City of Mitcham v Eric Andrews Clothier, Judith Ann Clothier and the Development Assessment Commission No. SCGRG 94/87 Judgment No. 4608 Number of Pages 11 Easements and Prescription (1994) 83 Lgera 431 (1994) 62

[1994] SASC 4608

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA OLSSON J

CWDS
Easements and prescription - restrictive covenants - enforceability - Plaintiff encumbrancee of first and second defendant's land - encumbrance purported to prohibit any application for planning consent to subdivide the land - observations as to what constitutes a valid easement and valid restrictive covenant - encumbrance not an easement, there being no identifiable dominant tenement - purported encumbrance not valid as against strangers to original covenant, there being no land identified as benef itting from it, and the covenant constituting the encumbrance not characterisable as being part of a building scheme or scheme of development - plaintiff unable to establish legal basis for enforcement of encumbrance or covenant. Rangeley v Midland Railway Co (1868) LR 3 Ch App 306; London and Blenheim Estates Ltd v Ladbroke Retail Parks Ltd and Ors (1994) 1 WLR 31; Municipal District of Concord v Coles (1906) 3 CLR 96; Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143; Pirie and Anor v The Registrar General (1962) 109 CLR 619; Clem Smith Nominees Pty Ltd v Farrelly and Ors (1978) 20 SASR 227; Re Ellenborouqh Park (1956) Ch 131; Riley v Pentilla (1974) VR 547; Burke v Yurilla SA Pty Ltd and Ors (1991) 56 SASR 382; Re Louis and the Conveyancing Act (1971) 1 NSWLR 164 and Brunner and Anor v Greenslade (1971) Ch 993, applied.

HRNG ADELAIDE, 25 May 1994 #DATE 10:6:1994

Counsel for plaintiff:                 Mr G Manos

Solicitors for plaintiff:             Manos and Associates

Counsel for respondents Clothier:     Mr A S Colton

Solicitors for respondents Clothier: Coltons

Respondent Development Assistance
Commission:  No appearance

ORDER
Application dismissed.

JUDGE1 OLSSON J I have before me an application by the two personal defendants (to whom I shall collectively refer as "Clothier") to discharge an interim injunction obtained by the plaintiff and directed to all three defendants, made by a Master on 24 January 1994 and extended by me until judgment in these proceedings.

2. The injunction effectively prohibits the processing of a development application (No 080/D079/93) ("the development application") by the third defendant ("the Commission"). That development application relates to a proposal to divide the land currently comprised in Certificate of Title Register Book Volume 4218 Folio 109, situated at Hillside Road, Blackwood ("the subject land") into what is described as two residential allotments.

3. The relevant history of events giving rise to the present proceedings is, for the most part, not in dispute.

4. The subject land is Allotment 8 Hillside Road, Blackwood, being portion of what was originally a larger parcel of land comprised in Certificate of Title Register Book Volume 4081 Folio 934 ("the original parcel"). In March 1983 application was made by the then registered proprietors to the plaintiff (as the relevant planning authority) to divide certain of the original parcel into nine separate allotments. On 21 June 1983 the plaintiff issued a formal planning consent to that proposal, subject to the following six specific conditions:-
    "1. That an encumbrance be entered on the title of each
    new allotment prohibiting the future division of that
    allotment.
    2. That no vehicular access be provided for Lot 8
    directly to Main Road.
    3. That corner cut offs measuring 4.5 x 4.5 metres be
    provided at the junction of Plymouth Avenue and Hillside
    Road with Main Road and such cut off be vested in
    Council as road reserve.
    4. That drainage easements providing for the proper
    disposal of stormwater from the allotments be provided.
    5. That allotment 9, allotment 4 and portions of lot 6
    and 7, lying to the South East of a line drawn from the
    intersection of the western boundary of lot 4 with the
    southern boundary of lot 6 to the intersection of the
    common boundary between lots 7 and 8 with the southern
    boundaries of these lots, which also forms the western
    alignment of Easement A, be vested in Council free of
    cost as a recreation reserve.
    6. That no dwellings be erected below the 203 metre
    contour level."

5. Consequent upon the issue of consent the then owners of the original parcel caused the areas of land referred to in paragraph 5 above to be vested in the plaintiff and executed the required encumbrance in favour of the plaintiff as to the balance of the land; whereupon fresh certificates of title for the new Allotment Nos 1-3 and 5-8 respectively, expressed to be subject to that encumbrance, duly issued. The new title for the subject land was, as already indicated, recorded as Certificate of Title Register Book Volume 4218 Folio 109 ("the new title"), whilst the encumbrance bore registered number 5129198. I shall advert to that encumbrance simply as "the encumbrance". It was expressed in these terms:-
    "MEMORANDUM OF ENCUMBRANCE
    Allotments 1, 2 and 3 in Deposited Plan No and
    Allotments 5, 6, 7, and 8 in Deposited Plan No. 12558
    being portion of the land comprised in and described by
    Certificate of Title Register Book VOLUME 4081 FOLIO 934.

ESTATE AND INTEREST An estate in fee simple.
    ENCUMBRANCES Nil. ENCUMBRANCER WARRALONG PTY LTD of 223
    Glen (Full name address and Osmond Road Frewville 5063
    and occupation) TERRA FIRMA DEVELOPMENTS PTY LTD of 274
    Melbourne Street North Adelaide 5006 ENCUMBRANCEE THE
    CORPORATION OF THE CITY OF (Full name address and
    MITCHAM of 131 Belair Road occupation) Torrens Park
    5062. (a) State the term of the THE ENCUMBRANCER HEREBY
    ENCUMBERS Annuity. If for life use THE ESTATE AND
    INTEREST HEREIN the words "During his SPECIFIED IN THE
    LAND ABOVE lifetime" DESCRIBED FOR THE BENEFIT OF THE
    ENCUMBRANCEE SUBJECT HOWEVER TO THE ENCUMBRANCES AS
    SHOWN HEREON WITH AN ANNUITY OF TEN CENTS ($0.10 ) TO BE
    PAID TO THE ENCUMBRANCEE (a). AT THE TIMES AND IN THE
    MANNER FOLLOWING (b)
    (b) State the times On the 1st day of January ineach
    appointed for payment of and every year (if demanded)
    the Annuity and any special covenants IT IS COVENANTED
    BETWEEN THE ENCUMBRANCER AND ENCUMBRANCEE AS FOLLOWS:-
    That the Encumbrancer will not make application to
    divide the said land pursuant to the provisions of the
    Planning Act 1982 as amended."

6. I am told that the Encumbrancees very rapidly thereafter sold the allotments not vested in the plaintiff, for residential building purposes.

7. On 11 June 1983 Clothier entered into a contract to purchase the subject land. That contract, which was plainly executed by the Vendors in anticipation of the formal issue of planning consent, made no specific mention of the encumbrance and, in an affidavit sworn by Judith Ann Clothier, it is deposed that Clothier did not engage their own solicitor or broker to complete the purchase and, consequently, the existence of the encumbrance or its terms was not specifically brought to their attention. However, it must be noted that, not only was the existence of the encumbrance noted on the new title for the subject land, but the memorandum of transfer of Allotment 8, signed by Clothier on or about 9 February 1984, was clearly expressed to be subject to it.

8. Subsequent to purchasing the subject land Clothier decided that they would seek to divide it into two allotments for the purposes of re-sale, to maximize the return from such sale. To that end, on 21 September 1993, they ultimately lodged the current development application with the Commission.

9. This actually followed an earlier application for consent to divide the subject land into two allotments, lodged with the plaintiff on 13 November 1991, which had a somewhat chequered history, involving proceedings before the Planning Appeal Tribunal - there being a dispute as to who was the appropriate planning authority to deal with it. Apparently that application pre-supposed that the plaintiff would purchase one allotment as an accretion to the adjacent public reserve. Eventually the 1991 application was rejected on planning grounds.

10. The plaintiff has, at all times, resisted the current development application, both on merit and also because it has been lodged contrary to the terms of the encumbrance. The present proceedings were initiated to enforce the terms of the encumbrance.

11. It is said that the subject land falls within the R1C Zone of the City of Mitcham, in which the stipulated primary land use is for detached residential dwellings on land of a minimum lot size of 930 square metres, such an area being about one quarter of the total size of the subject land.

12. Distilled to its essence the contention of Clothier is that the encumbrance is not enforceable by the plaintiff, as a restrictive covenant, because:-
    - it does not constitute or relate to a building scheme,
    but simply constitutes an attempt by the Council to
    implement legislative controls on development, outside
    of the relevant planning legislation.
    - it constitutes a mere prohibition on applying for land
    division and thus operates as a denial of the
    administrative function of the Commission and of the
    statutory right of Clothier to resort to the planning
    mechanism erected by statute.
    - it is not part of a building scheme and is not, on its
    face, intended to benefit any identifiable adjacent
    land.
    - there is no relationship of dominant and servient land
    (and specifically no land of the plaintiff which could
    be said to constitute dominant land which attracts the
    benefit of the restrictive covenant contained in the
    encumbrance).
    - the restrictive covenant in the encumbrance is
    therefore in gross and unenforceable.
    - the restrictive covenant does not otherwise fall into
    any category which the law both recognises and is
    prepared to enforce. It thus becomes necessary to
    consider some basic principles related to restrictive
    covenants.

13. I take, as a fundamental commencement point, what fell from Lord Cairns LC in Rangeley v Midland Railway Co (1868) LR 3 Ch App 306 at 311 (recently reiterated in London and Blenheim Estates Ltd v Ladbroke Retail Parks Ltd and Ors (1994) 1 WLR 31 at 36) ("London and Blenheim"), when he declaimed:-
    "There can be no such thing according to our law, or
    according to the civil law, as what I may term an
    easement in gross. An easement must be connected with a
    dominant tenement."

14. As was accepted by Barton J in Municipal District of Concord v Coles
(1906) 3 CLR 96 at 110 an easement was, from very early times, classicly defined as:-
    "... a privilege without profit, which the owner of one
    neighbouring tenement hath of another, existing in
    respect of their several tenements, by which the
    servient owner is obliged 'to suffer or not to do'
    something on his own land, for the advantage of the
    dominant owner."

15. A covenant which falls within that definition is said to run with the land, so as to be binding upon, or enforceable by, subsequent purchasers of the servient or dominant land, as the case may be.

16. Such a situation is to be contrasted with other types of restrictive covenant, which do not meet the definition criteria, but, nevertheless, may be enforceable by virtue of the well known principle espoused by Cottenham LC in Tulk v Moxhay (1848) 2 Ph 774 (41 ER 1143 at 1144) in these terms:-
    "... That this Court has jurisdiction to enforce a
    contract between the owner of land and his neighbour
    purchasing a part of it, that the latter shall either
    use or abstain from using the land purchased in a
    particular way, is what I never knew disputed. Here
    there is no question about the contract: the owner of
    certain houses in the square sells the land adjoining,
    with a covenant from the purchaser not to use it for any
    other purpose than as a square garden. And it is now
    contended, not that the vendee could violate that
    contract, but that he might sell the piece of land, and
    that the purchaser from him may violate it without this
    Court having any power to interfere. If that were so,
    it would be impossible for an owner of land to sell part
    of it without incurring the risk of rendering what he
    retains worthless. It is said that, the covenant being
    one which does not run with the land, this Court cannot
    enforce it; but the question is, not whether the
    covenant runs with the land, but whether a party shall
    be permitted to use the land in a manner inconsistent
    with the contract entered into by his vendor, and with
    notice of which he purchased. Of course, the price
    would be affected by the covenant, and nothing could be
    more inequitable than that the original purchaser should
    be able to sell the property the next day for a greater
    price, in consideration of the assignee being allowed to
    escape from the liability which he had himself
    undertaken. That the question does not depend upon
    whether the covenant runs with the land is evident from
    this, that if there was a mere agreement and no
    covenant, this Court would enforce it against a party
    purchasing with notice of it; for if an equity is
    attached to the property by the owner, no one purchasing
    with notice of that equity can stand in a different
    situation from the party from whom he purchased."

17. However, as was pointed out by Kitto J in Pirie and Anor v The Registrar General (1962) 109 CLR 619 at 628:-
    "But it is basic to the doctrine of Tulk v Moxhay that
    it applies only to a restriction created to preserve the
    value of other land, and that the restriction is not
    enforceable against derivative owners except for the
    protection of that other land. A familiar line of
    cases, of which it will suffice to mention London County
    Council v Allen; Chambers v Randall; Miles v Easter and
    Zetland (Marquess) v Driver shows that a restriction
    will be no longer enforceable against an owner of the
    subject land (other than the covenantor) once the person
    entitled to the benefit of the covenant has become a
    stranger in title to the land benefited. Accordingly a
    restriction cannot burden the land to the use of which
    it relates unless either (a) it is so created that the
    benefit of it is annexed to other land - conferred so as
    to amount to an added incident of the title and
    accordingly to pass upon and by virtue of a transfer
    without any need of specific assignment: Rogers v
    Hosegood - or (b) it is made by the terms of its
    creation susceptible of assignment to a purchaser upon a
    sale of that other land. Annexation of the benefit to
    other land may be produced in either of two ways: by the
    use of appropriate language in the instrument creating
    the restriction, or by the circumstance that the
    covenant was imposed on a disposition of the subject
    land as one of the lots covered by a common building
    scheme in which restrictions have been placed on all
    lots for their mutual advantage. Thus there are only
    three kinds of restriction which burden the land to the
    use of which they relate - restrictions the benefit of
    which is by express language annexed to the protected
    land, restrictions the benefit of which is annexed to
    the protected land by virtue of a building scheme, and
    restrictions the benefit of which is assignable with the
    protected land."

(See also the discussion of this aspect by Bray CJ in Clem Smith Nominees Pty Ltd v Farrelly and Ors (1978) 20 SASR 227 at 234-5, who summed up the situation by saying:-
    "In my view the law is now clear in Australia that the
    burden of restrictive covenants will only run with the
    land in equity against a subsequent holder of the land
    with notice of the covenant when the covenant is entered
    into for the benefit of some parcel of land, or possibly
    some interest in land. The burden of a covenant in
    gross will not so run; such a covenant only binds the
    original covenantor. The Torrens system certainly, in
    my view, imposes no more extensive burdens on subsequent
    registered proprietors of land under the system. Indeed
    in some respects, as will be seen, the burden might be
    less. The legislation in some States makes provision
    for the noting of restrictive covenants on the register.
    The South Australian Act does not, but Napier CJ was
    able to hold in Blacks Ltd v Rix that s.249 of the Act
    enables the Court to give effect to an equitable
    interest under the rule in Tulk v Moxhay against a
    registered proprietor who took the land with notice of
    the restriction. That case was the familiar case of a
    building scheme attracting the rule in Elliston v
    Reacher. Restrictive covenants with regard to the type
    of building to be erected on the land sold were
    contained in a registered encumbrance given by the
    original purchaser. These covenants were clearly for
    the benefit of the neighbouring owners, purchasers under
    the same scheme. Their lots were regarded as
    quasi-dominant tenements."

18. It must, however, be borne in mind that Bray CJ further pointed out (at 252) that his researches had failed to elicit any case in which a Tulk v Moxhay covenant had been upheld where (as here) the covenantee was not the vendor of the relevant land, but another party altogether.)

19. It has long since been established by authorities such as Re Ellenborough Park (1956) Ch 131 and Riley v Pentilla (1974) VR 547 and also reitered in London and Blenheim that there are four essential characteristics of a true easement, namely:- (1) there must be a dominant and a servient tenement; (2) an easement must "accommodate" (i.e. confer a benefit on) the dominant tenement, as such, in the sense that it does not purport to grant benefits for purposes unconnected with it, must have some natural connection with it, and is reasonably necessary for the enjoyment of it; (3) the dominant and servient owners must be different persons; and (4) the right conferred must be capable of forming the subject matter of a grant, in the sense discussed by Evershed MR in Re Ellenborough Park at 164. Against the above background of principle two issues specifically arise for determination in the instant case. They are:-
    (1) Can it fairly be said that the encumbrance evidences
    a restriction, the benefit of which is annexed to the
    protected land by virtue of a building scheme?

(2) In any event, is it nevertheless an easement in the
    traditional sense and enforceable accordingly?

20. It is, I trust, not doing Mr Manos, of counsel for the plaintiff, an injustice to say that he argued the second proposition somewhat faintly - seeking to identify an adjacent road probably vested in the plaintiff as a potential dominant tenement. He could not, however, identify any specific possible benefit to it and could not even point to evidence that the relevant road was in fact vested in the plaintiff. In my view there is nothing which could remotely establish characteristic (2) above, on the material before me.

21. This case therefore stands or falls on whether the plaintiff has been able to make good its first proposition.

22. It seems to me that the necessary answer must be in the negative, for two quite separate reasons.

23. In the first place, it is impossible to perceive any identification, in the instrument constituting the encumbrance, of any specific land intended to be benefited by it, this being a requirement - even in a building scheme.

24. As Bray CJ said in Clem Smith Nominees Pty Ltd v Farrelly and Ors at 237:-
    "Whatever may ultimately be held to be the law of
    England, however, 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."

25. The same point was made by Kitto J in Pirie and Anor v The Registrar General at 629:-
    "They ... (the restrictions in the encumbrance
    instrument) ... are not annexed to other land by the
    language of the instrument. If they are annexed to
    other land by a building scheme, at least the evidence
    does not show it. (What would have had to be shown is
    that the conditions were fulfilled in this case which
    were laid down in Elliston v Reacher; Reid v Bickerstaff
    and Kelly v Barrett.) Nor is there anything in the
    material before us to point to any other land as being
    land upon a disposition of which the covenant was
    intending to be assignable to the new owner. It is not
    finally settled by authority whether a restriction can
    fall within the third of these kinds unless the land
    with which it is intended to be assignable is defined by
    the instrument itself which creates the restriction.
    Bennett J held that it could not, that is to say he held
    that extraneous evidence to identify that land is
    inadmissible except in so far as, on ordinary
    principles, it may be looked at in aid of
    interpretation: Miles v Easter. Upjohn J, on the other
    hand, has held that the necessary identification may be
    found entirely in evidence of surrounding circumstances:
    Newton Abbott Co-operative Society Ltd v Williamson and
    Treadgold Ltd. Learned writers on the subject have
    supported the opinion of Bennett J: See Sir Lancelot
    Elphinstone's article (1952) 68 LQR 353, and Preston and
    Newsom, Restrictive Covenants Affecting Freehold Land,
    3rd ed. (1960) p.27. But in the present case there is
    nothing either in the instrument containing the covenant
    or in the evidence which has been adduced, to identify
    any land as being land which the covenant was designed
    to benefit. For all that appears the covenant was a
    covenant in gross. If it was, the restrictions were
    never binding save as between the parties to their
    creation and therefore cannot be said to have subjected
    the appellants' land to any burden: cf Concord Municipal
    District v Coles."

26. These authorities were adopted by the Full Court in Burke v Yurilla SA Pty Ltd and Ors (1991) 56 SASR 382 at 389. The possible qualification on the principle identified in London and Blenheim, at first instance, (1992) 1 WLR
1278 at 1283, related to extrinsic evidence, does not, in my opinion, fairly arise for consideration in this case.

27. On that basis alone the plaintiff's claim to enforcement of the restrictive covenant must necessarily fail.

28. Secondly, I find it impossible to perceive how what occurred in this case can reasonably be characterised as being part and parcel of a building scheme in the relevant sense, to which the approach espoused by the Full Court in Burke v Yurilla SA Pty Ltd and Ors (relied on by the plaintiff) could possibly attach.

29. In the case at bar all that is revealed by the evidence is that, in 1983, planning consent was sought and obtained to divide the original parcel so as, inter alia, to produce seven allotments capable of use for residential property development, subject to certain restrictions imposed by the plaintiff prohibiting the erection of dwellings, on the "flood plain" area, below the 203 metre contour level. It is also apparent that the plaintiff was, at the time, seeking, specifically in relation to the subject land, to prohibit vehicular access from it directly to Main Road - an aspect which, it obviously considered, was most readily enforced by the registration of the encumbrance.

30. The most noteworthy feature of the encumbrance is that it contains only one covenant - that the subject land is not to be the subject of an application to divide it. There are no other provisions related to restrictions on nature and extent of permissible building activity typically seen in building scheme encumbrances. The overwhelming inference is that the covenant was designed to meet concerns which were solely those of the plaintiff related to collateral aspects, rather than to establish some form of building standards in the area. There is simply no evidence of intention to protect other landowners acquiring allotments or to preserve the value of residual land from the original parcel, pending and after sale.

31. The essential notion of creation of reciprocal rights, enforceable between all allotment purchasers and their successors in title, which is inherent in a building scheme (or as the learned authors of Bradbrook and Neave, "Easements and Restrictive Covenants" would prefer to classify it - "a scheme of development"), as appears from authorities such as Re Louis and the Conveyancing Act (1971) 1 NSWLR 164 and Brunner and Anor v Greenslade (1971) Ch 993. Such a feature cannot be discerned in the encumbrance.

32. Whilst it is true that all purchasers of portions of the original parcel purchased or obtained title from a common source and that a common restriction was placed on all allotments sold as building sites, what is missing is clear evidence of satisfaction of the other essential ingredients, namely that:-
    . the restrictions were intended to be for the benefit of the
    owners of lots sold (as contrasted with the plaintiff, who was
    never intended to be a building owner); and
    . the parties to these proceedings acquired their allotments on
    the express footing that the relevant restriction imposed was
    intended to endure for the benefit of all other allotments in the
    general scheme.
    (Each of these aspects, and the authorities
    pertinent to them, are discussed in the text by Bradbrook and
    Neave at pp236 to 243 inclusive.)

33. In this instance it is important to note that the party seeking to enforce the covenant could not possibly be said to be one who acquired land on the footing that the restriction was intended for the benefit of all other lots in a general scheme of development, of which the land vested in it was, relevantly, a portion. It has never been suggested that any relevant benefit attached, or was intended to be attached, to the allotments which were transferred to the plaintiff for reserve purposes.

34. It follows that the plaintiff has failed to establish any basis recognised by the law upon which it can obtain and maintain the relief sought by it.

35. The interim injunction in this matter must be vacated and the plaintiff's application will be dismissed.