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Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd

Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd

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HIGH COURT OF AUSTRALIA
GUMMOW ACJ,
HAYNE, HEYDON, CRENNAN AND BELL JJ
CUMERLONG HOLDINGS PTY LTD APPELLANT
AND
DALCROSS PROPERTIES PTY LTD & ORS RESPONDENTS
Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd [2011] HCA 27
3 August 2011
S120/2011
ORDER
1.Appeal allowed.
2.Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made 2 September 2010, and in place thereof order that:
(a)the appeal be allowed;

(b)the first and second respondents pay the appellant's costs of the appeal to the Court of Appeal up to and including 11 July 2010 and the third respondent pay the appellant's costs thereafter;

(c)set aside order 3 of the orders of Smart AJ of the Supreme Court made 30 October 2009, and in place thereof:

(i)declare that the change expressed by LEP 194 to the zoning of the land of the appellant, identified as Lot 1 in DP302605, does not have effect to suspend the operation of the restrictive covenant burdening the land of the third respondent, identified as Lot 103 in DP834629; and

(ii)order that the third respondent be restrained, by itself, its servants and agents, from using or permitting the use of Lot 103 in DP834629 for any hospital, or any ancillary or associated purpose, contrary to the restriction imposed by instrument registered on 10 November 1993 pursuant to s 88B of the Conveyancing Act 1919 (NSW);

(d)amend order 4 of the orders of Smart AJ made 30 October 2009 by deleting "Plaintiff pay the defendants' costs of these proceedings" and substituting "First and second defendants pay the plaintiff's costs of these proceedings".

3.The third respondent is to pay the appellant's costs of the appeal to this Court.

On appeal from the Supreme Court of New South Wales
Representation
P J McEwen SC with S B Nash and N M Eastman for the appellant (instructed by Allsop Glover)
B W Walker SC with P Kulevski for the third respondent (instructed by Robert Napoli & Co Solicitors)
Submitting appearance for the first and second respondents
J E Griffiths SC with C C Spruce appearing as amicus curiae on behalf of the Minister for Planning and Infrastructure (instructed by Department for Planning)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

GUMMOW ACJ, HAYNE, CRENNAN AND BELL JJ. This litigation concerns a dispute between owners of neighbouring parcels of land in the vicinity of the intersection of Werona Avenue and Stanhope Road, Killara. This suburb is in the municipality of Ku‑ring‑gai on the North Shore of Sydney. The title to the parcels of land is held under the provisions of the Real Property Act 1900 (NSW), and so may be described as Torrens title.
Dalcross Holdings Pty Limited ("the second respondent") operated a private hospital on one lot ("Lot 101"), and proposed to extend that activity to an area bounded by the corner of Stanhope Road and Werona Avenue. This area includes…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] HCA 27
Decision Date: 3 August 2011

CaseChat Overview and Summary

The High Court of Australia heard an appeal concerning the enforceability of a restrictive covenant burdened on land owned by the third respondent (Dalcross Properties Pty Ltd) for the benefit of land owned by the appellant (Cumerlong Holdings Pty Ltd). The dispute arose when Ku-ring-gai Local Environment Plan No 194 ("LEP 194") amended the Ku-ring-gai Planning Scheme Ordinance, purportedly rendering the restrictive covenant unenforceable to permit the development of a hospital.

The central legal issue before the High Court was whether LEP 194, by its effect on the Ordinance, operated to suspend the restrictive covenant within the meaning of section 28 of the *Environmental Planning and Assessment Act 1979* (NSW). Specifically, the court had to determine if LEP 194 "provided that" the restrictive covenant "shall not apply" and, if so, whether the failure to obtain the Governor's approval as required by section 28(3) rendered the covenant still enforceable.

The High Court reasoned that both the restrictive covenant and LEP 194 were "regulatory instruments" and "environmental planning instruments" respectively. It held that LEP 194, by its engagement with the Ordinance, did effectively provide for the suspension of the restrictive covenant to allow for hospital development. However, this suspension was ineffective because the necessary approval under section 28(3) of the Act had not been obtained. The court applied the principle that a legislative instrument can "provide" for a matter not by express statement but by necessary consequence, drawing an analogy with the interpretation of section 51(xxxvi) of the Commonwealth Constitution.

Consequently, the High Court allowed the appeal, set aside the orders of the Court of Appeal, and declared that LEP 194 did not suspend the restrictive covenant. The third respondent was restrained from using its land for hospital purposes contrary to the covenant, and orders regarding costs were made in favour of the appellant.

Orders

Orders of the court

1. Appeal allowed.

2. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made 2 September 2010, and in place thereof order that:

(a) the appeal be allowed;

(b) the first and second respondents pay the appellant's costs of the appeal to the Court of Appeal up to and including 11 July 2010 and the third respondent pay the appellant's costs thereafter;

(i) declare that the change expressed by LEP 194 to the zoning of the land of the appellant, identified as Lot 1 in DP302605, does not have effect to suspend the operation of the restrictive covenant burdening the land of the third respondent, identified as Lot 103 in DP834629; and

(ii) order that the third respondent be restrained, by itself, its servants and agents, from using or permitting the use of Lot 103 in DP834629 for any hospital, or any ancillary or associated purpose, contrary to the restriction imposed by instrument registered on 10 November 1993 pursuant to s 88B of the Conveyancing Act 1919 (NSW);

(d) amend order 4 of the orders of Smart AJ made 30 October 2009 by deleting "Plaintiff pay the defendants' costs of these proceedings" and substituting "First and second defendants pay the plaintiff's costs of these proceedings".

3. The third respondent is to pay the appellant's costs of the appeal to this Court.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

GUMMOW ACJ, HAYNE, CRENNAN AND BELL JJ (dissent) HEYDON J

The restrictive covenant binding Lot 103 in favour of the appellant's Lot 1 plainly is a "regulatory instrument" within the meaning of s 28(1). LEP 194 is an "environmental planning instrument" because it is a "local environmental plan" which was made by the Minister under s 70 of the EPA Act. This follows from the definitions in s 4. The Ordinance also, as indicated above, is an "environmental planning instrument".Conclusions The appeal should succeed. Within the meaning of s 28(2), LEP 194 is an environmental planning instrument which, by its engagement with the provisions of the Ordinance, including cl 68(2), provides and specifies that, to the extent necessary to serve the purpose of enabling development to be carried out in accordance with LEP 194, the restrictive covenant of which the appellant's land has the benefit shall not apply to the land which it is sought to develop and use for the purposes of a hospital. But LEP 194 cannot have this effect because approval, as required by s 28(3), was not given. LEP 194 did so provide and specify with respect to the suspension of the restrictive covenant in question because, as Handley AJA put it[12], that was a necessary result of the making of LEP 194. This conclusion is contrary to the view of the majority in the Court of Appeal that s 28(3) is only engaged if there be in LEP 194 a statement in terms that a category of regulatory instrument, which includes the restrictive covenant, is not to apply to any development permissible under LEP 194.[12]Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd [2010] NSWCA 214 at [79]‑[80]. Some analogy with respect to the use of the term "provide" in s 28(2) is supplied by the construction which has been given to the power given to the Parliament to make laws with respect to "matters in respect of which [the] Constitution makes provision until the Parliament otherwise provides" (s 51(xxxvi))[13]. In King v Jones[14], Barwick CJ rejected what he understood to be the submission that, in order to "otherwise provide", the Parliament must make a law which in terms refers to the matter elsewhere in the Constitution, so as to expressly displace it; rather, it was enough that the result of the law, "of necessity", displaced the provision.[13]There are twenty‑two provisions in the Constitution to which s 51(xxxvi) applies: Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 647-648.[14](1972) 128 CLR 221 at 240; [1972] HCA 44.Orders The appeal should be allowed, and the third respondent should pay the appellant's costs of the appeal to this Court. The orders of the Court of Appeal should be set aside. In place thereof, the appeal to the Court of Appeal should be allowed, and the first and second respondents should pay the appellant's costs of that appeal up to and including 11 July 2010 (when it appears the third respondent was joined) and the third respondent should pay those costs thereafter. Order 3 of the orders of Smart AJ made 30 October 2009 should be set aside and in place thereof there should be an order:(a)declaring that the change expressed by LEP 194 to the zoning of the land of the appellant, identified as Lot 1 in DP302605, does not have effect to suspend the operation of the restrictive covenant burdening the land of the third respondent, identified as Lot 103 in DP834629; and(b)that the third respondent be restrained, by itself, its servants and agents, from using or permitting the use of Lot 103 in DP834629 for any hospital, or any ancillary or associated purpose, contrary to the restriction imposed by instrument registered on 10 November 1993 pursuant to s 88B of the Conveyancing Act 1919 (NSW).Order 4 should be amended by deleting "Plaintiff pay the defendants' costs of these proceedings" and substituting "First and second defendants pay the plaintiff's costs of these proceedings".

Ratio Decidendi

Legal Principle Established

Established by: HEYDON J

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