Burke v Yurilla SA Pty Ltd and Others No. 1614/90 Judgment No. 3027 Number of Pages 15 Real Property

[1992] SASC 3027

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(2), DEBELLE(1) AND COX(3) JJ

CWDS
Real Property - Torrens System - Restrictive Covenants - Building Scheme - Enforceability of restrictive covenants in registered encumbrance - Subdivision of land into residential allotments - Registered encumbrance to company with covenants restricting the type of building to be constructed - Subsequent transfers - Not all of the allotments contiguous - Head of the encumbrance company and purchasers of other allotments are entitled to enforce restrictive covenants - encumbrance against registered proprietor of another allotment in the scheme - Real Property Act, 1886, ss.128, 249 - Blacks Ltd v. Rix (1962) SASR 161 approved.
Procedure - Case stated - Party arguing question not raised by case stated - Desirability of adhering to questions raised.
Precedent - Stare Decisis - Decision of long-standing - Conveyancing practice developed on basis of decision - Whether court should overrule previous decision if is incorrect - Observations on doctrine of Stare Decisis - Geelong Harbour Trust Commission v. Gibbs, Bright and Co (1970) 122 CLR 504, Babaniaris v. Lutony Fashions Pty Ltd (1987) 163 CLR 1 applied.

HRNG ADELAIDE, 9, 23 July 1991 #DATE 18:9:1992
Counsel for Plaintiff:   In Person
Counsel for the Second, Third, Fourth, Fifth, Seventh, Eighth, Ninth, Tenth and Eleventh Defendants:   Dr R J Baxter
Solicitor for the Second, Third, Fourth,     Finlaysons Fifth, Seventh, Eighth, Ninth, Tenth and Eleventh Defendants:
Counsel for the Attorney-General:             Mr A R F Hall
Solicitor for the Attorney-General:            Crown Solicitor
Counsel for the South Australian Urban Land Trust, Delfin Property Group Ltd, Beneficial Finance Corp Ltd, Jennings Industries Ltd and Kinsmen Seaford Pty Ltd:   Mr B R M Hayes QC
Solicitor for the South Australian Urban Land Trust, Delfin Property Group Ltd, Beneficial Finance Corp Ltd, Jennings Industries Ltd and Kinsmen Seaford Pty Ltd:   Lynch and Meyer

ORDER
Question in the special case answered as follows - there is nothing in the operation of the Real Property Act, 1886 which renders the covenants contained in the encumbrance, the subject of this action, unenforceable against the plaintiff.

JUDGE1 DEBELLE J In this action the plaintiff seeks a determination as to whether certain restrictive covenants which are contained in a registered encumbrance are unenforceable against him. 2. The parties having joined in a request that the questions of law arising in this action be determined by the Full Court, Master Anderson stated a special case. 3. The plaintiff is the registered proprietor of allotment 206, one of a number of residential allotments at Ridgehaven Drive, Bellevue Heights. By memorandum of transfer dated 8 March 1955 Bellevue Heights Limited (as the first defendant was then called) transferred to the City of Mitcham, the second defendant, two sets of residential allotments at Bellevue Heights. They were lots 122-127 inclusive and 205-208 inclusive of the subdivision of portion of section 32 and other sections laid out as Eden Hills. The allotments 122-127 adjoin one another and are situated in Highland Drive, Bellevue Heights. The allotments 205-208 also adjoin one another and have a frontage to Ridgehaven Drive, Bellevue Heights. The two sets of residential allotments do not adjoin one another though they were formerly all comprised in one certificate of title, Register Book Volume 2381 Folio 88. Although there is nothing in the special case which expressly deals with the question, it is reasonable to infer that all of the allotments were once part of the same parcel of land. The two sets of residential allotments are no more than one kilometre apart. 4. On 9 March 1955, the day following the transfer of these allotments to it, the City of Mitcham entered into an encumbrance in respect of the allotments for the benefit of Bellevue Heights Limited. The encumbrance is in the following terms:
    "The Corporation of the City of Mitcham hereinafter with the
    (sic) respective executors administrators and assigns called "the
    encumbrancer(s)" being entitled to be regarded as the proprietor(s)
    of an estate in fee simple subject however to such encumbrances
    liens and interest as are notified by memorandum underwritten or
    endorsed hereon in allotments 122, 123, 124, 125, 126, 127, 205,
    206, 207, 208 being portion of the land comprised in partially
    cancelled Certificate of Title Register Book Volume 2329 Folio 102
    and desiring to render the said land available for the purpose of
    securing to and for the benefit of Bellevue Heights Limited whose
    registered office is situated at 22 King William Street Adelaide the
    sums of money hereinafter mentioned DO HEREBY ENCUMBER the said land
    for the benefit of the said Bellevue Heights Limited (hereinafter
    designated "the encumbrancee") with the payment of the sum of one
    shilling per annum to be raised and paid at the times and in the
    manner following that is to say that I/we will if the encumbrancee
    shall in writing demand the same pay to the encumbrancee on the 9th
    day of March in each year until the year of Our Lord Two Thousand
    the sum of one shilling and I/we do as such encumbrancer(s) hereby
    covenant (in addition to the covenants implied against the
    encumbrancer(s) as provided by The Real Property Act (1886-1945) or
    to be implied against the encumbrancer(s) by any future law) with
    the encumbrancee in the manner following that is to say:-
     FIRSTLY:- That if default shall be made in the payment of any
    monies payable hereunder for twenty-one (21) days next after any day
    whereon the same shall fall due or if breach shall be made in the
    performance or observance of any covenant or agreement on the part
    of the encumbrancer(s) herein contained or hereby implied then and
    in any or either of such cases it shall be lawful for the
    encumbrancees forthwith without notice and without any consent on
    the part of the encumbrancer(s) absolutely to sell the said land
    hereinbefore described either in one or more lots and either by
    public auction or private contract or partly by public auction and
    partly by private contract to any person or persons whosoever either
    upon credit or otherwise and subject to such terms and conditions as
    to title payment of purchase money possession or otherwise as the
    encumbrancee shall think fit with power for the encumbrancee to buy
    in the said land or any part thereof at any sale by public auction
    and to rescind any contract for sale and to vary and alter the terms
    and conditions of sale and to resell without being answerable for
    loss and to do all acts necessary to complete and enforce such sales
    or sale and all expenses of or attending the exercise of the powers
    hereby given or implied shall be payable by the encumbrancer(s) and
    may with interest at the rate aforesaid be deducted from the moneys
    realized hereunder.
     SECONDLY:- That any notice pursuant to this encumbrance may be
    served by posting the same in a stamped envelope in any Post Office
    or post pillar addressed to The Corporation of the City of Mitcham
    and shall be deemed to have been duly served twenty-four (24) hours
    after the posting thereof.
     THIRDLY:- That the encumbrancer(s) will not erect or permit to be
    erected on each allotment of the land hereby encumbered more than
    one house or dwelling together with the usual domestic outbuildings.
     FOURTHLY:- That the encumbrancer(s) will not erect or permit to be
    erected on the said land hereby encumbered any house or building for
    use otherwise than wholly and solely as a residence with usual
    domestic outbuildings.
     FIFTHLY:- That the encumbrancer(s) will not erect or permit to be
    erected on the said land hereby encumbered any house at the cost of
    less than the sum of pounds 3,250 inclusive of the cost of garage (if any)
    but exclusive of the cost of other outbuildings fencing and laying
    out garden Provided that with the consent of the encumbrancee in
    writing having first been obtained the said minimum cost of pounds 3,250
    may be reduced to pounds 2,500 which consent will only be given in special
    cases where the encumbrancee is satisfied that the architecture of
    the said house proposed is of a sufficiently high standard.
     SIXTHLY:- That the encumbrancer(s) will not apply to the Town
    Planner to resubdivide the land hereby encumbered without the
    consent of the encumbrancee in writing first having been obtained.
    And subject as aforesaid the encumbrancee shall be entitled to all
    powers and remedies given to an encumbrancee by "The Real Property
    Act 1886-1945". The encumbrance was registered as Memorandum of Encumbrance No.1881724 and an entry to that effect was endorsed on the certificate of title Register Book Volume 2381 Folio 88. 5. In 1960 the City of Mitcham resold all of the nine allotments in two transactions. The first was a transfer from the City of Mitcham to a Mr and Mrs Adams of lots 205-208 inclusive. The second was a transfer from the City of Mitcham to Realty Holdings Limited of lots 122-127 inclusive. Both transfers were registered on 29 March 1960. A fresh certificate of title was issued for lot 206 and presumably also for each of the other allotments. The encumbrance was endorsed on the new certificate of title Register Book Volume 3004 Folio 151. The endorsement reads:
"Encumbrance No.1881724 to Bellevue Heights Limited. Produced for
    registration the 22 day of March 1955 at 12.5pm(sic) (Single
Copy) (Including other land) D F Collins, (Reg. Gen.)" On 28 March 1968 a transfer of allotment 206 from Mr and Mrs Adams to the plaintiff was registered. 6. By subsequent transfers from Mr and Mrs Adams and from Realty Holdings Ltd, the remaining nine allotments were transferred to the third to eleventh named defendants who each hold a separate certificate of title. Each of these nine residential allotments has been made subject to the encumbrance executed on 9 March 1955 by the City of Mitcham. An order was made appointing the City of Mitcham to represent the third to eleventh defendants and any other unnamed person who may have an interest in the matter. 7. In this action the plaintiff asserts that the covenants in the encumbrance are unenforceable and of no effect, by virtue of ss.3, 54, 67, 72, 97, 128, 162, 191 and 249 of the Real Property Act, 1886 ("the Act"). The question asked in the special case is whether the covenants contained in the encumbrance are enforceable against the plaintiff by virtue of the operation of the Real Property Act, 1886. 8. The clear intention of the encumbrance is to create what is commonly called a building scheme. The covenants are designed to preserve the residential character of all of the allotments referred to in the encumbrance and to bind each allotment. It is reasonable to infer that the certificate of title in respect of each allotment has been endorsed with an entry which notes the existence of the encumbrance. 9. In some States of Australia, legislation relating to Torrens system land has recognised the practice of notifying on the certificate of title of the burdened land registered covenants which create a building scheme. The practice has been given legislative recognition in New South Wales (see Conveyancing Act, 1919 (NSW) s.88(3)(a)), in Western Australia (see Transfer of Land Act, 1893-1978 (WA) s.129A), in Victoria (see Transfer of Land Act, 1958 (Vic) s.88), and in Tasmania (see Land Titles Act, 1980 (Tas) ss.102-104). However, there is no specific provision in South Australia for noting restrictive covenants of this kind on the Register. Nevertheless, for a long time, there has been a practice in South Australia by which restrictive covenants have been notified on the certificate of title of land under the Real Property Act. 10. The device which has been adopted has been to register an encumbrance which included the restrictive covenants. The encumbrance charged the land with a nominal annual rent charge and then went on to include the restrictive covenants. The encumbrance was in the form of the encumbrance provided in the Tenth Schedule to the Real Property Act and so was registrable. The form contained in the Tenth Schedule provided for the inclusion of "any special covenants" and this was the means adopted to include restrictive covenants creating a building scheme. The intention was to ensure registration of the encumbrance and thus registration of the covenants so as to enable enforcement against a subsequent registered proprietor. 11. There can be little doubt that an encumbrance of this kind in so far as it encumbers the land with the payment of $1 as a rent charge is registrable since it complies with s.128 and the Tenth Schedule of the Act. The fact that the encumbrance includes other covenants which may or may not be enforceable does not affect the registrability of the encumbrance: Perpetual Executors and Trustees Association of Australia Ltd v. Hosken (1912) 14 CLR 286; Mahony v. Hosken (1912) 14 CLR 379; Clem Smith Nominees Pty Ltd v. Farrelly (1978) 20 SASR 227. 12. In Blacks Ltd v. Rix (1962) SASR 161, Napier CJ held that restrictive covenants establishing a building scheme and contained in a registered encumbrance in the form in the Tenth Schedule were enforceable against a successor in title of an original encumbrancer. In that case, each purchaser was required to accept the transfer of his allotment subject to an encumbrance which was registered on the title. Each encumbrance was in the same terms, namely, a perpetual yearly charge of one shilling to be paid, if demanded. The restrictive covenants were then set out in the encumbrance. Following the covenants was a provision which released the encumbrancer and his assigns from the rent charge and the observance of the covenants upon the encumbrancer and his assigns ceasing to be the registered proprietor "to the intent that the said rent charge and ... restrictions shall be binding on the registered proprietor ... for the time being of the said land or any part thereof". 13. In upholding the enforceability of the restrictive covenants contained in the registered covenant Napier CJ said:
    "My attention has been called to the recent decision in
    Victoria, Re Arcade Hotel Pty Ltd, where the Full Court refer to
    what they regard as the accepted practice under the Transfer of Land
    Act (Vict), namely, that restrictive covenants contained in
    registered transfers can be noted as encumbrances on the
    certificates of title of the lands burdened thereby. I think that
    much the same might be said of the practice under our Real Property
    Act. In that connection I refer to the form of "encumbrance" (in
    the tenth schedule) which provides for "any special covenants." But,
    be that as it may, I think that the relevant provision in our
statute is s.249, which provides:-
        '249. Nothing contained in this Act shall affect the
    jurisdiction of the Courts of law and equity in cases of actual
    fraud or over contracts or agreements for the sale or other
    disposition of land or over equities generally.
     And the intention of this Act is that ... all contracts and other
    rights arising from unregistered transactions may be enforced
    against such proprietors in respect of their estate or interest
    therein, in the same manner as such contracts or rights may be
    enforced against proprietors in respect of land not under ... this
    Act: Provided that no unregistered estate, interest, contract, or
    agreement shall prevail against the title of any bona fide
    subsequent transferee, mortgagee, lessee,...
     The defendants bought or acquired their registered titles subject
    to the encumbrance, that is to say, well knowing that the land had
    been bought on the faith of the restrictive covenants, as covenants
    running with the land, and enuring to the benefit of all the
    purchasers under the building scheme.
     For these reasons, I think that the plaintiffs are entitled to the
    relief claimed, and the judgment will, therefore, be entered for the
plaintiffs." 14. The decision in Blacks Ltd v. Rix has been criticised. In Clem Smith Nominees Pty Ltd v. Farrelly (1978) 20 SASR 227, doubts were expressed about the correctness of the decision: see Bray CJ at 240-242 and Zelling J at 255. Notwithstanding these doubts, the Court did not overrule Blacks Ltd v. Rix. Furthermore, the Court in that case was dealing with covenants in the nature of a restraint of trade clause and not with covenants which created a building scheme. The covenants in that case suffered also from the absence of a quasi-dominant tenement sufficient to attract the rule in Tulk v. Moxhay
(1848) 2 Ph 774, 41 ER 1143: see Bray CJ at 237. 15. The decision has been criticised also in Bradbrook and Neave, Easements and Restrictive Covenants in Australia (1981) at ch.17: see para.1714. The authors criticise the decision on two grounds. The first criticism concerns the use made by Napier CJ of s.249 of the Real Property Act. The authors suggest that it runs counter to the principles of indefeasibility contained in the Act and, in particular, to the basic tenet that a registered proprietor does not take subject to an unregistered interest (or in this case an interest which arguably should not have been registered) simply because he has notice. The purpose of s.249, they say, appears to be to ensure that the contracts entered into, and equitable interests created, by the registered proprietor himself will be enforceable against him. Unregistered equitable interests cannot be enforced against the registered proprietor even if he takes with notice. Although the registered covenants were contained in an encumbrance which was registered, they were not themselves registered. The authors suggest that the decision of Napier CJ is heretical in respect of its use of s.249. 16. The second criticism made by Bradbrook and Neave picks up comments made by Bray CJ in Clem Smith Nominees Pty Ltd v. Farrelly at 241-242 to the effect that s.97 of the Act might render the covenants unenforceable. Section 97 provides that in every instrument transferring land which is subject to a mortgage or encumbrance, two covenants are implied as between the transferee and transferor and, so long as the transferee remains the registered proprietor with the mortgagee or encumbrancee of the covenants. The first is that the transferee will pay the principal, interest and other monies secured by the mortgage or encumbrance. The second is that the transferee will indemnify the transferor, not only against the payment of the monies secured by the mortgage or encumbrance, but also against all liability in respect of any of the covenants contained in the mortgage or encumbrance. But, as Bray CJ pointed out, s.97 does not make the transferee primarily liable to the mortgagee or encumbrancee to observe the covenants other than the covenant to pay the monies secured by the mortgage or encumbrance. If, as Bray CJ suggested, s.97 is intended to contain an exhaustive enumeration of the implied obligations of the transferee of land to the mortgagee or encumbrancee, there will be no obligation on the part of successors in title to comply with the restrictive covenants contained in a mortgage or encumbrance. 17. Although the plaintiff in his statement of claim asserted that the covenants in this case were contrary to a number of provisions in the RealProperty Act, he ultimately grounded his attack upon the enforceability of the restrictive covenants upon the two criticisms of Blacks Ltd v. Rix as expressed in ch.17 of Bradbrook and Neave. 18. The first criticism concerns the use made by Napier CJ of s.249 of the Real Property Act. The reasons for the decision in Blacks Ltd v. Rix are elliptical. But it is not necessary to decide whether or not Napier CJ was correct in his use of s.249. There is, I think, another ground on which the decision could have been determined. 19. Where a building scheme is found to exist in the case of land under the general law and the successor in title has notice of the covenants, the courts of equity will enforce the common interest in maintaining the restrictions. To use Lord Macnaghten's words in Spicer v. Martin (1889) 14 App.Cas. 12 at 25 the community of interests necessarily requires and imports reciprocity of obligation. In the case of land under the Real Property Act, the enforcement of the equitable right will depend on whether a person dealing bona fide with the registered proprietor will be deemed to have notice of the restrictive covenants contained in a registered encumbrance. If he is, the courts will be able to enforce the equitable interest. 20. A subsequent registered proprietor of an interest in land under the RealProperty Act is deemed to have notice of covenants contained in a registered instrument, the existence of which is notified on the title, where the covenants affect the estate or interest in the land with which the instrument deals, that is to say, where the covenants run with the land. However, he will not be deemed to have notice of covenants contained in a registered instrument which do not affect the estate or interest in the land with which the instrument deals. This is the effect of the decision of the High Court in Mercantile Credits Ltd v. The Shell Co of Australia Ltd (1976) 136 CLR 326. 21. The burden of restrictive covenant will run with the land in equity against a subsequent holder of the land who has notice of the covenant when the covenant is entered into for the benefit of some parcel of land, or possibly some interest in land: Clem Smith Nominees Pty Ltd v. Farrelly per Bray CJ at 235; Re Louis and The Conveyancing Act (1971) 1 NSWLR 164, 175, 177-178. Before it can be held that the burden of a restrictive covenant will run with the land under the Torrens system, it is necessary to establish that the land entitled to the benefit of the covenant is capable of identification from the registered document or from the Register. In Clem Smith Nominees P/L v. Farrelly, Bray CJ said at p 237:

    "I am of opinion that under the Torrens system it is essential
    before the burden of a restrictive covenant can be held to run with
    the land that the land entitled to the benefit of the covenant shall
    be capable of identification in some way from the registered
    document containing the covenant or, at least, from other related
    documents which can be discovered by a search in the Lands Titles
    Office (see Bursill Enterprises Pty Ltd v. Berger Bros Trading Pty
    Ltd). A prospective purchaser of land subject to a burden should be
    able to find out by a search whether the covenant is a covenant in
    gross, which will not be binding on him if he purchases, or a
    covenant the benefit of which is attached to some parcel or parcels
    of land, which may be binding on him. It was so held by Hudson J in
    the Supreme Court of Victoria in In re Dennerstein. With respect I
agree." 22. It can be stated, therefore, that a person who deals with a registered proprietor is deemed to have notice of and will be bound by a restrictive covenant which runs with the land which is contained in a registered encumbrance noted on the original certificate of title. Covenants which are intended to establish a building scheme will ex hypothesi be for the benefit of other parcels of land. Provided the land entitled to the benefit of the covenant can be identified from the Register, those entitled to the benefit of the covenant will be able to enforce the covenant by equitable remedies. Those criteria are satisfied here and the covenants are enforceable against the plaintiff. 23. On this approach, it is unnecessary to consider whether s.97 of the RealProperty Act does in fact constitute an impediment to the enforcement of a restrictive covenant which establishes a building scheme. Those who seek to enforce the restrictive covenant can rely on their equitable remedies and on the fact that the registered encumbrance provides a means of giving notice of the restrictive covenants. The observations of Bray CJ on the possible effects of s.97 are, I think, limited to restrictive covenants which do not run with the land. 24. As both Barwick CJ and Stephen J noted in Mercantile Credits Ltd v. The Shell Co of Australia Ltd, to confer indefeasibility on rights which run with the land should not lead to difficulty or do violence to the general scheme of the Real Property Act. Barwick CJ observed at 340:
    "No practical difficulties arise from the view of the operation
    of the Act which I have expressed. The memorial of the memorandum
    of lease gives a dealing number which any person intending to deal
    with the registered proprietor of the fee would inevitably examine.
    The full extent of the lessee's interest in and rights with respect
    to the land would thus be seen, even though the existence of the
    right of renewal does not itself extend the term. Whilst the right
    created by the registered memorandum of lease remains exerciseable,
    the estate created by the subsequently registered memorandum is
    subject to the right of renewal. The consequences are not dependent
    on the registration of an extension of lease." Stephen J said at p.352:
    "To confer indefeasibility upon rights of renewal contained
    in registered leases does violence neither to the general scheme of
    the Act nor to the objects which it seeks to attain. The existence
    of such rights of renewal will be apparent upon any inspection of
    the register and those who deal in the land may thus learn of the
    extent to which the reversion is thereby contingently affected.
    What will be registered, and protected by that registration, is a
    right conferred by covenant which touches and concerns the land
    and runs with the land ... it is an incident of the lease creating
    an interest in the land and forming a part of the lessee's interest
    in that land. To accord it the protection afforded by registration
    is thus in no way inconsistent with the tenor of the legislation
and gives rise to no anomalies." 25. The necessity for a person intending to deal with the registered proprietor to make proper searches of the Register had earlier been emphasised by the High Court. In Bursill Enterprises Pty Ltd v. Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73, the High Court had held that where a purchaser failed to make such searches as he ought reasonably to have made, he is bound by that which is contained on the Register notwithstanding that the endorsement on the title might not have accurately described the nature of the interest to which the land is subject. In that case, it was held that a purchaser who had seen a reference to the registered number of a transfer described as creating a right-of-way ought to have searched the transfer to ascertain exactly the nature of the rights granted by it, which inspection would have disclosed that the transfer also included a transfer of air space. Windeyer J at 93 said:
    "But it seems to me that what is "notified" to a prospective
    purchaser by his vendor's certificate of title is everything that
    would have come to this (sic) knowledge if he had made such searches
    as ought reasonably to have been made by him as a result of what
    there appears.
     ... It seems to me that, at any time from 1872 till today, a
    prudent conveyancer acting for a purchaser of the land that is now
    Bursill's would have ascertained what it was that transfer 7922
    referred to on the vendor's certificate of title in law effected.
    True he might have been surprised to discover all that his search
    revealed. But surely no prudent person, seeing the reference to a
    right of way, would neglect to ascertain what exactly was the nature
    of the right of way, the land subject to it, the persons who could
    avail themselves of it, for what purposes in what manner and at what
    times." Barwick CJ at 79 expressed it quite plainly:
    "To my mind, it is inescapable that a person dealing with the
    registered proprietor in this case would be bound to search the
    registered dealing of which particulars were endorsed on the
relevant certificate of title." 26. In practice, the decision in Bursill's Case should not lead to difficulty in the case of encumbrances which include restrictive covenants which run with the land. The practice of the Registrar-General is to endorse on the certificate of title an entry to the effect that the land is subject to an encumbrance. As can be seen from the terms of the endorsement in this case, the endorsement conveys little more information than the fact that the encumbrance exists. Apart from any obligation which the decision in Bursill's Case might impose on a person intending to deal with the registered proprietor, the paucity of information disclosed by the endorsement will make it necessary in any event to search the Register to ascertain the precise terms and effect of the encumbrance. If the encumbrance is discharged, an endorsement to that effect is noted on the title. It would not be difficult, therefore, for any person searching the Register to ascertain whether the encumbrance is current. Provided that the person intending to deal with the registered proprietor is able to identify the land which is entitled to the benefit of the covenant either from the encumbrance or from other related documents which can be discovered on a search of the Lands Titles Office, the purchaser would have notice from the Register itself of the restrictive covenant and its terms: see Bray CJ in Clem Smith Nominees Pty Ltd v. Farrelly and re Dennerstein. 27. The plaintiff raised three other preliminary points. Generally speaking, this is an inappropriate practice. The procedure for a special case is designed to enable the resolution of questions of law stated in the special case. The facts referred to in a special case are those which are sufficient to enable the resolution of the questions of law. Parties should, therefore, confine argument on a special case to the questions in the special case and not raise fresh questions. Apart from the possibility that a party might be taken by surprise given that only the facts necessary to determine the special case will be set out, there is a real risk that the Court will be deprived of the facts necessary for the resolution of the additional points. However, it is possible in the circumstances of this case to deal with the further questions which the plaintiff raised. 28. The plaintiff's first point was a drafting point. He referred to the definition of "encumbrancers" and contended that it was not expressed in terms which bound successors in title of the encumbrancer other than the first. The encumbrancers are the City of Mitcham with its "respective executors, administrators and assigns". The plaintiff contended that if the encumbrance was to bind all successors in title, different terms should have been used. For example, he said, the expression "successive assigns" could have been used. Given that the City of Mitcham had sold the land to Mr and Mrs Adams and the Adams in turn had sold to him, the plaintiff says that he is not bound by the covenant. The argument misunderstands the operation of a restrictive covenant of this kind. Provided that the requirements of a building scheme have been satisfied and the covenants run with the land, and provided also that a successor in title has notice of the covenants, those entitled to the benefits of the covenants can enforce them against all successors in title of the burdened land. It has been held that such covenants will be enforceable even if the word "assigns" has not been included: Holloway Brothers Ltd v. Hill (1902) 2 Ch 612; White v. Southend Hotel Co (1897) 1 Ch 767. Furthermore, I think the word "assigns" in this encumbrance indicates an intention the covenants are to bind all successors in title. 29. The plaintiff then contended that, since the payment of the rent charge contained in the encumbrance was not linked to the performance of the covenants, the covenants did not bind the successors in title of the encumbrancer. He referred to the dicta of Bray CJ in Clem Smith Nominees Pty Ltd v. Farrelly at 232. In that case, the fact that the rent charge was not linked to the performance of the covenants was relevant because it was held that the covenants did not run with the land. However, since a person who deals with a registered proprietor is deemed to have notice of and will be bound by a restrictive covenant which runs with the land which is contained in a registered encumbrance, the absence of a link between the payment of a rent charge and the performance of the covenants is not relevant in this case. 30. The plaintiff's third preliminary point was that, since the two sets of residential allotments 122-127 and 205-208 were separated by other allotments and a road, it was not possible to contend that a building scheme existed. It was not possible, the plaintiff said, to identify the dominant tenements. He again called in aid the decision in Clem Smith Nominees Pty Ltd v. Farrelly where it was held that covenants could not benefit a parcel of land 35 kilometres distant from the land asserted to be the dominant tenement. However, the plaintiff is the owner of allotment 206 and there are at least three allotments, which are identified in the encumbrance, which adjoin allotment 206, and which benefit from the covenants. The registered proprietors of those allotments are parties to this action and seek to uphold the covenants. Even if it were necessary to sever the other allotments, four allotments would be sufficient to constitute a building scheme. This argument must therefore fail. Furthermore, I would not be prepared to hold that the two sets of residential allotments did not comprise a building scheme in the absence of evidence as to the circumstances in which the encumbrance came to be executed. One important question of fact is whether the two sets of allotments were originally part of a larger parcel of land in one ownership which was then subdivided and all the allotments, including those the subject of this action, were made subject to the building scheme. Alternatively, two or more owners of adjoining land might have combined to create the building scheme: see Re Mack and The Conveyancing Act (1975) 2 NSWLR 623. 31. In my view, each of the preliminary points raised by the plaintiff must fail. 32. I would, therefore, answer the special case as follows. There is nothing in the operation of the Real Property Act, 1886 which renders the covenants contained in the encumbrance, the subject of this action, unenforceable against the plaintiff. 33. Even if I had concluded that the decision in Blacks Ltd v. Rix was wrong, I would not, for the following reasons, have been prepared to overrule it. 34. Towards the end of the argument on the questions in the special case, the Court referred to the decision in the Geelong Harbour Trust Commissioners v. Gibbs, Bright and Co (1970) 122 CLR 504 and asked whether, in the event that it were to accede to the plaintiff's contentions, it was appropriate to overrule a decision which had stood since 1962 and on the basis of which many encumbrances containing restrictive covenants in the nature of a building scheme might have been registered. The Court adjourned the hearing to enable the Registrar-General and the Attorney-General to present any argument they thought fit touching the questions in the special case. 35. On the resumption of the hearing, Mr Hall appeared for the Attorney-General. Mr Hayes QC appeared for the South Australian Urban Land Trust and four companies engaged in the development of residential land. He applied to intervene on the ground that all the organisations for whom he appeared made extensive use of encumbrances with covenants of the kind involved in the special case. Leave to intervene was granted. 36. Both the Attorney-General and the intervenors argued in support of the retention of a practice which, they said, was well established before Blacks Ltd v. Rix and which has been widely used since. Mr Hall reinforced what is contained in the present edition of Jessup, Lands Titles Office - Forms and Practice (7th Ed) para.2306, namely, that provided that the encumbrance sought to be registered is in registrable form and creates a rent charge, the Registrar-General has no objection either on the ground of principle or of practicality to the fact that the encumbrance may contain other covenants. According to the Registrar-General the practice has not led to any difficulty. Mr Hall also expressed the Attorney-General's support of the practice as providing a kind of flexible development control which was impracticable to implement under the Development Plan or the Planning Act, 1982. 37. The decision in Blacks Ltd v. Rix suggests that the practice had existed for some time before and it might not be unreasonable to infer from at least 1928, when the encumbrance in that case was created. Certainly, the first edition of Jessup, then entitled Forms and Practice of the Lands Titles Office of South Australia, and published in 1940 while Mr Jessup was Deputy Registrar-General of Deeds in Adelaide, expressly mentions the practice with implicit approval in these terms (at p.147):
    "4. The object of an encumbrance is to secure a money payment
    not being a debt. ... The encumbrance has been used to give notice
    of a restrictive covenant, eg building restriction, the party
    entering into the covenant executing an encumbrance securing a
    yearly charge of a nominal amount, say 1s. The object is to obtain
    registration and thus serve as notice - otherwise such a covenant
    cannot be shown on the certificate of title. Thus, in a variety of
    ways the encumbrance may be employed where the land is intended to
    be charged with some burden not being a debt. It is very important
    to note that in all cases the encumbrance must secure a money
    payment." Mr Jessup later became Registrar-General. He retired in September 1961. The fourth edition of his work was published in 1963 shortly after Blacks Ltd v. Rix had been decided and it was edited by Mr Jessup. In the fourth edition, the note in relation to encumbrances, quoted above, was expanded and Blacks Ltd v. Rix was referred to as being of particular interest because it upheld this type of encumbrance. The relevant parts of the commentary in the fourth edition at p.149 read:
    "4. The object of an encumbrance is to secure a money payment
    not being a debt. ... The encumbrance has been used to give notice
    of a restrictive covenant, eg building restriction, the party
    entering into the covenant executing an encumbrance securing a
    yearly charge of a nominal amount, say 1s., with liquidated damages
    set out in case of any breach. Somewhat the same procedure has been
    used to secure a covenant in partial restraint of trade. The object
    is to obtain registration and thus serve as notice - otherwise such
    a covenant cannot be shown on the certificate of title; see Elliston
    v. Reacher (1908) 2 Chancery 374; Ampol Petroleum Ltd v. Mutton
(1952) 53 SR (NSW) 1 and R J Finlayson and Ors v. Elder Smith and Co
Ltd (1936) SASR 209; Langdale Pty Ltd v. Sollas (1959) VR 634, 22
ALJ 71 and 27 ALJ 366 and 516. It is advisable to annex the
    covenant to defined land and every part of it, see Miles v. Easter
(1933) 1 Chanc 611 and Re Arcade Ltd (1962) VR 274, and Re Barry and
Conveyancing Act (1961) 79 Weekly Notes (NSW) 759; but see, however,
    Newton Abbott Co-operative Society Ltd v. Williamson and Threadgold
    (1952) 1 Chanc 287. As to the restriction to build only as a
    private dwelling house, the erection of flats was upheld to be a
breach, see Re A R Wilson (1949) 49 SR (NSW) 276, and Re Derhams
application (1961) VR 174. Blacks Ltd and others v. Rix and others
    (1962) SASR is of particular interest because it upheld an
    encumbrance containing a restrictive covenant of a type freely
    employed in South Australia for many years." The current edition, namely the 7th, in para.2306 in substance repeats the same commentary and includes references to some more recent decisions. Thus the practice has not only stood for at least 50 years, but has been acted upon, if not with the approval, at least without apparent disapproval by the Registrar-General. 38. Since 1962 (when Blacks Ltd v. Rix was decided) Parliament has on 22 occasions amended the Real Property Act but has not legislated to prohibit the practice. While the absence of any legislation concerning this kind of encumbrance creates no presumption that Parliament has sanctioned or approved the practice (c.f. s.18 of the Acts Interpretation Act, 1915), the fact that Parliament has not legislated to prohibit the practice is a relevant factor for the Court to take into account when considering whether it should interfere with a practice which is now longstanding. 39. Both the Attorney-General and the intervenors contended that the Court should give substantial weight to the established conveyancing practice that has existed since Blacks Ltd v. Rix was decided and should not overrule the decision. 40. The decision in Blacks Ltd v. Rix was that of a single judge of this Court and is, of course, capable of being overruled by a Full Court of this Court. But where a decision has stood for a long time and a commercial or conveyancing practice has developed on the footing that the decision is correct, the Court will be slow to overrule the previous decision: Geelong Harbour Trust Commissioners v. Gibbs, Bright and Co. (supra), where, notwithstanding decisions of the House of Lords which indicated that it was wrong, the High Court did not overrule a decision interpreting a statutory provision which had stood without question for over 50 years and which during that time had been re-enacted. In that case Kitto J said at 519:

    "In my opinion the proper course to take is to adhere to the
    construction which in this country has been settled for so long. A
    legislature whose intention is different may easily give effect to
    it by enacting a different provision. The ease with which this may
    be done gives, in my opinion, compelling significance to the fact
    that it is not been done yet." The position would be a fortiori where, as here, the earlier decision approved a practice which at the time had already been in existence and acted upon for many years. The views of the majority of the High Court were upheld by the Privy Council: 129 CLR 576, the Judicial Committee noting that the adoption of a new interpretation "might create retrospectively rights of action against owners, masters and agents of vessels which had used Australian harbours". 41. The view that a decision of long-standing on the basis of which parties have arranged their affairs should not lightly be disturbed by a superior court was reiterated by the High Court in Babaniaris v. Lutony Fashions Pty Ltd (1987) 163 CLR 1 at 12-14, 22-23 and 28-30. As Mason J observed at p 13 "Adherence to this approach promotes the certainty of the law and protects the integrity of acts and transactions which have taken place in the faith of the law as it has been previously declared." 42. In cases of statutory construction, however, if the court is convinced that a previous interpretation is erroneous, then the court will correct the error and declare the true intent of the statute: Babaniaris v. Lutony Fashions Pty Ltd (supra) at 13, 23. Where the meaning of the statute is doubtful and decisions have been acted upon in such a way as to affect rights and obligations, a court will be reluctant to depart from long standing decisions, particularly where the overruling will affect property rights or disturb titles: Barbaniaris v. Lutony Fashions Pty Ltd (supra) at 22-23. In the Geelong Harbour Trust case, Barwick CJ, with whom Owen J agreed and who constituted the minority opinion, did acknowledge that the legislation in that case "did not affect the title to property or any other matter of conveyancing". In Campbell College, Belfast (Governors) v. Commissioner of Valuation for Northern Ireland (1964) 1 WLR 912, 918 Lord Reid expressed the principle in these terms:
    "I would not seek to lay down any general rule as to the
    circumstances which ought to prevent this House from correcting a
    long standing error. But one consideration is, I think, of
    paramount importance. In arranging their affairs people are
    entitled to rely on a decision which appears to have gone
    unchallenged, and it would require some exceptional reason to
    justify a reversal if it appeared that that was likely to create
    any serious embarrassment for those who had acted on the faith of
    what seemed to be settled law." See also Platz v. Osborne (1943) 68
    CLR 133, 137; West Ham Union v. Edmonton Union (1908) AC 1, 4-5;
Brownsea Haven Properties Ltd v. Poole Corporation (1958) Ch 574,
    604, 612; R v. National Insurance Commissioner; ex parte Hudson
(1972) AC 944, 966. As Brennan and Deane JJ noted in Barbaniaris v.
    Lutony Fashions Pty Ltd at 30, "considerations of practical justice
    or injustice may be particularly persuasive". 43. Given the fact that the practice of registering an encumbrance for the purpose of giving notice of a building scheme had been long-standing even before the decision in Blacks Ltd v. Rix, that in Blacks Ltd v. Rix the practice was approved, and that since Blacks Ltd v. Rix was decided the practice has continued, if not with approval, at least without apparent disapproval from the Registrar-General, and that to overrule Blacks Ltd v. Rix would jeopardise, if not invalidate many building schemes already in existence, compelling reasons exist which justify this Court in deciding that it should not now overrule the decision, even if it was satisfied that the decision was wrong. 44. Persons have acquired land on the footing that the covenants are enforceable. To hold now that these covenants are not enforceable is likely to affect adversely the value of their land in circumstances where the price paid for the land would have in part reflected the view that the covenants were enforceable. 45. For these reasons, I would answer the question in the special case as follows. There is nothing in the operation of the Real Property Act, 1886 which renders the covenants contained in the encumbrance, the subject of this action, unenforceable against the plaintiff.

JUDGE2 KING CJ I agree with the answer proposed by Justice Debelle and with his reasons therefore.

JUDGE3 COX J I agree with the reasons and the conclusion of Justice Debelle.