Accordent Pty Ltd v Bresimark Nominees Pty Ltd - [2008] SASC 196

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
ACCORDENT PTY LTD & PORTELLOS v BRESIMARK NOMINEES PTY LTD & ORS
[2008] SASC 196
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Duggan and The Honourable Justice Anderson)
17 July 2008
GUARANTEE AND INDEMNITY - THE CONTRACT OF GUARANTEE - CONSTRUCTION AND EFFECT - GENERALLY
LANDLORD AND TENANT - COVENANTS - RUNNING WITH LAND OR REVERSION - COVENANTS WHICH RUN
LANDLORD AND TENANT - RENT - BREACH OF COVENANT TO PAY - ACTIONS TO RECOVER RENT OR DAMAGES - ACTION TO RECOVER RENT
Appeal by third party - whether a person who becomes a proprietor of land subject to a lease can enforce a guarantee in respect of the tenant's obligations under the lease - lease given to vendor of the land before it was sold - whether guarantee touches and concerns the land - whether vendors had assigned the benefit of the guarantee - whether guarantee was a deed poll - whether Accordent Pty Ltd had right of appeal pursuant to s 43 of the District Court Act 1991 (SA).
Held: appeal dismissed - guarantor's covenants touches and concerned the land - assignment was valid - deed of guarantee does not act as a deed poll.
Land and Business (Sale and Conveyancing) Act 1994 (SA) s 7; District Court Act 1991 (SA) s 43; District Court Civil Rules 2006 r 36(5), r 93(1); Law of Property Act 1939 (SA) s 15(1), referred to.
Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 244 ALR 1; Simmons v Lee [1998] 2 Qd R 671 ; Kumar v Dunning [1989] QB 193; Thomas v Harris [1947] 1 All ER 444; Moody v Condor Insurance Ltd [2006] 1 WLR 1847; John Nitschke Nominees Pty Ltd v Hahndorf Golf Club Inc (2004) 88 SASR 334; Swift Investments v Combined English Stores Group PLC [1989] 1 AC 632; Lang v ASEMO Pty Ltd [1989] VR 747; Consolidated Trust Company Ltd v Naylor (1936) 55 CLR 423; Re A & K Holdings Pty Ltd [1964] VR 257; Chelsea & Walham Green Building Society v Armstrong [1951] Ch 853; Three Rivers District Council v Governor and Company of the Bank of England [1996] QB 292, applied.
Bresimark Nominees Pty Ltd v Smartworld Enterprises Pty Ltd and Ors [2008] SADC 14; Farrow Mortgage Services Pty Ltd v Hogg (1995) 64 SASR 450; Long Leys Co Pty Ltd v Silkdale Ltd (1991) 5 BPR 11,512, considered.

ACCORDENT PTY LTD & PORTELLOS v BRESIMARK NOMINEES PTY LTD & ORS
[2008] SASC 196
Full Court: Doyle CJ, Duggan and Anderson JJ

DOYLE CJ: This appeal raises the question of whether a person who becomes the proprietor of land, the contract to purchase and the transfer of the land being expressed to be subject to a lease registered on the title, can enforce a guarantee in respect of the tenant’s obligation under the lease, the guarantee having been given to the vendor of the land before it was sold to the purchaser.
A District Court Judge found that the guarantee “touched and concerned the land”, and so the benefit of the guarantee passed to the purchaser. He found also, in the particular circumstances, that the benefit of the guarantee had been assigned to the purchaser. He also found that the guarantee (it was by deed) was a deed poll, enforceable by the owner from time to time of the land.
On appeal, each basis of the decision is challenged.
Background facts
In light of the issues argued, the background facts can be simplified somewhat.
Kyren Pty Ltd and Mr Samaras (the vendors) owned land (“the land”) on which stood an office building.
In 2003 the vendors entered into a lease in writing (“the Lease”) over part of the office building. The tenant was Smartworld Enterprises Pty Ltd (“Smartworld”). The Lease was registered on the title to the land.
On the same day that the Lease was granted, two directors of Smartworld entered into a “Deed of Guarantee and Indemnity” (“the Guarantee”). In brief, by the Guarantee they guaranteed the performance by Smartworld of its obligations under the Lease. The guarantors were Mr Galanis and Ms Takmakis (“the guarantors”). The vendors were the other party to the Deed.
In August 2003 Bresimark Nominees Pty Ltd (“Bresimark”) purchased the land from the vendors at auction. The vendors and Bresimark entered into a written contract for the sale of the land. By the contract, the vendors agreed to give vacant possession subject to any tenancies described in a Schedule to the contract. The relevant part of the Schedule refers to Annexure “A”. Annexure “A” comprises documents relating to the Lease and other leases that had been granted by the vendors. Annexure A begins with the following text:
As from the date of settlement the Vendor shall assign to the Purchaser and the Purchaser must accept an assignment from the Vendor of the Vendor’s rights and obligations pursuant to any lease in respect of the tenancies referred to and as detailed hereunder.
The documents that comprise the balance of Annexure A contain a written summary of the four leases that the vendors had granted. Annexure A includes a summary in relation to the Lease. It sets out, in brief terms, salient aspects of the Lease. The portion relating to the Lease includes a section headed “Notes”. The “Notes” include the following statement:
The Lease is guaranteed by Directors of Lessee Company.
As well, a written statement provided by the vendors to Bresimark under s 7 of the Land and Business (Sale and Conveyancing) Act 1994 (SA) is intended to give “notice of certain particulars concerning the land to be acquired”. One part of the relevant form refers to the Schedule and to Annexure A.
The transfer of the land from the vendors to Bresimark is stated to be subject to “Encumbrances”, one of which is the Lease. The transfer was duly registered. Bresimark was thereafter the registered proprietor of the land.
The Judge found that at settlement the original Deed of Guarantee and Indemnity was delivered by the vendors to Bresimark’s representative: Bresimark Nominees Pty Ltd v Smartworld Enterprises Pty Ltd and Ors [2008] SADC 14 at [7]. (This finding is supported by a letter of 4 February 2004 from Bresimark’s broker, part of exhibit P7).
The Lease was not assigned by the vendors to Bresimark. Notice of assignment of the Guarantee was not given to Mr Galanis or Ms Takmakis at or about the time of settlement.
In April 2004, in circumstances that are not material, Accordent Pty Ltd (“Accordent”) and others agreed to indemnify Ms Takmakis in respect of her liability under the Guarantee. This was recorded in a Deed of Settlement.
Smartworld failed to pay the rental due under the Lease. In July 2005 solicitors for Bresimark wrote to Smartworld demanding payment of the arrears. On the same day the solicitors wrote to Mr Galanis and Ms Takmakis. They enclosed a copy of the letter sent to Smartworld, and informed Mr Galanis and Ms Takmakis that if the required payments were not made, Bresimark would enforce the guarantee against the guarantors.
Smartworld did not pay the arrears. Bresimark brought proceedings in the District Court against Smartworld, Mr Galanis and Ms Takmakis.
The defendants joined various other persons by way of counterclaim and by way of third party notice. In particular, Ms Takmakis issued a third party notice against Accordent. She claimed that Accordent was liable to indemnify her in respect of any liability on her part to Bresimark. She relied upon the Deed of Settlement.
When the action came to trial in the District Court, the amount owing to Bresimark by Smartworld was not in dispute. For present purposes, the only issue that fell to be determined was whether Mr Galanis and Ms Takmakis were liable to Bresimark under the Guarantee.
I gather from the Judge’s reasons that the defence of the claim was conducted by counsel for Smartworld, who also appeared for Accordent and for the other persons liable under the Deed of Settlement. Counsel for Ms Takmakis adopted the submissions made by counsel for Smartworld and Accordent.
The Judge found in favour of Bresimark. He ordered that judgment be entered against Mr Galanis and Ms Takmakis for the agreed amount.
Accordent has purported to appeal against the finding that Mr Galanis and Ms Takmakis were liable under the Guarantee, and against the judgment entered against them. Mr Galanis and Ms Takmakis have each filed a “Notice of Cross Appeal.” They also appeal against the judgment entered against each of them.
When the appeals came on for hearing, I questioned the basis upon which Accordent had appealed. Mr Lazaravich, counsel for Accordent, submitted that Accordent was entitled to appeal because it was “directly affected” by the judgment. He made no reference to any statutory provision, to the Rules or to any authority. Whether s 43 of the District Court Act 1991 (SA) gives Accordent a right of appeal in the present circumstances is unclear. However, the defence filed by Accordent to the third party Statement of Claim denies the liability of Mr Galanis and Ms Takmakis to Bresimark. The combined effect of r 93(1) and r 36(5) of the District Court Civil Rules 2006, coupled with the fact that s 43 of the District Court Act confers a right of appeal on a party to an action, may mean that Accordent’s appeal is competent. In any event, Mr McNamara QC, counsel for Bresimark, took the pragmatic approach that as Mr Galanis and Ms Takmakis had appealed, were before the Court and were proposing to adopt the submissions by Mr Lazaravich, there was no point in him challenging the competency of the appeal by Accordent.
The hearing of the appeal then proceeded, submissions in support of the appeal being put by Mr Lazaravich. Those submissions were adopted by counsel for Mr Galanis and Ms Takmakis.
Do the guarantors’ covenants touch and concern the land?
The District Court Judge found that the guarantors’ covenant that Smartworld would perform its obligations under the Lease, and in particular pay the rental due, were covenants that touched and concerned the land and so could be enforced by Bresimark in its capacity as registered proprietor of the land.
In Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10; (2008) 244 ALR 1 (decided after the District Court Judge gave his decision) the High Court held that a covenant by a guarantor to guarantee payment of rent payable by a lessee under a lease could and did “touch and concern” the land the subject of the relevant lease. Accordingly, such a covenant could be enforced by a transferee of the reversion, which Bresimark is: Gumland at [93]-[102]. The High Court rejected a submission that such a covenant by a guarantor was merely a “collateral obligation”, not affecting land and not running with land: Gumland at [102].
In so deciding, the High Court has settled an issue on which conflicting views have been expressed in cases and in academic writings. On the hearing of the appeal Mr Lazarevich, as I understood his submission, conceded that the decision in Gumland supported this aspect of the District Court Judge’s decision. However, apparently wishing to preserve the ability to apply to the High Court for special leave to appeal, he did not formally concede that the appeal must be dismissed. He did not put detailed submissions on this aspect of the case. Nor did Mr McNamara.
In light of that, I can deal with this aspect of the appeal relatively briefly.
There are two bases for the conclusion reached by the High Court in Gumland.
The first is that a covenant by a tenant to pay rent runs with the land, and if that is so, a covenant by a surety that such a tenant’s covenant will be performed and observed must also be a covenant which touches and concerns the land: Gumland at [101]. In so deciding the High Court referred with approval to observations to that effect by Lord Templeman in Swift Investments v Combined English Stores Group PLC [1989] 1 AC 632 at 637-638 (three other members of the House agreed with his speech) and by McPherson JA (with whom the other members of the Court agreed) in Simmons v Lee [1998] 2 Qd R 671 at 675. As McPherson JA said:
If rent runs with the land, it is not a long step to say that a guarantee of that rent also does so.
That approach to the matter suffices to support the Judge’s conclusion in the present case. That conclusion is sufficient support for the judgment entered against the guarantors. On this basis the appeal must be dismissed.
In Gumland the High Court also held that the guarantors’ covenant satisfied the test outlined by Lord Oliver in Swift Investments for determining whether a covenant touches and concerns land. The other members of the House of Lords in that case agreed with the speech of Lord Oliver, as well as with the speech of Lord Templeman. In Swift Investments Lord Oliver said at 642:
Formulations of definitive tests are always dangerous, but it seems to me that, without claiming to expound an exhaustive guide, the following provides a satisfactory working test for whether, in any given case, a covenant touches and concerns the land: (1) the covenant benefits only the reversioner for time being, and if separated from the reversion ceases to be of benefit to the covenantee; (2) the covenant affects the nature, quality, mode of user or value of the land of the reversioner; (3) the covenant is not expressed to be personal (that is to say neither being given only to a specific reversioner nor in respect of the obligations only of a specific tenant); (4) the fact that a covenant is to pay a sum of money will not prevent it from touching and concerning the land so long as the three foregoing conditions are satisfied and the covenant is connected with something to be done on, to or in relation to the land.
In argument before this Court Mr Lazarevich accepted that the guarantors’ covenants in the present case satisfied this test. When asked specifically whether the test set out in Swift Investments was met, he acknowledged that it was.
Subject to one point, I am satisfied that that concession is correct. The first part of that test is satisfied. The guarantors’ covenants benefit only the reversioner for the time being. The other parties to the guarantee are the vendors, for the purposes of the guarantee called “the Lessor”, and that expression includes “successors and assigns”. In my opinion it follows that once the vendors transferred the land to Bresimark, the vendors lost the benefit of the Guarantee (other than accrued rights). The Guarantee benefits the reversioner or owner for the time being. The second part of Lord Oliver’s test is satisfied because the covenant affects the value of the land in the hands of the owner for the time being. A guarantee of the tenant’s obligations is likely to enhance the value of the land: Gumland at [98]. As to the third part of the test, the guarantors’ covenants are not personal to a specific reversioner or purchaser of the land. As I have already mentioned, the Guarantee is given to “successors and assigns” of the vendors. The reservation that I have relates to the requirement that a covenant should not be, in Lord Oliver’s words, “in respect of the obligations only of a specific tenant”. In the present case the guarantee is a guarantee in respect of the obligations of Smartworld as lessee. There is no provision to the effect that the guarantee extends to a successor or to an assignee of Smartworld. In this respect there may be a contrast with the provisions of the guarantees under consideration in Gumland. In that case there was a provision in the guarantees that if the lessee assigned its rights of occupation for the purposes of the guarantees then the term “lessee” should mean the person in occupation as a result of that assignment: Gumland at [4].
On the other hand, it is arguable that in the Guarantee “Lessor” and “Lessee” are to have the same meaning as those terms have in the Lease. In the Lease, “Lessee” includes successors and assigns of the Lessee. The relationship between the Guarantee and the Lease supports this approach. This was the approach taken in somewhat similar circumstances in Lang v ASEMO Pty Ltd [1989] VR 747 at 777-778.
The report of the decision in Swift Investments sets out the clause that contains the guarantee under consideration: Swift Investments at [639]. The guarantee was in the form of a covenant that the tenant would pay the rent reserved and perform and observe the tenant’s covenants. The report does not disclose whether, by definition or otherwise, the reference to the tenant included a reference to successors or assigns of the tenant. After setting out the covenant referred to, Lord Oliver said at [639]:
The only other observation which requires to be made about the terms of the lease is that in the usual way the expression “the lessor” is expressed to include the reversioner for the time being immediately expectant on the term thereby created.
I note that he makes no similar point about the reference to the tenant.
In Swift Investments the House of Lords approved the decision in Kumar v Dunning [1989] QB 193. The guarantee under consideration is not set out in full in that case. The guarantee was in the form of a covenant by the sureties that a named company (called the assignee) would duly pay the rent payable under an underlease assigned to the assignee and would observe the covenants on the part of the underlessee: Kumar at [196]. The definition (if any) of “the assignee” is not referred to. But there is nothing in the report in Kumar to suggest that the result would have been different if the guarantee related only to the named company. Indeed, Sir Nicolas Browne-Wilkinson V-C said at [200]:
… As it seems to me, in principle a covenant by a third party guaranteeing the performance by the tenant of his obligations should touch and concern the reversion as much as do the tenants’ covenants themselves.
There is nothing there to suggest that a different result would be reached if the guarantee in question related to a particular tenant.
I add that in Swift Investments at 642 Lord Oliver specifically approved the reasoning of the Court of Appeal in Kumar v Dunning and said that the two cases were “indistinguishable” and that nothing “turns upon the precise terms of the covenant in either case”.
Be that as it may, as I understand the reasons of the High Court in Gumland, there were, as I have already said, two different routes by which it came to its conclusion. If I am right in that, then it remains the case that the District Court Judge’s conclusion was correct. The guarantors’ covenants were covenants that Smartworld as tenant would pay the rental due under the lease, and that was a covenant which touched and concerned the land.
Moreover, as I have indicated, the speeches in Swift Investments and the reasons of the Vice Chancellor in Kumar also support the more direct approach that I have referred to as the first basis for the conclusion reached in Gumland.
It follows, in my opinion, that the appeal must be dismissed.
However, in case the matter should go further, it is appropriate to deal with the other bases upon which the Judge entered judgment for Bresimark against the guarantors. I will do so relatively briefly because these grounds were not the subject of full submissions before this Court, in light of the outcome on the issue already dealt with by me.
Assignment
The Judge found that the vendors had assigned the benefit of the guarantee to Bresimark and that the requirements of s 15(1) of the Law of Property Act 1939 (SA) had been met. Accordingly, the Judge found that the guarantee was enforceable by Bresimark against the guarantors. I agree with the Judge’s decision in this respect.

The Judge also found that there was an equitable assignment of the guarantee, and on that basis Bresimark could enforce the guarantee against the guarantors. I agree with that conclusion as well.
As I have already noted, the vendors sold the land to Bresimark subject to the four existing leases. The contract was in writing, and was signed by the vendors. The contract is a standard form contract. It makes provision for details relevant to the particular transaction to be inserted into the printed form. It also allows for the provision of additional material. Annexure A (referred to above) is part of the contract, as is the text with which Annexure A begins (also set out above) that refers to the assignment by the vendors of rights to the purchasers.
I am satisfied that when that text is considered in its contractual context, it means that with effect from the date of settlement, or completion of the contract, the vendors were undertaking to assign to Bresimark, among other things, their rights under the Guarantee. That is, the assignment was to take effect upon settlement.
The relevant context is the circumstance that the contract provides for the sale of land subject to leases, including the Lease. The Annexure summarises key aspects of each of the four leases. In two instances that summary contains a statement (in terms set out above) to the effect that the directors of the tenant company have given guarantees in respect of the relevant lease. The existence of those guarantees enhances the value of the land being sold by the vendors. One would expect the vendors, for that reason, to draw the existence of the guarantees to the attention of the purchasers, and to be willing to assign the benefit of them to the purchasers, and one would expect the purchasers, for the same reason, to want to obtain the benefit of the guarantees. In other words, the existence of the four leases, and the existence of the guarantees in respect of two the leases, are a significant part of the contractual context.
Of course, one must return to the terms in which the parties to the contract have expressed their intentions, and to the rights and obligations that they have created.
As I have already noted, the words used at the commencement of Annexure A are apt to effect a transfer or assignment of a chose in action as from a future event, namely, the settlement of the contract. The question is, what are the choses in action or rights or entitlements that are being assigned?
I consider that the rights or entitlements of the vendors under the Guarantee can, in the circumstances, be treated as encompassed by the reference to “rights and obligations pursuant to any lease…”. That is, as including a reference to rights or entitlements under the guarantee of the Lease to Smartworld. I acknowledge that one would not ordinarily refer to rights under the Guarantee as rights “pursuant to” the Lease. In its ordinary meaning “pursuant” means “proceeding conformably with” or “according to”: Macquarie Dictionary, 4^th Ed, 2005. But the contract between the vendors and Bresimark is not a formal contract, drawn up by lawyers. It is a standard form of contract apt for completion by a land agent or by the parties themselves. Allowing for the nature of the contract document, and for the contractual context, it is appropriate to treat the reference to “rights and obligations pursuant to any lease” as including rights under the guarantees referred to in the Annexure. Such rights are rights and obligations in respect of the tenancies referred to in the annexure, and while they are not strictly or properly so called “rights and obligations pursuant to any lease”, their connection with the lease is sufficiently close for me to be satisfied that, in its context, the word “pursuant” must have been used with an intention of referring to the rights and obligations, summarised in the Annexure, that are related to or connected with the Lease.
For those reasons, I agree with the Judge’s conclusion that by Annexure A the vendors agreed that as from the date of settlement their rights under the guarantee were assigned to Bresimark.
The Judge found that written notice of the assignment was given to the guarantors by two letters from Bresimark’s solicitors dated 25 July 2005. The relevant letter addressed to the guarantors asserts an entitlement against them under the Guarantee, and in the enclosed letter (addressed to Smartworld) Bresimark is identified as the registered proprietor of the land and, by clear implication, as the person standing in the position of landlord under the Lease. The relevant letter states that Bresimark is giving notice to the guarantors that if Smartworld fails to comply with its obligations, Bresimark will look to the guarantors “for appropriate compensation and indemnity.”
By the two letters in question the guarantors are informed, therefore, that Bresimark is now the registered proprietor of the land; by clear implication that the vendor and Bresimark are in the relationship of landlord and tenant; that Bresimark holds the Guarantee; that Smartworld is in arrears in the payment of rent, that Bresimark claims the arrears of rent from Smartworld, and that Bresimark will claim “compensation and indemnity” from the guarantors pursuant to the Guarantee if Smartworld does not make the required payment.
The requirements of a notice in writing for the purposes of s 15(1) of the Law of Property Act were considered by the High Court in Consolidated Trust Company Ltd v Naylor (1936) 55 CLR 423. Dixon and Evatt JJ said at 438-439 that the term “express notice in writing” was undoubtedly used in contrast with or in opposition to the notion of notice by implication or by operation of law, or in opposition to constructive notice. They went on to say at 439:
The purpose is to make essential actual notice that the debt has been assigned … The purpose does not extend to giving the debtor particulars of the assignment. The assignment must be by writing, but, if it is in writing, then notice to the debtor is necessary only to acquaint him with the fact that the debt is payable to the assignee and the statute requires that he shall be expressly notified. But, neither in its exact terms, nor according to its general intent, does the provision appear to make it essential that the notice should contain an express statement that the assignment is a written one.
I am satisfied, applying similar reasoning, that the letters sent to the guarantors did, by necessary implication, give the guarantors notice that Bresimark now stood in the position of the vendors, and notice that the obligation under the Guarantee was now owed to Bresimark as assignee. It was not necessary, for the notice to be effective, that the letter should state in express terms that the assignment of the rights under the Guarantee had been a written one, nor was it necessary for the document that effected the assignment to be identified.
For those reasons I agree with the Judge that the rights under the Guarantee were effectively assigned to Bresimark, and were enforceable against the guarantors.
There is one further point to be made in relation to this aspect of the matter. On the hearing of the appeal, Mr Lazarevich submitted that the letters of 25 July 2005 were not received by Ms Takmakis. The amended Statement of Claim alleges (para 12) that notice of the assignment was given by the letters of 25 July 2005. The receipt of those letters is admitted in the respective defences by Mr Galanis (para 16) and by Ms Takmakis (para 7).
I turn now to the question of equitable assignment.
It is necessary to consider whether there has been an effective equitable assignment of the vendor’s rights under the Guarantee only if there is no effective assignment for the purposes of s 15(1) of the Law of Property Act.
In the present circumstances, that need might arise if my finding that there was an agreement in writing for the assignment of rights under the Guarantee (found in the contract for the sale of land) is not correct; or if the required notice of the assignment was not given to the vendors, or if the true meaning of the arrangements is that there was no more than a contract to assign the benefit of the Guarantee, the contract not having been carried out.
I consider it clear, from the circumstances of the case, that the intention of the vendor and of Bresimark was that the benefit of the guarantee be assigned to Bresimark. I would draw that conclusion from the fact that the contract for the sale of land and the Transfer were expressed to be subject to the Lease; from the reference to the Guarantee in Annexure A; from the fact that before entering into the contract a booklet of documents was made available to Bresimark or its representatives, that booklet containing the Lease and the Guarantee (see the letter of 25 August 2003, part of exhibit P7); and from the fact that shortly after the date of the contract the vendor’s representative sent to Bresimark’s conveyancer a copy of the booklet with a copy of the relevant documentation, including a copy of the Guarantee (see the same letter). A further significant fact is that at settlement the vendor delivered to Bresimark (by its agent or representative) the original Guarantee. I consider that to be an evidentiary fact supporting the conclusion that there was an earlier agreement for the assignment of rights under the Guarantee.
Accordingly, even if, contrary to my conclusion, the contract for the sale of land, and in particular Annexure A, does not amount to an assignment of rights under the Guarantee as from the time of settlement, I would infer from the facts referred to an agreement between the vendors and Bresimark, partly in writing and partly by conduct, for the assignment to the benefit of the Guarantee.
Indeed, the handing over of the original guarantee at settlement might itself suffice as a sufficient indication of an agreement for the assignment of the benefit of the Guarantee: see Thomas v Harris [1947] 1 All ER 444.
The agreement to which I have referred is supported by consideration, being the entry into and completion of the contract for the sale of the land. It is not necessary to consider, in the circumstances whether there would be consideration to support an agreement founded wholly on the handing over of the Guarantee at settlement.
Whether Bresimark was entitled to bring these proceedings in its own name, without joining the vendors, is open to argument, although the Judge below had no doubt about this: see [2008] SADC 14 at [57]. The point was not raised on appeal. On this point I refer to the discussion in Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (4^th ed, Butterworths Lexis Nexis, 2002) at [6‑520]. I note that in Three Rivers District Council v Governor and Company of the Bank of England [1996] QB 292 the Court of Appeal held that the assignee in equity of a chose in action is entitled to sue on that chose in action in its own name. It is not necessary to resolve this issue. No point was taken on this matter on appeal nor, as best I can tell, was any such point taken at trial. Accordingly, as the failure to join the vendors does not make the claim or proceedings a nullity, and is capable of being remedied by appropriate procedural measures, even at this stage, in my opinion a claim based on an equitable assignment does not fail on that basis: see eg Long Leys Co Pty Ltd v Silkdale Ltd (1991) 5 BPR 11,512 at 11,517-11,518; Farrow Mortgage Services Pty Ltd v Hogg (1995) 64 SASR 450 at 459.
For those brief reasons I agree with the Judge, should it be necessary to rely upon an assignment in equity, Bresimark is entitled to do so.
Is the guarantee a Deed Poll?
The Judge found that the Deed of Guarantee operated or took effect as a deed poll: [2008] SADC at [97]. Accordingly, Bresimark was entitled to enforce the guarantor’s covenants “… if it is sufficiently described or referred to in the Deed”: [2008] SASC at [97]. As the Judge noted, Bresimark was an assign of the vendors. The Deed of Guarantee defines “the Lessor” (the vendors) as including their “successors and assigns … as appropriate”. It followed, said the Judge, that Bresimark was referred to in the Deed of Guarantee as a person entitled to enforce the guarantors’ covenants. Therefore, the Judge found, this was a further basis for finding the guarantors liable to Bresimark.
On this aspect of the case I respectfully disagree with the Judge.
Deeds are two kinds, an indenture or deed poll. The origins of the distinction need not be explored in any detail. In brief, an indenture was a deed cut in a toothed or waving line. On the other hand, a deed poll was so called because the paper or parchment on which it was written was polled or cut even. There is a further relevant distinction. An indenture is made between two or more persons in different interests, whereas a deed poll characteristically is made by a single person or by two or more persons having the same or similar interests. The distinction is, in very broad terms, between a deed that operates and has effect as between persons having different interests (an indenture) and a deed made by a person or persons with the same interests, and not having an operation or effect as between those persons and other persons with different interests (a deed poll).
Subject to certain exceptions (none were suggested to be material in this case) the covenants in an indenture are enforceable only by the parties to the Deed (or, obviously enough, the successors and assigns if the Deed so provides and if there has been a succession or an assignment). On the other hand, a covenant in a deed poll can be enforced by a person not a party to the deed poll, if that person is named or sufficiently identified as the person for whose benefit the covenant is given. My summary draws on the reasons of Sholl J in Re A & K Holdings Pty Ltd [1964] VR 257 at 261-262.
The distinction between an indenture and a deed poll is referred to, and an illustration of its relevance is given by Park J in Moody v Condor Insurance Ltd [2006] 1 WLR 1847. His Lordship said at [15]:
[15]The argument takes us into somewhat arcane and esoteric aspects of the law relating to deeds. It is common ground that, although not all deeds can confer rights on a non-party so that the rights are enforceable by the non-party against the party who executes the deed, some deeds can do that. Such deeds are commonly described by the old expression “deeds poll”. It was demonstrated to me from authoritative textbooks that, in the practice of capital markets in England, it is common (indeed usual) for guarantees of indebtedness under loan stocks and similar debt instruments to be provided for in deeds executed solely by the guarantor, without the investors in whose favour the guarantees are given having to be signing parties to them. …
Similarly, in A & K Holdings Pty Ltd a company was in financial difficulties. Ten other companies that were part of the same group executed a deed of guarantee in favour of the unsecured creditors of the company. By the deed the companies guaranteed on demand payment in full of the amounts owed by the company to the unsecured creditors. Sholl J said at 260:
… On the true construction of the guarantee, I am of opinion that it purports to take effect as an immediately operative deed poll – a unilateral document made by each of the 10 guarantor companies – but not intended to be executed by any other party.
… The document, it seems to me, is intended to be an immediately operative deed poll.
The distinction between an indenture and a deed poll is one rooted in antiquity, and as far as I am aware not much considered in recent times. The only relatively recent case drawn to our attention is Moody v Condor Insurance Ltd. Consistently with the contemporary preference for substance over form, Park J took the approach that the distinction between an indenture and a deed poll was not purely one of form. The distinction was to be drawn by considering the operation and effect of the deed in question, and not solely by having regard to its form. It is not necessary to summarise the facts in that case. The approach taken appears from the following passage from the reasons of Park J:
[16]I accept that there is a distinction between deeds which do confer rights on persons who are not parties to them and deeds which do not, but I do not think that the division is made in the purely mechanistic way which is implicit in Miss Ife’s submission. The distinction is commonly equated with that between deeds poll and deeds inter partes. The standard example of a deed poll is a deed executed by one person alone, by which the executing party makes a promise to someone else who is not party to the deed. … A deed inter partes, by way of contrast, is a deed between two or more parties by which one or more of them makes or make promises to the other or others of them. I hesitate to assert definitively that a deed inter partes could never create rights which could be enforced by a non-party to the deed against a party, but I certainly accept that the indications in the textbooks and authorities (which tend to be of considerable antiquity in this area) are to that effect: deeds inter partes create rights and obligations between the parties, and are not, or (putting it more cautiously) are not customarily thought to be, the kinds of documents to use if the intention is to confer rights on non-parties which they can enforce against parties.
…
[18]In my judgment it is necessary to consider, not just whether one or two persons executed the documents, and not just whether the word “between” appears. It is necessary to examine what the parties who execute a document, saying that they are executing it “as a deed” (the modern equivalent of affixing a wax seal), set out to do by it. Does one or more of them in fact make promises to the other or others (as one would expect of a deed inter partes), or do they rather seek to use the document as a means for each of them to make unilateral promises to a person who is not a party to it (or to persons who are not parties to it)? When the conventional word “between” appears, is it an appropriate word given the content of what appears in the document that follows? When those questions are asked in this case it becomes, in my judgment, clear that the loan note and guarantee instrument and the guarantee were the types of deeds which not merely were intended to create rights enforceable by non-parties (Mr Moody and Mr Miller), but which in law achieved the intention.
…
[21]The word “between” at the beginning of the loan note and guarantee instrument is a conventional word for a draftsman to use where one document is going to be executed by more than one person. But it is potentially misleading in this case. It may create the impression that the two persons who have executed this instrument have used it to record the contents of an agreement between themselves. …
Park J went on to say that although the guarantee in question was executed by Condor Insurance Ltd (the guarantor) and by another party to the relevant transaction, properly understood the document performed two distinct functions, or created two different relationships, and that relevantly the document operated as a deed poll as between Condor and the plaintiffs in the action, who were not parties to the deed.
Similarly, in Chelsea & Walham Green Building Society v Armstrong [1951] Ch 853 Vaisey J also took an approach that emphasised substance rather than form. His conclusion (at 857) was this:
It seems to me that the document is in form much more analogous to a deed poll. It may be more accurately stated as a deed not inter partes, although it is not strictly a deed poll.
I return to the provisions of the Deed of Guarantee. The guarantors and the vendors are parties to the Deed, each of them having executed the Deed. The Deed is expressed to be “between” them. This is not decisive, but indicates that in form the Deed appears to be a deed between parties.

The covenants in the Deed are not expressly given to the vendors. After reciting the parties and the consideration (the grant of the Lease to Smartworld), one comes to the operative words which are that the guarantors “Hereby Jointly And Severally Guarantee”. Then follow the covenants by the guarantors. The principal covenants are the first two covenants, and they are expressed as follows:
1The payment by the Lessee to the Lessor of all rental and/or other monies payable to the Lessor by the Lessee by virtue of the tenancy created between the Lessor and the Lessee or expressed to be payable to the Lessor by the Lessee under or by virtue of the Lease or otherwise payable by the Lessee to the Lessor by virtue of the occupancy of the said premises by the Lessee as tenant or on any other basis whatsoever.
2The performance and observance by the Lessee of the covenants terms and conditions and restrictions expressed or implied in respect of or applicable to the said tenancy and or the Lease and on the part of the Lessee to be observed or performed.
So it can be said, as Mr McNamara argued, that these are unilateral covenants in favour of the Lessor for the time being.
But, contrary to the conclusion reached by the Judge, I am of the opinion that this Deed is to be construed as, and operates as, an indenture. The fact that it is made between the guarantors and the vendors, and that each of them has executed it, is a significant fact. In that respect the case stands in contrast to the circumstances in Re A & K Holdings Pty Ltd. As well, when one analyses what the parties have done, in my opinion the natural description of the Deed is to say that the guarantors, as one party to the Deed, have agreed with the vendors (as the other party to the Deed) to guarantee the performance by the lessee of its covenants under the Lease. To my mind, the natural conclusion to reach is that the vendors are a party to the Deed of Guarantee because the covenants in the Deed of Guarantee were given in favour of the vendors (and their successors and assigns). The fact that the covenants are so expressed as to be capable of enforcement by successors and assigns is not a sufficient reason to treat them as, wholly or at least to that extent, unilateral covenants in favour of that class of persons. On that approach, it seems to me, any deed between parties could be regarded as a deed poll, if the covenants found in the deed were capable of enforcement by successors and assigns.
For those reasons I conclude that the Deed of Guarantee does not operate as a deed poll. That being so, it is not enforceable by Bresimark merely because Bresimark is in fact a successor or assignee of the vendors.
I add that no submissions were put relating to s 34(1) of the Law of Property Act, as to which see the comments of Besanko J in John Nitschke Nominees Pty Ltd v Hahndorf Golf Club Inc [2004] SASC 128; (2004) 88 SASR 334.
Although I differ from the District Court Judge on that point, that does not affect the outcome of the case.
Conclusion
For those reasons I would dismiss the appeal.
DUGGAN J: I agree that the appeal should be dismissed for the reasons given by the Chief Justice.
ANDERSON J: I also agree that the appeal should be dismissed for the reasons given by the Chief Justice.