Barport Pty Ltd v Baum

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0083

BARPORT PTY LTD (ACN 169 464 313)	Applicant
v
GARRY MAXWELL BAUM	First Respondent
and
PATRICIA ANNE BAUM	Second Respondent

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JUDGES:	KYROU, McLEISH and NIALL JJA
WHERE HELD:	MELBOURNE
DATES OF HEARING:	7 May 2019, 21 May 2019
DATE OF JUDGMENT:	1 August 2019
MEDIUM NEUTRAL CITATION:	[2019] VSCA 167
JUDGMENT APPEALED FROM:	Baum v Barport Pty Ltd [2018] VSC 291 (Cameron J)

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REAL PROPERTY – Restrictive covenant – Covenant stated that registered proprietor ‘shall not construct any building or hangar that is not in accordance to the height limitations as per Civil Aviation Safety Authority Manual of Standards Part 139’ – Whether judge erred in defining term by dictionary definitions without regard to context – Whether applicant breached restrictive covenant – Civil Aviation Safety Authority Manual of Standards pt 139.

EQUITY – Estoppel – Whether respondents estopped from enforcing restrictive covenant – Estoppel by silence – Applicant assumed it could construct hangar with walls six metres tall without fear of adverse legal consequences – Respondents did not induce assumption – Respondents under no duty to correct assumption – Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 applied.

MISLEADING OR DECEPTIVE CONDUCT – Applicant alleged misleading or deceptive representations by respondents – Alleged representations not made out – No reasonable expectation of disclosure – Competition and Consumer Act 2010 (Cth) sch 2 ss 4, 18.

PRACTICE AND PROCEDURE – Relief – Whether order affected wrong part of hangar – Whether order went too far to remedy breach of restrictive covenant – Appeal allowed in part to amend order for purposes of clarity.

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APPEARANCES:	Counsel	Solicitors
For the Applicant:	Mr I G Waller QC with Mr J S Mereine	HWL Ebsworth Lawyers
For the Respondents:	Mr H N G Austin QC with Ms J A Findlay	Whyte Just & Moore Solicitors

KYROU JA
MCLEISH JA

NIALL JA:

Introduction and summary

For a number of years before the events that gave rise to this proceeding, the respondents[1] operated an airport on rural land, which they owned, near Lethbridge, Victoria. This proceeding concerns the construction of an aircraft hangar on land created by a subdivision of the respondents’ land and acquired by the applicant. The applicant’s land is adjacent to one of the runways at the airport.
[1]The respondents are husband and wife, live at Lethbridge Airport and are the trustees of the G and P Baum Superannuation Fund (‘Baum Super Fund’).

The source of controversy between the parties is the height of the hangar. The southern wall is six metres high and faces the runway. The judge found that its height breached a covenant on title in favour of the respondents’ land and ordered that the southern wall of the hangar be lowered.[2] The judge rejected a defence based on estoppel and a counterclaim for misleading or deceptive conduct.
[2]Baum v Barport Pty Ltd [2018] VSC 291 (‘Reasons’).

The first issue in this application for leave to appeal is the construction of the covenant which incorporates, by reference, height limitations contained in a Manual of Standards (‘MOS’) published by the Civil Aviation Safety Authority (‘CASA’). The second and third issues, which arise if the first is decided adversely to the applicant, are whether the applicant should be relieved from the operation of the covenant because the respondents should be estopped from enforcing the covenant or the respondents engaged in misleading or deceptive conduct. The final issue concerns the form of relief ordered by the judge and whether it went too far.

We would grant leave to appeal and allow the appeal on ground 2 for the purpose of amending the order made by the judge for the purposes of clarity, but otherwise dismiss the appeal. Our reasons follow.

The facts

In 2013 and 2014, the respondents commenced a development to increase the capacity of the airport. Part of that process entailed the subdivision of the land into what became 19 lots. The largest lot, Lot 1 (now Lot 1A),[3] comprised the airfield, including two runways. Lots 2 to 19 were smaller, regular shaped lots, located in two parallel lines adjacent to one of the runways. It was intended that they would be sold and that the new owners would build hangars to support the airport’s operations.
[3]Ibid [5]. The certificate of title for Lot 1 was cancelled on 9 March 2017 and, on that same day, the certificate of title for Lot 1A was created. Lot 1A comprises Lot 1 and an additional small area of land. The restrictive covenants now benefit Lot 1A. For simplicity, the land will be referred to as Lot 1, reflecting the text of the restrictive covenants as originally registered. Nothing turns on the difference.

On 5 April 2014, a number of the lots, including Lot 2, were auctioned by Ray White Highton, on behalf of the respondents, and Lot 2 was passed in. Lot 2 was marketed as the best lot because it was closest to the runway, had access to the apron and was a corner block. As a consequence, the lot had the highest asking price.

The vendors’ statement, provided pursuant to s 32 of the Sale of Land Act 1962, included an unregistered plan of subdivision which contained three covenants, the most important of which for present purposes was the second covenant:

The registered proprietor/s for the time being of lots 2–18 on this plan shall not construct any building that is not in accordance to the height limitations as per CASA Manual of Standards Part 139 — Aerodromes.

A draft contract of sale contained special condition 23, which was in the following terms:

COVENANT
The purchaser will include in the Transfer of Land a covenant (‘the covenant’) as follows:
‘The Transferees with the intention that the benefit of this covenant will be annexed to and run at law and in equity with the land comprised in Lots [insert lot No.s] and Lots [insert lot No.s] inclusive on Plan of Subdivision PS725105P other than the land hereby transferred and that the burden of this covenant will be annexed to and run at law and in equity with the land hereby transferred and every part or parts thereof, do hereby for themselves their successor and transferees COVENANT with the transferor its successors and assigns the registered proprietor or proprietors for the time being of all the land comprised in Lots [insert lot No.s] and Lots [insert lot No.s] inclusive on Plan of Subdivision PS725105P or any part or parts thereof other than the land hereby transferred that without the express written consent of the transferor first had and obtained:
a) [insert details of covenant]
And this covenant shall appear on the Certificate of Title to issue for the said lot and run with the land.[4]

[4]Emphasis in original.

The lot was subsequently sold to Ferryman Properties Pty Ltd (‘Ferryman’). Mr Warren Barry (‘Mr Barry’) and Mr Kelvin Barry, the directors of Ferryman, executed the contract of sale (‘Contract’). On 13 May 2014, the applicant was nominated as the purchaser of Lot 2.

The Contract identified the land sold as Lot 2 on an unregistered plan of subdivision, which was attached to the Contract. The Contract was subject to registration of the plan,[5] and permitted the vendor to make certain changes to the final form of the plan.[6] The parties acknowledged that the land formed part of a staged development of the airport.[7] The parties also agreed to enter into a separate licence agreement, providing the purchaser with access to adjacent land containing runways, taxiways and other improvements.[8]
[5]Special condition 13.
[6]Special condition 9.
[7]Special condition 10.
[8]Special condition 11.

The Contract did not include cl 23 of the draft.

Mr Barry gave evidence that he told both the real estate agent and the vendors’ solicitor that he intended to build a hangar to the boundary at a height of six metres.

On 31 May 2014, a meeting of lot holders was held at which Mr Barry and Mr Baum were present. Also present were a number of providers and builders of sheds and hangars who were available to meet with lot holders. At that meeting, Mr Baum told the lot holders that he intended to move the lots ‘to the east somewhat’ to accommodate a wider taxiway and service road.

At some point that evening, Mr Barry introduced himself to Mr Baum and said that he wanted to erect a large hangar that would stretch across the width of the boundary and would be six metres high. Mr Baum replied that there may be a height limit for that lot and that he would send Mr Barry some information.

Mr Baum gave inconsistent evidence about his knowledge as to whether, given the fall of the land, it would be possible to construct a six metre tall hangar conformably with the MOS. In evidence in chief, he said ‘I knew the maximum height you could actually build to is six metres if everything is level and I knew it wasn’t level’. In cross-examination, he appeared to retreat from that position when he said ‘I did not know you could build to six metres or that you couldn’t. I didn’t — at that stage, I didn’t even know the height you could build to’. A little later he said ‘I did not know what height you could build a hangar to on that lot, level or not level or anything’.

A short time later, in his cross-examination, he appeared to revert to his original evidence and said ‘I thought, “No, you can’t build to six metres high, because I know it’s higher than the actual runway”’.

Whatever his state of knowledge or belief, the judge did not make findings about this matter. Certainly, on 31 May 2014, Mr Baum was aware that Mr Barry intended to construct a six metre hangar, but he expressed himself in equivocal terms and advised Mr Barry that he would send further information to him.

The following Monday, 2 June 2014, Mr Baum sent an email to Mr Barry which, given its prominence in the proceeding, it is necessary to set out in full:

Warren
Maximum heights are devined by the CASA [Manual] of Standards 139 Chapter 13 (attached)
Table 13.1–1: Standards for physical dimensions and obstacle limitation surfaces
Transitional surface Slope (to 45 m in height) 20%
This Standard limits hangar heights to a maximum rise 20% or put more simply a rise of 1 metre for every five metres distance from the runway strip edge
The first lots (no 2 and no 18) are 30 metres from the edge of the runway strip
This allows the closest wall to the runway of lot No 2 to be some 5.5 to 6 metre [high]. The actual height will need to take [into] account the final level of your lot once it has been levelled. The 5.5 m assumes the lot would be 0.5 metre higher than the runway edge
The centre (ridge) of the Hangar can be higher because it is further away from [t]he runway and [similarly] the wall furtherest from the runway could be higher still
I confirm the 3m width of land between your Hangar door and [t]he sealed [hardstand] will be sealed
Garry Baum[9]

[9]Emphasis in original.

The email did not attach the MOS. A further email, in materially the same terms, but incorporating a URL linked to the entry for the MOS in the Federal Register of Legislation, was sent the following day.

Mr Barry acknowledged receipt of the 2 June email. In his evidence in chief, he said that, to his understanding, the email meant that there was a height limitation and that he could build up to six metres. Referring to the email, he said ‘so he’s telling me, I can build up to six metres. That’s enough. That’s all I need.’ A little later in his evidence, he said that he understood that whatever had to happen to accommodate a building of up to six metres high would occur. He said the email meant that he could build up to six metres, and that if that was not possible, Mr Baum would tell him.

Mr Barry maintained that position in cross-examination, saying that he understood from the email that the lot would be levelled and could accommodate a building up to six metres high, but no higher. As will appear, this understanding on the part of Mr Barry never wavered.

According to the evidence, the next direct interaction between Mr Barry and Mr Baum occurred some 10 months later, on 19 April 2015. Before coming to the details of that encounter, it is necessary to refer to some matters of chronology.

(a)On 14 September 2014, another lot holder, Michael Hooker, who was also intending to construct a hangar, sent an email to Mr Barry, Mr Baum and others, setting out the specifications for a number of hangars to be built on various of the lots, with a view to marshalling those who intended to build hangars in the hope of getting favourable group pricing. The detail is unimportant, however the email referred to a six metre hangar being proposed for Lot 2. The judge found that Mr Baum did not read the email.[10]
(b)From about October 2014, Mr Baum commenced levelling each of the lots, including Lot 2. In May 2014, he told the lot holders that he would undertake earthworks at the site and level the land. He undertook the work on Lot 2 in three stages: first, he removed the top soil, then he cut and filled the lot to make it level and, finally, he made adjustments before the concrete slab was poured. As a result of that process, he reduced the level of the lot by about 300 mm, which made it close to level with the bitumen apron which had already been constructed. At that time, he estimated that the lot would need to be reduced by around 600 to 700 mm in order to make it level with the runway. As things transpired, this appears to have been an underestimate.
(c)On 3 November 2014, John Eastwood, another lot holder, sent an email to Mr Barry, Mr Baum and others regarding hangar construction, attaching a spreadsheet of the requirements for each lot, including a six metre height in respect of the hangar proposed for Lot 2. Again, the judge found that Mr Baum did not read the email.[11]
(d)On 23 February 2014, the respondents’ solicitors wrote to the applicant’s solicitors, stating that the respondents wanted construction of the hangar on Lot 2 to be completed prior to 1 February 2016.

(e) On 9 April 2015, the plan of subdivision was registered.

[10]Reasons [104].

[11]Ibid.

In the registered form of the plan of subdivision, the covenants differed, in some respects, from those provided in the vendors’ statement. As registered, and noted on the title to Lot 2, the covenants provided as follows:

Land to benefit:                  Lot 1 on this plan
Land to be burdened:  Lots 2–19 (both inclusive) on this plan
Description of restriction:
1)        The registered proprietor/s for the time being of lots 2–19 (both inclusive) on this plan shall not construct any building using external materials other than:
neutral COLORBOND walls and roof cladding or natural concrete.
2)        The registered proprietor/s for the time being of lots 2–19 (both inclusive) on this plan shall not construct a fence using material other than Neutral COLORBOND.
3)        The registered proprietor/s for the time being of lots 2–19 (both inclusive) on this plan shall not construct any building or hang[a]r that is not in accordance to the height limitations as per CASA Manual of Standards Part 139 — Aerodromes.
4)        The registered proprietor/s for the time being of lots 2–19 (both inclusive) on this plan shall not construct any building, hang[a]r or fence without the construction of the building, hang[a]r or fence or the construction of a combination of the building, hang[a]r or fence being the full width of the street frontage of the lot.

It is convenient to highlight here the differences from the earlier version of the covenants that had appeared in the vendors’ statement: the registered covenants only benefitted Lot 1 (and no longer included the other lot holders); the number of lots increased by one, to 19 lots; a specific reference to ‘hangar’ was added to what became the third covenant; and the obligation to build to the width of the lot was expressed in a different form, but to the same general effect.

Mr Barry and Mr Baum met on 19 April 2015. The conversation took place at Lot 2. By that point, Mr Barry was exploring, with a hangar manufacturer, the use of a cantilever track door in order to give the widest possible opening to the hangar, so as to maximise the size of aircraft that it could accommodate. Mr Barry proposed a southern door mounted on a cantilevered door track, extending beyond the outside of the building.

In circumstances where the building was to be constructed to the boundary of the lot, the use of such a device attached to the outside wall of the hangar would necessarily involve the track encroaching into an area beyond the lot, towards the runway. Mr Barry said in his evidence that he explained to Mr Baum at that meeting the concept of extending the door track beyond the lot boundary, and that Mr Baum indicated his concern about whether or not the 20 per cent gradient, required by the MOS, would be complied with. Mr Barry said he explained that the limit would still be able to be satisfied because the rail track would be positioned below the roof line to a height of about 4.8 or 4.9 metres. Mr Barry said that Mr Baum did not confirm whether or not that would be possible, and asked Mr Barry to put the details in writing.

Mr Baum denied that there was any discussion at that meeting about the height of the hangar proposed for Lot 2 and said that he was ‘very relaxed’ that Mr Barry knew that the hangar had to comply with ‘CASA’s standard of heights’. In cross-examination, he said that Mr Barry did not speak about the walls being six metres high and that Mr Barry ‘would have known that would have aggravated the hell out of me and he wouldn’t say that’. He also denied any mention of the cantilever track.

Following that meeting, on 21 April 2015, Mr Barry sent an email to Mr Baum, with the subject ‘hangar heights’ in the following terms:

Hi Garry,
Thanks for your time on Sunday.
As per our discussion then, I am looking at hangar designs with Safety Steel Structures. To optimise the opening width of the hangar, a small cantilever track may be necessary, which would extend beyond the boundary of my lot by 2.5 metres. It would be about 5 m above ground. The CASA Manual of Standards height restriction would be complied with, as the limiting value would be (30 m – 2.5m)/5, or 5.5m max.
I’m attaching a photo of another hangar with a cantilever track shown, to better illustrate the concept.
What are your views on this?
Regards,
Warren Barry

The same afternoon, Mr Baum replied by email, saying:

Hi Warren,
As per my message I left on your mobile this afternoon, I have been informed by the Solicitor that as I’m not in that Body Corporate I will have no say in whether you will be able to extend beyond your boundary with a cantilever track. It would have to go to a ‘Body Corporate’ meeting and there is no guarantee it would be accepted. I have someone that is looking at purchasing a ‘house block’ that builds hangars and the link is [URL] which might be worth getting a quote from.
Regards
Garry

Mr Baum said that, having read the email, he understood that Mr Barry had assessed the applicable levels and that the email gave him ‘a lot of satisfaction that [Mr Barry] was doing the right thing’.

On 23 April 2015, the applicant settled the Contract.

In October 2015, Mr Baum compacted Lot 2 and, on 30 October 2015, concrete footings were poured for the hangar on Lot 2.

On 1 December 2015, Mr Baum assisted Jamie Carson, an employee of the builder contracted to build the hangar, in unloading steel for the construction of the hangar on Lot 2. He was told by Mr Carson that the steel beams were six metres long and he understood that these were the vertical columns or posts to be used in the construction of the hangar. He said that, after he was told this, he was ‘absolutely horrified’. He said that he appreciated the height the following day, after the wall was up, and that once he had seen the concrete wall six metres high he got to the ‘panicking stage’. Notwithstanding that reaction, he did not raise the matter with Mr Barry.

We note that the judge found that before 1 December 2015, Mr Baum was not aware that the hangar the applicant intended to construct on Lot 2 would have had six metre high walls, and that it was reasonable for him to assume that it would not.[12] This finding was attacked in the application in this Court, and it will be necessary to return to it in some detail.
[12]Ibid [153]–[156].

On 5 December 2015, during a Christmas party, Mr Barry and Mr Baum met outside Lot 2. It was agreed by the parties that the conversation took place and that they discussed a proposed installation of a water meter outside the southern doors to the hangar on Lot 2. During this conversation, Mr Baum raised his objection to the hangar having a southern door and indicated that the water meter would be placed on the southern boundary. Mr Barry asked that the meter be placed towards the boundary of Lot 2 and Lot 18 so as not to impede access to the southern doorway. Mr Baum did not raise the height of the walls. At this point, the frame of the hangar had been completed.

We note that, on the appeal, the applicant identified four changes in the evidence of Mr Baum relating to this encounter. Initially Mr Baum denied speaking to Mr Barry about the height of the wall or the water meter on the day of the Christmas party. However, he subsequently conceded that the conversation had in fact occurred. Secondly, Mr Baum sought to locate the conversation in time by saying that he was absolutely positive the concrete floor of the hangar was in place. Later in his evidence, he accepted that, at the time of the conversation, the slab had not been poured. Thirdly, at one point in his evidence, he accepted the conversation took place outside Lot 2 and, at another point, denied the conversation took place at that location. Finally, having given evidence that he was horrified when he was told by Mr Carson that the walls would be six metres high, he later said that he did not raise that topic with Mr Barry on 5 December because, he said, he ‘wasn’t 100 per cent sure you couldn’t build it six metres high’. He went on to say, by way of explanation, that it:

would be for a building surveyor to work out, not for me to work out. Mr Barry had bought the hangar, had the block of land with my conditions, I expected him to build to what I’d told in the beginning and up until that steel turned up I thought that’s what he was doing.

The judge did not address these differences in Mr Baum’s evidence. However, at [106] of her Honour’s reasons, she accepted Mr Baum’s evidence that he was horrified to realise that the height of the walls would be six metres, describing it, and his failure to raise it with Mr Barry, as a ‘frank admission’.

On 21 December 2015, the concrete slab for the hangar was poured.

On 4 January 2016, Mr Baum sent an email to Mr Barry asking whether a building surveyor had ‘signed off on CASA rules regarding the building on Lot 2’. On or around that day, the two men spoke by telephone and Mr Baum told Mr Barry that the hangar was too high and suggested he speak with a surveyor, Mr Fitzgerald.

At around this time, Mr Baum told Mr Carson to slow the construction of the hangar, however, on 7 January 2016, Mr Barry sent a message to Mr Carson instructing him to keep building the hangar. In his evidence, Mr Barry explained that all that remained to be done at that point was to ‘put some tin on the roof and finish the door’. He said that the structure was complete and it would have served no purpose to cease construction because it would not be safe to leave it in an unfinished state. The construction was finally completed on 8 February 2016.

The pleadings

On 23 February 2016, the respondents (as plaintiffs) commenced a proceeding seeking to enforce the height covenant. At trial, by their amended statement of claim, the respondents alleged that the construction of the hangar was in breach of the third restrictive covenant (‘Covenant’) and sought an order that the applicant demolish and remove the hangar or, alternatively, an order requiring the making of necessary modifications to ensure compliance with the Covenant.

The applicant sought to meet the proceeding in three ways. The first two, as articulated in its defence, asserted that, on its proper construction, the Covenant did not operate to prohibit the building of a hangar on Lot 2 above a certain height or, secondly, if it did, the respondents were estopped from seeking to enforce the Covenant after the applicant had completed construction. The third strand to the applicant’s case, brought by counterclaim, alleged misleading or deceptive conduct on the part of the respondents.

The judge held that the MOS imposed a height limitation and rejected the applicant’s case. We shall refer in more detail to the judge’s reasons when dealing with each proposed ground of appeal.

Grounds of appeal

The proposed grounds of appeal are discursively expressed. Distilled, the applicant sought leave to appeal on the following four grounds:

(1)The judge erred in finding that the Covenant imposed a height limitation on the construction of the hangar and the judge erroneously took into account extrinsic material in construing the Covenant.
(2)The judge erred in ordering the reduction of the height of the hangar, as the order affected the wrong part of the hangar and went beyond what was necessary to remedy the breach.
(3)The judge erred in finding that the respondents were not estopped from enforcing the Covenant against the applicant, by considering the estoppel defence in terms of isolated representations rather than assumptions or expectations having regard to all of the conduct, surrounding circumstances and context.
(4)The judge erred in dismissing the applicant’s counterclaim for misleading or deceptive conduct, by misconstruing the representations and failing to take into account all of the circumstances.

We will first discuss ground 1, followed by grounds 3, 4 and 2.

Ground 1 — Restrictive covenant

The full set of restrictive covenants is set out at [23] above. The critical covenant for the purposes of these proceedings provides:

3) The registered proprietor/s for the time being of lots 2–19 (both inclusive) on this plan shall not construct any building or hang[a]r that is not in accordance to the height limitations as per CASA Manual of Standards Part 139 — Aerodromes.

The parties accepted that the Covenant incorporates at least part of the MOS by reference. It is therefore necessary to refer to the contents of the MOS in some detail.

The MOS

The MOS is an instrument promulgated by CASA under the Civil Aviation Regulations 1988 (Cth). The MOS Part 139 — Aerodromes sets standards for certified aerodromes, registered aerodromes and other aircraft landing areas where aircraft arrive, depart or move that are not certified or registered (‘ALAs’). However, s 1.1.1.7 of the MOS provides that, subject to a presently irrelevant exception, the MOS does not ‘affect ALAs’.

The parties agreed that Lethbridge Airport is not a registered or certified aerodrome, but is an ALA. We note that it is the above exclusion in s 1.1.1.7 that underpins the applicant’s construction ground.

The MOS prescribes standards for registered and certified aerodromes and provides for a process of registration. Those standards deal with various matters, including physical characteristics,[13] obstacle restriction and limitation,[14] visual aids provided by aerodrome markings, markers, signals and signs[15] and by aerodrome lighting,[16] and operating standards for certified aerodromes.[17]
[13]MOS ch 6.
[14]Ibid ch 7.
[15]Ibid ch 8.
[16]Ibid ch 9.
[17]Ibid ch 10.

Chapters 3 and 4 provide for certification and registration of aerodromes and essentially require that the aerodrome’s physical characteristics and facilities comply with relevant standards or are adequate for aeroplane safety.

Chapter 7 prescribes standards that control the airspace around an aerodrome. In part, these standards define, and regulate, obstacles that may interfere with the safe operation of the aerodrome. Unsurprisingly, whether an object (including a building) is considered an obstacle, and must meet the applicable standard, depends on its physical relationship with various operational parts of the aerodrome.

For the purpose of defining that relationship and determining when an object is an obstacle, the MOS adopts two concepts: ‘obstacle restriction area’ and ‘obstacle limitation surface’. That appears in the two-limbed definition of obstacle in s 7.1.1.2 which provides:

An obstacle is defined as:
(a)any object that stands on, or stands above, the specified surface of an obstacle restriction area which comprises the runway strips, runway end safety areas, clearways and taxiway strips; and
(b)any object that penetrates the obstacle limitation surfaces (OLS), a series of surfaces that set the height limits of objects, around an aerodrome.

The first limb is applied in prohibitory terms. Objects, except for approved visual and navigational aids, must not be located within the obstacle restriction area of the aerodrome without the specific approval of CASA.[18]
[18]Ibid s 7.1.2.1.

The second limb of the definition of ‘obstacle’ operates by reference to obstacle limitation surfaces (‘OLS’).

An OLS is defined in s 1.2.1 to mean:

A series of planes associated with each runway at an aerodrome that defines the desirable limits to which objects may project into the air space around the aerodrome so that aircraft operations at the aerodrome may be conducted safely.

OLS are further explained in s 7.3. Section 7.3.1.1 says that the OLS are conceptual (imaginary) surfaces associated with a runway, which identify the lower limits of the aerodrome airspace above which objects become obstacles to aircraft operations, and must be reported to CASA. A note to that section says:

The term OLS is used to refer to each of the imaginary surfaces which together define the lower boundary of aerodrome airspace, as well as to refer to the complex imaginary surface formed by combining all the individual surfaces.

Section 7.1.3.1 provides that an aerodrome operator must establish the OLS applicable to the aerodrome. The establishment of an OLS is required for various defined surfaces within the aerodrome.[19]
[19]Ibid s 7.1.3.2.

Section 7.1.6.1 provides that if a proposed object or structure is determined to be an obstacle, details of the proposal must be referred to CASA to determine whether it will be a hazard to aircraft operations. The aerodrome operator must monitor the OLS applicable to the aerodrome and report to CASA any infringement or potential infringement of the OLS.[20] CASA may direct that the obstacle be marked and/or lit, and may impose operational restrictions on the aerodrome as a result of an obstacle.[21]
[20]Ibid s 7.1.4.1.
[21]Ibid s 7.1.6.3.

In certain circumstances, an obstacle that infringes the OLS may be permitted in the aerodrome but may be subject to ameliorating conditions, such as lighting[22] and marking,[23] so as to mitigate any safety risk.
[22]Ibid s 9.4.
[23]Ibid s 8.10.

It should be noted that, at trial, the parties adduced expert evidence. Mr Jordan (the expert retained by the respondents) and Mr Thompson (the expert retained by the applicant) each concluded that the hangar did not comply with the MOS, if those standards were applicable, on the basis that it infringed the OLS that applied to the airport. In their joint report, the experts agreed that the airport is an ALA that does not comply with sub-pt 139.D of the Civil Aviation Safety Regulations 1998 (Cth)[24] and that the MOS does not currently apply to the airport. As the MOS does not currently apply, the experts could not conclude what effect the Covenant would have on the ALA and stated that any CASA determination in relation to the hangar could not be accurately forecast.
[24]The MOS only applies to ALAs that conduct operations under this sub–part.

The judge’s findings on construction

The judge approached the meaning of ‘height limitations’ in the Covenant by addressing three questions:

First, whether the words ‘height limitations’ can be understood as general knowledge without reference to extrinsic evidence; secondly, if yes, what meaning would a reasonable person attribute to these words; and, thirdly, given the meaning the reasonable person attributes to these words, what are the ‘height limitations’ in relation to Lot 2 under the MOS.[25]

[25]Reasons [67].

In answer to the first two questions posed, the judge found that the term ‘height limitations’ can be understood without reference to extrinsic evidence and bore its ordinary and everyday meaning, as a height restriction which cannot be breached, or the maximum allowable height.[26]
[26]Ibid [68].

As to the third question, the judge found that the Covenant imposed a height limitation within the ordinary meaning; the experts agreed that, if the MOS applied, the hangar would infringe the height limitations; and the evidence supported the conclusion that the parties expected that height limitations in the MOS would apply.[27]
[27]Ibid [81].

Parties’ submissions

The applicant first submitted that the MOS only applies to a registered or certified aerodrome and not an ALA. Accordingly, it has no application to, and imposes no limit on, Lethbridge Airport. Secondly, the applicant submitted that the MOS does not, in any event, impose a height limit in the sense of a height level that cannot be exceeded, and allows for objects that exceed the limitation to be subject to lighting or other navigational aids. Thirdly, the applicant submitted that, to the extent that any limit is imposed, it only arises where the aerodrome operator has established an OLS in accordance with the MOS, and that had not occurred at the airport.

The respondents did not seek to uphold the approach adopted by the judge. Under cover of a Notice of Contention, they said that the judge erred in construing the words ‘height limitations’ in the Covenant separately and according to their ordinary and every day meaning as ‘maximum allowable height’, rather than in the context of the words of the Covenant.

The respondents submitted that the MOS defines a height limit by reference to whether or not the object penetrates the OLS. The OLS sets the height limit of objects around an aerodrome and where an object exceeds, or in the language of the MOS penetrates, that height limit, it is subject to an obstacle limitation regime.

Consideration of ground 1

It is not necessary to dwell on the constructional principles that apply to construing a restrictive covenant on title. 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[28] and not in the abstract, but by reference to the location of the physical characteristics of the properties which are affected by it.[29] 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.
[28]Prowse v Johnstone [2012] VSC 4 [52].
[29]Brugge v Hare [2011] NSWSC 1364 [36]; Westfield Management Ltd v Perpetual Trustee Company Ltd (2007) 233 CLR 528, 540 [42]; Clare v Bedelis [2016] VSC 381 [31].

Commencing with the text, the first aspect of note is that the Covenant burdens Lots 2 to 19 (inclusive) and is in favour of Lot 1. At the time of subdivision, Lot 1 was being used as an airport and its physical characteristics included the construction of runways and other airport facilities.

Secondly, each of the four restrictions relate to the construction of buildings on the burdened lots. The first and second restrictions relate to the permitted materials for construction and the fourth restriction requires that the construction be the full width of the street frontage of the lot.

The third restriction, being the Covenant, prohibits the registered proprietor from constructing any ‘building or hangar that is not in accordance to the height limitations as per CASA Manual of Standards’. The Covenant deals with a single activity, rather than a continuing state of affairs. The reference to any hangar and the incorporation of standards that apply to aerodromes are obvious textual links to the operation of the airport on Lot 1.

The text of the Covenant is framed as a source of obligation. There is nothing conditional in the language of the Covenant to indicate that its operation would be dependent upon a subsisting and enforceable obligation under the MOS. Importantly, the obligation is imposed on lot owners. This may be contrasted with the MOS, which imposes obligations on the aerodrome operator. Its language is to impose rather than duplicate an existing obligation.

It is also relevant to have regard to purpose. The purpose of the Covenant is to be determined, at least in part, by its effect and what it is apt to achieve.[30] Height restrictions imposed by a covenant are not unusual. Most obviously, they will be imposed to protect the amenity of the benefited land by securing a view or providing a sense of space or light.
[30]Suhr v Michelmore [2013] VSC 284 [26].

Before the judge, the respondents submitted that the Covenant was designed to achieve three purposes. The first was to set safety standards for the airport, the second was to keep up to date with current safety standards, as determined by CASA from time to time, and the third was to ensure that the airport met the applicable standards of a registered aerodrome so as to enable it to become a registered airport. The judge appears to have rejected each of those purposes, although without identifying an alternative.[31] Before this Court, the respondents relied on the first purpose only.
[31]Reasons [78]-[81].

In our view, the purpose of the height limit is to prevent the construction of buildings or hangars which, by reason of their height, would interfere with the safe and orderly operation of the airport. That accords with the purpose of the four covenants as a whole, namely, to impose restrictions on the construction of buildings so as to ensure consistency in materials and that buildings on the subdivided lots support, or at least not be in conflict with, the continuing and safe operation of the airport.

Each of the subdivided lots is close to the runway, however, by subdivision and sale, it was contemplated that each would be held in freehold. Without a restrictive covenant, the owner of Lot 1 would be unable to ensure that further uses of the land would be compatible with the operation of the airport and would be dependent on planning controls, the content of which may vary over time and be outside the control of the airport operator. Further, any licence or contractual limitation on use would not generally run with the land.

To delay the operation of the Covenant until registration or certification of the airport would deprive the Covenant of practical utility. It would mean that lot owners would have an unfettered ability to erect buildings that might immediately affect the safe operation of the aerodrome and, in the future, impact the ability of the aerodrome operator to obtain registration or certification. That result would not be conducive to the purpose we have identified and is inconsistent with the language of present obligation.

Faced with that construction, the applicant submitted that the Covenant should be read as prohibiting the construction or retention of the building so that, once the MOS applies of its own force, the aerodrome operator could enforce the Covenant and require modification of any building that had been erected prior to certification or registration.

On this construction, if and when the aerodrome is registered or certified, the aerodrome operator could compel lot owners to comply with the obligations relating to height which CASA might impose on an aerodrome operator. This was said to have the advantage of bringing the operation of the Covenant in line with the practical operation of the MOS.

The first difficulty with that construction is that it requires the reading of words into the Covenant in order to overcome the significant flaw that the applicant’s preferred construction introduces. Secondly, the fact that a lot owner would be free, initially, to build to any height, has the obvious consequence that the airport might become unsafe for aviation, and registration might be refused and, accordingly, the Covenant would never come into force.

It would also have the draconian result that a building that was not in breach of the Covenant at the time of construction, would breach the Covenant once the airport became registered, and the owner would be liable for enforcement action for breach of the Covenant. The activity regulated by the Covenant is the construction of buildings or hangars. The reasonable reader would take from the words of the Covenant that compliance is to be assessed at the time the relevant activity is undertaken, rather than at some later point depending on whether or not another event, outside the control of the land owner (such as registration or certification), has occurred.

The applicant also submitted that the immediate application of the height limitation would render the Covenant more onerous than the MOS, which does not expressly prohibit obstacles that penetrate the MOS. In our view, that consequence merely reflects the prohibitory language of the Covenant and the fact that, unlike the MOS, the obligation is imposed on the lot owner. The fact that the consequences of exceeding the limitation may be stricter under the Covenant than the MOS does not render the construction absurd or unworkable and flows naturally from the language used.

In our view, the applicant’s construction, to the extent that it depends on registration or certification in order to become operative, cannot be accepted. It is not faithful to the language or purpose of the Covenant, and requires it to be impermissibly re-written.

Turning then to the terms of the MOS, we reject the submission that the MOS does not relevantly impose a height limitation.

Both as a consequence of its text and as a matter of practical effect, ch 7 prescribes height limitations for objects which, if exceeded, mean that the object is an obstacle liable to regulation.

The MOS refers to the OLS as setting the height limits of objects. It does so in the definition of obstacle set out above.[32] The applicant relied on the definition of OLS, which refers to ‘desirable limits’, and sought, unpersuasively, to draw a distinction between a height limit and a height limitation. It submitted that a limit was something that can be exceeded, although with consequences, but a limitation cannot be transgressed. We see no substantive distinction between the two words.
[32]At [53].

In substance, the OLS set the height limits of objects, in that the OLS refer to the lower boundary of aerodrome airspace. An object that exceeds that limit is an obstacle. The fact that an object may penetrate the OLS and still be permitted by CASA to remain in place does not mean that the OLS do not impose a height limitation, rather they simply prescribe different potential consequences for exceeding the limit. Once the height of an object penetrates the OLS, it becomes subject to a specific regulatory framework.

In our opinion, the respondents were correct in submitting that the judge had erroneously approached the construction of the Covenant by attempting to define the phrase ‘height limitation’ by reference to dictionary definitions and divorced from its context. The expression is clearly capable of bearing different meanings depending upon the context in which it is used. A height limitation is not necessarily confined to a maximum allowable height beyond which the thing is not permitted. That was the meaning given by the judge. However, it is also apt to describe a height limit as the point at which the building or hangar becomes liable to be regulated under the MOS.

In the context of the MOS, which was incorporated by reference, and given the purpose of the Covenant, the phrase ‘not in accordance to the height limitation as per’ the MOS meant the registered proprietor shall not construct any object that, by reason of its height, penetrated the OLS and became an obstacle.

Further, the last sentence of s 7.3.2.9(e) of the MOS, dealing with the inner transitional surface, draws a contrast with the transitional surface and says ‘the transitional surface should be used for building height control’.

The applicant contended that the reference to transitional surface was only relevant to an inner transitional surface and that was inapplicable to the current circumstances. However, read in its entirety, it is clear that the sentence to which we have referred reflects the operation of the MOS in relation to the transitional surface, and, in particular, the OLS.

It is correct, as the applicant submitted as its third point, that the height limitations in the MOS revolve around the OLS, which must be established by the aerodrome operator. In the present case, there is no evidence that the operator had established the OLS in accordance with the MOS.

In our view, nothing turns on this. The Covenant does not generally adopt the MOS as a source of obligation, it only adopts the height limitation. Further, the Covenant does not adopt the mechanisms that accompany the application of the MOS.

Restrictive covenants relating to height may be validly expressed in different ways. For example, they may be expressed by reference to some external datum point, or by reference to the number of storeys of the building. It is not objectionable for the height to be calculated by reference to a source that is incorporated by reference.[33] On occasion, the form of a covenant relating to height has been argued to be unenforceable as ambiguous or uncertain, however, no such case is mounted in the present proceeding.[34]
[33]Suhr v Michelmore [2013] VSC 284; Ferella v Otvosi (2005) 64 NSWLR 101.
[34]Ferella v Otvosi (2005) 64 NSWLR 101.

The applicant fastened on to the fact that Table 7.1-1 of the MOS applies to different approach runways depending on the applicable ‘code number’. The MOS provides that the code number corresponds to the highest value of the aeroplane reference field length for the runway.[35]
[35]MOS s 2.1.5.2.

The applicant argued that the information required to calculate the appropriate code is within the knowledge of the airport operator, but not the landowner, and that the OLS cannot be determined without knowing, relevantly, the aeroplane reference field length. Given that orthodox principles of construction applicable to restrictive covenants require an examination from the perspective of a reasonable person, it was argued that a construction that required information to be obtained from the airport operator should be rejected.

It is true that applying Table 7.1-1 requires some knowledge of the airport layout and the operation of the MOS. That does not mean, and it was not contended, that the Covenant is uncertain or ambiguous. The respondents accepted that the application of the Covenant may require a suitably qualified person to ascertain the OLS in the circumstances, however that did not render the construction improbable or onerous.

The Covenant applies to land which, at the time of the creation of the Covenant, was being used as an airport. We have already identified that the purpose of the Covenant is connected to the use of the land in that specialised way. In those circumstances, and given that it is permissible for a covenant to adopt a metric by reference, it is not surprising that the Covenant requires some degree of knowledge or skill in its application.

The height limitation imposed was readily able to be understood and applied, even though the aerodrome operator had not formally prepared an OLS in the manner required for registration. Both of the experts were capable of assessing the relevant operation of the height limit on the assumption that an OLS had been prepared. The paraphrase of the Covenant’s effect given by Mr Baum in his email of 2 June 2014 was substantially correct. It follows that the judge was correct to hold that the Covenant applied to Lot 2 and imposed a height limitation based on the OLS.

We reject ground 1.

Ground 3 —Estoppel

The judge rejected the applicant’s case on estoppel on the basis that the respondents had not, by their conduct or silence, induced the applicant to assume that it could build to six metres on Lot 2 without fear of adverse legal consequences.

Applicant’s submissions on estoppel

First, the applicant contended that the judge erred by treating each of the relevant matters on which the applicant relied in isolation, rather than having regard to all of the conduct, surrounding circumstances and context. Secondly, the applicant submitted that the judge erred in her approach to the circumstances in which silence will support an equitable estoppel. Specifically, it submitted that, once the respondents knew that the applicant intended to conduct its affairs on an assumption or expectation that it could build a hangar to six metres, they had an obligation to either warn the applicant or act so as to avoid any detriment which the applicant might suffer in reliance on such assumption or expectation. In that context, the applicant submitted that the judge failed to consider that the real effect of the emails sent on 2 and 3 June 2014 was to encourage, rather than deny, the correctness of the applicant’s assumption or expectation.

Finally, it was submitted that the judge failed to take into account five matters, which the applicant described as critical evidence. They were:

(a)the evidence of Mr Barry that he noticed that special condition 23, entitled ‘Covenant’, which was included in the draft contract of sale, had been removed from the final version and that the agent and the solicitors for the respondents had not said anything about a height limit, CASA rules or CASA standards;
(b)the conversation on 31 May 2014, in which Mr Barry told Mr Baum of his intention to build a six metre high hangar. Mr Baum conceded that, at this time, he knew that this would not be possible, yet he did not deny the correctness of the assumption;
(c)the emails of 2 and 3 June 2014, which were sent in circumstances where Mr Baum, an earthmover with 46 years’ experience, thought Lot 2 was about 600 or 700 mm above the runway and, based on his experience, always knew that the level could not be reduced by that amount;
(d)the conversation on 19 April 2015, in which Mr Barry spoke with Mr Baum about the hangar having six metre high walls and Mr Baum said nothing about the height of the hangar; and
(e)every aspect of the development of the airport was under Mr Baum’s control. He was in charge of the subdivision, the surveyors and engineers; in control of the final location of the lots; assumed responsibility for levelling Lot 2; compacted Lot 2; and knew the level of the runway and the level of Lot 2.

Estoppel principles

The pleaded estoppel appears to be both a promissory estoppel — by which equity binds a holder of a legal right who induces another to expect that the right will not be exercised against him or her — and a common law estoppel by representation that a certain state of affairs exists.[36] On either basis, estoppel precludes the enforcement of rights contrary to the representation that induced a change of position.
[36]Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, 420 (Brennan J), 398 (Mason CJ and Wilson J) (‘Waltons Stores’).

In Waltons Stores(Interstate) Ltd v Maher,[37] Brennan J, in a much cited passage, gave the following summary:

to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.[38]

[37](1988) 164 CLR 387.

[38]Ibid 428–9.

That general formulation of the relevant principles adopted by Brennan J in Waltons Stores may accommodate different factual situations, and reflects the broader equitable principle upon which it is based.[39] The foundational principle is that equity will not permit an unjust or unconscionable departure by a party from an assumption or expectation of fact or law, present or future, which that party has caused another party to adopt for the purpose of their legal relations.[40] Equity intervenes where it would be unconscionable for a party to depart from an assumption or expectation which it has created in another. The reference to ‘unconscionable’ in this context is a reflection of the elements of estoppel, rather than an additional or overarching element that must be satisfied.
[39]DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728, 740 [47] (Meagher JA).
[40]Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1, 68 [217] (Nettle J) (‘Crown Melbourne’).

The concern of equity is not to require the fulfilment of an unperformed or partially performed promise, but to address the detriment that a party would suffer in the event of the other party resiling from a position it had induced the first party to assume.[41] It is the detriment that flows from the change of position that informs the operation of the estoppel.
[41]Pipikosv Trayans [2018] HCA 39 [60] (Kiefel CJ, Bell, Gageler, Keane JJ).

As explained by Dixon J in Grundt v Great Boulder Pty Ltd,[42] the justice of estoppel is not established simply by demonstrating that the plaintiff has assumed a state of affairs which, if erroneous, would result in prejudice or detriment.[43] It is essential to show that the person against whom the equity arises has played a part in the adoption of the assumption, such that it would be unfair or unjust if he or she were permitted to resile from it.[44] The question of fairness or justice is not left at large, but rather, the law defines ‘with more or less completeness the kinds of participation in the making or acceptance of the assumption that will suffice to preclude the party if the other requirements for an estoppel are satisfied’.[45]
[42](1937) 59 CLR 641 (‘Grundt’).
[43]Ibid 675.
[44]Ibid.
[45]Ibid 675–6.

(a) Representations

In general terms, promissory estoppel and estoppel by representation involve a promise that the relevant party will not rely on or enforce a legal right, or a representation that a given state of fact exists.

It has long been recognised that for a representation to found an estoppel it must be clear.[46] Where the conduct consists of a spoken representation, the words used must be able to be understood in a particular sense by the person to whom the words are addressed. Those words provide the basis for the assumption or expectation upon which the person acts.[47] The representation must be such as to be able to create the assumption or expectation in question.[48]
[46]Crown Melbourne (2016) 260 CLR 1, 16 [35] (French CJ, Kiefel and Bell JJ), 46 [149] (Keane J), 65 [210] (Nettle J).
[47]Ibid 16 [35] (French CJ, Kiefel and Bell JJ).
[48]Ibid 17 [39] (French CJ, Kiefel and Bell JJ).

The requirement for certainty in the representation ensures that the representation can be reasonably understood in the particular sense required and does not operate to underwrite ‘unrealistic expectations or wishful thinking’.[49] Certainty is a reflection of the requirement that the person against whom the estoppel operates must have played such a part in creating the assumption or expectation that it would be unconscionable to depart from it.[50]
[49]Ibid 47 [153] (Keane J).
[50]Ibid 65 [211] (Nettle J).

It follows that, in order to assess whether a communication has sufficient clarity to carry the claimed representation, it will be necessary to have regard first and foremost to the words that are used, but also to matters of context, including the nature of the legal right that the assumption holds will not be enforced, in order to determine whether the representation was reasonably capable of inducing the relevant assumption.

(b) Assumption induced by silence

Silence has little or no role to play where the assumption has already been adopted because of the representation or conduct of the relevant party. Where that party, by representation, induces the mistake, it is not necessary to found the estoppel on subsequent silence. Rather, the estoppel will usually be based on the continuing uncorrected misrepresentation.

However, silence may give rise to an estoppel if, having regard to the nature of the relationship, the nature of the assumption, or the circumstances as a whole there is a duty to speak. In Thompson v Palmer,[51] Dixon J observed that an estoppel may be established where a person remains silent, knowing the other person labours under a mistake in circumstances where there is a duty to correct the misunderstanding or identify the true position.[52]
[51](1933) 49 CLR 507.
[52]Ibid 547.

A duty to speak has been found in a number of cases where a person having title or right to property perceives another person as innocently, and in ignorance, conducting itself with reference to the property in a manner that is inconsistent with the existing title or right.[53] In Waltons Stores, Brennan J, speaking of the circumstances in which a defendant induces a plaintiff to adopt an assumption or expectation, said:

For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant’s property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.[54]

[53]See, eg, Waltons Stores (1988) 164 CLR 387; Ramsden v Dyson (1866) LR 1 HL 129; Willmott v Barber (1880) 15 Ch D 96; Svenson v Payne (1945) 71 CLR 531; Ward v Kirkland [1967] Ch 194.

[54]Waltons Stores (1988) 168 CLR, 429.

Brennan J held that, once the defendant in Waltons Stores knew that the plaintiff was improving the land in the belief it held a lease, the failure to warn or to countermand that assumption was tantamount to a promise that the defendant would complete the lease.[55]
[55]Ibid.

In Waltons Stores, Mason CJ and Wilson J held that equity must intervene because the silence, in the circumstances, constituted a clear encouragement or inducement to the relying party to continue to act on the basis of the assumption which it had made.[56] In those circumstances, it was unconscionable to adopt a course of inaction which encouraged it in the course it had adopted.[57]
[56]Ibid 407.
[57]Ibid 407–8.

To similar effect, in Commonwealth v Verwayen,[58] Deane J observed that a defendant will have played a necessary part in the adoption of, or persistence in, the assumption if he or she knew that the other party laboured under the assumption and refrained from correcting him or her when it was his or her duty in conscience to do so.[59]
[58](1990) 170 CLR 394.
[59]Ibid 444.

The role played by silence, which is sometimes explained as carrying an implied representation, must be coherent with the principles that apply to express representations. The import of the silence must be clear and unequivocal and must be assessed in light of the broader context. It is relevant to observe that there may be many reasons why a person might remain silent. As Goff LJ said in The Leonidas D,[60] ‘it is difficult to imagine how silence and inaction can be anything but equivocal … silence and inaction are of their nature equivocal, for the simple reason that there can be more than one reason why the person concerned has been silent and inactive’.[61]
[60][1985] 2 All ER 796.
[61]Ibid 805–8.

The doctrine of estoppel does not provide a free standing obligation to warn another person that his or her intended conduct is likely to result in harm. The requirement that the person’s silence be unconscionable must not be devoid of content, or be satisfied simply on proof of knowledge that harm may follow. Such an approach would shift responsibility in circumstances where there is no contractual obligation to protect the interests of the other party and would undermine the certainty and value of the proprietary interests or rights held by the person against whom the estoppel is said to run.

Consideration of ground 3

It is necessary to return to the pleaded assumptions. The first assumption was that a hangar with a six metre high wall could be constructed on the southern boundary of Lot 2. The premise underpinning this assumption must be either that there was no relevant height limitation, or that a six metre high wall complied with the height limitation. Given the terms of the MOS, and as a matter of logic, this latter assumption could only be sound if the southern boundary was level with the edge of the runway. These assumptions relate to an existing state of affairs.

The second and third assumptions were that the respondents did not object to the construction of a hangar with a six metre high wall, and that, if such a wall breached the Covenant, the respondents would not enforce the Covenant against the applicant. Accordingly, those assumptions were that the respondents would not exercise the legal right embodied in the Covenant against the applicant.

The judge paraphrased the pleaded assumptions as an assumption that the applicant could construct a hangar with walls six metres tall on Lot 2 without fear of adverse legal consequences.[62] The judge did not make an express finding that the applicant had adopted the pleaded assumptions at the time it took the detrimental action. The detrimental action was: accepting the nomination to be the purchaser of Lot 2, settling the Contract and constructing the hangar.
[62]Reasons [84].

It is reasonable to accept that the applicant assumed that it was permitted to build at the southern boundary to a height of up to six metres. First, that was the effect of Mr Barry’s evidence. Secondly, that is what it did.

The evidence does not permit a finding that the applicant assumed that there was no height limitation on Lot 2. Mr Baum told Mr Barry on 31 May 2014 that there may be a height limit, his emails of 2 and 3 June 2014 expressly referred to the limit and its content, and the 3 June email contained a URL link to the entry for the MOS in the Federal Register of Legislation. Further, Mr Barry’s email of 21 April 2015, which was concerned with the proposed cantilevered door, referred to the ‘CASA Manual of Standards height restriction’ and explained that the proposed cantilever track would comply with it. Mr Barry accepted in his evidence that he knew that there was a height limit.

The judge did not make a finding as to whether the applicant’s assumption that it could build up to six metres was based on a belief on the part of Mr Barry that the land was level with the runway or because, regardless of the levels, Mr Baum had permitted construction of the hangar up to six metres in height, or a combination of both. It is not clear from the evidence, and the judge made no finding, whether the difference in levels between Lot 2 and the runway was readily discernible to anyone present on the site.

Having closely reviewed Mr Barry’s evidence, we are satisfied that Mr Barry assumed that a wall of six metres was permitted, and that Mr Baum would take such steps as were needed to allow that to occur. He said in evidence that he ‘assumed that the level of Lot 2 would end up at whatever had to happen to it, to accommodate a building of up to six metres high and that Mr Baum would do that’. He said that, by 23 April 2015, he assumed that Mr Baum had levelled the fall of the land, such that he could build a six metre high building and he assumed it was level to the level of the runway.

In cross-examination, he said that the land was going to be levelled or that he ‘assumed it would be dealt with as required’. He accepted in his cross-examination that he had not been told expressly by Mr Baum about the respective levels of the land, but that he understood that Lot 2 would be levelled and it could accommodate a building up to six metres high, but no higher.

The force of Mr Barry’s evidence reflected his understanding that he was permitted to build to six metres, but the mechanics of how that might be allowed to occur was a second order consideration that he left to Mr Baum. The evidence does not establish that Mr Barry formed his own view about the respective levels or how a six metre structure would comply with the Covenant. He did not secure his own surveyor to assess the levels, nor did he seek information from a surveyor retained by Mr Baum.

(a) Did Mr Baum induce the assumption?

The matters upon which the applicant relied as inducing the assumption can be grouped as follows:

(a)Mr Baum’s silence or failure to disclose in the auction and sale process that there was a height limitation or that the airport would be applying to be registered or certified;
(b)Mr Baum agreed or authorised building to a height of six metres (as per the conversation of 31 May 2104 and emails of 2 and 3 June 2014); and
(c)Mr Baum remained silent until 5 January 2016, despite knowing Mr Barry wanted to build to six metres[63] at the same time as encouraging lot holders to build hangars, and controlling the fall of the land through earthworks and levelling.

[63]Based on the conversations of 19 April 2015, 1 December 2015 and 5 December 2015; the emails sent to Mr Baum on 14 September 2014, 3 November 2014 and 21 April 2015; and observation of the construction on 1 December and 5 December 2015.

Notably, the judge said that the applicant made no claim of detrimental reliance in respect of any period after construction commenced in October 2015 and that, accordingly, no act or omission by the respondents after construction commenced formed part of the claim in estoppel.[64] We shall return to this observation, because it does not accurately reflect the pleading which alleged that the applicant relied on the assumption from, rather than in, October 2015.
[64]Reasons [87].

The matters before the meeting of 31 May 2014 can be dealt with briefly. The encouragement of lot holders to construct hangars, and to do so quickly, was neutral as to the dimensions of any hangar that might be constructed. Given the collocation of the lots with the runway, it would not have been surprising or unexpected for there to be height limits and restrictions on the choice of building design and size. Further, silence would not have enabled any assumption as to whether or not the covenantee would seek to enforce the Covenant. Indeed, the only reasonable assumption, based on the words of the Covenant, would be that it imposed a legal obligation and that compliance with it was required.

Similarly, nothing meaningful can be drawn from the deletion of special condition 23 from the draft contract of sale. The Covenant was not hidden and was discoverable with the exercise of due care. In any event, the applicant did not seek relief in relation to its entry into the Contract. By the time the Contract settled, and well before construction of the hangar started, the applicant was aware of the Covenant and how Mr Baum said it operated.

It follows that the conduct of the auction and the communications with the agent did not induce the assumption.

The conversation on 31 May 2014 and the emails that followed on 2 and 3 June 2014 are central to the applicant’s case. In order to assess their meaning, it is relevant to note that, on 31 May 2014, Mr Barry told Mr Baum of his intention to build a six metre high wall. This caused Mr Baum to express some reservation about potential height limits and to indicate that he would send Mr Barry some information, which he did, by email, a few days later.

The text of the email of 2 June 2014 is set out at [18] above and the text of the email of 3 June 2014 is summarised at [19] above.

The first five lines of the 2 June email made it tolerably clear that there was an applicable height limitation at the airport, that the limitation was to be ‘devined’ (or defined) by the ‘CASA Manual of Standards 139’ and that the formula for transitional surfaces was a rise of 20 per cent, or, as the email said, ‘put more simply a rise of 1 metre for every five metres distance from the runway strip edge’.

The next part of the email dealt directly with Lot 2 and, after referring to the distance from the edge of the runway (being 30 metres), went on to say:

This allows the closest wall to the runway of lot No 2 to be some 5.5 to 6 metre [high]. The actual height will need to take [into] account the final level of your lot once it has been levelled. The 5.5 m assumes the lot would be 0.5 metre higher than the runway edge.

In assessing what that paragraph was capable of conveying, it is relevant that Mr Baum had been told that Mr Barry intended to construct a hangar with a height of six metres. Mr Baum accepted that he referred to a height of six metres in the email because that was the height to which Mr Barry had wanted to build. However, at least for the purposes of understanding what the email reasonably conveyed to Mr Barry, it is not otherwise relevant to take into account what Mr Baum knew or suspected about the relative land levels, and the height that could be achieved consistently with the MOS, where those matters had not been communicated to Mr Barry.

In that context, the email cannot reasonably have induced any assumption that there was no height limit, or that any height limit would not be enforced.

The email was capable of conveying that a wall with a height within the range of 5.5 to six metres may be possible, and the actual height would depend on the level of Lot 2. Logically, the email conveyed that if Lot 2 was level with the runway then, on a simple application of the specified formula, a wall six metres high would be compliant. However, the email says that whether that would be so, needed to take account of the ‘final level of [Lot 2]’. In our view, the email did not represent what that final level would be, nor did it represent that a wall of somewhere between 5.5 and six metres would definitely be permitted.

The email clearly conveyed that the permitted height would depend on the final levels, once Lot 2 had been levelled. There was no suggestion in the email, nor in the surrounding circumstances, that the level of the runway, which had by that time been constructed, would be altered by Mr Baum. Further, the levelling of Lot 2, to which the email referred, related to the work that Mr Baum had agreed to undertake to level each lot. It was primarily concerned with rendering the lot itself level, rather than altering its relative height compared to other points at the airport. The email fairly conveyed that a measurement of levels would need to be done before the final permitted height could be ascertained.

The email contained no assurance or representation as to what the ultimate permissible height might be. Nor did it contain an implied representation that Mr Baum was accepting responsibility for ensuring compliance with the height restriction. In short, it did not confer permission to build the hangar to six metres. To the contrary, it conveyed that the likely maximum height was within a range and that the eventual maximum depended entirely on measuring the ultimate levels.

Our understanding of the email is not changed by taking into account that Mr Baum was encouraging lot owners to build (and to do so promptly) or that Mr Barry had told the agent or the vendors’ solicitor that he wanted to build to six metres, without demur.

It follows we agree with the judge that the email was too equivocal to carry an implicit representation that Lot 2 would be somewhere between zero and 0.5 metres higher than the runway after levelling.[65]
[65]Ibid [138]–[139]. This conclusion is also relevant to the misleading or deceptive conduct claim considered below.

It follows that the express representations made by Mr Baum were not such as to induce the assumption acted on by Mr Barry. As will appear, the evidence of Mr Barry establishes that he relied on the email of 2 June as the basis for his understanding that he could build to six metres and for the purposes of commencing construction in October 2015.

The applicant sought to combine the effect of the emails with Mr Baum’s silence between June 2014 and January 2016 when, it is said, Mr Baum knew that Mr Barry intended to build a six metre high wall; that this could not be done conformably with the MOS; and that the two datum points, being the level of Lot 2 and the runway, could not be made level. In this context, the applicant submitted that the emails encouraged rather than denied the correctness of its assumption.

That submission presents a factual issue as to what Mr Baum knew about the intention of the applicant and a legal issue as to whether, if he did know, he was obliged to warn the applicant that the assumption on which it was proceeding was false. It is convenient to first address the factual underpinning on which the submission depends.

(b) The knowledge of Mr Baum

The applicant submitted that Mr Baum had knowledge of three things: that the applicant intended to construct a hangar to a height of six metres; that this required Lot 2 and the edge of the runway to be level; and that the two datum points could never be made level.

Standing in the way of the applicant’s submission is the finding by the judge that Mr Baum did not become aware that the hangar the applicant intended to construct on Lot 2 would have six metre high walls until 1 December 2015.[66]
[66]Ibid [153], [157], [159].

It is necessary to provide some context to that finding. It is clear that, at least in April 2015, Mr Baum knew that Mr Barry’s preferred position was to build to six metres, and, in that sense, the applicant intended to build to six metres if it could. However, it was quite a different thing for Mr Baum to understand that the applicant would build to six metres without making its own inquiries and satisfying itself that it could be done conformably with the MOS. The judge accepted the evidence of Mr Baum that he thought that Mr Barry had done the necessary calculations and, in effect, had the matter in hand.

The applicant sought to have this Court overturn the above finding of fact. It relied on the following matters: the failure of the judge to address the inconsistencies in the evidence of Mr Baum, particularly in relation to the conversations between Mr Barry and Mr Baum on 31 May 2014 and 19 April 2015; Mr Baum’s denial that he received the two emails sent on 14 September 2014 and 3 November 2014, both of which mentioned that a hangar of six metres, should not have been accepted by the judge; and the length of time that judgment stood reserved.

Before addressing those matters, it is convenient to refer to the principles which this Court must apply in considering findings of fact made by a trial judge. A central tenet of those principles was explained by the High Court in the following passage in Robinson Helicopter Co Inc v McDermott:[67]

A court of appeal conducting an appeal by way of rehearing is bound to conduct a ‘real review’ of the evidence given at first instance and of the judge’s reasons for judgment to determine whether the judge has erred in fact or law. If the court of appeal concludes that the judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings. But a court of appeal should not interfere with a judge’s findings of fact unless they are demonstrated to be wrong by ‘incontrovertible facts or uncontested testimony’, or they are ‘glaringly improbable ‘ or ‘contrary to compelling inferences’.[68]

[67][2016] HCA 22 (‘Robinson Helicopter’).

[68]Ibid [43] (citations omitted).

This Court must take into account the limitations that exist in an appeal setting and the comparative advantages of the trial judge in the evaluation of the credibility of witnesses.

The applicant submitted that any advantage that might usually inhere in a trial judge is outweighed where there is a substantial delay in the delivery of judgment, and that delay calls for special care in the scrutiny of the judge’s findings of fact, particularly where those findings are based on the credibility of witnesses. There is force in that submission.

Delay between the trial and delivery of judgment is not itself a ground of appeal. In Braham Investments Pty Ltd v Wantrup,[69] this Court held that ‘delay in giving judgment weakens the usual advantage which a trial judge has over an appellate court in evaluating the credit of witnesses, and this must be taken into account on appeal’.[70] Further, delay may undermine or weaken the common assumption that a failure to refer to a matter in the reasons for judgment does not mean that it has been overlooked.[71]
[69][2018] VSCA 291.
[70]Ibid [225] (citations omitted).
[71]Ibid [226].

In the present case, judgment was reserved for 12 months. That is clearly longer than desirable. We have taken that delay into account in conducting our review.

Earlier in these reasons,[72] we identified the inconsistencies in the evidence given by Mr Baum with respect to the conversation of 31 May 2014. Ultimately, little would be achieved by seeking to resolve those inconsistencies, because it is clear from the email of 2 June 2014 that Mr Baum was aware, at that point, that Mr Barry was proposing to build a six metre tall hangar. Mr Baum accepted in his evidence that he had referred in his email to the range of 5.5 to six metres because he knew that Mr Barry wanted to build a hangar six metres high, and his email was responsive to the discussion of 31 May. However, we accept that those inconsistencies suggest the need for care in the scrutiny of Mr Baum’s evidence.
[72]At [15]–[16] above.

Notwithstanding what he was told on 31 May 2014, Mr Baum’s email of 2 June 2014 clearly identified the existence of a height limitation, how it was to be calculated and that the estimate in the email as to what was possible was provisional. Having sent this email, there was no reason for Mr Baum to think that Mr Barry would take the email as permission to build to six metres, or that Mr Barry would proceed without making any inquiries of his own.

The applicant next relied on the emails of 14 September and 3 November 2014. The first of those was sent by Michael Hooker to a number of recipients, including Mr Baum. This contained the intended specifications of hangars to be constructed on a number of lots, including Lots 2, 3, 4, 6, 13, 14 and 16. In the case of Lot 2, the wall height was specified as six metres. The email instructed the recipients that, in the event they were seeking pricing from builders for their hangar, they should ask for group pricing on the basis of the attached specifications.

The email of 3 November 2014 was from John Eastwood to a number of recipients, including Mr Baum. The subject matter identified in the email was ‘Lethbridge Hangars’ and the email attached a spreadsheet titled ‘HANGAR Table’. The spreadsheet had 17 columns, one for each lot number, and set out in tabular form the various specifications for each proposed hangar. For the entry ‘Bay Size M’, eight of the lots had the numeral ‘6’, and the remaining lots were blank for that item.

The judge noted that Mr Baum had given evidence that he did not read either of the emails. The judge rejected a submission that, given his interest in the operations of the airport, Mr Baum would have been astute to read the emails. Her Honour found it distinctly unlikely that he would have read an email suggesting that the applicant might breach the Covenant, and not raised it with Mr Barry.[73] Further, her Honour accepted his evidence that, at the time he received the initial email, he was overloaded with work and that he did not make a habit of reading emails.[74]
[73]Reasons [104].
[74]Ibid.

We note that the emails dealt with a number of hangars, were addressed to a number of people and did not call for any action on the part of Mr Baum.

In our view, the finding of the judge was not glaringly improbable and we see no legitimate basis upon which we could overturn it. We do not reach that conclusion on the basis of the judge’s advantage in seeing the witnesses because, for whatever reason, she did not expressly evaluate their credibility. It would have been preferable for that matter to be addressed. However, ultimately the question can be determined by reference to the documents and we do not think that questions of credit have been determinative. For the same reason, we do not see the delay to which we have already referred as being of much significance in our conclusion.

The next matter upon which the applicant relied was the judge’s treatment of the conversation of 19 April 2015. We have set out the inconsistencies in the evidence of Mr Baum in relation to this conversation above.[75]
[75]At [27] above.

Without explicitly saying so, the judge necessarily accepted the evidence of Mr Baum that he was not told on 19 April 2015 that Barport intended to construct to a height of six metres. So much follows from the judge’s unequivocal finding that Mr Baum did not know of this until 1 December 2015.

It is again regrettable that the judge did not descend to the detail as to why she rejected the evidence of Mr Barry about this important conversation. There was a clear contest on the evidence, and Mr Baum was inconsistent in his recounting of what was said — a matter which the judge’s reasons do not address.

Although the evidence surrounding the conversation of 19 April 2015 was contradictory, the email on 21 April 2015 constituted a recognition on the part of the applicant that the MOS set out the relevant height restriction and that compliance was expected. The judge accepted the evidence of Mr Baum that he understood that email to mean that Mr Barry ‘had levels done to know how high he could build at Lot 2’.[76]
[76]Reasons [156].

Further, the focus of the email was on the incursion of the cantilever track onto common property.

Notably, the judge accepted the evidence of Mr Baum that he was horrified on 1 December 2015 when, after speaking with Mr Carson, he appreciated the height of the proposed hangar was to be six metres.[77] This spontaneous reaction, which the judge described as a frank admission, was consistent with a dawning realisation that the proposed hangar was six metres high and would exceed the permitted height, and that the applicant was intending to proceed with construction regardless of the MOS.
[77]Ibid [106].

In our opinion, the conclusion reached by the judge was not glaringly improbable and was open to the judge. Therefore, in our view, the factual basis upon which the applicant relied to found its case based on silence is not made out.

The evidence of Mr Baum as to his understanding of the relative levels and their significance was inconsistent. He said that he knew in May 2014 that the two points were not level and that, after he had levelled the lots in October 2014, he knew Lot 2 could not be reduced by the 600 or 700 mm necessary to bring it level with the runway. He also gave evidence that he always knew that in order to build a wall to six metres, the two points had to be level. However, he later said in evidence that he did not know in June 2014 (at the time of his email) what the MOS standard was, as it applied to Lot 2, but only that there was a limit. By December 2015, he knew that it was not permissible to build to six metres because the two points were not level.

Although the judge made no express finding, we proceed on the basis that, at least from October 2014, Mr Baum knew that Lot 2 and the runway were not level, and that a building with a height of six metres could only be constructed if they were level.

However, accepting that this was so does not introduce any inconsistency with the finding that Mr Baum did not know before 1 December 2015 that the applicant intended to build to six metres and would proceed to do so without testing the height against the terms of the MOS.

(c) Was there a duty to speak?

The previous discussion deals with the position up to 1 December 2015. As found by the judge, from that day, Mr Baum was aware that the applicant was in the process of building to six metres. The judge did not take into account matters after October 2015, on the basis that reliance on such matters was not pleaded.[78] Given the terms of the pleading which alleged reliance from October 2015, that was an error.
[78]Ibid [87], [99].

However, we are satisfied that, notwithstanding the knowledge that Mr Baum then held, there was no obligation on his part to inform the applicant that a six metre wall would be inconsistent with the Covenant and would not be permitted. Further, as we explain below, the applicant did not act to its detriment as a result of the silence after 1 December 2015.

The applicant pointed to the expertise of Mr Baum in earthworks, his capacity to influence the level of the land, his control of the development and the emails of June 2014 as the basis for its contention that Mr Baum induced or acquiesced in the assumption, in order to submit that he was under a duty to warn the applicant of its mistake.

It is important to recall that the proposed hangar was to be built entirely on the freehold land of the applicant and that that land was subject to express restrictive covenants, of which the applicant as owner was on notice. The applicant, as registered proprietor, was bound by the Covenant and was responsible for ensuring compliance with it. The building was commissioned by the applicant and the respondents had no role in its selection or construction. The hangar was to be built for the commercial interests of the applicant and was an improvement of the land, from which the applicant as owner stood to benefit. Mr Barry was a commercial pilot and, it may be accepted, had some familiarity with airport layout and design needs.

On the other hand, Mr Baum was a driving force in the development of the airport and took a keen interest in the development. The airport sought to benefit from the development of the lots and the Covenant was expressed for the benefit of Lot 1.

Importantly, Mr Baum undertook earthworks on the new lots. The earthworks, expertise and overall control of the airport were important features of the relationship, however the earthworks were gratuitous; primarily concerned with the internal levels of the lot and meeting the level of the hardstand; and were not undertaken as part of the construction of the hangar.

The judge found that the parties were relevantly of equal bargaining power and competence.[79] We agree. Mr Baum was not a party to the contracts to build the hangar and the construction of the hangar did not involve a transaction or bargain between the two parties.
[79]Ibid [164].

The fall of the land was an observable and measurable feature to which the parties had equal access. The applicant had commissioned builders for the construction of the hangar, and there was no reason why it could not engage surveyors or other consultants to ensure compliance with the Covenant. The evidence showed that Mr Barry paid little regard to the terms of the Covenant or the MOS.

It was not unconscionable for Mr Baum not to immediately inform Mr Barry that the structure was non-compliant. Mr Baum had little, if anything, to gain from remaining silent. Even though he knew then that the structure, once completed, would infringe the MOS, Mr Baum’s silence did not convey that the building would be permitted regardless of its compliance. The communication between the parties, the conduct of Mr Baum and the circumstances as a whole did not transfer responsibility for ensuring compliance with the Covenant from the applicant to Mr Baum. Further, the delay between Mr Baum’s realisation that the wall was being erected in excess of the height limit on 1 December 2015 and directly raising the matter a few weeks later was not long and, given that by this stage the applicant was committed to the construction, was understandable.

In our opinion, this is a very different case to Waltons Stores. In that case, the putative landlord sat back while the tenant undertook improvements to the landlord’s land on the understanding that a lease existed or would be perfected.

For completeness, we note that the judge did not fail to take into account the specific matters upon which the applicant relied. We have already noted our conclusion that the removal of condition 23 did not advance the applicant’s case.[80] The judge also took into account the conversation of 31 May 2014 and the emails that resulted from it, as well as the interaction of 19 April 2015. Further, the judge was well aware of the applicant’s submissions on silence in respect of both the estoppel ground and the misleading or deceptive conduct claim.
[80]At [133] above.

In any event, the applicant could only succeed in establishing an estoppel if the relevant assumption created by the respondents formed the basis of the detrimental reliance by the applicant.[81] The applicant must also show that the respondents knew that the applicant was proceeding on the basis of the assumption. The acts which were said to be undertaken to the detriment of the applicant were the acceptance of the nomination to become the purchaser under the Contract, completing the purchase and commencing construction.
[81]CrownMelbourne (2016) 260 CLR 1, 17 [39] (French CJ, Kiefel and Bell JJ).

The evidence of Mr Barry was unequivocal that he relied on the email of 2 June 2014 as permission to construct up to six metres and became committed to construction in reliance on it. It was that assurance that formed the basis of his decision to construct the hangar. We have already explained that the email was not capable of conveying that meaning and the email did not reasonably induce the detrimental action. Mr Baum was not responsible for the misunderstanding.

Further, by 1 December 2015, the construction of the hangar was well under way and the applicant did not establish that it continued because of the silence. Even after the issue of the height of the hangar and its compliance with the MOS was directly raised on 4 January 2016, Mr Barry instructed Mr Carson to proceed to complete the building, which took until 8 February 2016. The evidence did not clearly establish at what point the contract for the construction of the hangar was made, what its terms were, or what would have happened to the ongoing construction work had Mr Baum complained about the height on 5 December 2015.

In our view, the judge was correct in her conclusion that the estoppel claim failed.

Ground 4 — Misleading or deceptive conduct

There were two bases for the misleading or deceptive conduct claim: first, the emails of 2 and 3 June 2014 and, second, the failure of Mr Baum to disclose either the final level of Lot 2 relative to the runway or the fact that he objected to the construction of a hangar with walls six metres high.

Parties’ submissions on ground 4

In relation to the first basis, the applicant submitted that the judge misconstrued the emails by failing to have regard to representations that ch 13 of the MOS applied and that, read fairly, the email conveyed a representation that the level of Lot 2 would be between zero and 0.5 metres higher than the edge of the runway, thus allowing construction of a wall with a height between 5.5 to six metres.

The applicant submitted that the judge failed to approach the representation as being one with respect to a future matter, attracting the operation of sch 2 s 4 of the Competition and Consumer Act 2010 (Cth).[82] The applicant submitted that there were no reasonable grounds for representing that Lot 2 and the runway edge could be made level in circumstances where Mr Baum knew that the level of Lot 2 needed to be reduced by 600 or 700 mm, so as to make it level with the runway edge.
[82]Schedule 2 of the Competition and Consumer Act 2010 (Cth) is the Australian Consumer Law (‘ACL’).

In support of the second basis, the applicant submitted that the emails sent by Mr Baum on 2 and 3 June contained a half-truth, which Mr Baum was obliged to correct. It was submitted that the emails were sent to ensure the completion of the sale of Lot 2 and were crafted so as to encourage Mr Barry to think that a construction of six metres was possible. The duty to correct the ‘half-truth’ was said to arise because Mr Baum knew that Lot 2 and the runway edge could not be made level and Lot 2 could not be reduced by the necessary 600 to 700 mm.

Misleading or deceptive conduct principles

Conduct will be misleading or deceptive if it induces or is capable of inducing error.[83] Silence may constitute misleading or deceptive conduct where it, for example, embodies a false representation or where there is a reasonable expectation that, if some relevant fact does exist, it will be disclosed. Silence may also form part of the context or factual matrix in which other conduct is to be considered.[84]
[83]ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640, 651 [39].
[84]Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31.

Relevantly, a reasonable expectation of disclosure may arise where law or equity imposes a duty of disclosure; where a statement conveying a half-truth only is made; when the representor has undertaken a duty to advise; when a representation of continuing effect, although correct at the time it was made, has subsequently become incorrect; and when the representor has made an implied representation.[85]
[85]Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76 [482] (Gilmour and White JJ).

Consideration of ground 4

The email of 2 June 2014 did not convey the pleaded representation that the level of Lot 2 would be between zero and 0.5 metres higher than the edge of the runway, and, correspondingly, that a wall would be permitted between 5.5 to six metres in height. We have already expressed our conclusions as to what the email conveyed and we need not repeat them. The qualified language did not carry the connotation that the applicant pleaded.

We agree with the judge that the email was too equivocal to convey the pleaded meaning and it was not reasonable for the applicant to interpret the email as meaning that a hangar with walls that were six metres high was permitted and could be built.

Further, the reference to ch 13 of the MOS is immaterial. At the relevant time, there was no ch 13 of the MOS. However, this erroneous cross-reference went nowhere given that, at least from April 2015, Mr Barry proceeded on the understanding that the MOS set the relevant height limit and that it imposed a 20 per cent gradient.

We would not characterise the representation as one as to a future matter. Although it related to the final levels of the land that had yet to be realised, in substance the representation was as to the current capacity of the land to be altered relevant to the runway. In any event, the real issue is not whether there was a reasonable basis for the representation, but what the communication was capable of conveying. In relation to this issue, the special treatment accorded to representations as to future matters was irrelevant. The email simply did not convey the pleaded representation.

It is possible, as we have already adverted to, that the email represented that it might be possible to render the two points level. However, the applicant did not act on that representation. Rather, it acted on the representation, which it had erroneously presumed arose from the email, that it had permission to build to six metres. That representation was not conveyed by the email.

The applicant relied on Gould v Vaggelas[86] in support of the proposition that the misrepresentation need not be the only cause of the relevant loss and that it is sufficient if it plays at least some part. That principle is engaged where there are potentially multiple causes of the relevant loss. The problem confronting the applicant was of a different order. The applicant acted on a misunderstanding of what the email was capable of conveying. It was not the email, but that misunderstanding that led the applicant to believe that it could build to six metres.
[86](1985) 157 CLR 215.

It follows that the judge was correct to reject the first basis upon which the misleading or deceptive conduct claim was advanced.

The second aspect of the claim amounts to a contention that it was misleading or deceptive for Mr Baum to fail to disclose the final level of Lot 2, relative to the runway, and that he objected to a height of six metres.

We are not persuaded that the email conveyed a half-truth that demanded correction. The email did not purport to provide definitive advice as to what could be built conformably with the Covenant. The phrase ‘half-truth’ implies that the representation tells only part of the story and that the gaps are not obvious to the reader. Here, the email made clear that the final position of the land would depend on earthworks that were yet to be undertaken. This did not involve a half-truth, but rather was a statement that the final position was not yet known.

We have held that there was no duty in equity to speak. That analysis also provides a partial answer to the applicant’s case on misleading or deceptive conduct and it is not necessary to repeat it. However, silence or a failure to disclose some material fact may amount to misleading or deceptive conduct if there is a reasonable expectation, objectively determined, of disclosure. This is to be assessed by reference to all of the circumstances and the answer is not foreclosed by the analysis undertaken in relation to estoppel.

For the purposes of determining this issue, it may be accepted that Mr Baum knew that in order for Lot 2 to be level with the runway, it would be necessary to reduce the height of Lot 2 by 600 or 700 mm and that this could not be achieved, given the need for the hangar to relate to the bitumen apron. However, the judge found that Mr Baum did not know until 1 December 2015 that Mr Barry was actually building to six metres irrespective of the levels. Without that knowledge, there could be no reasonable expectation of disclosure.

As the judge noted, Mr Baum did not promise to level the land to a specific height and the applicant did not request that he do so. The judge correctly held that it was not reasonable for a party, faced with a range of potential heights to which it might be permitted to build, to assume, without checking, that it could build to the maximum stated height.[87] In considering whether the silence of the respondents amounted to misleading or deceptive conduct, the judge was obliged to take into account the context and surrounding circumstances, including the nature of the relationship between the parties.[88] No doubt Mr Barry relied on Mr Baum in some respects, especially in relation to earthworks. However, that did not absolve the applicant from taking reasonable care to ensure that it was compliant with the covenants on its title.
[87]Reasons [141].
[88]Miller v BMW (210) 241 CLR 357.

We are also not persuaded that Mr Baum could reasonably have been expected to warn Mr Barry that he would enforce the MOS height limitation, and that, correspondingly, would not allow any building that exceeded the height limit. The email of 2 June 2014 put Mr Barry on notice of the applicable limit. Mr Barry’s email of 21 April 2015 proceeded on the basis that the hangar would be compliant.

In that context, the judge considered it important that each party was at least of equal bargaining power; Mr Barry did not seek independent legal advice on the Covenant; Mr Barry did not independently analyse the MOS; and he did not engage a surveyor.[89] He gave no instructions to Mr Baum in relation to earthworks, which were ad hoc and unpaid, and, in his email of 21 April 2015, Mr Barry had advised Mr Baum that the cantilever track on the hangar would comply with the MOS.
[89]Reasons [164].

Taken together, these matters were all relevant to the assessment of whether the failure of Mr Baum to speak up as to his view about the likely ultimate levels was misleading or deceptive. We are not persuaded that there was any error in the judge’s conclusion.

Each party proceeded under an assumption that the other was responsible for determining the relevant levels. In the context where the Covenant was on title and was drawn to the applicant’s attention, it was not misleading or deceptive for Mr Baum not to advise the applicant of the fall of the land and the need to comply with the Covenant. In circumstances where Mr Barry had both the obligation and the capacity to ensure compliance, it was reasonable for Mr Baum to proceed on the basis that Mr Barry would take reasonable steps to look after the applicant’s interests.

The judge was correct to reject the misleading or deceptive conduct claim.

Ground 2 — Relief

The judge made the following order:

Within 4 months the defendant/plaintiff by counterclaim must modify the hangar on the land described in Certificate of Title Volume 11562 Folio 998 by reducing the height of the hangar, as follows, by:
(a) at least 1.386 m on the eastern elevation of the hangar; and
(b) at least 1.146 m on the western elevation of the hangar.[90]

[90]Emphasis in original.

The applicant submitted that the order went too far to remedy the breach of the Covenant. It submitted that the proceeding concerned the southern wall of the hangar, and that the reference in the order to the eastern and western elevations was misplaced. The southern wall faced in a southerly direction and, from the viewpoint of the runway, extended along an east-west axis. The reference in the order to the eastern and southern elevation was intended to reflect this fact. It was a mistake for the order not to make explicit that it was directed to the southern wall. It was this wall that caused the roof line to breach the Covenant and needed to be reduced to bring it into compliance.

We would allow the appeal on this ground so as to amend the order to make that explicit. That can be done by inserting the words ‘of the southern wall’ after the word ‘height’ in the third line so that it would read:

Within 4 months the defendant/plaintiff by counterclaim must modify the hangar on the land described in Certificate of Title Volume 11562 Folio 998 by reducing the height of the southern wall of the hangar, as follows, by:
(a) at least 1.386 m on the eastern elevation of the hangar; and
(b) at least 1.146 m on the western elevation of the hangar.[91]

[91]The orders made will also make clear that compliance will be required within four months of the date of this Court’s orders.

The applicant further submitted that, given that the breach of the Covenant did not involve trespass to the respondents’ property; between January 2017 and March 2017 there were 3,487 landings at the airport; and Mr Baum considered the airport to be safe, there was no reason to require the wall to be reduced. Further, the applicant pointed to the evidence of Mr Thompson that the penetration of the OLS by the southern wall would not necessarily preclude registration or certification of the airport. The applicant submitted that, given the MOS prescribed a limit, it was appropriate to take into account how the MOS would address breaches of the limit, including by requiring the wall to be painted or marked in a way that would render it safe and compliant with the MOS.

In its written closing submissions before the judge, the applicant submitted that the Court should withhold injunctive relief and award damages instead. In circumstances where there is an ongoing infringement of a proprietary right, the general approach is that an injunction will be granted, unless the plaintiff has disentitled itself to an injunction or the injury to the legal right is small; is capable of being estimated in money; can adequately be compensated; and the case is one in which it would be oppressive to grant an injunction.[92] The submission that damages should be awarded in place of an injunction was not maintained on the application for leave to appeal.
[92]Break Fast Investments v PCH Melbourne (2007) 20 VR 311, 320 [40] (Dodds-Streeton JA), citing Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287, 322–3 (AL Smith LJ).

Therefore, the issue under this ground relates solely to the form of the injunction. The form of the injunction involves a discretionary judgement and it is necessary for the applicant to establish an error of a kind reviewable under the principles propounded in House v The King.[93]
[93](1936) 55 CLR 499.

In our view, subject to the form of the injunction which we have addressed, there was no error in the order made by the judge. The purpose of the Covenant is to facilitate aviation safety and compliance with it removes a potential impediment to registration or certification of the airport. It was of clear and ongoing value to the respondents. There was evidence before the judge that the respondents intended in the future to apply for registration in order to use the airport as a base for pilot training. The evidence also indicated that the airport had been redesigned with an eye to CASA regulations. In that respect, the airport was rezoned into a special purpose zone, existing structures were removed or relocated and the respondents expended both their own money and money from a government grant to further develop the airport.

Even if the attainment of registration or certification was not an immediate purpose of the Covenant, adherence to the Covenant would be of benefit to any future application and it is relevant to take that fact into account.

Is also necessary to have regard to the exiguous state of the evidence as to the cost of a reduction of the height of the hangar and the burden that this would impose on the applicant. In its pleadings at trial, the applicant alleged that reducing the height of the hangar would cost approximately $95,000. It does not appear that this figure was supported by any reliable evidence and no reliance was placed on it in the applicant’s written case on the application for leave to appeal. It may be accepted that the order imposed a significant impost on the applicant. However, we are not persuaded that the judge’s conclusion failed to take any relevant matters into account or was plainly unjust or unreasonable.

In the circumstances, the respondents were entitled to an order which brought the hangar into compliance with the Covenant. The order went no further than was necessary in order to achieve that outcome.

Accordingly, we reject ground 2, other than to amend the order for the purposes of clarity.

Disposition

For the reasons above, we would grant leave to appeal, allow ground 2 of the appeal for the limited purpose of amending the order, but otherwise dismiss the appeal.

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[2019] VSCA 167

1 August 2019