Re Ferraro [2021] VSC 166 (12 April 2021)

2 This proceeding concerns the plaintiff's application for a declaration that the covenants affecting the Subject Land are invalid for want of any benefiting land being readily identifiable.

3 At the first return of the application on 29 January 2021, the plaintiff sought to have the matter determined without notice being given to potential contradictors. I noted this in paragraph D of 'other matters' in the orders made that day, and indicated that the orders allowed a framework for the appropriateness of that course to be considered. I made orders on that day for the plaintiff to file any further evidence and an outline of submissions by 4.00 pm on 15 March 2021 and for the proceeding to be listed for hearing on 25 March 2021 to deal with the matter raised in paragraph D of 'other matters' and, if appropriate, for the hearing of the substantive proceeding. No orders were therefore made at that stage for notice to be given pursuant to s 84(3) of the Property Law Act 1958 (Vic) ('Act').

4 The plaintiff relies on the following affidavits and the exhibits thereto:

(a) affidavit of David Boruch Zvi Vorchheimer sworn 18 December 2021 ('Vorchheimer Affidavit'). Mr Vorchheimer is a partner of HWL Ebsworth Lawyers ('HWL Ebsworth'), solicitors for the plaintiff; and

(b) affidavit of Madeleine Rose Barlow sworn 11 March 2021 ('Barlow Affidavit'). Ms Barlow is a solicitor employed by HWL Ebsworth.

5 The plaintiff also relies on the written submissions of her counsel, Matthew Townsend, dated 11 March 2021 which have been placed on the Court file ('Written Submissions').

6 I have not set out in full the detailed evidence relied upon and the detailed Written Submissions, as it is not necessary to do so. However, all of the evidence and all of the Written Submissions have been taken into account.

7 For the reasons which follow, I accept the plaintiff's submissions and will make the declaration sought.

8 The restrictive covenants noted as encumbrances on the title to the Subject Land are contained in instrument of transfer 551627 ('Lot 106 Covenant') and instrument of transfer 657637 ('Lot 105 Covenant') (together, 'Covenants').[1]

9 Instrument of Transfer 551627, being the Lot 106 Covenant, was signed on 28 June 1907 and registered on 3 July 1907. The Lot 106 Covenant prohibits the construction of any shop or terrace of dwelling houses; and requires:

(a) any dwelling house to be built of brick with a roof of slate of tiles;

(b) all plans for development to be approved by Kate Lynch, James Byrne and Harold Paul Dennehy;

(c) the cost of any development to be not less than £750; and

(d) no more than one building to be constructed on the lot.

...and the said Thomas Francis Brennan hereby covenants with the said Kate Lynch, James Byrne and Harold Paul Dennehy and their transferees that the said Thomas Francis Brennan will not erect on the said land hereby transferred any shop or terrace of dwelling houses and any dwelling house which may be erected shall be built of brick with roofs of slate or tiles and the plan thereof shall first be submitted to and approved of by the said Kate Lynch and James Byrne and Harold Paul Dennehy and shall not cost less than seven hundred and fifty pounds exclusive of Architects fees and also that no more than one building shall be erected on the lot transferred and it is intended that this covenant shall be set out as an encumbrance at the foot of the Certificate of title to be issued in respect of the said land and shall run with the land.

11 The Lot 106 Covenant describes the covenantees as being:

WE KATE LYNCH of Grace Park Hawthorn widow, JAMES BYRNE of 350 Flinders Lane Melbourne Customs agent and HAROLD PAUL DENNEHY of 19 Beaconsfield Parade St Kilda Gentleman being registered as the proprietor of an estate in fee-simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of two hundred and forty two pounds sixteen shillings and eightpence paid to us by THOMAS FRANCIS BRENNAN of 112 Grey Street East Melbourne Accountant DO HEREBY TRANSFER to the said Thomas Francis Brennan ALL our estate and interest in ALL THAT piece of land being lot 106 on Plan of Subdivision Number 4774 lodged in the Office of Titles being part of Crown Portion 40 at Hawthorn Parish of Boroondara County of Bourke and being part of the land more particularly described in Certificate of Title entered in the Register Book Volume 3009 Folio 601716...

12 Instrument of Transfer 657637, being the Lot 105 Covenant, was signed on 29 July 1911 and registered on 2 August 1911. The Lot 105 Covenant sought to prohibit the construction of any shop or terrace of dwelling houses; and requires:

(a) any dwelling house to be built of brick with the main portion of the roof being constructed of slate of tiles;

(b) all plans for development to be approved by Kate Lynch and James Byrne;

(c) the cost of any development to be not less than £750; and

(d) no more than one building to be constructed on the lot.

13 More particularly, the Lot 105 Covenant provides:

...Thomas Francis Brennan doth hereby for himself his heirs executors administrators and transferees covenant with the said Kate Lynch and James Byrne and their heirs executors and administrators respectively that he the said Thomas Francis Brennan his heirs executors administrators and transferees will not erect on the land hereby transferred any shops or terrace of dwelling houses and also will not erect on the said land any dwelling house unless the same shall be built of brick or stone with the main roof of slate or tiles and the plan thereof be first submitted to and approved of by the said Kate Lynch and James Byrne their heirs executors or administrators respectively and the cost of such dwelling house shall be at least seven hundred and fifty pounds exclusive of architect's fees and also that he the said Thomas Francis Brennan his heirs executors administrators and transferees will not erect more than one dwelling house on the land hereby transferred and it is intended that this covenant shall run with the said land and be set out as an encumbrance at the foot of the Certificate of Title to issue in respect of the same.

14 The Lot 105 Covenant describes the covenantees as being:

WE KATE LYNCH of Melbourne Mansions Collins street Melbourne widow and JAMES BYRNE of 350 Flinders Lane Melbourne Customs agent being registered as proprietors of an estate in fee simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of two hundred and four pounds paid to us by THOMAS FRANCIS BRENNAN of "Loma Langi" Linda Crescent Hawthorn Accountant DO HEREBY TRANSFER to the said THOMAS FRANCIS BRENNAN ALL our estate and interest in ALL THAT piece of land being lot 105 on Plan of Subdivision Number 4774 lodged in the Office of Titles ...

15 The Subject Land is otherwise known as:[2]

(a) Lots 1 and 2 on Title Plan 709799H; and more particularly described in

(b) Certificate of Title Volume 4583 Folio 551.

16 The Subject Land is shown on Title Plan 709799H, below:[3]

17 The Subject Land is rectangular in shape and is approximately 1032 sqm in size, and is currently developed with a large single dwelling.[4]

18 The history of the Subject Land is complex, as it derives from a number of certificates of title issued at various times. Set out below is a brief summary.

19 The Subject Land was created upon the transfer of the following by Instrument of transfer 1038681 dated 29 March 1922:

(a) the whole of Certificate of Title Volume 3213 Folio 557 ('Parent Title 1'); and

(b) the western portion of Certificate of Title Volume 3542 Folio 308 ('Parent Title 2').[5]

20 The relevant title plans describe the land as transferred from the Parent Titles as:

(a) Parent title 1 containing the whole of Lot 106 on plan of subdivision 4774;[6] and

(b) Parent title 2 containing the westerly portion of Lot 105 on plan of subdivision 4774.[7]

21 Parent Title 1 was created following the transfer of Lot 106 on Plan of Subdivision 4774 from Certificate of Title 3009 Folio 716 ('Head Title') pursuant to Instrument 551627, which contains the Lot 106 Covenant, on 3 July 1907.[8]

22 Parent Title 2 was created following the transfer of Lot 105 from Certificate of Title Volume 3315 Folio 850 ('Grandparent Title') pursuant to Instrument 657637, which contains the Lot 105 Covenant, on 3 August 1911.[9]

23 The Grandparent Title was created pursuant to Instrument 578756 on 18 September 1908 and contained all that land remaining in the Head Title.[10]

24 The Grandparent Title was made up of parcels of land that were subsequently subdivided and transferred out over the course of time to form the neighbourhood as it predominantly exists today.

25 The Head Title was created on 17 November 1904. A number of parcels were transferred directly from the Head Title, including Lot 106.

26 On 28 April 2020, PDV Group Pty Ltd, on behalf of the plaintiff, made an application for a planning permit to Boroondara City Council ('Council') seeking permission for the partial demolition of and additions and alterations to the existing dwelling on the Subject Land ('Proposed Development').[11]

27 According to Mr Vorchheimer, as part of the planning permit assessment process, Council formed the view that the Proposed Development would breach the Covenants and refused to grant a permit. Council's view was that the proposed additions and alterations to the existing dwelling would use materials that would be in breach of the Covenants as both Covenants require the dwelling house on the Subject Land to be constructed of brick and have a slate/tile roof. Council officers formed the view that the planning permit application must be refused in accordance with s 61(4) of the Planning and Environment Act 1987 (Vic), which provides that if the grant of a permit would authorise anything which would result in a breach of a registered restrictive covenant, the responsible authority (in this case, the Council) must refuse to grant the permit.

28 Section 84 of the Act provides as follows:

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.

(4) Any order made under this section shall be binding on all persons whether ascertained or of full age or capacity or not then entitled or thereafter capable of becoming entitled to the benefit of any restriction which is thereby discharged, modified or dealt with and whether such persons are parties to the proceedings or have been served with notice or not.

(5) An order may be made under this section notwithstanding that any instrument which is alleged to impose the restriction intended to be discharged, modified or dealt with has not been produced to the Court, and the Court may act on any evidence of such instrument as it thinks fit.

(6) This section shall apply to restrictions whether subsisting on the thirty-first day of December One thousand nine hundred and eighteen, or imposed thereafter and whether the land affected thereby is registered or not, and in the case of registered land the registrar shall if the restriction has been noted on the register give effect on the register to the order when made.

29 In this case, the plaintiff makes her application pursuant to s 84(2) of the Act.

30 As set out above, s 84(3) confers a discretion on the Court to require notification of an application before making an order under s 84. That power extends to an application for a declaration under s 84(2).

31 As Lansdowne AsJ noted in Re Hunt, restrictive covenants were in common use around the time of the Covenants,[12]

...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.

In some instances of transfer from a common vendor, the network of covenants thus created does benefit all the land in the parent title or subdivision, and reciprocally burdens all the land in the parent title or subdivision, whatever the date of the transfer.

32 It is well established that a restrictive covenant only runs with the land to burden a successor in title if the following three elements are all met:[13]

(a) the covenant must be negative;

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

(c) the covenant must be given for the benefit of land, not simply for the benefit of the covenantee, and the covenant must touch and concern that land.

33 In this case, the plaintiff properly concedes that the first two of these elements are met, as:[14]

(a) The restrictions referred to are evidently expressed in negative terms:

(i) In respect of the Lot 106 Covenant, the restrictions are that the covenantor (emphasis added)

will not erect on the said land hereby transferred any shop or terrace of dwelling houses and any dwelling house which may be erected shall be built of brick with roofs of slate or tiles and the plan thereof shall first be submitted to and approved of by the said Kate Lynch and James Byrne and Harold Paul Dennehy and shall not cost less than seven hundred and fifty pounds exclusive of Architects fees and also that no more than one building shall be erected on the lot transferred.

(ii) In respect of the Lot 105 Covenant, the restrictions are that the covenantor (emphasis added)

will not erect on the land hereby transferred any shops or terrace of dwelling houses and also will not erect on the said land any dwelling house unless the same shall be built of brick or stone with the main roof of slate or tiles and the plan thereof be first submitted to and approved of by the said Kate Lynch and James Byrne their heirs executors or administrators respectively and the cost of such dwelling house shall be at least seven hundred and fifty pounds exclusive of architect's fees and also that he the said Thomas Francis Brennan his heirs executors administrators and transferees will not erect more than one dwelling house on the land hereby transferred.

(b) The wording of the Covenants allow for the inference that the original parties intended to burden the land acquired by the covenantor:

(iii) In respect of the Lot 106 Covenant (emphasis added):

DO HEREBY TRANSFER to the said Thomas Francis Brennan ALL our estate and interest in ALL THAT piece of land being lot 106 on Plan of Subdivision Number 4774 lodged in the Office of Titles being part of Crown Portion 40 at Hawthorn Parish of Boroondara County of Bourke and being part of the land more particularly described in Certificate of Title entered in the Register Book Volume 3009 Folio 601716... and it is intended that this covenant shall be set out as an encumbrance at the foot of the Certificate of title to be issued in respect of the said land and shall run with the land.

(iv) In respect of the Lot 105 Covenant (emphasis added):

DO HEREBY TRANSFER to the said THOMAS FRANCIS BRENNAN ALL our estate and interest in ALL THAT piece of land being lot 105 on Plan of Subdivision Number 4774 lodged in the Office of Titles ... and it is intended that this covenant shall run with the said land and be set out as an encumbrance at the foot of the Certificate of title to issue in respect of the same.

34 However, the plaintiff contends that the third element is not met, as it is not possible to identify the land sought to be benefited. Whether or not the benefit of the Covenants have been annexed to some land is therefore the key issue for determination in this application.

35 In Fitt v Luxury Developments Pty Ltd,[15] Gillard J considered the passing of a benefit under a covenant and the need for the benefit of the covenant to be annexed to some land. His Honour said:

Whether or not the benefit of the covenant is annexed to some land is a question depending upon the common intention of the original parties to the covenant. It is necessary to construe the words of the covenant in their natural and ordinary meaning to determine the intention of the parties and whether they intended that the covenant was to be annexed to some land and run with it. In carrying out this exercise the court may take into account the surrounding circumstances objectively known to the parties at the time.[16]

36 In terms of how precisely the land must be identified, his Honour said:

Often the land to be protected is fully and accurately defined in the terms of the restrictive covenant. However sometimes the covenant is expressed in general terms and refers to an area by a particular name. It is well established that extrinsic evidence is admissible to explain the context in which the words were used.

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'.[17]

37 However, as Emerton J noted in Beman[18] and Lansdowne AsJ noted in Re Hunt,[19] Gillard J's observations as to the use of surrounding circumstances in respect of interpreting restrictive covenants should be treated with caution. In Westfield Management Limited v Perpetual Trustee Co Limited,[20] the High Court held that at least in the case of Torrens title land, general principles as to the use of extrinsic evidence in certain circumstances in questions of the construction of contracts do not apply to the determination of interests in land. The High Court expressed the view that to allow extrinsic evidence in the construction of a dealing would be inconsistent with the operation of the Torrens system:

To put the matter shortly, rules of evidence assisting the construction of contracts inter partes, of the nature explained by authorities such as Codelfa Construction Pty Ltd v State Rail Authority of NSW, did not apply to the construction of the Easement.

...

The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.[21]

38 Although Westfield was not a case concerning a restrictive covenant, [22] the principles enunciated there apply to cases construing covenants.[23]

39 In the earlier High Court case of Pirie v Registrar General, Kitto J held that the annexation of the benefit of a covenant to other land requires "the use of appropriate language in the instrument creating the restriction".[24]

40 In Clem Smith Nominees Pty Ltd v Farrelly,[25] Bray CJ in the Full Court of the Supreme Court of South Australia stated that:

under the Torrens system it is essential before the burden of a restrictive covenant can be held to run with the land that the land entitled to the benefit of the covenant shall be capable of identification in some way from the registered document containing the covenant or, at least, from other related documents which can be discovered by a search in the Land Titles Office. A prospective purchaser of land subject to a burden should be able to find out by a search whether the covenant is a covenant in gross, which will not be binding on him if he purchases, or a covenant the benefit of which is attached to some parcel or parcels of land, which may be binding on him.[26]

Should the Court proceed to hear and determine the application on an ex parte basis?

41 Consistent with the orders I made on 29 January 2021, I have considered whether the plaintiff should be required to give notice of her application for a declaration to any person who may wish to argue against it. If the application is to proceed ex parte then there is no contradictor to the plaintiff's submissions, yet if the declaration is made then by virtue of s 84(4), it will be binding on those persons who may have wished to contend that they were beneficiaries of the restrictions.

42 In order to form a view as to this, it was necessary for me to form a view as to whether any land is identified as benefited by the Covenants. My reasons for concluding that no land is identified as being benefited by the Covenants are set out in the next section of these reasons.

43 After considering the evidence and the plaintiff's submissions, like Lansdowne AsJ in Re Hunt,[27] I consider the plaintiff's case to be such a clear case "that it is neither necessary nor appropriate to seek to elicit any contradictor." As her Honour stated,

it would be difficult to identify any person with standing to object to the declaration because such a person would need to have an interest in benefited land, and no land is identified as benefited.

44 I share her Honour's observation that applicants in other proceedings should not assume that applications for such a declaration will necessarily proceed ex parte, since some applications for such a declaration as to enforceability of a covenant have been on notice to potential beneficiaries.[28]

45 In the exceptional circumstances of this case, I am satisfied that it is appropriate to determine the application without a contradictor.

Is there any land identified as benefiting from the Covenants?

46 As is clear from the summary of the relevant principles as set out in paragraphs 35 to 40 above, answering this question requires consideration of the words of the Covenants to ascertain whether the benefiting land is identifiable, either expressly or by implication.

47 The plaintiff submits, and I accept, that the wording of the Lot 106 Covenant appears to suggest that the parties intended to benefit those persons taking title from Kate Lynch, James Byrne and Harold Paul Dennehy, namely their 'transferees'.[29] The Lot 106 Covenant provides that the covenantor, Thomas Francis Brennan, 'hereby covenants with the said Kate Lynch, James Byrne and Harold Paul Dennehy and their transferees' (emphasis added).

48 The plaintiff submits that even with an express acknowledgement that a covenant was intended to benefit the transferees of the original covenantees, the third element of a valid restrictive covenant remains unmet where it is unclear who the relevant transferees of the original covenantees are and, therefore, which land is to benefit from the covenant.[30] In this regard, the plaintiff relies on Beman, where Emerton J stated as follows:[31]

However, even with the express acknowledgement that the Covenant (or at least the building materials covenant) was intended to benefit the transferees of Kate Lynch and James Byrne, the third element of a restrictive covenant remains unmet because it is unclear who are the relevant 'transferees' of Kate Lynch and James Byrne and therefore what land is to benefit from the Covenant. The transferees of Kate Lynch and James Byrne might be persons to whom land was transferred by Kate Lynch and James Byrne prior to the date of the Covenant or they might be transferees to whom land was transferred after the date of the Covenant. Indeed, they might be both.

49 At this juncture, it is convenient to set out some of the background of Beman, as the covenant in that instance is relevantly similar to the Lot 106 Covenant and concerned land in the same estate.

50 The covenant in Beman was expressed in the following terms ('Beman Covenant'):[32]

The said Robert Padmore Greenshields hereby covenants with the said Kate Lynch and James Byrne and their transferees that any buildings (except outbuildings) now and hereafter to be erected on the said land transferred shall be built of brick or stone with roofs of tiles, slates or iron or any other material and ... will not erect on that part of the said land transferred fronting Mary Street any shop or detached dwelling house facing Mary Street only but this covenant shall not prevent the said Robert Padmore Greenshields or his transferees from erecting outbuildings and accommodation apertinent to any buildings erected in Glenferrie Road and it is intended that this covenant shall be set out as an encumbrance at the foot of the Certificate of Title to be issued in respect of the said land and shall run with the land.

51 The Beman Covenant concerned land which was originally lots 79 and 80 on plan of subdivision 4774,[33] which is the same plan of subdivision as in this case. It was common ground in that case that the original vendors (or covenantees), Kate Lynch and James Byrne, had a very large local landholding transferred to them on 18 September 1908 and they then undertook a long-term program of gradually selling the holding in parts, selling off the final part in 1932.[34]

52 Beman concerned an application for leave to appeal and appeal from a decision of the Victorian Civil and Administrative Tribunal ('Tribunal').[35] In that case, the landowner had applied to the Council for a permit allowing removal of the Beman Covenant on grounds including that it was unenforceable, and the Council had issued a permit modifying its terms but not permitting its removal. The landowner appealed to the Tribunal, seeking removal of the Beman Covenant. The Tribunal affirmed Council's decision and made no amendment to the proper interpretation of the terms of the Beman Covenant. The Tribunal's key finding was that, on the proper interpretation of the Beman Covenant, it was probable that there were still beneficiaries of the Beman Covenant and this should have been fully investigated as part of the permit application.[36] The Tribunal's decision was overturned on appeal, in Beman.

53 The plaintiff submits that the Lot 106 Covenant describes that the land to be transferred forms part of the land contained in the Head Title, leading to an inference that the beneficiaries of the Lot 106 Covenant may be discovered by reference to the residual land in that folio remaining owned by the said Kate Lynch, James Byrne and Harold Paul Dennehy at the time the Lot 106 Covenant was created on 28 June 1907 (emphasis added):

WE KATE LYNCH of Grace Park Hawthorn widow, JAMES BYRNE of 350 Flinders Lane Melbourne Customs agent and HAROLD PAUL DENNEHY of 19 Beaconsfield Parade St Kilda Gentleman being registered as the proprietor of an estate in fee-simple in the land hereinafter described ... DO HEREBY TRANSFER to the said Thomas Francis Brennan ALL our estate and interest in ALL THAT piece of land being lot 106 on Plan of Subdivision Number 4774 lodged in the Office of Titles being part of Crown Portion 40 at Hawthorn Parish of Boroondara County of Bourke and being part of the land more particularly described in Certificate of Title entered in the Register Book Volume 3009 Folio 601716...

54 This was the approach taken by the Tribunal in Beman Tribunal Decision,[37] as Emerton J explained:[38]

The Tribunal accepted the submission that the 'transferees' in question were the transferees of the residual land in the area owned by Kate Lynch and James Byrne that still formed part of their main landholding at the time the Covenant was created in October 1909. That may have been a reasonable assumption, having regard to the likelihood that Kate Lynch and James Byrne would seek to protect the value of the land that they continued to hold and would have had less interest in the value of the land that they had already sold off.

55 Importantly, Emerton J went on to say that: [39]

However, there is no compelling reason to limit the intended beneficiaries of the Covenant in this particular way. The words of the Covenant, construed in context, do not require any such a conclusion.

56 What is to be made of the use of the words 'and shall run with the land' in the Lot 106 Covenant? Relevantly, it states (emphasis added):

it is intended that this covenant shall be set out as an encumbrance at the foot of the Certificate of title to be issued in respect of the said land and shall run with the land

57 In Beman, Emerton J held that notwithstanding that the covenant includes this expression, such wording does not assist in identifying the land to be benefitted by the covenant: [40]

In these circumstances, the words 'and shall run with the land' at the end of the Covenant are not 'game-changing'. They do not solve the problem of identifying the land to benefit from the Covenant.

58 The plaintiff submits that while it might be possible to speculate about which land the covenanting parties intended to take the benefit of the Lot 106 Covenant, the benefitted land is not easily ascertainable, and the third element of a restrictive covenant is not made out in respect of the Lot 106 Covenant.

59 I accept the plaintiff's submission. The apposite parts of the Lot 106 Covenant are so similar, if not identical, to those in the Beman Covenant (leaving aside the fact that Harold Paul Dennehy is one of the covenantees here but not in respect of the Beman Covenant) that I am bound to follow Emerton J's decision in Beman. I should state that not only am I bound to do so, I find her Honour's reasoning and conclusion to be compelling. The benefiting land is not ascertainable from what appears on the Register of Titles, which is the applicable standard, as set out in paragraphs 37 to 40 above.

60 The relevant wording in respect of the covenantees is different in the Lot 105 Covenant compared with the Lot 106 Covenant. In the former case, the Lot 105 Covenant describes the covenantees as 'the said Kate Lynch and James Byrne and their heirs executors and administrators respectively'. Unlike the 106 Covenant, it does not refer to their 'transferees'. I will return to this aspect shortly.

61 Despite this difference, the balance of the Lot 105 Covenant is relevantly similar to the Lot 106 Covenant, in that it too does not identify the land which is to benefit from the Lot 105 Covenant. Just as with the Lot 106 Covenant, there is no annexation of the benefiting land.

62 The plaintiff submits, and I accept, that although it is arguably easier to identify the relevant 'heirs executors and administrators' of the covenantees than their transferees, the Lot 105 Covenant still fails to identify who the relevant 'heirs executors and administrators' are with respect to the particular land which is to take the benefit of the restrictions.

63 The covenantees in Re Hunt were expressed in the relevant restrictive covenant as being the vendor and his executors and administrators: 'the said Robert Singleton his executors and administrators'.[41] Apart from the covenantees in that case not including the vendor's heirs, the wording is relevantly similar to the Lot 105 Covenant. In other relevant respects, the wording of the Hunt Covenant is relevantly similar to the Lot 105 Covenant and it does not identify the land which is to be benefited by the Hunt Covenant.[42] In that case, Lansdowne AsJ found that the Hunt Covenant was personal only to the vendor and his executor.[43]

64 As noted by Lansdowne AsJ in Re Hunt, there are several statutory provisions that extend the benefit or burden of a covenant:[44]

For completeness, I note that there are several statutory provisions that extend the benefit or burden of a covenant, being ss 78, 79 and 79A of the [Act]. Section 78 provides that a covenant made after the commencement of the Act is deemed to be for the benefit of the covenantee and his successors in title, even if those words are not used, and s 79 applies the same deeming provision in respect of the burden of a covenant in relation to covenants made after the commencement of the Act. It is not necessary to consider those provisions further in this case, as the Covenant is of an earlier date.

65 Section 78 of the Act, introduced with the Property Law Act 1928, provides:

78 Benefits of covenants relating to land

(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.

66 Section 79 of the Act, introduced with the Property Law Act 1928, provides:

79 Burden of covenants relating to land

(1) A covenant relating to any land of a covenantor or capable of being bound by him, shall, unless a contrary intention is expressed, be deemed to be made by the covenantor on behalf of himself, his successors in title and the persons deriving title under him or them, and, subject as aforesaid, shall have effect as if such successors and other persons were expressed.

This subsection shall extend to a covenant to do some act relating to the land, notwithstanding that the subject-matter may not be in existence when the covenant is made.

(2) For the purposes of this section 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 such land.

(3) This section shall apply only to covenants made after the commencement of this Act.

67 Section 79A of the Act, introduced with the Transfer of Land (Restrictive Covenants) Act 1964, provides:

79A Construction of covenants affecting land

It is hereby declared that when the benefit of a restriction as to the user of or the building on any land is or has been annexed or purports to be annexed by any instrument to other land the benefit shall unless it is expressly provided to the contrary be deemed to be and always to have been annexed to the whole and to each and every part of such other land capable of benefiting from such restriction.

68 Since the Covenants, signed in 1907 and 1911, were created prior to the introduction of these provisions, these statutory provisions extending the benefit or burden of a covenant do not apply. The plaintiff submits, and I accept, that sections 78 to 79A of the Act do not fix the failure of the Covenants to identify the benefited land and were not in force at the time the Covenants were created.

69 The plaintiff submits that s 65 of the Conveyancing Act 1904 (Vic), in force at the time the Covenants were signed, appears to provide a similar function as sections 78 and 79 of the Act insofar as it deems a covenant to be made with the executor administrator and assigns of the land:

65(1) A covenant relating to land of inheritance or devolving on the heir as special occupant shall be deemed to be made with the covenantee his heirs and assigns and shall have effect as if heirs and assigns were expressed.

(2) A covenant relating to land not of inheritance or not devolving on the heir as special occupant shall be deemed to be made with the covenantee his executors administrators and assigns and shall have effect as if executors administrators and assigns were expressed.

(3) This section applies only to covenants made after the commencement of this Act.

70 The Court in Re Hunt considered the effect of section 65 of the Conveyancing Act 1904 (Vic), and concluded that the effect of this provision was to not to annex the benefit of the covenant to the land, but rather to extend the personal benefit to those other persons being the executors, administrators or assigns:[45]

Counsel for the plaintiff has taken me to an earlier provision, in force at the time of creation of the Covenant. That provision is s 65 of the Conveyancing Act 1904. Section 65(2) of that Act deemed a covenant 'relating to land not of inheritance or not devolving on the heir as special occupant' (which would appear to be the situation in respect of the Covenant) to be made with 'the covenantee his executors administrators and assigns' even if those persons were not expressed to be benefited in the covenant itself. That deemed extension does not in my view annex the benefit of the Covenant to land, but merely extends its personal benefit to those other persons. In this case, the covenantee's executor is himself deceased, and there is no evidence of any assignee of the benefit of the Covenant from the covenantee. Thus s 65 does not undermine the plaintiff's contentions in this case.

71 The plaintiff submits, and I accept, that the Lot 105 Covenant is similar in its uncertainty to the covenant in Re Hunt, which was comparably silent on identifying the land to which the benefit was to be annexed.

72 For the Lot 105 Covenant to run with the Subject Land and burden a successor in title, that is, the plaintiff, then as set out above it must identify the benefiting land. Otherwise, it is merely a personal covenant and does not burden the Subject Land in the hands of a successor in title.

73 For all of these reasons, along with the matters set out in paragraphs 56 and 57 above, the third element of a restrictive covenant is not made out in respect of the Lot 105 Covenant.

74 For the reasons set out above, the Subject Land is no longer affected by any restrictions contained in the Covenants as they do not specify the land to which the restrictive covenants confer a benefit and are no longer enforceable.

75 Orders and declarations giving effect to this judgment will be made.

[1] Exhibit DBZV-2 to the Vorchheimer Affidavit.

[2] Exhibit DBZV-1 to the Vorchheimer Affidavit; Written Submissions, [12].

[3] Exhibit DBZV-1 to the Vorchheimer Affidavit; Written Submissions, [13].

[8] Barlow Affidavit, [6]; Exhibit MRB-2 to the Barlow Affidavit.

[10] Barlow Affidavit, [9]; Exhibit MRB-3 to the Barlow Affidavit.

[12] [2017] VSC 779, [16]-[17].

[13] See Adrian J Bradbrook and M A Neave, Easements and Restrictive Covenants in Australia (Butterworths, 2nd ed, 2000), [1419]; Beman Pty Ltd v Boroondara City Council [2017] VSC 207, [18] ('Beman').

[14] Written Submissions, [63]-[65].

[15] [2000] VSC 258 ('Fitt').

[20] [2007] HCA 45; (2007) 233 CLR 528 ('Westfield').

[21] Westfield, 539 (citations omitted).

[22] In Westfield, the relevant dealing was an easement granting a right of way under one commercial building in Sydney to another.

[24] [1962] HCA 58; (1962) 109 CLR 619, 628.

[25] (1978) 20 SASR 227 ('Clem Smith Nominees').

[26] Clem Smith Nominees, 237 (citations omitted).

[33] Beman Pty Ltd v Boroondara CC [2016] VCAT 2020, ('Beman Tribunal Decision'), [9].

[34] Beman, [7]; Beman Tribunal Decision, [10].

[35] The Tribunal's decision is Beman Pty Ltd v Boroondara CC [2016] VCAT 2020, ('Beman Tribunal Decision').

[37] Beman Tribunal Decision, [53].

[40] [2017] VSC 207, [34].

[41] The covenant in that case herein referred to as the 'Hunt Covenant'.

[45] Re Hunt, [44] (emphasis added).