit and burden) on all land in a defined area.[5]

13 There are three equitable elements that must be satisfied if a restrictive covenant is to burden a successor in the title to the original covenantor:

(a) the covenant must be negative;

(b) the burden must be intended to run with the land; and

(c) the covenant must be given for the benefit of the land, and the covenant must touch and concern that land.[6]

14 Where land is burdened by a restrictive covenant, s 61(4) of the Planning and Environment Act 1987 (Vic) provides that a local authority must refuse to grant permission for any development which will or may contravene the restrictions in the covenant. A party in the position of the owner must apply to the Court seeking, as in the current case, a declaration that the terms of the covenant are unenforceable, and/or an order that the covenant be removed. Such applications are governed by s 84 of the PLA, which provides as follows:

84 Power for Court to modify etc. restrictive covenants affecting land

(1) The Court shall have power from time to time on the application of any person interested in any land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon by order wholly or partially to discharge or modify any such restriction (subject or not to the payment by the applicant of compensation to any person suffering loss in consequence of the order) upon being satisfied -

(a) that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material the restriction ought to be deemed obsolete or that the continued existence thereof would impede the reasonable user of the land without securing practical benefits to other persons or (as the case may be) would unless modified so impede such user; or

(b) that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the restriction whether in respect of estates in fee-simple or any lesser estates or interests in the property to which the benefit of the restriction is annexed have agreed either expressly or by implication by their acts or omissions to the same being discharged or modified; or

(c) that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction:

Provided that no compensation shall be payable in respect of the discharge or modification of a restriction by reason of any advantage thereby accruing to the owner of the land affected by the restriction unless the person entitled to the benefit of the restriction also suffers loss in consequence of the discharge or modification nor shall any compensation be payable in excess of such loss; but this provision shall not affect any right to compensation where the person claiming the compensation proves that by reason of the imposition of the restriction the amount of consideration paid for the acquisition of the land was reduced.

(2) The Court shall have power on the application of any person interested -

(a) to declare whether or not in any particular case any land is affected by a restriction imposed by any instrument; or

(b) to declare what upon the true construction of any instrument purporting to impose a restriction is the nature and extent of the restriction thereby imposed and whether the same is enforceable and if so by whom.

(3) The Court may before making any order under this section direct such inquiries (if any) to be made of any local authority or such notices (if any) whether by way of advertisement or otherwise to be given to such of the persons who appear to be entitled to the benefit of the restriction intended to be discharged, modified or dealt with as, having regard to any inquiries, notices or other proceedings previously made given or taken the Court thinks fit.

15 Relevantly for the purposes of the current application, s 78 of the PLA provides as follows:

(1) A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title and the persons deriving title under him or them, and shall have effect as if such successors and other persons were expressed.

For the purposes of this subsection in connexion with covenants restrictive of the user of land successors in title shall be deemed to include the owners and occupiers for the time being of the land of the covenantee intended to be benefited.

(2) This section shall apply to covenants made after the commencement of this Act but the repeal of section sixty-four of the Conveyancing Act 1915 shall not affect the operation of covenants to which that section or any corresponding previous enactment applied.

16 Further, s 88 of the Transfer of Land Act 1958 (Vic) ('TLA') provides as follows:

(1) The Registrar may record on the relevant folio of the Register the following -

(a) subject to subsection (1A), a restrictive covenant, if all of the registered proprietors of the land to be affected by the covenant agree to the creation of the restrictive covenant;

(b) subject to subsection (1A), (1B) and (1C), a variation or release of a recorded restrictive covenant.

(1A) The Registrar must not, under this section, record a creation, variation or release of a restrictive covenant -

(a) that is part of a plan under the Subdivision Act 1988; or

(b) authorised by a planning scheme or permit under the Planning and Environment Act 1987.

Note

Creations, variations and releases of restrictive covenants created in plans under the Subdivision Act 1988 and authorised by planning schemes and permits under the Planning and Environment Act 1987 must be dealt with under the Subdivision Act 1988.

(1B) A recording on a folio of a restrictive covenant created by a plan under the Subdivision Act 1988 must not be amended or deleted by the Registrar under this section unless the restrictive covenant is varied or released by -

(a) the agreement of all of the registered proprietors of the land affected by the covenant with the consent of the council of the municipal district in which the land is located; or

(b) an order of a court or VCAT.

(1C) A recording on a folio of a restrictive covenant that was created in any way other than by a plan under the Subdivision Act 1988 may be amended or deleted by the Registrar under this section if the restrictive covenant is varied or released by -

(a) the agreement of all of the registered proprietors of the land affected by the covenant; or

(b) an order of a court or VCAT.

17 Notwithstanding the terms of s 88(1A) above, I could not locate any provision of the Subdivision Act 1988 (Vic) which provided a mechanism by which restrictive covenants can be 'dealt with'. However, none of the plans of subdivision in evidence, which provide a complete subdivisional history with respect to the subject land, make reference to the subject covenant, such that it seems that the subject covenant does not fall within the terms of ss 88(1A) or (1B) of the TLA.

18 Finally, for completeness, s 103 of the TLA provides as follows:

103 General provision as to correction of errors etc.

(1) In any proceeding in a court relating to any land or any instrument or dealing in respect thereof if the court directs the Registrar to make any amendments to the Register or otherwise to do any act or make any recordings necessary to give effect to any judgment decree or order of the court the Registrar shall obey such direction.

(1AA) In any proceeding in VCAT relating to land or any instrument or dealing in respect of land, if VCAT directs the Registrar to make any amendment to the Register or otherwise to do any act or make any recordings necessary to give effect to an order of VCAT, the Registrar must obey that direction.

(1AB) The Registrar may only make amendments to the Register under subsections (1) and (1AA) if an application in the appropriate approved form is lodged.

(2)(a) The Registrar may upon such evidence as appears to the Registrar sufficient correct errors in the Register or in any plan of subdivision or unregistered instrument and supply entries or recordings omitted to be made therein under the provisions of this Act, but in any such case the Registrar shall not erase, delete or render illegible the original entry or recording, and shall indicate on that entry or recording the date on which the correction or recording was made.

(b) Every correction recording or entry under subsection (2)(a) shall have the like validity and effect as if the error or omission had not occurred, but without prejudicing any rights accrued from any recording made in the Register prior to the actual time of correcting the error or supplying the omitted entry or recording.

19 As for the legal principles concerning the enforceability or otherwise of the subject covenant, along with the question of when and to what extent the Court should require advertisement and/or notification of applications of the current kind, the relevant authorities will be discussed later in these reasons.

20 The owner relied upon an affidavit of an experienced town planning consultant, Mr Robert Easton, sworn on 1 October 2024. Mr Easton annexed to his affidavit a report prepared by him in September 2024 ('expert report'). In the expert report, Mr Easton set out his instructions as follows:

I have been briefed to prepare this report in relation to an application for a declaration by 313 Investments & Holdings Pty Ltd ("the plaintiff") that restrictive covenant No. AN598078M ("the covenant") (see page A6) affecting the land situated at and known as 29 & 31 Ravenhall Way Ravenhall in the State of Victoria and being the land contained in Certificates of Title Volume 12175 Folio 013 and Volume 12175 Folio 014 ("the subject land") (see page A2-A5) and known as Lots 4 & 5 on Plan of Subdivision PS828092 (see page A9) does not affect the land and is unenforceable on the grounds set out in Section 84(2) of the Property Law Act 1958.

The relevant part of my instructions from Planning & Property Partners Pty Ltd on behalf of the plaintiff were:

If requested prepare an Independent expert report which provides your opinion on the following:

(a) what are (or were) the Volume and Folio details of the certificate of title of the land in Lot 1 on Plan of Subdivision 604907F?

(b) As at 24 February 2017 (being the date of the Covenant), what was the status of the certificate of title for the land in Lot 1 on Plan of Subdivision 604907F?

(c) To the extent that the land in Lot 1 on Plan of Subdivision 604907F had been further subdivided as at 24 February 2017, describe in detail, as a step by step analysis, what searches of the Register would have been required to be undertaken on 24 February 2017 to determine:

(i) what lands as at 24 February 2017, comprised that land formerly in Lot 1 on Plan of Subdivision 604907F; and

(ii) who owned as at 24 February 2017 those lands that comprised that land formerly in Lot 1 on Plan of Subdivision 604907F; and

21 After describing the subject land and its development and context, Mr Easton set out the subdivisional history of the subject land back to the time of the creation of the ancestor lot. Mr Easton noted that of the 222 lots within the area within the ancestor lot, only 27 lots were originally created by Pincove. Most of the lots created by Pincove have been further subdivided by subsequent owners. Mr Easton referred to the lots in existence on 24 February 2017 (the date of registration of the subject covenant) and opined as follows:

In my opinion the average punter would find it almost impossible to determine which of these lots were still owned by Pincove Pty Ltd on 24 February 2017.

22 Under the heading 'Summary of Opinion', Mr Easton stated as follows:

The Subject covenant now burdens five lots fronting the north side of Ravenhall Way. Two of these lots comprise the subject land.

The covenant was created on 24 February 2017. It gives the benefit to Lot 1 on Plan of Subdivision 604907F. This lot was cancelled on 24 November 2010. This was approximately 7 years prior to the creation of the subject covenant. That lot has been subdivided multiple times since then by a chain of 8 subdivisions by Pincove Pty Ltd eventually resulting in the subject land.

It further appears that the reference to the covenant giving the benefit to the Lot 1 on Plan of Subdivision 604907F may be an apparent nonsense as this lot did not exist on the day the covenant was either signed or registered as detailed earlier in this report.

23 The owner also relied upon an affidavit sworn on 6 December 2024 by its director, Mr Medhi Moosavi, who deposed as follows:

Since becoming the registered proprietor of the Land on 9 August 2023, the Plaintiff has not:

1. made any application, other than the application presently before the Supreme Court of Victoria in this proceeding, to modify or remove the restrictive covenant described in Instrument of Transfer No. AN598078M (Covenant); nor

2. made an application for a planning permit pursuant to the Planning and Environment Act 1987 and the provisions of the Melton Planning Scheme.

I am not aware of any applications made by previous registered proprietors of the Land to modify or remove the Covenant, nor for a planning permit.

24 Finally, in response to issues raised by my chambers in correspondence with the owner's solicitors after the first return of the application on 5 December 2024, on 12 December 2024, the owner's solicitor, Mr Thomas Morrison, affirmed an affidavit in which he deposed as to certain searches carried out by him and Mr Easton. Those searches led him to conclude that Pincove no longer owns any land in Victoria, let alone any land in the area covered by the ancestor lot.

25 In its written submissions filed on 4 December 2024, the owner submitted that the subject covenant does not burden the subject land because it does not sufficiently identify the land to be benefited by the subject covenant. Accordingly, the subject covenant does not satisfy the third equitable element referred to at paragraph 13 of these reasons, that is that the covenant must be given for the benefit of the land, and the covenant must touch and concern that land ('third element').

26 As for the question of how the identity of the benefitting land is to be ascertained, the owner submitted that following the decisions of the High Court in Westfield Management Ltd v Perpetual Trustee Co Ltd[7] and Deguisa v Lynn,[8] ('Deguisa') the following statement by Gillard J in Fitt v Luxury Developments Pty Ltd[9] should be treated with caution:

It is not essential that the land to which the covenant is annexed should be expressly identified in the words of the covenant ... It is sufficient if the words define the land so as to make it open and "easily ascertainable".[10]

27 The owner referred to the decision of the Court of Appeal in Jeshing Property Management Pty Ltd v Yang,[11] ('Jeshing') where the Court held that when construing the terms of a restrictive covenant for the purpose of identifying the benefitting land, regard may only be had to the registered title and the instruments expressly referred to in it. In that case, the Court held that where a restrictive covenant referred to a great-great-grandparent title, it was permissible to refer to that instrument to complete and construe the covenant concerned, but it was not permissible to extend the scope of admissible evidence to covenants recorded on the title to other land transferred out of the great-great-grandparent title in order to construe the covenant concerned.

28 The Court referred to the following statement of the High Court in Deguisa:[12]

...the Torrens system is characterised by the guarantee of the State that the title which it produces to a person seeking to take an interest in a parcel of land is an accurate and comprehensive statement of the state of the title to that land, as to both the title of the registered owner and the interests of others in that land. With the benefit of that guarantee, a person dealing with a registered proprietor of land need look no further than the registered title and the interests notified on it in order to ensure that his or her dealing does not miscarry.[13]

29 The owner submitted that, in the current case, the reference in the subject covenant to the ancestor lot was insufficient to enable a purchaser or prospective purchaser of the subject land to identify the land intended to benefit from the subject covenant, because it would be necessary for that party to undertake an extensive search of the Register in order to identify the specific parcels of land within the ancestor lot and the identity of their registered proprietors at the time the subject covenant was registered.

30 The owner also referred to the decision of Morris P in Thornton v Hobsons Bay City Council[14] ('Thornton'), and submitted as follows (omitting footnotes and emphasis added in original):

In Thornton, Morris P held that the covenant in question was ineffective or unenforceable as the land said to be benefited by the covenant was not sufficiently described, or not described with sufficient exactitude. In that case, the covenant sought to identify the land to be benefited by reference to land remaining untransferred in a particular certificate of title. However, at the time the covenant was made, the certificate of title referred to was no longer in existence, it having been cancelled about six months earlier. In relation to this, his Honour stated: Thus at that time there was no land remaining untransferred in that certificate of title. Hence notwithstanding the exactitude with which the draftsman of the covenant sought to achieve, in fact all he has achieved is a nonsense.

Lastly, it is well settled that, except where the land in question forms part of a building scheme, the benefit of a restrictive covenant can only attach to land which is then owned by the covenantee. If the land said to benefit is not owned by the covenantee at the time of the covenant then any purported benefit of the restrictive covenant will fail.[15]

32 As for the question of whether the subject land was governed by a building scheme, the owner referred to the requirements that must be satisfied in order for a building scheme to exist, being the requirement for notice of the existence of the scheme, the nature of the restrictions imposed by the scheme, and the identity of the land affected by the scheme be included in the certificate of title.[16] The owner submitted that the authorities suggest that an express reference to a building scheme needs to be made in the relevant instruments in order for the restrictions sought to be imposed by the building scheme to be enforceable.

33 The owner submitted that the current application should proceed on an ex parte basis because it is clear that the subject covenant is unenforceable because no benefitting land is identified in the subject covenant. For that reason, there is no person with standing to object to the making of the declaration sought by the owner.

34 The owner submitted that, given that the title to the ancestor lot had been cancelled almost seven years prior to the registration of the subject covenant, the covenant's reference to the ancestor lot is a 'nonsense', in the sense described by Morris P in Thornton.[17] The owner submitted as follows:

Even if it were permissible to identify benefitted land in a restrictive covenant by reference to an ancestral lot which had since been further subdivided by the time the covenant was created (for example, on an argument that all lots within the area of the ancestor title are benefited), the Covenant's reference to the [ancestor lot] is still insufficient to adequately identify any benefitted land. This is because it is not possible to determine:

1. what descendant lots of the [ancestor lot] existed as at 24 February 2017 (being the date of the Covenant); or

2. which of these lots (if any) were still owned by Pincove (the covenantee) at this point,

without searching documents on the Register that go beyond the Covenant and plan of subdivision 604907F (being the only other registered instrument referenced in the Covenant). One would have to search each subdivision in the chain of subdivision as Mr Easton did in his report. Clearly, carrying out such searches offends the Deguisa principles and is not permissible. Therefore, it is simply not possible to identify any benefitted land in the Covenant in a manner which the law says is permissible. As Mr Easton notes in his report: "the average punter would find it almost impossible to determine which of these lots were still owned by Pincove Pty Ltd on 24 February 2017".

Accordingly, the Court ought find that the Covenant fails the third equitable element required of a restrictive covenant and therefore does not run with the Subject Land to bind the successive owners beyond the original covenantor. As a result, the Covenant does not burden the Subject Land.

35 Responsibly, given the ex parte nature of the owner's application, the owner's written submissions went on to address the following matters which could arguably undermine its submission that the restriction in the subject covenant is unenforceable, being:

(a) whether Pincove could enforce the subject covenant against the owner;

(b) the operation of s 79 of the PLA; and

(c) the existence or otherwise of a building scheme.

36 The owner submitted that while Pincove (which is still a registered entity) could have enforced the subject covenant against the original covenantor, it cannot enforce the subject covenant against any successor in title to the covenantor, including the owner, because the third element is not made out by reason of the failure of the subject covenant to properly identify the land benefitted by the restrictions in the subject covenant.

37 For the same reasons, the owner submitted that s 78 of the PLA does not apply. In any event, the language of s 78 is of similar effect to the language of the subject covenant, which goes to the second equitable element (being an intention that the burden runs with the land) but does not cure the failure of the subject covenant to satisfy the third element.

38 The owner submitted that the Court can be satisfied that no building scheme exists, and, even if a building scheme did exist, there was insufficient notice of the building scheme on the titles to the subject land for it to be effective to bind the owner. The owner submitted as follows:

The documents to which regard can be had in determining whether adequate notice has been given of any building scheme are the certificates of title for the Subject Land, the interests notified thereon and any registered instruments referred to therein. Therefore, regard can relevantly be had to the certificates of title, the Covenant and PS604907F (being an instrument referred to in the Covenant).

A review of these documents confirms the following:

1. there is no express reference to a building scheme in any of them;

2. it cannot be inferred that any building scheme exists for reasons including:

3. there is no evidence that Pincove laid out an estate in lots subject to restrictions which were intended to be imposed on all of them - to the contrary, PS604907F shows only two large parcels laid out (lot 1 and lot 2);

4. the [ancestor lot] is on a plan of subdivision from 2007 (some 10 years prior to the Covenant) which was cancelled approximately seven years prior to the Covenant which goes against any inference that the Covenant is part of a "large subdivision sold over a relatively short period"; and

5. there is no land properly identified as being affected by any scheme as the [ancestor lot] did not exist at the time of the Covenant (that is, this element suffers from the same shortcomings as the third equitable element, as discussed above).

For the same reasons Ierodiaconou AsJ found that there was inadequate notice of any building scheme in Xu v Natarelli, the Court ought find there is inadequate notice of any scheme in this instance. There is no express reference and a scheme cannot be inferred from the available instruments.

39 Following the first return of the application on 5 December 2024, on 6 December 2024, the owner filed further written submissions concerning the question of whether the matter ought to proceed ex parte, without any orders being made for notification under s 84(3) of the PLA.

40 The owner has been unable to locate any published decision where an ex parte determination was sought and refused in an application under s 84 of the PLA, acknowledging that this is unsurprising, given that the issue of notification is generally dealt with quite promptly at the first return date. However, the owner referred to the decision of Lansdowne AsJ in Re Castlerea Carpenters Pty Ltd[18] ('Re Castlerea') as being potentially relevant to the current application.

41 In Re Castlerea,[19] the application to modify a restrictive covenant did not proceed ex parte, as the beneficiaries of the covenant were notified, but no sign advertising the application was placed on the property. As none of the beneficiaries objected, the application proceeded unopposed, and orders were made for the modification of the covenant. However, after the relevant orders were authenticated, the Court was informed by a third party that a previous application for a modification of the covenant had been refused by a different judicial officer. While her Honour was largely concerned with the question of whether the application needed to be reopened, she also discussed the operation of s 84(3) of the PLA. The owner summarised her Honour's observations as follows:

Her Honour concluded that the power conferred by s 84(3) of the PLA is judicial. It requires the exercise of a discretion, or achievement of a state of satisfaction, by the Court in at least the following respects:

a. whether to exercise the power to direct inquiries or notices at all;

b. as to who appears to be entitled to the benefit of the restriction;

1. as to the form of notice to be given ·to those persons; all of which is to be determined; and

d. having regard to any inquiries, notices or other proceedings.

42 The owner noted that, in the process of exercising the discretion under s 84(3) of the PLA, the Court must decide whether to accept the veracity of the plaintiff's evidence regarding the identity of the beneficiaries of the restrictive covenant.

The plaintiff acknowledges that there can be sound practical and jurisprudential reasons for directing a notice be placed on land under s 84(3) and that careful thought must be given to the same. Having a contradictor can operate as a 'safeguard' against any error in the expert evidence of the plaintiff. However, before exercising such discretion, the Court still needs to satisfy itself of 'who appears to be entitled to the benefit of the restriction'. If the Court is satisfied that there is no such person (or, cannot satisfy itself that there is such a person), then the discretion should not be exercised. To use her Honour's own words in the earlier decision of Re Hunt, if it is such a "clear case" that there is no beneficiary, then it is "neither necessary-nor appropriate to seek to elicit any contradictor".

The plaintiff's application is a clear case of there being no benefitting land (and therefore no beneficiaries) because the benefitted land identified in the Covenant did not exist at the time the Covenant was made. That it did not exist cannot be argued against. A register search statement of the land identified in the Covenant (Lot 1 on Plan of Subdivision 604907F, the Identified Lot) clearly states that the folio has been cancelled and the historical register search statement clearly states that it was cancelled on 24 November 2010. It is clear from the title searches of the Subject Land and the Covenant itself that the Covenant was made on 24 February 2017, over six years after the Identified Lot was cancelled. Thornton is authority that the Covenant therefore does not bind the Subject Land.

Further, the High Court in Deguisa has recently held that unless reference to an interest is endorsed on the certificate of title or incorporated by reference in a registered instrument notified on the certificate of title, the interest has not been notified on the certificate of title. Accordingly, for the purposes of identifying the benefitted land of the Covenant (being an instrument notified on the certificate of title), one cannot look beyond the Covenant itself and any registered instrument referred to therein (which in this case, is PS 604907F). Unless and until the High Court decides otherwise, this cannot be argued against. Therefore, any argument that a descendant lot of the Identified Lot is a benefitted lot must fail because one cannot ascertain the identity of any descendant lots as at the date of the Covenant (or at all) without performing searches of the Register beyond the Subject Land's certificates of title, the Covenant and Plan of Subdivision 604907F (being the only registered instrument referred· to in the Covenant). Indeed, a substantially similar argument to this failed in Deguisa.

44 The owner submitted further, in summary, as follows:

(a) by reason of the general principles of contractual construction, no instrument that post-dates the registration of the subject covenant can be used to determine what land, if any, was benefitted at the time the subject covenant was registered;

(b) requiring that a notice be placed on the subject land may cause unnecessary costs to be incurred, given that the owner may be liable to pay the costs of objectors and potential objectors in seeking and considering advice with respect to the owner's application; and

(c) the affidavit of Mr Moosavi establishes that no prior application to remove or modify the subject covenant have been made, and no application for a planning permit has been made, which addresses the concerns raised by Lansdowne AsJ in Re Castlerea.[20]

45 The owner's further submissions concluded as follows:

In any event, the very nature of the plaintiff's case means that the Court need not have regard to any matters beyond those which are ascertainable from permitted searches of the Register. In this sense, the Court should accept the evidence upon which the plaintiff relies (being search statements from the Register) as being correct. This is precisely the point of the Torrens system and the approach that authorities like Deguisa seek to uphold.

46 I am satisfied, for the reasons advanced by the owner in its submissions, that the restriction in the subject covenant is unenforceable, and accordingly, the declaration sought by the owner should be made. Additionally, the unenforceability of the subject covenant renders the subject covenant obsolete, and it should therefore be removed pursuant to s 84(1)(a) of the PLA. Since no land is identified as having the benefit of the subject covenant, there is no utility in making orders requiring advertisement or notification of the current application. Such a process would be unnecessary, could cause confusion, and may impose unnecessary costs upon the owner, and potentially other owners of lots within the business park.

47 I agree that the decision of the High Court in Deguisa[21] stands for the principle that any party interested in particular land, such as a prospective purchaser or mortgagee 'need look no further than the registered title and the interests notified on it' to determine the existence and nature of any dealings with the land and any encumbrances upon it. As evidenced by the expert report, determining the identity of the land within the area of the ancestor lot at the time the subject covenant was registered, and the identity of the current registered proprietors of those lots, would require a party in the position of the owner to carry out quite extensive searches of the Register in order to determine the land purportedly benefitting from the restrictions in the subject covenant. Such a requirement is fundamentally inconsistent with Torrens principles, as articulated by the High Court in Deguisa,[22] and reinforced by the Court of Appeal in Jeshing.[23]

48 These decisions, along with the previous decision of the High Court in Westfield Management Ltd v Perpetual Trustee Co,[24] in my view resolve any past inconsistencies in the authorities regarding the need for the identification of the benefitting land in favour of the proposition that the land benefitted must be precisely defined in the instrument recording the covenant.[25] Arguably, the principles under the general law now largely align with the requirements of s 88 of the Conveyancing Act 1919 (NSW), which provides that a restrictive covenant will not be enforceable unless the instrument creating the covenant 'clearly indicates', among other things, the land burdened by and benefitting from the restrictions.

49 Further, s 78 of the PLA, which has been described by the learned authors of 'Bradbrook and Neave's Easements and Restrictive Covenants'[26] ('Bradbrook and Neave') as the 'statutory annexation provision', does not solve the problem created by the misdescription of the land intended to benefit from the covenant. The purpose and effect of s 78 of the PLA is, among other things, as follows:

(a) to abrogate the general law requirement that a person seeking to enforce the covenant must have the same estate in the land concerned as the covenantor;[27] and

(b) to make it unnecessary, for the purpose of establishing the requisite intention that the covenant run with the land, to use express words mentioning the covenantee's successors in title in the covenant concerned.[28]

50 For a party seeking to rely on the statutory annexation provision, it seems to me that it is a prerequisite that the covenant be enforceable by the original covenantee (in this case, Pincove) against the successors in title to the covenantor (such as the owner). The subject covenant in this instance fails to meet this requirement. Again, while it might have been enforceable as a personal covenant against the original covenantor, it is incapable of binding successors in title because the land purportedly intended to benefit from the subject covenant is not adequately or sufficiently identified.

51 Accordingly, I agree with the owner's submissions that the subject covenant is unenforceable.

52 Given that I am satisfied that there is no land that benefits from the subject covenant, there is little point in making orders for notification under s 84(3) of the PLA. That conclusion is consistent with the approach taken by other judicial officers in this jurisdiction when forming the view that the position with respect to the (un)enforceability of the relevant covenant is so clear cut so as to justify not putting the registered proprietor to the expense and inconvenience of notification, especially in circumstances where the notification process may invite objections from parties who are not beneficiaries of the covenant concerned.[29]

53 However, following the initial hearing of the application, and following my review of the relevant authorities, I formed the view that, at least on the question of standing, given the defects in the drafting of the subject covenant, which must have been a mistake, further enquiries were necessary and further consideration needed to be given to the question of whether Pincove, being the original covenantee, should be notified of the application, not by reason of the terms of s 84(3) of the PLA, but because Pincove may have standing under general law principles.

54 The intention underlying the subject covenant is quite clear from its language and its context. The subject land is part of a light industrial/commercial business park developed upon the land within the ancestor lot. The subject covenant is quite prescriptive as to what are not permissible uses of the land within the business park. The reference in the subject covenant to the title of the ancestor lot must have been a mistake, given the prior cancellation of the title of the ancestor lot. I can reasonably infer that many of the other successor lots to the ancestor lot are burdened by covenants in similar terms, many of which may also be unenforceable for the same reason.

55 Restrictive covenants are a species of contract. There is no reason why the principles and requirements governing the rectification of contracts in equity should not apply to restrictive covenants (setting aside for the moment the availability of any remedy under s 88 of the TLA).[30] Accordingly, arguably, Pincove being the original covenantee, had standing to appear at the application, not in the sense traditionally contemplated by s 84(3) of the PLA, and arguably not for the purpose of resisting the making of a declaration, but on the question of whether this Court should exercise its discretion to make a declaration and/or to order that the subject covenant be removed.

56 As observed by Lansdowne AsJ in Re Hunt,[31] the purpose of a restrictive covenant is to protect the value of the land remaining in the parent land for the benefit of the covenantee, being the owner of that land. If Pincove continued to own land in the area covered by the ancestor lot, it could argue that a declaration that the restrictions in the subject covenant were unenforceable would materially impair the value of the land it held that was originally part of the ancestor lot, and there would be no question that it would have standing to at least apply for rectification of the subject covenant or a variation of the subject covenant pursuant to s 88 of the TLA.

57 In those circumstances, it would arguably be appropriate for Pincove to be notified of the current application. I do not have any doubt that I am bound by the decisions in Deguisa[32] and Jeshing[33] to reach the conclusions I have reached regarding the enforceability of the subject covenant. However, given the discretionary nature of the relief sought by the owner, I would have given careful consideration to an argument that I should refrain from making the declaration sought, or alternatively, that I should stay the proceeding in order to give Pincove the opportunity to make an application for rectification or variation of the subject covenant.

58 However, after receiving further evidence from the owner, and reviewing some further authorities referred to me by counsel for the owner, I reached the conclusion that it was not necessary or appropriate to require the owner to notify Pincove of the application. I did so for two reasons:

(a) Pincove no longer owns any land in Victoria, let alone in the area covered by the ancestor lot, and as such would not have any standing to bring an application to rectify or vary the subject covenant; and

(b) in any event, any such application would be doomed to fail on the basis that it would contravene the principle of indefeasibility of title, being the central feature and underlying rationale of the Torrens system of land registration.

59 To explain further, for the purposes of an application for rectification, Pincove would only have the necessary interest in correcting the mistake in the subject covenant if it continued to own land in the area within the ancestor lot. Otherwise, it has no economic or other material interest capable of protection by an order for rectification. While it was a party to the agreement that resulted in the registration of the subject covenant, Pincove can no longer suffer any disadvantage by reason of any error in drafting the subject covenant. Rectification is an equitable remedy, and equity is directed at preventing disadvantage being suffered as a result of unconscientious reliance by a party on its legal rights.[34] In the absence of any material disadvantage to Pincove by reason of the unenforceability of the subject covenant, it is difficult to see how Pincove would have any standing to bring an application for rectification, let alone see how any such application would be successful, even if it was unopposed by the original covenantor (being the owner's predecessor in title), which it may well have been.

60 Rectification, as an equitable remedy, is inherently discretionary. It is difficult to conceive of circumstances in which a court would exercise its discretion to grant rectification of what is, in essence, a contract for the transfer of land between parties who no longer hold any interest in the land in question. Such an order would, as discussed further below, infringe upon the rights of the current registered proprietor of the land, being the owner, whose title is otherwise protected by the principle of indefeasibility. Pincove, having no legitimate interest to safeguard, would lack standing to seek rectification: to do so would be to act without any substantive justification or legal entitlement.

61 As stated by the learned authors of 'Meagher, Gummow & Lehane's Equity: Doctrines and Remedies',[35] citing, among other things, the decision in Smith v Jones:[36]

Rectification will not be decreed if it would prejudice the bona fide purchaser for value who has acquired an interest in the property dealt with in the instrument sought to be rectified.[37]

62 Further, while the matter is not completely free from doubt, it seems to be more likely than not that Pincove (or any registered proprietor of any land within the ancestor lot) would not have standing to bring an application to vary the subject covenant under s 88 of the TLA. While this section does not expressly limit the parties who may bring an application for variation of a covenant under this provision, under s 88 of the TLA, the making of an application to a court or the Victorian Civil and Administrative Tribunal is provided under s 88(1C)(b) of the TLA as an alternative mechanism to the making of an agreement between the registered proprietors of the land affected by the covenant, with the consent of the relevant planning authority.

63 The land 'affected by the covenant' must mean land burdened by or benefitting from the covenant. However, by reason of my earlier findings, no land is burdened or benefitted by the subject covenant. Accordingly, in my view, no person has standing to bring an application under s 88 of the TLA.

64 Further, even setting aside the question of standing, there is little point in bringing the current application to the attention of Pincove (or any other party). The limited authority on the point provides that the Court's power to vary or amend restrictive covenants under provisions such as s 88 of the TLA cannot be exercised where the variation or amendment would infringe upon a right to which indefeasibility is attached. Any attempt to rectify or vary the subject covenant would directly undermine the principle of indefeasibility of title, the centrality of which was reinforced by the High Court in Deguisa.[38]

65 In Re Saliba,[39] Mukhtar AsJ made orders for rectification of a restrictive covenant to correct a mistake. While his Honour made those orders exercising the Court's equitable jurisdiction, he referred to the statutory powers of amendment and/or correction pursuant to ss 88 and 103 of the TLA.

66 His Honour referred to the decision of the New South Wales Supreme Court in Sahade v Owners Corporation SP 62022[40] ('Sahade'), a case concerning the New South Wales equivalent of s 103 of the TLA. In that case, Kunc J held that the term 'errors and omissions' was not confined to errors and omissions attributable to the New South Wales counterpart of the Registrar of Titles. His Honour referred to the statement of the New South Wales Court of Appeal in Sahab Holdings Pty Ltd v Registrar-General[41] ('Sahab') that:

...the scope of the power of correction was ascertained by reference to whether the correction of the error would impinge upon a right to which indefeasibility attached.[42]

67 In both Sahade[43] and Sahab,[44] the correction of the errors concerned did not impinge upon any rights to which indefeasibility was attached. This is to be contrasted with the current case, where any rectification in accordance with equitable principles, or any amendment, correction or variation pursuant to ss 88 or 103 of the TLA would impinge upon the owner's otherwise indefeasible title, by, in effect, replacing an unenforceable restrictive covenant with an enforceable restrictive covenant.

68 The decisions referred to above all pre-dated the decision of the High Court in Deguisa.[45] While this decision concerned the question of the means by which restrictive covenants may be construed, and the limitations upon the admissibility of extrinsic evidence to construe registered instruments, the statements of principle have broader application to issues which may arise concerning the construction and amendment of registered instruments concerning Torrens land. In particular, the Court's emphatic restatement of the primacy of the principle of indefeasibility of title supports the proposition that the power of this Court to rectify or amend registered instruments, whether exercised, under its equitable jurisdiction, or utilising the statutory powers of amendment and correction under the TLA, is clearly confined to corrections and amendments which do not impinge upon rights protected by indefeasibility.

69 For that reason, an application by Pincove (even if it had the necessary standing) to amend the subject covenant to reflect what may have originally been intended at the time of its registration would be bound to fail. No other party would have the necessary standing to make any such application. There would be no utility in notifying Pincove (or any other party) of this proceeding given that I have no doubt that the subject covenant is unenforceable, and no doubt that any application to rectify or vary the subject covenant would be bound to fail.

[2] Subject of course to obtaining the necessary planning approvals and building permits.

[3] [2017] VSC 779.

[6] Re Pomroy [2021] VSC 739 [63], citing Beman Pty Ltd v Boroondara City Council [2017] VSC 207 [18].

[7] [2007] HCA 45; (2007) 233 CLR 528.

[8] [2020] HCA 39; (2020) 268 CLR 638.

[9] [2000] VSC 258.

[11] (2023) 73 VR 275.

[12] [2020] HCA 39; (2020) 268 CLR 638.

[13] Jeshing (2023) 73 VR 275 [44], citing Deguisa [2020] HCA 39; (2020) 268 CLR 638, 644.

[14] [2004] VCAT 383.

[15] See Xu v Natarelli [2018] VSC 759.

[16] See Re Hunt [2017] VSC 779 [42], citing Vrakas v Mills [2006] VSC 463 [45].

[17] [2004] VCAT 383.

[18] [2019] VSC 303.

[21] [2020] HCA 39; (2020) 268 CLR 638.

[23] (2023) 73 VR 275.

[24] [2007] HCA 45; (2007) 233 CLR 528.

[25] See Newton Abbot Co-operative Society Ltd v Williamson & Treadgold Ltd [1952] 1 Ch 286; Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227; cf Fitt v Luxury Developments Pty Ltd [2000] VSC 258.

[26] Bradbrook AJ and McCallum SV 'Bradbrook and Neave's Easements and Restrictive Covenants' (3rd Edition, Lexis Nexis Butterworths, 2011) [13.19].

[29] See Re Hunt [2017] VSC 779; Re Ferraro [2021] VSC 166; and Re Pomroy [2021] VSC 739.

[30] In Re Saliba (Supreme Court of Victoria, Mukhtar AsJ, 24 November 2017) the parties to a transfer of land which, among other things, provided for the registration of a restrictive covenant, applied to amend the terms of the restrictive covenant. Both parties agreed that the restrictive covenant contained a mistake. His Honour referred to the statutory power to make amendments and corrections to restrictive covenants and other registered instruments under ss 88 and 103 of the TLA, but chose to make an order for rectification of the restrictive covenant exercising the Court's equitable jurisdiction, stating as follows (at [15]):

I think what has occurred in this case is a paradigm example of a common mistake which would readily attract a court's equitable jurisdiction under the doctrine of rectification.

[31] [2017] VSC 779.

[32] [2020] HCA 39; (2020) 268 CLR 638.

[33] (2023) 73 VR 275.

[34] See Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 [444]; Maralinga Pty Ltd v Major Enterprises Pty Ltd [1973] HCA 23; (1973) 128 CLR 336, 349-350.

[35] JD Heydon, MJ Leeming and PG Turner (5th Edition, Lexis Nexis Butterworths, 2014) ('MGL').

[36] [1954] 2 All ER 823.

[38] [2020] HCA 39; (2020) 268 CLR 638.

[39] (Supreme Court of Victoria, Mukhtar AsJ, 24 November 2017).

[40] [2013] NSWSC 1791.

[42] Ibid [190]. Reversed by the High Court on appeal, but not on this point. The decision of the Court in Sahab (2011) BPR 29627 has also been followed in Swancare Group Inc v Commissioner for Consumer Protection [2014] WASC 80 and in DM Longbow Pty Ltd v Registrar-General of NSW [2016] NSWSC 184.

[43] [2013] NSWSC 1791.

[45] [2020] HCA 39; (2020) 268 CLR 638.