196 Hawthorn Road Pty Ltd v Duszniak

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S ECI 2018 01724

196 HAWTHORN ROAD PTY LTD	Plaintiff
v
KRYSTYNA DUSZNIAK & ORS (according to the attached schedule)	Defendants

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JUDGE:	Lansdowne AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	15 August 2019; further submissions to 24 September 2019.
DATE OF JUDGMENT:	1 May 2020
CASE MAY BE CITED AS:	196 Hawthorn Road Pty Ltd v Duszniak
MEDIUM NEUTRAL CITATION:	[2020] VSC 235

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REAL PROPERTY – Restrictive covenant – Preliminary questions relating to proper construction of covenant – Not to erect any building other than one private dwelling house of stated minimum cost without the consent in writing of the transferor – Transferor now deceased – Whether power to consent applied only to cost restriction – Whether restrictions became absolute or spent on death of the transferor – Principles of construction considered – Barport Pty Ltd v Baum [2019] VSCA 167 – Admissibility of evidence of the existence and content of other covenants imposed by the transferor in relation to the purpose of the restrictions – Westfield Management Limited v Perpetual Trustee Company Limited (2007) 233 CLR 528; Prowse v Johnston & Ors [2012] VSC 4; Suhr v Michelmore [2013] VSC 284; Clare v Bedelis [2016] VSC 381 – Consideration of previous decisions – Bell v Norman C. AshtonLtd (1956) 7 P & CR 359; In Re Beechwood Homes Ltd application [1994] 2 EGLR 178; Briggs v McCusker [1996] 2 EGLR 197; Crest Nicholson Residential (South) Ltd v McAllister [2003] All ER 46; Margerison v Bates [2008] 3 EGLR 165; Churchill v Temple [2011] 1 EGLR 73; Woodhouse v Woodhouse [2010] UKUT 235 (LC) – Restrictions held to become absolute on death of transferor – Property Law Act 1958 (Vic) s 84(2).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Townsend	Tisher Liner FC Law
For the First, Second and Third Defendant	Ms T Acreman
For the Sixth and Seventh Defendants	Mr Harold Shafer, by leave

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

The Covenant...................................................................................................................................... 2

Legal principles.................................................................................................................................. 6

Submissions...................................................................................................................................... 16

Issues.................................................................................................................................................. 20

Consideration.................................................................................................................................... 21

Plaintiff’s evidence...................................................................................................................... 22
A conditional contract or a dispensing power?...................................................................... 24
Does the dispensing power apply to the single dwelling restriction?................................ 25
Effect of Ms Langdon’s death.................................................................................................... 26
Textual indications............................................................................................................ 27
Purpose of the Covenant.................................................................................................. 29
Evidence of other covenants............................................................................................ 31
Consideration of other aspects of context...................................................................... 40
Previous decisions............................................................................................................. 42
Australian cases................................................................................................................. 43
English authorities............................................................................................................. 46

Conclusion and orders.................................................................................................................... 51

HER HONOUR:

Introduction

The plaintiff is the registered proprietor of two parcels of adjoining land, at 196 and 198 Hawthorn Road, Caulfield North. The plaintiff already holds a planning permit to construct seven apartments on 196 Hawthorn Road, but now wishes to construct an apartment building across the two parcels, containing 16 apartments. A potential barrier to that endeavour is the covenant on the title to the land at 198 Hawthorn Road (‘Land’), which may contain a single dwelling restriction. In this proceeding, the plaintiff seeks a declaration that the covenant (‘Covenant’) was limited to the life of the transferor/covenantee, and so the Land is no longer affected by any restriction in the Covenant.[1] In the alternative, the plaintiff seeks discharge of, or modification to, the Covenant so that it requires only that any building on the Land be used for residential purposes.
[1]Further amended originating motion filed 1 May 2019.

At the time that they were joined to the proceeding, all the defendants opposed the declaration and objected to the proposed discharge or modification of the Covenant. I made orders on 24 April 2019 that the following preliminary questions be tried separately before a trial of the merits of discharge or modification:

(i) Is the restriction in instrument of transfer 1223428 limited to the life of the covenantee, Sophie Sarah Annie Langdon?

(ii) Does it follow that the subject land is now not affected by any purported restriction contained in instrument of transfer 1223428?

(together, the ‘Preliminary Questions’)

The fourth and fifth defendants, Mr and Mrs Caple, agreed with the plaintiff to withdraw their appearance and objection to the application by deed dated 14 May 2019 and did not participate further in the proceeding.

The trial of the Preliminary Questions was heard on 15 August 2019. The first to third defendants were represented by counsel. The sixth and seventh defendants, were represented by leave by their father, Mr Harold Shafer. None of the defendants filed any evidence, and did not seek to cross examine the directors of the plaintiff or the plaintiff’s expert, Mr Robert Easton. Only the first to third defendants filed written submissions. I allowed Mr Shafer to make a brief oral submission at the conclusion of the hearing. The plaintiff first filed submissions dated 24 April 2019, but at the hearing sought to rely on more extensive written submissions dated 13 August 2019 and further factual material relating to the spread and contents of other covenants. As set out in more detail later in these reasons, I allowed the plaintiff to rely on the submissions at the hearing, gave it the opportunity to put the factual material into evidence after the conclusion of the hearing, and allowed the parties to make further written submissions.

For the reasons that I now give, I would answer the Preliminary Questions as follows:

(iii) No.

(iv) No.

The Covenant

The parties are in disagreement as to the ambit of relevant facts, and, if the spread and content of other covenants is relevant, whether those facts are properly in evidence. I will return to those disagreements shortly. For the time being, I set out only the history and terms of the Covenant, as drawn from the report of Mr Easton. It does not appear that these matters are controversial for the purpose of the Preliminary Questions.

The Covenant was created by transfer dated 27 May 1925 of Lot 10 of Plan of Subdivision 8216, which was part of the land within Certificate of Title Vol 3840 Folio 767998, from Sophie Sarah Annie Langdon to one James Sutherland Yorston (‘Transfer’). The operative words of the Covenant are as follows:

AND the said James Sutherland Yorston DOTH HEREBY for himself his heirs executors administrators and transferees registered proprietor or proprietors for the time being of the land hereby transferred covenant with the said Sophie Sarah Annie Langdon her executors administrators and transferees registered proprietor or proprietors for the time being of the land now remaining in Certificate of Title Volume 3840 Folio 767998 not to erect on the land hereby transferred any building other than one private dwelling house such dwelling house not to cost less than One thousand pounds exclusive of outbuildings and fencing relative thereto without the consent in writing of the said Sophie Sarah Annie Langdon and hereby consents to this covenant as an encumbrance on title to issue in respect of the said land.

Ms Langdon had become the registered proprietor of the land contained within Certificate of Title Vol 3840 Folio 767998 (‘Parent Title’) on 4 February 1915. The land within the Parent Title was subdivided by a series of subdivisions between 1915 and 1938. The Land is contained within the third of these subdivisions, LP 8216 lodged in March 1921 (‘Subdivision’) , and is Lot 10 of 11 lots. I insert a copy of LP 8216 below, marked up by Mr Easton to show the Land in pink.

There is no dispute, at least in the determination of the Preliminary Questions, that the beneficiaries of the restrictions in the Covenant, if those restrictions still bind the Land, are the current proprietors of the land remaining in the Parent Title as at the date of the Transfer. The evidence in this preliminary trial as to those beneficiaries is contained in Mr Easton’s report. The report contains a table of transfers out of the Parent Title, which shows that only five parcels remained in the Parent Title as at the date of the Transfer. Some of those parcels were subsequently further subdivided. Mr Easton’s evidence is that the land benefited by the Covenant (at least during the lifetime of Ms Langdon) is as follows:

(v) Lot 9 on LP 8216 (which is now known as 196 Hawthorn Road, and is also owned by the plaintiff);

(vi) Lots 6, 7 and 8 on LP 8216, now known as 1A, 1B and 1C Crotonhurst Avenue, and 192 and 194 Hawthorn Road;

(vii) A strip of land south of 1A Walworth Avenue, now part of 202 Hawthorn Road;

(viii) The land now known as 1 Mitchell Road;

(ix) The land now known as 3/3, 4/3, 5/3 and 6/3 Mitchell Road; 11 Mitchell Road; 1/5 and 2/5 Walworth Avenue; 1/3 and 2/3 Walworth Avenue; 4 Walworth Avenue; and 1/6 and 2/6 Walworth Avenue; and

(x) Various roads and portions of roads including Crotonhurst Avenue, Walworth Avenue, a portion of Langdon Road, a portion of Mitchell Road and a small strip running between lots facing onto Crotonhurst Avenue, and those facing onto Mitchell Road and Walworth Avenue.

A map showing the current street plan and street numbers, marked up to show the benefited land as identified by Mr Easton in blue and purple, is as follows:

The plaintiff concedes that the first and second defendants, Mr and Mrs Duszniak, the registered proprietors of the land known as 192 Hawthorn Road, Caulfield North, and the sixth and seventh defendants, Ms Sharon and Mr David Shafer, the registered proprietors respectively of 2/6 and 1/6 Walworth Avenue, Caulfield North, are beneficiaries of the restrictions in the Covenant, if those restrictions still bind the Land. For the purpose of the preliminary hearing the plaintiff does not dispute that the third defendant, Ms Ellinson, is a beneficiary of the Covenant, if it still burdens the Land, but foreshadows that at trial on the merits it may dispute the extent to which she is a beneficiary. Ms Ellinson is the registered proprietor of the land known as 2 Walworth Avenue, Caulfield North which as shown on the map above runs south to north, and adjoins the western boundary of both 196 and 198 Hawthorn Road, Caulfield North, and claims to be the owner of certain land appurtenant to it. She claims to be a beneficiary by reason of the appurtenant land. This appurtenant land is shown in the map above as the small purple square at the top left of her land.

Given the date of the Covenant, it might be expected that the transferor, Ms Langdon, is now deceased. The plaintiff has produced evidence by way of grant of probate that that is indeed the case. Ms Langdon died on 21 June 1948. The inventory attached to the grant of probate discloses that at her death she no longer owned any land in the Parent Title.[2] Indeed, the last transfer out of the Parent Title occurred on 2 February 1938 and the Parent Title was cancelled as of that date.[3]
[2]Exhibits to the affidavit of Natalie-Veronique Chani, sworn 13 June 2019.
[3]Exhibit RWE-1 to the affidavit of Robert Walter Easton, sworn 24 August 2018 (‘Mr Easton’s Report’ or ‘Easton Report’), A 19 and [5.4].

It follows that Ms Langdon can no longer give the consent envisaged in the Covenant. There is no dispute that she, and she alone, was the only person who could give the consent envisaged in the Covenant.[4] Thus the fundamental issue for the Preliminary Questions is what effect Ms Langdon’s death has had on the Covenant, and, in particular the single dwelling restriction. The plaintiff’s fundamental contention is that as a consequence of Ms Langdon’s death the restrictions are no longer enforceable. The defendants’ fundamental proposition is that, if the power of Ms Langdon to dispense with a restriction applied to the single dwelling restriction (which they do not concede), her death means that the restrictions became absolute.
[4]As compared with many of the English authorities to which I was taken, where there was an initial issue as to whether the power to consent applied to the executors or successors in title to the vendor.

Legal principles

The plaintiff seeks the declarations, or in the alternative discharge or modification of the Covenant, pursuant to s 84(2) and s 84(1)(c) respectively of the Property Law Act 1958 (Vic) (‘PLA’). Those subsections provide 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—

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

…
(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.

…

The power to make a declaration conferred by s 84(2) of the PLA requires construction of the Covenant. The usual rule for the construction of a written document between parties is that the Court must ascertain the objective intention of the parties to the document, as revealed by the text and in some circumstances by evidence extrinsic to the text. ‘Objective’ construction means the meaning that a reasonable person would reach on the basis of the words used, as opposed to the subjective intentions of the parties. The notional ‘reasonable person’ in this exercise is a reasonable person in the position of the party to whom the words in question were addressed, usually the promisee.[5] In the case of the restrictions in the Covenant, the promisee was the transferor, Ms Langdon.
[5]J W Carter, Contract Law in Australia (LexisNexis Butterworths, 7th ed, 2018) [12-03], citing Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, 462.

Restrictive covenants are contracts with distinct features. A restrictive covenant that runs with land is not just a contract between the two original parties to the transfer, enforceable by them or their assigns alone. It also imposes a burden and benefit on land, which respectively binds and benefits subsequent purchasers from each of the original parties. This means that in the case of restrictive covenants a dispute as to interpretation often arises as between subsequent purchasers, not the original parties, yet the dispute is to be determined on the basis of the intention of the original parties, from the perspective of the hypothetical reasonable promisee, and often after a significant lapse of time and in circumstances quite different to those pertaining at the time of the original transfer.

This might suggest that extrinsic evidence as to the intention of the original parties could be potentially critical in the case of construction of a covenant. However, where the covenant burdens Torrens title land, permitting extrinsic evidence to be adduced as to the intention of the original parties may offend the principle of indefeasibility of title i.e. that a purchaser should be able to ascertain all necessary information relating to the land from the register. In Westfield Management Ltd v Perpetual Trustee Company Ltd (‘Westfield’)[6], the High Court held that extrinsic evidence as to the intention of the grantor and grantee of an easement was not admissible in the exercise of construing it. An easement has different features to a restrictive covenant, but nevertheless the case is usually regarded as applying to restrictive covenants burdening Torrens title land as well, so that the rules that permit the admission of extrinsic evidence in conventional contracts do not apply to the construction of covenants burdening Torrens title land.
[6](2007) 233 CLR 528.

The principles to apply in the construction of a restrictive covenant were most recently considered by the Court of Appeal in Barport Pty Ltd v Baum (‘Barport’).[7] In that case, the covenant in question was a recent one and the parties to the dispute were the original transferor and transferee. Perhaps for these reasons, it was not necessary for the Court to consider the principles that apply to construction of a covenant in great detail. They summarised those principles as follows, here extracted without citations, as follows:

Plainly, the text of the covenant is crucial. As with any constructional exercise, context plays a role and the words should be construed by reference to the instrument as a whole and not in the abstract, but by reference to the location of the physical characteristics of the properties which are affected by it. However, context may not be used to ascertain or elucidate the subjective intentions or expectations of the covenantor. The purpose of the covenant will be important in so far as it can fairly be discerned from the instrument as a whole.[8]

[7][2019] VSCA 167.

[8]Ibid [68].

These factors can be seen as a hierarchy of considerations, with the text as the starting point, in its factual context, and assisted by consideration of the purpose of the covenant, to the extent it can be ascertained.

The land in question in that case was adjacent to an airport, and was suitable for use for airport related activities. The relevant restriction was that the transferee ‘shall not construct any building or hang[a]r that is not in accordance with the height limitations as per CASA Manual of Standards Part 139-Aerodomes’. The trial judge construed the term ‘height limitations’ in isolation, and having regard to dictionary definitions, rather than by reference to the standard incorporated by reference, the CASA Manual of Standards. The Court of Appeal held that this approach was incorrect, because it ignored the context of the restriction.[9]
[9]Ibid [88].

The Court commenced its analysis by observing that the text of the restriction, as it appeared in the registration of the subdivision, imposed its burden on every lot in the subdivision except one, which was the benefited lot. The Court then observed that this benefited lot was, at the time of the subdivision, being used as an airport with physical characteristics including runways and other airport facilities. They observed that the reference to ‘any hangar’ and the incorporation of standards that apply to aerodromes were ‘obvious textual links to the operation of the airport on (the benefited lot)’.[10] I observe that this is an example of analysis of the text in its factual context.
[10]Ibid [69], [71].

The Court then had regard to the purpose of the restriction, to be determined at least in part by its effect and what it is apt to achieve.[11] They determined that this purpose was to prevent the construction of a hangar that by reason of its height would interfere with the safe and orderly operation of the airport. They reached that conclusion having regard to the necessity to ensure that use of the burdened lots, which were all close to the airport, would be consistent with continued operation of the airport. In short, the Court considered the text of the restriction, in its context, and having regard to its purpose as ascertained from the document as a whole.
[11]Ibid [73], citing Suhr v Michelmore [2013] VSC 284, [26].

In support of their observation that the words of the covenant should not be construed in the abstract, but ‘by reference to the location of the physical characteristics of the properties which are affected by it’ (emphasis in bold added) the Court of Appeal in Barport cited with apparent approval, amongst other authorities, the summary of principles of construction by Associate Justice Derham in Clare v Bedelis.[12] In his summary, Derham AsJ stated this principle as follows (emphasis in bold added, and citations omitted):

(d)the words of the covenant should be construed not in the abstract but by reference to the location and the physical characteristics of the properties which are affected by it, and having regard to the plan of subdivision and, depending on the evidence, possibly having regard to corresponding covenants affecting other lots in the estate;[13]

[12][2016] VSC 381, [31].

[13]Ibid.

It seems to me likely that the Court of Appeal made an unintentional error in utilising the word ‘of’ between ‘location’ and ‘the physical characteristics’, as opposed to ‘and’. In other words, it is both the location of the burdened and benefited properties, and their physical characteristics that are relevant. This is shown by the discussion in Barport of the fact that the land burdened by the restriction was adjacent to land being used as an airport, whose physical characteristics included the construction of runways and other airport facilities.[14]
[14]Barport (n 7), [69].

The parties agree that the relevant principles were helpfully summarised by Derham AsJ in Clare v Bedelis. Two further relevant principles from his Honour’s summary in that case are as follows. First, that the construction of covenants in other cases is at the most persuasive only, as the meaning of the words used depends on their context and the purpose or object of the specific covenant in question.[15] Secondly, that if the meaning of a restriction remains in doubt after other rules of interpretation have been applied, then as a last, or ‘very last resort’, the restriction should be construed against the covenantor.[16]
[15]Clare v Bedelis (n 12), [31(e)]. See also Prowse v Johnstone [2012] VSC 4, [54] (Cavanough J).
[16]Clare v Bedelis (n 12), [31(g)].

A particular question that arises in this case is the extent to which the Court can have regard to the existence and terms of other covenants created on transfers out of the Parent Title. The possible admissibility of such evidence is identified by Derham AsJ in the second sentence of the extract from Clare v Bedelis above. The plaintiff seeks to rely on the spread and content of other covenants in support of its submission that the purpose of the Covenant was to control the form of development of the Land only during the lifetime of Ms Langdon. The defendants disagree with this approach. Thus one issue in this preliminary trial is whether the consideration of ‘context’ extends to consideration of the spread and content of other covenants imposed on transfers from the Parent Title.

Consideration of this issue first requires more detailed discussion of Westfield. As noted earlier, in that case, which concerned an easement, the High Court held that it would be inconsistent with the principle of indefeasibility of title for Torrens title land to allow evidence extrinsic to the register to be admitted to determine the intention of the original parties to the grant of the easement. The Court explained this view in these words (citations omitted):

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.[17]

[17]Westfield (n 6), [37] and [39].

The extrinsic evidence sought to be relied upon in Westfield concerned the intention of the original parties to the grant of the easement. Although the Court held that extrinsic evidence of that type was not admissible, it did not hold that all extrinsic evidence is inadmissible. The Court noted as follows:

It may be accepted, in the absence of contrary argument, that evidence is admissible to make sense of that which the Register identifies by the terms or expressions found therein. An example would be the surveying terms and abbreviations which appear on the plan found in this case on the DP.[18]

[18]Ibid [44].

How Westfield might apply to a restrictive covenant, and in particular to the admission of evidence relating to similar covenants on other land transferred out of the parent title, arose in Prowse v Johnstone(‘Prowse’).[19] In that case, the opponents to a proposed modification sought, as does the plaintiff in this case, to rely on evidence of other similar single dwelling covenants in other transfers from the parent title to establish the purpose of the restriction. The parties had not addressed the judge, Cavanough J, on the impact of Westfield, and he himself identified the question as to whether Westfield would prevent the reception of the evidence of the other covenants. His Honour first noted that Westfield related to an easement, not a restrictive covenant, and that there are differences between the two. However, it appears that he regarded Westfield as being of general application in relation to Torrens title land, and so applying to the construction of a restrictive covenant as well as an easement.[20] He noted that the New South Wales Court of Appeal had determined in cases subsequent to Westfield that it did not prohibit all extrinsic evidence, and that, in particular, it permitted the admission of evidence relating to the material in the folio identifiers, the registered instrument, the deposited plans and the physical characteristics of the tenements.[21]
[19][2012] VSC 4.
[20]Ibid [57].
[21]Ibid [58], referring to Sertari Pty Ltd v Nirimba Developments Pty Ltd [2007] NSWCA 324, [16], and Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64.

Cavanough J ultimately decided that he did not need to hear from the parties as he considered the terms of the relevant covenant, viewed in isolation, were sufficiently clear. Nevertheless, he observed that he would have been inclined to permit evidence relating to the other covenants. This was because the relevant subdivision was referred to in the covenant itself, and the covenants burdening other lots sold out of that subdivision could all be obtained by searching the register.[22]
[22]Ibid, [58].

The effect of Westfield on construction of a restrictive covenant next arose in this Court in Suhr v Michelmore (‘Suhr’).[23] That case concerned a height restriction that was to be determined by reference to the ‘present level’ of the subject land, which the parties agreed meant the level of the land as at the date of the covenant, 1937. The plaintiffs sought a declaration that the covenant was void for uncertainty because it could not be given effect without reference to evidence beyond that which appears on the register. Pagone J first expressed some reservations as to whether Westfield was directly applicable to construction of a covenant, as opposed to an easement, but nevertheless accepted that the ‘proper construction of the meaning of both restrictive covenants and easements is to be undertaken without regard to extrinsic evidence’.[24] He added, however, that ‘it does not follow that the properly construed instrument cannot itself require reference to extrinsic material’[25] (emphasis in bold added) or, putting it slightly differently, Westfield does not require the conclusion that extrinsic evidence may not be admitted in relation to the meaning of a term which ‘upon its proper construction directs attention to something outside of the Register’ (emphasis in bold added).[26] This was the approach taken by the Court of Appeal in Barport, and indeed the Court in that case cited Suhr with approval in that regard.[27]
[23][2013] VSC 284.
[24]Ibid [7].
[25]Ibid.
[26]Ibid [9].
[27]Barport (n 7), [94].

How Pagone J in Suhr then applied those principles to the facts before him is, however, with respect, a little unclear. He held that the terms of the covenant directed attention to the level of the land in 1937; noted that the plaintiffs conceded that it was valid when first made in 1937; and stated that they had not shown that it become invalid by reason of any material change to the land since then.[28] To reach this conclusion, Pagone J relied on ‘visual inspection’ of the land as revealed by present and historical photographs, which showed that the level had not materially changed.[29] It must follow that Pagone J regarded these photographs as being admissible, but he did not elaborate if, and if so how, they fitted within the framework of permissible extrinsic evidence.
[28]Suhr (n 23), [17].
[29]Ibid [17].

The explanation may be that a covenant is always to be construed having regard to the physical condition of the subject land, and this physical condition, whether revealed by actual inspection or photographs, is not to be considered extrinsic evidence. This explanation is suggested by Pagone J’s later statement that ‘[n]othing in the topography or relevant circumstances of the site renders uncertain the operation of the covenant according to its terms’.[30] It is also consistent with his express identification of certain other evidence, being surveying evidence as to the level of the land currently and in 1937 and evidence from neighbours as to their recollection of the land, as ‘extrinsic’. Pagone J held that it was not necessary to have regard to the surveying evidence, as it merely confirmed what was evident from visual inspection. He did not state whether or not the surveying evidence would have been admissible, had there been a change in the level of the land. He did, however, state that the personal evidence of neighbours would not have been admissible in relation to the construction of the covenant, as infringing the Westfield principle, although admissible in relation to modification or discharge.[31]
[30]Ibid [19].
[31]Ibid [20].

The question of the relevance of the existence and terms of similar covenants on other transfers from the parent title arose in Clare v Bedelis.[32] The dispute in that case also concerned a height restriction, in that case by words in the covenant that restricted development to a single dwelling of one storey. The plaintiffs contended that the development in progress, a house with an understorey, was in breach of the restriction. They relied heavily on the interpretation of similar restrictions in other cases. In opposition, the defendant relied on the physical topography of the site (which was sloping); the fact that other lots in the parent title with similar covenants and similar sloping conditions contained houses with understoreys; and the absence of covenants restricting development to one storey on lots on the highest part of the parent title. The defendant contended that this pattern of covenants showed that the purpose of the covenant in question was to ensure views from land higher in the parent title were not obstructed.
[32](n 12).

Derham AsJ held that the purpose of the covenant in question was, as the defendant contended, to protect views. His Honour reached this conclusion on the basis of the topography of the burdened land, and the absence of single storey covenants on the most elevated properties transferred out of the parent title.[33] His Honour visited the site and observed the house under construction, finding that it did not offend this purpose. Derham AsJ also held that the decisions on the meaning of height restrictions in other instruments in other cases were ‘of very dubious utility’. His Honour elaborated as follows:

Some general matters considered by Courts in other decisions will be applicable, but because the construction of a restriction must always be undertaken by reference to a particular development on land in a particular locality, great care must be taken not to slavishly apply the reasoning on the construction and application of a covenant in one case to another.[34]

[33]Ibid [62],[67].

[34]Ibid [72].

I also have previously considered the effect of Westfield in relation to construction of a covenant in Re Hunt.[35] That case concerned a covenant which did not in its terms identify any benefited land. I held on the basis of Westfield and Pirie v Registrar General[36] that the covenant must itself identify the benefited land, and extrinsic evidence to that effect was not admissible. That case is plainly distinguishable from this, as extrinsic evidence in that case would have required the insertion of text into the covenant, as opposed to interpretation of the text already there.
[35][2017] VSC 779.
[36](1962) 109 CLR 619, 628 (Kitto J).

By way of summary, I identify the principles of construction of particular relevance to the proper construction of the Covenant as follows:

·The task is to determine the objective intention of the parties at the time of the Transfer;
·In that exercise the text is crucial;
·The words should be construed having regard to the Covenant as a whole;
·It is relevant to have regard to the purpose of the Covenant;
·The construction of the Covenant, including identification of its purpose, should not be undertaken in the abstract, but by reference to the location and physical characteristics of the burdened and benefited land;
·Where the text itself directs attention to an external circumstance (such as the level of the land), or incorporates by reference a document, evidence of that external circumstance or document is admissible;
·However, because the Covenant burdens Torrens system land, other extrinsic material relating to facts or circumstances at the time of creation of the Covenant is not admissible in the construction of the Covenant, unless that material is ascertainable from the Register. I will discuss how this applies to evidence relating to other covenants later in this judgment ;
·Care should be taken in applying conclusions as to the meaning of similar phrases in other instruments; and
·As a principle of last resort, the Covenant should be construed against the covenantor.

Submissions

In its initial submissions in chief (‘Plaintiff’s First Written Submissions’),[37] the plaintiff advanced four broad submissions in support of its contention that the restrictions in the Covenant were limited to the life of Ms Langdon. In these submissions, and in its subsequent submissions, the plaintiff parses the Covenant so as to apply the ability of Ms Langdon to consent to a relaxation of the restrictions to all of the restrictions.
[37]Amended Outline of Submissions on the Declaration Application, 24 April 2019.

One of the contentions in the Plaintiff’s First Written Submissions was based on the principle that a provision in a contractual document cannot be severed if severance would alter the nature of the contract. The plaintiff submitted that the Covenant was a conditional contract that allowed more than one dwelling to be built on the Land provided permission in writing was granted by Ms Langdon. The plaintiff submits that to construe the Covenant so that when that consent could no longer be given the restriction to one dwelling became absolute, would be to sever the consent provision, which as a matter of usual construction principles is not possible as it would change the fundamental nature of the Covenant from conditional to absolute.[38]
[38]Ibid [7]-[12].

The next contention in the Plaintiff’s First Written Submissions was based on the form of words used in relation to the grant of consent. The plaintiff submitted that the absence of provision for consent by the executors, administrators, or transferees of Sophie Langdon, as opposed to consent by her personally, shows that the parties intended the Covenant to contain an ‘expiry event’ being the death of Sophie Langdon. The plaintiff submits that it can be inferred that the purpose of the Covenant was to allow Ms Langdon to supervise the development of the Land, during her lifetime only.

Further, the Plaintiff’s First Written Submissions relied on previous cases in which courts or tribunals have held covenants with a consent provision to be personal, or confer no substantive benefit on other land.

Finally, the plaintiff in its First Written Submissions observed that there was no uniform approach taken by Ms Langdon in relation to restrictions on transfers from the Parent Title, some transfers containing no covenant at all, and others containing a covenant in different form to the Covenant.[39]
[39]Ibid [26], which refers to Mr Easton’s evidence. Mr Easton was referring to transfers from the Parent Title as a whole, not just the Subdivision as the plaintiff states.

The first to third defendants (henceforth ‘the defendants’) replied to the Plaintiff’s First Written Submissions in a written outline dated 5 July 2019. They took quite a different approach to parsing of the Covenant. In their interpretation, the consent provision applied only to the minimum cost requirement, not to the single dwelling restriction. In other words, the defendants submit that the Covenant never conferred a power to dispense with the single dwelling restriction, not even during Ms Langdon’s lifetime.[40] In the alternative, the defendants submit that the restrictions became absolute on the death of Ms Langdon. In support of this submission, the defendants identified a number of cases not previously cited by the plaintiff.
[40]Outline of Submissions on Preliminary Questions, 5 July 2019 (‘Defendants’ First Written Submissions’).

Two days before the hearing of the Preliminary Questions the plaintiff filed a further, and more lengthy, outline (‘Plaintiff’s Second Written Submissions’).[41] This further outline was not permitted by the timetable that had been laid down, and no leave to file it was sought. It did not clearly identify to what extent, if at all, it adopted or departed from the Plaintiff’s First Written Submissions, although on close examination it did both to some degree. In other respects, the Plaintiff’s Second Written Submissions were in reply, although late, and contained a more detailed analysis of previous authority, some of which had been identified by the defendants. The plaintiff also sought in these submissions and at the hearing to elaborate its previously brief reference to the existence and terms of other covenants in transfers from the Parent Title, and in support of that submission sought to rely on a compilation of covenants which were not on affidavit. Understandably, the defendants were caught by surprise by these submissions, but in the interests of limiting costs agreed to proceed with the oral hearing, provided there was an opportunity to put on a further response.
[41]Outline of Submissions on Preliminary Questions, 13 August 2019.

In the interests of having all relevant, or potentially relevant material before me, I allowed the plaintiff to file and serve after the hearing an affidavit identifying all evidence relating to other covenants on which it sought to rely, and to make further submissions in support. In an apparent attempt to comply with those directions, the plaintiff filed and served after the hearing an affidavit and submissions (‘Plaintiff’s Third Written Submissions’). The thrust of those submissions is that examination of whether a covenant was imposed or not on other transfers from the Parent Title, and the dates, spread and content of those covenants, supports the inference that the Covenant was not intended to apply in perpetuity.

In response, the defendants in their further submissions (‘Defendants’ Second Written Submissions’) object to what they describe as ‘the evolving nature of the plaintiff’s case’.[42] In particular, they submit that the submissions as to the purpose of the Covenant advanced by the plaintiff in the Plaintiff’s Third Written Submissions are at odds with the evidence of Mr Easton. If the Court is minded to accept the plaintiff’s submission as to the purpose of the Covenant, as stated in the Plaintiff’s Third Written Submissions, the defendants seek to cross examine Mr Easton.
[42]Defendants’ written submissions, 11 September 2019 (‘Defendants’ Second Written Submissions’) [3].

The defendants also submit that the affidavit filed by the plaintiff after the hearing, on which the plaintiff relies for its submissions as to the spread, history and content of other covenants, is inadmissible or so prejudicial that it should be excluded. If I consider that the evidence is admissible, then the defendants seek to cross examine the solicitor for the plaintiff who is the deponent of the affidavit.

The defendants’ overall submissions in the Defendants’ Second Written Submissions are as follows. First, it is unnecessary for the Court to draw a conclusion as to the purpose of the Covenant for the determination of the Preliminary Questions, and inappropriate to do so in the absence of the testing of evidence on the point. Secondly, the spread and content of other covenants is inadmissible extrinsic evidence or, if admissible notwithstanding Westfield, is irrelevant to the construction exercise required by the Preliminary Questions, although it may be relevant to determination of the merits of the application to discharge or modify the Covenant if it still binds the Land. The defendants contend that the Preliminary Questions should be answered having regard to the text of the Covenant.

The final set of written submissions are those in reply by the plaintiff to the Defendants’ Second Written Submissions. In those submissions, which I will call the Plaintiff’s Reply Submissions, the plaintiff withdraws any aspects of its Third Submissions or the solicitor’s affidavit which the Court considers would require cross examination of Mr Easton or the solicitor, and so a further hearing. Further, the plaintiff submits that it does not rely on Mr Easton’s evidence for the determination of the Preliminary Questions, other than for reference to the base documents he attaches to his Report. If the Court disagrees, and considers that the plaintiff has relied on Mr Easton’s evidence, then the plaintiff withdraws reliance on that evidence. Similarly, the plaintiff states that it does not rely on the solicitor’s evidence as to the spread and content of other covenants, but only the base documents exhibited to her affidavit, to which the defendants take no objection. In relation to the purpose of the Covenant, the plaintiff submits that the defendants themselves have made submissions on the purpose of the Covenant. Overall, the plaintiff denies that its case has ‘evolved’, as opposed to being further elaborated.

I have set out the parties’ successive submissions in some detail for two reasons. First, as background to my identification of the issues. Secondly, because the content and sequence of the submissions may be relevant to later questions of costs.

Issues

There are two key issues. These are:

(xi) On the proper construction of the Covenant, does the consent condition/dispensing power apply to both the single dwelling and the cost restrictions (as the plaintiff contends) or only the cost restriction (as the defendants contend)?

(xii) What is the effect of the death of Ms Langdon? Does it mean that the restrictions are spent, as the plaintiff contends, or that they become absolute, as the defendants contend if I am against them as to the application of the consent condition/dispensing power?

The starting point in relation to both issues is the text of the Covenant. The resolution of the issues also involve a number of subsidiary issues. These include:

(xiii) Should the plaintiff be regarded as relying on Mr Easton’s evidence for the determination of the Preliminary Questions and, if so, should it be permitted to withdraw from that reliance as it seeks to do in the Plaintiff’s Reply Submissions?

(xiv) Is the Covenant properly construed as a conditional contract, the condition being the power of Ms Langdon to consent to a relaxation of one or more of the restrictions, or is this power more properly construed as a dispensing power?

(xv) Consideration of the purpose of the Covenant, including the extent to which the content and spread of covenants burdening other land transferred out of the Parent Title may be taken into account in the construction of the Covenant.

(xvi) If evidence of the type in (iii) is admissible, is it before the Court in this case in proper form?

(xvii) Further, depending on the answer to the preceding question, should the defendants be permitted to cross examine the solicitor and Mr Easton?

(xviii) Consideration of any other evidence relating to the context in which the Covenant was imposed, and the physical characteristics and location of the lands affected by it.

(xix) Consideration of the extent to which the Australian and English cases to which I have been referred assist in the construction of the Covenant.

Consideration

Before discussing the issues as eventually crystallised, it is helpful to note that the plaintiff made a significant change in tack from its originating motion as first filed. In the originating motion the plaintiff sought a declaration that the Covenant as a whole, as opposed to the power to consent, was personal to Ms Langdon. However, the plaintiff subsequently amended the originating motion to seek the different declaration that the Covenant was limited to Ms Langdon’s life, and that is the case that the plaintiff pursued at hearing. Although the practical effect of either declaration would be the same, if the plaintiff were to be successful, there is a significant difference in rationale. A covenant that is personal to the transferor/covenantee does not confer any benefit on land subsequently sold by the transferor out of the parent title after the date of the covenant. It is a contract in personam, as opposed to a contract in rem that runs with the land the transferor subsequently transfers out of the parent title.

An example of a personal covenant is the covenant I considered in Re Hunt,[43] which did not identify in its terms any benefited land. Another example is the covenant considered in Palm Beach Lands Pty Ltd v Marshall,[44] one of the cases initially relied on by the plaintiff, which Needham J of the New South Wales Supreme Court held to be personal to the original vendor and original purchaser. By the amendment to its originating motion, the plaintiff effectively concedes that if the Covenant no longer burdens the Land it is not because it did not confer benefit on any identified land, but for the different reason that once Ms Langdon could no longer consent the Covenant was spent. This was an appropriate adjustment to the plaintiff’s case. By comparison to the covenant in Re Hunt the text of the Covenant plainly identifies benefited land. The Covenant is expressed to be not just with Ms Langdon and her executors and administrators, but also with her ‘transferees registered proprietor or proprietors for the time being of the land now remaining in [the Parent Title]’.
[43](n 35).
[44](1988) NSW ConvR 55-411.

Plaintiff’s evidence

The plaintiff contends in its Reply Submissions that it ‘only seeks to rely on the base documents in Mr Easton’s evidence for the purposes of the preliminary questions’ and claims that in its written submissions it only made reference to Mr Easton’s Report in relation to the argument that the Covenant was personal, which was not pursued, and as to his opinion in relation to the spread and content of covenants on other land transferred by Ms Langdon.[45]
[45]Plaintiff’s Reply Submissions [13]-[14].

I consider this submission to be disingenuous. Mr Easton’s Report was exhibited to his affidavit, which was submitted with the originating process. It was relied on by the plaintiff from the commencement of the proceeding to identify the beneficiaries of the Covenant, if it is still of effect. That reliance determined the extent of notification of the application, and then the ability of objectors to become defendants to the proceeding, including to the determination of the Preliminary Questions. If the plaintiff sought to otherwise limit its reliance on the Report for the determination of the Preliminary Questions then counsel should have indicated that from the outset, desirably at the time of the making of the directions for the hearing of the Preliminary Questions, but certainly no later than the Plaintiff’s First Written Submissions. The plaintiff did not do so. The defendants were entitled to take the view that the Report as a whole was in evidence for this preliminary trial, and it seems from their initial submissions dated 5 July 2019 that that is the view they did take, as they rely on an aspect of it themselves.[46]
[46]Defendants’ First Written Submissions [12].

If this was incorrect, then the plaintiff had the opportunity in the Plaintiff’s Second Written Submissions to correct the misconception. It did not. In fact, it made further reference to the Easton Report.[47] Nor did the plaintiff indicate at the oral hearing any limited reliance on the Easton Report. In fact the recording of the hearing[48] shows that in answer to my question at the outset of the hearing as to the evidence relied upon, counsel for the plaintiff replied that that evidence, being the Easton Report, and an affidavit of the solicitor sworn on 24 April 2019 that had already been filed. Counsel did not indicate any qualification to this reliance. The first time the plaintiff sought to limit its reliance, or withdraw its reliance, on the Easton Report was in its Reply Submissions. That is too late. It is also inconsistent with the affidavit of the solicitor filed with those submissions, which states that her affidavit is in addition to, amongst other material, Mr Easton’s evidence and her earlier affidavit to which counsel had referred at the outset of the hearing. I consider that the proper conclusion is that the whole of the Easton Report is in evidence for the purpose of these Preliminary Questions, as well as any later trial on the merits, and the plaintiff is not permitted to withdraw that reliance in reply.
[47]Plaintiff’s Second Written Submissions, footnote 29.
[48]None of the parties ordered a written transcript of the hearing. The Court has obtained the recording for the purpose of these reasons.

A conditional contract or a dispensing power?

The plaintiff’s submission on severance construes the Covenant as a conditional contract, that allows construction beyond the stated restrictions conditional on Ms Langdon’s consent. In my view this is not the correct construction. To read the Covenant in this way would be to read it as permissive, as opposed to restrictive. A restriction in a covenant that runs with land must be negative in effect, and as it is plain (and now conceded) that the original parties intended that the benefit of this Covenant would run, at least during Ms Langdon’s life, with land she subsequently transferred out of the Parent Title, the Covenant was intended to be negative in impact.

I am supported in this view by the English authorities to which both parties have taken me. Those cases, which I will discuss in more detail shortly, differ in their approach to the effect of the death of the person, or dissolution of the company, with the power to consent to a relaxation of the restrictions. However, even those cases that considered that when the power to consent vanished so did the restriction, described that power to consent as an exception to a prohibition, or a dispensing power, rather than a permissive condition.[49] In my view, that is the correct characterisation of the power in the Covenant.
[49]The leading case to this effect is Crest Nicholson Residential (South) Ltd v McAllister [2003] 1 ALL ER 46, [52] (Neuberger J).

Further, as the defendants submit, the question of severance usually arises where a provision is void[50] or uncertain, not where it is no longer capable of effect. The argument then becomes whether the void or uncertain provision can be severed without affecting the meaning of the remaining provisions. I was not referred to any instance of its application to a provision no longer capable of effect.
[50]For example, as in the cases relied upon by the plaintiff Bennett v Bennett [1952] 1 All ER 413; Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24.

Does the dispensing power apply to the single dwelling restriction?

The next question is whether the dispensing power - that Ms Langdon could permit greater development than a single dwelling of a certain minimum cost - applied to both of those restrictions (as the plaintiff contends) or only the cost requirement (as the defendants contend). This is a question of parsing that is resolved by analysis of the text of the Covenant.

On the defendants’ construction, the single dwelling restriction and the cost requirements are distinct and independent of each other. The single dwelling restriction is not able to be departed from i.e. is absolute. On this construction, the death of Ms Langdon is irrelevant to the single dwelling restriction as the ability to depart from the restrictions in the Covenant with the consent of Ms Langdon applied only to the cost requirement. In support of this submission, the defendants rely on the placement of the consent qualifier after the cost requirement, as opposed to at the beginning of the single dwelling restriction. They point to another covenant imposed on a transfer from Ms Langdon of a parcel out of the Parent Title in which the consent requirement appears at the beginning of the single dwelling and cost restrictions and submit that had the intention of the Covenant been to allow Ms Langdon to agree to a departure from the single dwelling, as well as cost restrictions, this phrasing would have been used.

The transferee in that covenant agreed on behalf of himself and his transferees that:

I or they will not without first obtaining the consent in writing of the said Sophie Sarah Annie Langdon or her heirs executors administrators or transferees erect upon the land hereby transferred any building other than a private dwelling house, the erection of such dwelling house to cost not less than the sum of Four hundred pounds exclusive of fencing and outbuildings relating thereto And that the foregoing covenant shall appear as an encumbrance on the Certificate of Title to be issued on any subsequent transfer or transfers until after the expiration of ten years from the date hereof when the said covenant shall cease to be operative.[51]

[51]Transfer 809792 dated 23 August 1916, a copy of which is annexed to Mr Easton’s Report, A 222.

I agree that in the covenant extracted above the placement of the consent qualifier at the beginning of the restrictions makes it clear that it applies to both, but I do not accept that placement at the end of the restrictions in the Covenant necessarily limits its operation to only the second of the restrictions. If that were the case, then the converse argument would apply: that placing it at the beginning limited it to the first restriction only. In my view, the reason either placement can be equally efficacious in applying the power to consent to both restrictions is what flows from the phrase ‘such dwelling’ between the single dwelling and the cost restrictions. This phrase is used in both the example relied upon by the defendants and quoted above (consent power at the start) and the Covenant (consent power at the end) between the single dwelling and the cost restrictions. In my view, the linkage created by the words ‘such dwelling’ in each case shows that the dominant restriction was intended to be the single dwelling restriction, which dwelling was subject to the further requirement of a minimum cost. In other words, I agree with the plaintiff that it would do violence to the text to treat the two restrictions as independent, which they would have to be if the consent qualifier only applied to the cost requirement.

The plaintiff’s interpretation, with which I agree, is further supported by the description of both restrictions in the singular, rather than plural in the final phrase of the Covenant: ‘and hereby consents to this covenant as an encumbrance on title to issue in respect of the said land’. In other words, although there are two components to the restriction, they are not distinct covenants or encumbrances. I conclude that the dispensing power to consent applies to both restrictions.

Effect of Ms Langdon’s death

The second principal issue is what is the effect of the death of Ms Langdon on those restrictions.

Textual indications

The starting point is that analysis of the text makes it clear, and this is not disputed, that it was only Ms Langdon herself who could give consent to depart from the restrictions. The power to consent is not expressly extended to anyone other than she, as opposed to the conferral of the benefit of the restrictions, which are expressed to apply to Ms Langdon and her executors and administrators and transferees, and further to the registered proprietors for the time being of the land remaining in the Parent Title. The limitation of the consent power to an individual, of necessarily limited lifespan, means that the parties to the Covenant can be assumed to have understood that at some point consent would no longer be possible. Was it their intention, objectively assessed, that at that point in time the restrictions would be spent i.e. no longer apply, or was it their intention that the restrictions would then become absolute?

The plaintiff relies on the limitation of the power to consent to Ms Langdon alone in support of its contention that the restrictions were not intended to extend beyond her capacity to consent. I do not consider that the only conclusion to be drawn from this is that on her power to consent lapsing, so would the restrictions. The alternative reading, that it was the intention to confine the power to relax the restrictions to her lifetime, but not the restrictions, is equally open.

The plaintiff also relies on the fact that for practical purposes the minimum cost requirement would lose efficacy, whether or not Ms Langdon could still consent to its relaxation. The parties to a contract relating to land can be assumed to know that over time the minimum cost requirement would likely be overtaken by increases in the cost of building. Thus it may have made no practical difference to a proprietor of the Land after Ms Langdon’s death whether the cost restriction became spent or absolute on her death because in all likelihood the construction of any dwelling would exceed that cost. That cannot be said, however, in relation to the single dwelling restriction.

I accept the plaintiff’s submission that the likelihood that the minimum cost requirement would, over time, cease to have meaningful content gives some textual support to the view that it and the single dwelling restriction were not intended to become absolute on Ms Langdon’s death. However, I do not consider that indication to be as compelling as textual indications to the contrary. There are two such textual reasons that support the view that the restrictions were intended to become absolute on Ms Langdon’s death. The first is the placement of the dispensing power at the end of the restrictions, as opposed to at the start. As noted earlier, in my view placement of the dispensing power at either end of the restrictions can be equally efficacious in applying it to all the restrictions. However, placing it at the end, as in the Covenant, as opposed to the start (as in the alternative example cited by the defendants) gives greater textual prominence to the restrictions, than to the power to relax them. In other words, the placement at the end supports the view that the restrictions are the dominant intention and the dispensing power subservient to that intention. In my view, this reading of the text tends towards the conclusion that the lapsing of the dispensing power was not intended to cause the restrictions to also lapse. Rather, the restrictions would then become absolute.

More persuasively still is the fact that the text makes it plain, and it is not disputed, that the benefit of the Covenant runs with the land then remaining in the Parent Title. The beneficiaries of the Covenant include ‘the registered proprietor or proprietors for the time being of the land now remaining in [the Parent Title]’ (emphasis added). In other words, the intended beneficiaries of the restrictions were not limited to Ms Langdon and her immediate executors, administrators or transferees, i.e. persons with whom she transacted or who she appointed during her life. The benefit of the restrictions extended to successive purchasers of the land in the Parent Title that remained in the Parent Title at the date of the Transfer, even if those later transfers would be many years in the future, and so likely to be after Ms Langdon’s death. Further, it was also objectively conceivable at the time of creation of the Covenant that Ms Langdon might die before all the remaining land in the Parent Title was sold. It would be inconsistent with the unambiguous words that confer benefit for that benefit to lapse on Ms Langdon’s death, which may have been before or after the sale of the remaining land in the Parent Title.

In my view, the literal reading of the text shows that the dispensing power was intended to be an exception to the restrictions that subsisted during Ms Langdon’s lifetime, but when it lapsed on her death the restrictions would become absolute. I now turn to the other matters identified as relevant in Barport to assess whether they tend towards a different conclusion.

Purpose of the Covenant

In Barport, when identifying the constructional principles that apply to construing a restrictive covenant, the Court of Appeal included the purpose of the covenant as one of the matters to be considered. As noted earlier, the Court held that ‘[t]he purpose of the covenant will be important in so far as it can be fairly discerned from the instrument as a whole’.[52]
[52]Barport (n 7) [68].

The defendants in their further submissions submit that ‘for the purposes of answering the preliminary questions, it is unnecessary for the court to draw any conclusions as to the purpose of the Covenant...’.[53] In my view, if this is intended to contend that the Court is not required to consider purpose, it is inconsistent with Barport and incorrect.
[53]Written Submissions in accordance with the orders of Lansdowne AsJ made 15 August 2019, [27].

The purpose of a single dwelling covenant without a dispensing power has been considered in many previous decisions. Those decisions have held that the purpose is to afford the benefits of low density with the consequential benefits of greater spaciousness, less noise, traffic and general activity than in more densely populated residential areas.[54] The purpose of a cost restriction is generally seen as a crude form of quality control at a time when planning controls were non-existent or rudimentary. These are the purposes for which the defendants contended in their initial submissions, and the plaintiff did not demur from them. Indeed, they are broadly consistent with the evidence of the plaintiff’s expert, Mr Easton.[55]
[54]Recent examples include Oostemeyer v Powell [2016] VSC 491, citing earlier authority; Re Morihovitis [2016] VSC 684; Jiang v Monaygon Pty Ltd [2017] VSC 591; Re Sanders and anor [2019] VSC 217; Re Eape (Holdings) Pty Ltd [2019] VSC 242.
[55]Easton Report [4.3], [4.5].

The difficulty in this case is that the Covenant provided that Ms Langdon could dispense with the restrictions. Can the purpose of the restrictions when coupled with that dispensing power be ascertained, and, if so, was the purpose, as the plaintiff contends, to allow Ms Langdon to control the development of the subdivision but only during her lifetime?[56]
[56]Plaintiff’s Second Written Submissions [41].

As noted earlier, the plaintiff relies on the likely loss of content in the cost requirement to submit that had Ms Langdon wished to ‘control the design of the subdivision from the grave’ she would have extended what the plaintiff describes as ‘the consent power’ in the same way that the benefit is extended, i.e. to her executors, administrators, transferees and the registered proprietors for the time being of the land then remaining in the Parent Title.[57] In my view, there is a flaw in the plaintiff’s reasoning in relation to this difference in extent. The flaw lies in the description of the power of Ms Langdon to give consent to a relaxation of the restrictions as control over the development of the Land, i.e. a positive power to control, as opposed to the power to dispense with the control over development already imposed by the restrictions.
[57]Plaintiff’s Second Written Submissions [37], [41].

The plaintiff draws this reasoning from that in the English cases I will shortly discuss in more detail, Crest Nicholson Residential (South) Ltd v McAllister[58] (‘Crest Nicholson’) and Churchill v Temple [59] (‘Churchill’). The covenants under consideration in those cases required the approval by the vendor or associated persons of plans before any development and, in Churchill, any alteration to an existing dwelling, was permitted on the burdened land. That is quite a different thing to a power to dispense with a control already imposed. The first is properly described as control over development, because none can take place without approval; the second, as in the Covenant, less so. The Covenant does not prevent development; it merely limits it to one dwelling of certain minimum cost unless that restriction is dispensed with. Thus the reasoning employed in Crest Nicholson and Churchill, and adopted by the plaintiff, is less compelling.
[58][2003] All ER 46.
[59][2011] 1 EGLR 73.

Evidence of other covenants

There is more potential force to the plaintiff’s argument as to purpose by comparison of the text of the Covenant with other covenants that Ms Langdon imposed on transfers by her from the Parent Title. Some such other covenants are attachments to Mr Easton’s Report, and both parties in their submissions prior to the hearing referred to some of those examples, although to different effect. Other transfers were exhibited to an affidavit sworn by the solicitor for the plaintiff in April 2019. At the hearing, the plaintiff sought to rely on a compilation of covenants that was not in admissible form. As noted earlier, I allowed the plaintiff to seek to adduce that evidence in admissible form after the hearing, that affidavit to contain exhaustive reference to all the covenants on which the plaintiff relies. The plaintiff filed and served a further affidavit of its solicitor, purportedly to that end, accompanied by further submissions.

The subsequently filed solicitor’s affidavit (‘Affidavit’) states that it is in addition to earlier material, including Mr Easton’s affidavit, to which his Report was exhibited, and previous affidavits by that solicitor and another solicitor for the plaintiff. The substance of the Affidavit consists of a map, said to show the modern lot allotment of land subdivided by Ms Langdon; and an exhibit containing a chronology from which the Affidavit implies the map was created, and various transfers said to have been ‘not previously exhibited’. The chronology consists of a list of dates and extracts of various covenants with added commentary. In summary, the Affidavit contains both some source transfers and argumentative material said to have been created from them and other transfers ‘previously exhibited’.

Regrettably, the Affidavit does not readily enable to reader to determine where those other transfers ‘previously exhibited’ appear, or if the combined list is exhaustive of all transfers by Ms Langdon out of the Parent Title prior to the Transfer. Nor is this made explicit in the accompanying submissions. It is only if all such transfers were in evidence that the Court could be invited to draw to conclusions from them, as otherwise those conclusions could be unreliable.

A comparison of the Table of Transfers in the body of Mr Easton’s Report[60] with the table attached to his Report headed ‘Subdivision & Covenant Activity’ that lists the transfers he attaches[61] shows that he has not attached to his Report every transfer out of the Parent Title. It appears that his focus was on changes to the neighbourhood, rather than on an exhaustive examination to ascertain the extent and content of all covenants imposed by Ms Langdon.[62] The solicitor’s earlier affidavit sworn 24 April 2019 put into evidence a further four transfers out of the Parent Title by Ms Langdon, and the Affidavit still more. It is only by close examination of all three of these documents to compile a consolidated list of transfers in evidence and then comparison of that consolidated list with Mr Easton’s Table of Transfers, that the defendants and the Court could be confident that all transfers out of the Parent Title prior to the Transfer were in evidence. This additional work should not have been necessary.
[60]Easton Report (n 2), 10-11.
[61]Ibid A 67-A 68.
[62]He attaches transfers that relate to changes described in sub-paragraph [10.3].

The defendants contend that the Affidavit is not admissible, although they do not take issue with the admissibility of instruments from the Register attached to the Affidavit. I will proceed on the basis that nor is objection taken to the instruments attached to the Easton Report or the solicitor’s April affidavit.

I agree that the Affidavit is not admissible. It suffers from multiple defects. First, r 43.03 of the Supreme Court (General Civil Procedure) Rules 2015 provides that an affidavit should be confined to evidence within the deponent’s own knowledge, save that in interlocutory applications an affidavit may be based on information and belief, provided the grounds are set out. This is a preliminary trial, not an interlocutory application, yet it is unclear if the information contained within the Affidavit is drawn from the solicitor’s own knowledge, or whether she has relied on others. This latter possibility is alluded to by her statements that the information contained in the affidavit is ‘from my own knowledge except where otherwise stated’ and that ‘[w]here I depose to matters based on information provided to me by others, I believe that to be true.’[63] The Affidavit does not, however, identify any material which was provided or prepared by others. If the proper inference of the absence of any source identified in the Affidavit for this material is that it was prepared by the solicitor herself, then she does not give any indication of the searches she undertook to obtain the source material, or her qualifications to translate that source material into the commentary in the chronology or the map. Both would ordinarily be thought to require expertise, as to interpretation of land instruments and translation of lot numbers into street addresses, and it cannot be assumed that these are skills of every solicitor. Indeed, as shown below, some of the commentary is plainly incorrect.
[63]Affidavit of Natalie-Veronique Chani sworn 29 August 2019, [2].

An inference that the solicitor herself obtained the source documents and prepared the map and chronology on the basis of them is also potentially at odds with the statement by counsel for the plaintiff at the hearing that the list of covenants that he sought to hand up at that time was prepared in his chambers under his supervision, although not checked in its entirety by him. The Court did not retain this document and so I am unable to compare it with the Affidavit.

If the proper inference is that the chronology and map were prepared by someone other than the solicitor, then she does not identify that person or persons, or give any grounds for considering their work to be correct. I agree with the defendants that in the absence of the identity of the person or persons who prepared the map and chronology and evidence as to that person’s or persons’ relevant expertise the evidence is inadmissible.

It may have been possible to allow the Affidavit, notwithstanding these irregularities, if the solicitor was made available for cross examination, or if the map and commentary in the chronology were demonstrably supported by the source material exhibited to it, combined with that exhibited to the solicitor’s April affidavit and to the evidence of Mr Easton. Mr Easton’s evidence is advanced on the basis that he does have expertise in title searching, and the defendants did not dispute this.

The plaintiff does not, however, offer the solicitor for cross examination. Rather, in its final written submissions, the Plaintiff’s Reply Submissions, the plaintiff seeks to withdraws reliance on the Affidavit, if the Court were disposed to require the solicitor to be made available for cross examination. That is enough to dispose of the Affidavit. Given the defects I have identified above, it would not be appropriate to admit the Affidavit unless the solicitor is able to be cross examined.

For completeness, however, I have also considered whether the commentary in the chronology is consistent with that contained in Mr Easton’s Report. Although the plaintiff also seeks to limit its reliance on that Report, for the reasons given earlier, I do not consider it should be permitted to do so. As I now set out, the commentary in the chronology is in some instances plainly incorrect or otherwise irrelevant to examination of other covenants entered into by Ms Langdon in respect of land in the Parent Title. This in turn casts doubt on the accuracy and relevance of the map. In what follows, I do not intend to be exhaustive, but merely to demonstrate that the evidence in the Affidavit comprised of the chronology and map is not reliable. These are additional reasons for rejecting it.

First, I agree with the defendants that to the extent the spread and content of other covenants imposed by Ms Langdon may be relevant and admissible (an issue to which I will return shortly) that cannot extend beyond covenants on land in the same Parent Title as the Covenant. That is because it is the Parent Title which is referenced in the Covenant itself. It seems that Ms Langdon may have owned land in another title that was adjacent to the Parent Title, both forming part of the last subdivision to include land from the Parent Title. However, to extend the admissibility of evidence of other covenants to covenants imposed on that other land would require a third party to not only consider what is revealed by the Transfer itself, but to somehow ascertain if Ms Langdon owned other land on which she had imposed covenants. In my view, this is not consistent with Westfield in respect of Torrens title land. The chronology attached to the Affidavit includes covenants imposed on land not within the Parent Title, which is made plain by the dates on which they were created. The Parent Title was cancelled on 2 February 1938, but the chronology includes, in items 25-29, covenants created after that date.

Secondly, at least in the example identified by the defendants in respect of the transfer extracted at page 9 of the chronology, the argumentative text attached to the extract from the transfer is plainly incorrect. It cites the transfer as attached to Mr Easton’s Report as the source document, but wrongly states that it relates to Lot 9 of LP 6683 when the transfer itself states that it relates to Lot 2. The ‘modern address’ given for the Lot is also incorrect. According to Mr Easton, the street address for Lot 2 of LP 6683 is 2A Crotonhurst Avenue, not 186 Hawthorn Road and 2A Walworth Avenue, as stated in the argumentative text attached to the chronology.

Finally, the sequence of transfers in the chronology is not consistent with the Table of Transfers that appears in Mr Easton’s Report. Mr Easton’s Table of Transfers, supported as it is by the Parent Title, shows that the first transfer out of the Parent Title, relating to part of Lot 6 of LP 6683, was signed on 27 January 1916 and registered on 7 February 1916. This transfer does not appear in the chronology, which commences with a transfer dated 20 August 1916. The chronology incorrectly describes a later transfer of part of Lot 6 of LP 6683 4 June 1918, referenced in Mr Easton’s Table of Transfers as being registered on 19 June 1918 and relating to the ‘narrow part 6 LP 6683’, as being in relation to the whole of Lot 6.

I have not sought to check the correctness of the defendants’ assertion that there are ‘numerous minor errors’ in the argumentative text above the cutting and pasting of various covenants into the chronology. The errors I identify above alone show that the chronology, and presumably also the map to the extent that covenants are identified by incorrect street addresses, are not reliable, and include covenants that could not be ascertained by a search of the Register confined to the Parent Title.

For these reasons, the Affidavit, with the exception of the full copy instruments of transfer exhibited to it and those incorporated by reference to earlier evidence, is not admissible. Assuming for the moment that Westfield allows these transfers to be received into evidence, the question then becomes whether the Court can safely and fairly draw conclusions from those transfers.

The issue is a difficult one. The Plaintiff’s Reply Submissions rely on the inadmissible content of the Affidavit. The defendants and the Court should not be required to assess what flows from consideration of these transfers without the benefit of submissions based on reliable and admissible evidence. Further, if the Court considered that conclusions adverse to the defendants’ case could be drawn from examination of the transfers, then it may be necessary to give the defendants the opportunity of further comment.

On the other hand, the examination I have undertaken of all three sources of exhibited transfers shows that the Court does have before it all the transfers out of the Parent Title prior to the Transfer. To ignore these other covenants entirely, assuming them to be admissible pursuant to Westfield, would be to ignore potentially relevant evidence, and depart from an approach that both the plaintiff and the defendants, at least to some extent, have taken. On balance, I think the appropriate approach is to examine the other covenants, but on the basis that if conclusions adverse to the defendants could be drawn, then the defendants should have the opportunity to make further submissions.

For this purpose, I assume that the admission of evidence of other covenants imposed by Ms Langdon on land transferred out of the Parent Title does not infringe the Westfield principle. I do so notwithstanding that the defendants assert that it does. Contrary to the defendants’ submissions, it is the approach that has been taken, or would have been taken if necessary, in at least two other cases in this state. It would have been the approach of Cavanough J in Prowse,[64] had he needed to consider that material, and was the approach taken by Derham AsJ in Clare v Bedelis.[65] In that case, Derham AsJ relied on the content of other covenants to reach his conclusion as to the purpose of the covenant in question. The defendants have not included Prowse in their analysis, and have misconstrued the reluctance of Derham AsJ in Clare v Bedelis to have regard to the manner of expression of a particular restriction in other covenants as applying to the admissibility of other covenants in relation to purpose.[66]
[64](n 19).
[65](n 12).
[66]Compare his Honour’s approach at [67]-[68] with the portion the defendants rely on at [109] of Clare v Bedelis (n 12).

I do, however, agree with the defendants that there must be doubt as to whether or not evidence of other covenants infringes Westfield. I accept that evidence of the other instruments identified in the relevant transfer does not infringe Westfield. In the case of the Transfer these other instruments are the Parent Title and the Subdivision. Examination of the Parent Title would reveal the other transfers, both before and after the Transfer. But to actually ascertain if similar covenants were imposed on those other transfers would require a third party enquirer to take the additional step of obtaining those other transfers. There is considerable force to the defendants’ submission that that is a step too far.[67] I consider that there must be doubt that that further exercise is consistent with the principles of indefeasibility of title and limited search in respect of Torrens title land, as discussed in Westfield. The further step of reaching a conclusion as to the meaning of the subject covenant by comparison with other covenants would certainly not be, in my view. Despite these reservations, given the approach taken in Prowse and Clare v Bedelis , I will consider the other transfers with the qualification I have indicated.
[67]Defendants’ Second Written Submissions [49].

The defendants contend that it is only transfers before the Transfer that could appropriately be considered to determine the purpose and so assist in determining the objective intention of the parties in the Transfer, and not transfers by Ms Langdon after the Transfer. The transfers in evidence were registered both before and after the date of the Transfer. The plaintiff in the submissions accompanying the Affidavit in particular sought to rely on the subsequent transfers because they did not contain any covenant. I consider the defendants correct in their assertion that reference can only be made to transfers prior to the Transfer. Later transfers to other purchasers may suggest something about Ms Langdon’s subjective intentions, or the objective intentions of the parties to those transfers, but cannot show anything about the objective intentions of Ms Langdon and the purchaser/covenantor as at the date of the Transfer.

In the Plaintiff’s Reply Submissions, the plaintiff submits that examination of the suite of covenants identified in the Affidavit shows that:

(a)the Covenant does not form part of a cohesive broader network of single dwelling covenants; and
(b)there is no contextual basis to support the conclusion that the Covenant was intended to apply in perpetuity.

To the extent then, that the court may have regard to the surrounding context created by the network of covenants, the purpose of the [C]ovenant is not to “create a low density population with consequent benefits” as the Defendants suggest, but that the architect was only ensuring that the estate, as it developed, would not prejudice subsequent land sales. That is, the commercial common sense purpose was to see the estate properly developed - the intention was not directed towards what was to happen on the land in 20, 50 or indeed 100 years.[68]

[68]Plaintiff’s Third Written Submissions [8]-[9].

I disagree. In my view, examination of the other transfers in evidence, as extracted in full from the Register, that are transfers by Ms Langdon out of the Parent Title preceding the Transfer, does not lead to any safe conclusion in relation to the purpose of the Covenant. The examination reveals, as noted by the plaintiff, that not every lot in the Parent Title transferred out before the Land was burdened by a restrictive covenant. However, many were. The chronological sequence, working from the Table of Transfers in Mr Easton’s Report, does not reveal any particular pattern, or consistent change over time. Transfers that imposed a covenant are interspersed with transfers that did not; and the various covenants impose at least four different forms of restriction, more if one includes variations as to minimum cost, or variation as to where consent to relaxation of the restrictions appears. The four principal variants of restrictions impose:

·single dwelling and cost restrictions, for example the very first transfer 794473, and the twelfth transfer out to be registered, 881386;[69]
·single dwelling and cost restrictions, with a ten year expiry, for example 872406;[70]
·single dwelling and cost restrictions, which can be dispensed with by the consent of Ms Langdon and in any event are subject to a ten year expiry, for example the second transfer out, 809792;[71]
·single dwelling and cost restrictions, which can be dispensed with by the consent of Ms Langdon. The Covenant is in this form. The only other example of this form of restrictions in evidence is in transfer 1166195, which is exhibited to the earlier affidavit of the solicitor.[72] That transfer is the one immediately preceding the Transfer.

[69]Easton Report, A 184 and A 228.

[70]Easton Report, A 178.

[71]Easton Report, A 222.

[72]Exhibit NVC-19 to affidavit of Natalie-Veronique Chani, sworn 24 April 2019,.

In relation to geographic distribution of covenants, as discussed earlier, I do not consider it safe to rely on the map that forms part of the Affidavit. It is not immediately apparent otherwise that the imposition or absence of a covenant, and the varying forms of covenants, had any geographic rationale.

The only observation that I consider safe to make is that the imposition by Ms Langdon of two different forms of covenant with an express time for expiry, being ten years from the date of the covenant, on a number of transfers out of the Parent Title prior to the Transfer suggests that if the intention was that a restriction would lapse, that intention was made express. Strikingly, one of these forms of ten year expiry also contained a consent provision, which implies that expiry and consent were not intended to be co-extensive. In other words, the forms of covenant that expressly contain an expiry date support the view that the restrictions in the Covenant became absolute once Ms Langdon could no longer consent, rather than that they lapsed.

Given that the only observation that I consider soundly based by examination of the history of transfers supports the defendants’ case it is not necessary to give the defendants the opportunity of further submissions.

Consideration of other aspects of context

The Victorian authorities noted earlier regard the factual context, location and physical characteristics of the burdened land as matters that are relevant to consider in the construction of a covenant. Indeed in some cases, such as Barport and Clare v Bedelis, these matters were of considerable assistance. In this case, neither party sought to rely on any evidence relating to these matters, with the exception of the spread and content of other covenants discussed above. Nevertheless, for completeness, I have considered whether there is anything else of potential relevance that emerges in relation to context from Mr Easton’s Report, or the instruments referenced in the Transfer, being the Parent Title and Subdivision. Matters of potential relevance that were ascertainable at the time of the Transfer in addition to the existence and spread of other covenants on land transferred out of the Parent Title prior to the Land may include these:

(xx) The subdivision of the land within the Parent Title proceeded in stages, ultimately by way of four subdivisions.

(xxi) The Land is contained in the third of these subdivisions.

(xxii) The land remaining in the Parent Title as at the date of the Transfer, which was accordingly the benefited land, was not confined to land in the Subdivision.

(xxiii) The Land fronts onto a road, Hawthorn Road, which was in existence at the time of creation of the Parent Title in 2015, as opposed to the subsidiary roads created by the various subdivisions within the Parent Title.

(xxiv) The benefited lots not within the Subdivision front onto subsidiary roads within the Parent Title.

(xxv) All of the other lots in the Subdivision that front onto Hawthorn Road are benefited lots, i.e. they had not been sold by Ms Langdon prior to the sale of the Land. Mr Easton attaches the later transfers relating to those lots, which show that none imposed covenants, but for the reasons given above, I do not consider this relevant to the proper construction of the Covenant.

(xxvi) None of the other lots within the Subdivision, being those that front onto Crotonhurst Avenue to Mitchell Road on the west, are benefited lots i.e. they were sold prior to the Land. Some contained single dwelling covenants (Lots 2, 3 and 11); one contained a single dwelling covenant with a dispensing power in Ms Langdon (Lot 1, which is the largest lot); and Lots 4 and 5 did not contain any covenant.

(xxvii) The lots in the Subdivision are not all of similar dimensions. In particular, while the lots in the Subdivision sold prior to the Land that front onto Crotonhurst Avenue are of similar or greater width to the Land, they are substantially greater in depth (150 feet as opposed to 117 feet for the Land).

(xxviii) While there is no evidence as to the history of development of the Land, Mr Easton’s Report shows that it is presently developed by a substantial brick dwelling which at least to my eye seems to date from a similar period to the date of the Covenant.

I do not consider that any definite conclusions can be drawn from this contextual material, and, indeed, some of it could support conclusions tending in either direction – that the restrictions were intended to lapse, or that they were intended to become absolute. For example, the fact that the Land fronted Hawthorn Road, at the edge of the Subdivision and Parent Title and already a substantial road, could support the view that over time it was intended that the restriction would lapse. However, Mr Easton’s evidence that the Land contains a substantial single dwelling of some apparent age works against this reading. The parties to the Transfer might equally well have considered that a substantial single dwelling would be the appropriate development for land fronting a substantial road for time to come.

Similarly, the sequence of purchases out of the Subdivision might suggest that the larger parcels which fronted smaller roads were more initially attractive to purchasers. This could lend weight to an argument that the inducement provided by a single dwelling restriction on a lot facing a major road, which benefited other similar lots facing Hawthorn Road, was intended to subsist for all time, and not just during Ms Langdon’s lifetime. Such an argument is speculative, however. There may well have been other reasons why the Land did not sell until after the other lots. Further, the argument is substantially undermined by the fact that when the next Lot facing Hawthorn Road sold, Lot 9 which sold by transfer dated 25 January 1926, Ms Langdon did not require the transfer to contain a single dwelling covenant, although Lots 6-8, which also fronted Hawthorn Road, remained unsold at that time.

In short, I do not consider that the factual context identified above adds in any material way to the construction of the Covenant arrived at by examination of the text. That examination leads to the view that the restrictions were intended to become absolute, rather than lapse, on Ms Langdon’s death or incapacity.

Previous decisions

The proper construction of a restriction must be considered having regard to the text of the whole of the covenant, in its factual context. It follows that previous determinations as to the construction of restrictive covenants containing a dispensing power by consent of the vendor are persuasive only. Nevertheless, both the plaintiff and the defendants have taken me in detail to a number of such previous determinations. They agree that there is no Australian authority directly on point, but there are a number of English decisions on which they each rely to support their competing arguments. This is because there are two lines of English authority - one supporting the plaintiff’s construction, and the other the defendants’.

Australian cases

Before considering the English decisions, I will touch on the Australian cases to which I have been referred.

There are three such cases. None of them deal directly with the situation here i.e. a restriction that could at the time it was imposed be dispensed with by the transferor, but the transferor can no longer consent either by reason of death, or, if a company, by reason of dissolution.

The plaintiff relies on the line of reasoning of the Victorian Civil and Administrative Tribunal (‘VCAT’) in Waterfront Place Pty Ltd v Port Phillip CC (‘Waterfront Place’) [73] in support of its submission on severance. In that case, the covenant in question prevented development of the site or demolition without the consent of the original transferor/developer Mirvac or its nominee. In other words, the restriction required approval of any development or redevelopment, as opposed to imposing a limit on development that could be dispensed with, as in this case. The developer was also still in existence. The covenant came before VCAT on an application by a subsequent transferee to discharge or modify the restriction to enable redevelopment of the site to high rise, which was opposed by beneficiaries of the restriction. The Tribunal allowed modification of the restriction for reasons which included the conclusion that the benefit of the restriction was illusory, as Mirvac had the ‘absolute and unfettered power to at any time approve any form of redevelopment of the subject land’. The plaintiff seeks to apply that reasoning to this case, by submitting that if the restrictions were to become absolute, as the defendants contend, then that would fundamentally change the nature of the restriction.
[73][2014] VCAT 1558.

I do not accept that the reasoning in that case can be applied in this. Here there was a baseline of development permitted. It is true that Ms Langdon could permit more, but unless and until she exercised that power the beneficiaries had the protection of limited development. That benefit was not illusory. It is also important to keep in mind that the issue in Waterfront Place arose in the context of assessing the injury to beneficiaries if the restriction was modified. That is quite a different question to ascertaining the original intention of the restriction.

In the Plaintiff’s First Written Submissions, the plaintiff also sought to rely on a decision of Needham J in Palm Beach Lands Pty Ltd v Marshall (‘Palm Beach Lands’).[74] The covenant in question in that case also imposed a ban on development unless plans were approved in writing by the original transferor. That transferor remained in existence and, together with the current owners of land that benefited from the covenant, opposed the proposal of the defendant to build a dwelling that would interfere with their views of Pittwater. The defendant was a successor in title to the original covenantor. Needham J held that the covenant was not enforceable by the original transferor against the defendant because it was personal in nature to both the original transferor and original covenantor. In other words, Needham J held that the covenant did not run with the land. He held that even if it did run with the land, none of the objectors were beneficiaries who could enforce it, for reasons confined to that case.
[74](n 44).

The plaintiff no longer seeks to argue that the Covenant was personal in nature to Ms Langdon, and concedes that it runs with the land and the defendants are beneficiaries of it. Accordingly, Palm Beach Lands is distinguishable, and has little relevance to the ascertainment of the meaning of the Covenant.

In any event, the opposite conclusion was reached by Millhouse J in the Supreme Court of South Australia in respect of a covenant in similar terms in West Lakes v Makris (‘West Lakes’).[75] The covenant in that case also prohibited construction without the approval in writing of the original transferor, a company which was still in existence and objected to the construction undertaken by the defendant, a successor in title to the original covenantor. Millhouse J held that the covenant ran with the land, although it was only enforceable by the original transferor. The principal issue in the case was the defendant’s contention that the restriction was unenforceable, given that its extent could not be ascertained from inspection of the Register. Millhouse J held that it could, although there may now be some doubt as to whether this decision would survive Westfield. None of these aspects of the case are relevant to the dispute here.
[75][1993] ANZ Conv R 193.

Millhouse J also turned his mind to the hypothetical situation of the original transferor ceasing to exist. In that case, the definition of the covenantee included its successors and assigns, and so Millhouse J proceeded on the assumption that there would always be someone or somebody to give or withhold approval.[76] The power to dispense with the restrictions in this the matter before me, by contrast, was confined to Ms Langdon, and her alone. I do not consider, however, that this difference to West Lakes is reason to doubt the construction of the Covenant I have arrived at by examination of its text. The more significant distinction to my mind is that West Lakes, like Palm Beach Lands, and some of the English cases, prevented any development without approval. In other words, the land in question in those cases would be effectively sterilised unless consent could be obtained, making it imperative that a person or entity who could give that consent remained. Here, by contrast, development of a certain kind was always permitted. Ms Langdon could allow development of a different kind, but her consent was not essential to the land being utilised at all.
[76]Ibid 197.

I now turn to the English cases to further demonstrate this distinction.

English authorities

As mentioned earlier, there are two lines of English authority, one supporting the plaintiff’s position, and the other the defendants’.

The plaintiff relies on a series of cases in which the relevant covenant provided that the consent of the original transferor must be obtained before development was permitted. These are single instance decisions, but the reasoning in one, Crest Nicholson,[77] a judgment of Neuberger J, at that time sitting as a single judge in the Chancery Division, was approved by the Court of Appeal, although the appeal succeeded on other grounds.[78] For that reason, and also given the later eminence of Neuberger J, his reasoning is strongly persuasive, in so far as it is applicable in this case.
[77](n 49).
[78]At trial, the plaintiff had conceded that the defendant, who sought to prevent the plaintiff from building multiple dwellings without plans approval, was a beneficiary who could enforce the restriction if it was not spent. The plaintiff failed at trial because of another restriction, limiting construction to one dwelling. On appeal, the plaintiff/appellant sought, and was granted, leave to withdraw the concession. Lord Justice Chadwick, with whom Lord Justice Auld and Lady Justice Arden agreed, allowed the appeal on the basis that the defendant was not a beneficiary of either restriction, but noted at [53] that he agreed with the reasoning of Neuberger J that the restriction preventing building without approval was spent.

In reaching his conclusions, Neuberger J declined to follow the earlier line of authority, commencing with the single judge decision of Harman J in Bell v Norman C. Ashton Ltd (‘Bell v Ashton’).[79] That case concerned a covenant that provided that without the consent in writing of the vendors no building could be used for any other purpose than a private dwelling, and that no more than two houses of a stated minimum cost could be built on any one lot. The covenant contained a provision that the vendors could authorise the construction of shops on a named road. The defendant had commenced to build nine houses over two lots, relying on the purported consent of the personal representatives of the vendors.
[79](1956) 7 P & CR 359.

Harman J described the power of the vendors to consent as a dispensing power, which as discussed earlier I consider to be the correct characterisation of the power of Ms Langdon to allow more than one dwelling of specified cost. He held that the power to consent was personal to the vendors, who were now deceased, but that in any event the consent power was limited to allowing shops on the named road. Harman J further held that the limitation to two dwellings was enforceable by the plaintiff, and granted relief accordingly. There does not appear to have been any submission put by the defendant to the effect that the limitation was spent given the inability of the vendors to now consent. Rather it appears the case proceeded on the basis that it remained in force. Thus the case is of limited assistance where, as here, the issue is whether the limitation which could be dispensed with is spent.

The principal English authority that could support of the defendants’ construction of the Covenant is the 1994 decision of the Court of Appeal In Re Beechwood Homes Ltd application (‘Re Beechwood Homes’).[80] In that case, the covenant provided that no building could be constructed without the prior approval by the vendors of the plans, and no road created without their consent. The relevant land had not been developed. The vendors were no longer available to consent. The plaintiff made application to modify the covenant to enable development of the land, and the application failed at first instance. The appeal also failed. Lord Dillon, with whom Lord Justices Leggatt and Henry agreed, characterised the power to consent as a dispensing power attached to an otherwise absolute prohibition. He observed that the vendors being no longer able to give that consent, the ‘position is that the dispensing power has gone. But the restrictions remain unmitigated by any dispensing power. It is not the position that the restrictions vanish with the dispensing power’.[81] The effect of the decision was that, in the absence of modification of the covenant, the land was effectively sterilised i.e. could not be developed at all. The court did not make mention of this. It is significant, however, that, as Lord Justice Dillon observed, it had been the common basis at trial, and so on the appeal, that the consent power was a dispensing power attached to an otherwise absolute prohibition. In other words, there was no argument put or permitted that the prohibition became spent with the dispensing power. That is not the position in this case.
[80][1994] 2 EGLR 178.
[81]Ibid, 180 [A].

Re Beechwood Homes was subsequently applied by Judge Rich QC, sitting as a judge of the High Court, in Briggs v McCusker.[82] There was a similar restriction in that case, preventing any construction without first obtaining the written approval of the vendor. The vendor was now deceased. The plaintiffs sought an injunction to prevent the defendant from constructing a house. Judge Rich held that the restriction had become absolute on the death of the vendor, applying Re Beechwood Homes. Nevertheless, he refused the plaintiffs relief on the basis that they were not beneficiaries of the restriction. Thus the application of Re Beechwood Homes was not critical to the decision.
[82][1996] 2 EGLR 197.

The next significant English case is Crest Nicholson.[83] That was also a case in which the approval of the vendor, in that case a company, was required for any construction on the subject land. The vendor company had subsequently been dissolved, and given the lapse of time could no longer be re-registered. Neuberger J noted that reading the restriction as now absolute conformed with its strict literal interpretation. However, he declined to follow Bell v Ashton and Re Beechwood Homes. He noted that those cases were distinguishable in that the argument put to him, that the restriction was discharged now that the vendor could not consent, had not been put in those cases. Further, he observed that in Bell v Ashton the restriction becoming absolute did not entirely sterilise the land.
[83](n 49).

In the case before him, Neuberger J held that the requirement for approval had become spent given the power to consent could no longer be exercised. One important aspect of his reasoning was that if the restriction was now absolute, it would prevent any development of the land. He considered this to be a commercially absurd result, which could not have been the intention of the parties to the covenant. He also reasoned that the exception, the approval of the vendor, was so fundamental to the prohibition, that when the exception was discharged by the dissolution of the vendor, so must be the prohibition. This is similar to the severance argument put by the plaintiff in this case. Critically, Neuberger J also relied in reaching his conclusion on textual indications in the covenant as a whole, including a separate limitation to a single dwelling and provision in the requirement for consent to plans that consent could not be unreasonably withheld. He reasoned that it would be perverse for all development to now be prohibited given those provisions. There are no such textual indications in the Covenant.

Crest Nicholson was subsequently applied by single judges in English courts or tribunals in Margerison v Bates (‘Margerison’)[84] and Churchill.[85] Margerison concerned a covenant that prevented the addition, enlargement or alteration of a dwelling on the subject land, which had been constructed with the approval of the vendor, without her approval. The covenant provided that her consent was not to be unreasonably withheld. The vendor had since died. Jones QC, sitting as a judge of the High Court, held that the restriction had been discharged by her death. He reasoned that it would flout common sense for no alteration to now be permitted; relied on the qualifier that consent could not be unreasonably withheld; and adopted the reasoning of Crest Nicholson that the exception was so fundamental to the prohibition that when the exception was discharged, so was the prohibition.
[84][2008] 3 EGLR 165.
[85](n 59).

The restrictions in question in Churchill required the approval of the vendors or their surveyors of plans for the permitted single dwelling, and prohibited any structural alteration or addition without the consent of the vendors or their surveyor. The vendors had since died. The plaintiff, a successor in title to the original covenantor, wished to demolish the existing house and rebuild. Mr Strauss QC, sitting as a Deputy Judge of the High Court, held that the prohibition had been discharged by the death of the vendors. In that case, as in Crest Nicholson and Margerison, the covenants contained a provision that consent could not be unreasonably withheld. There were also other textual indications that supported the view that the restrictions were designed to operate in the short term only. Mr Strauss held that he was not required to follow Re Beechwood Homes given that the reasoning of Neuberger J in Crest Nicholson, which he applied, had been approved by the Court of Appeal.

I agree that the reasoning in Crest Nicholson, Margerison and Churchill is persuasive in respect of the covenants there in question. However, I also agree with the defendants that those cases are distinguishable from this because the restriction in this case does not prevent all development without consent. The Covenant becoming absolute does not sterilise the land – it merely limits development to a single dwelling. This was the distinction made by Bartlett QC, President of the Lands Chamber in Woodhouse v Woodhouse (‘Woodhouse’),[86] and I think it a compelling one. The President in that case held that a restriction that prevented a building being used for trade without the previous consent of the vendor, now deceased, had become absolute. He applied Bell v Ashton in reaching that conclusion. He distinguished Crest Nicholson, and other cases in which the vendor’s consent was required for any development, noting that in those cases, but not in that before him relating to expansion of permitted use, there was a ‘strong argument for construing the restriction as one that becomes spent if the vendor dies (or is dissolved)’.[87]
[86][2010] UKUT 235 (LC).
[87]Ibid [10].

In summary, when the English authorities are analysed in this way, they are not inconsistent with the construction of the Covenant which I have arrived at by textual analysis i.e. the restriction to a single dwelling became absolute on Ms Langdon’s death. The fact that a particular construction of a contract may lead to a very unreasonable result is a relevant consideration. [88] However, there is nothing very unreasonable about a restriction to a single dwelling becoming absolute at the time it can no longer be dispensed with - indeed permanent restriction of development to a single dwelling (subject to modification or discharge of the restriction) is the effect of the very common form of single dwelling covenant that is absolute from the outset. Further, the English authorities that support the plaintiff’s construction are distinguishable by reason of the textual indications that support that construction in the covenants with which they were concerned, which do not appear in the Covenant.
[88]L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235, 251 cited with approval by Nettle JA, as he then was, with whom Redlich JA and Hargrave AJA agreed, in APN Funds Management Ltd v Australian Property Investment Strategic Pty Ltd [2013] VSCA 239, [29].

Conclusion and orders

In construing the Covenant I have examined the text, considered the factual context in which the restrictions were imposed, the purpose of the Covenant (so far as it can be ascertained), and the reasoning employed in the English cases. I conclude that the proper construction of the Covenant is that the power of Ms Langdon to consent to development different from a single dwelling of minimum cost was objectively intended, as the text shows, to be a dispensing power, as opposed to a condition of development. The objective intention of that dispensing power was, that when she could no longer consent , the restrictions that she could dispense with would become absolute. Accordingly, I answer the Preliminary Questions as follows:

(xxix) Is the restriction in instrument of transfer 1223428 limited to the life of the covenantee, Sophie Sarah Annie Langdon? No.

(xxx) Does it follow that the subject land is now not affected by any purported restriction contained in instrument of transfer 1223428? No.

I will ask the parties to prepare appropriate orders to give effect to these reasons, including as to costs and the future conduct of the proceeding. If they disagree, then I will make provision for submissions in respect of the points of disagreement and, unless oral hearing is required, determine the dispute on the papers, consistently with the approach currently required by the COVID-19 restrictions.

SCHEDULE OF PARTIES

S ECI 2018 1724
196 HAWTHORN ROAD PTY LTD	Plaintiff
- and -
KRYSTYNA DUSZNIAK	First defendant
DARIUSZ DUSZNIAK	Second defendant
MEGAN ELLINSON	Third defendant
~~RUTH CAPLE~~	~~Fourth defendant~~
~~GRAEME CAPLE~~	~~Fifth defendant~~
SHARON SHAFER	Sixth defendant
DAVID SHAFER	Seventh defendant

[2020] VSC 235

1 May 2020