Double Bay Bowling Club v Council of the Municipality of Woollahra trading as Woollahra Municipal Council

Case •

[2020] NSWSC 1861

•

08 December 2020

No judgment structure available for this case.

Supreme Court


New South Wales

  • Summary available
Medium Neutral Citation: Double Bay Bowling Club v Council of the Municipality of Woollahra trading as Woollahra Municipal Council [2020] NSWSC 1861
Hearing dates: 26, 27, 28 and 29 October 2020
Date of orders: 17 December 2020
Decision date: 08 December 2020
Jurisdiction: Equity - Real Property List
Before: Rein J
Decision:

[112]

Catchwords:

LAND LAW — Restrictive covenants — Extinguishment of restrictive covenants — Extinguishment by order of court – in 1948 Woollahra Municipal Council (“the Council”) sold Lots 9 and 101 to Double Bay Bowling Club (“the Club”) and imposed as a condition of sale a Restrictive Covenant which prohibited the Club from using the lots for any purpose other than a recreational purpose connected with a bowling club (“the Covenant”). Lot 101 is used as a bowling club. Lot 9 had, until 2018, a cottage which was rented to the Club’s greenkeeper. The cottage has been demolished and two townhouses are now being constructed on Lot 9 pursuant to a development consent given by the Council in 2017 – the Club seeks to have the Covenant removed from Lot 9 on a number of grounds including obsolescence – town planning evidence that use of Lot 9 for recreational purposes is now prohibited under current zoning and use as a residence for a greenkeeper for the Club’s bowling club (at Lot 101) was in breach of the Covenant and was not a recreational purpose – Consideration of discretionary factors under s89(1) of the Conveyancing Act 1919 (NSW) (“the Conveyancing Act”) – Held: the Covenant imposed on Lot 9 should be extinguished pursuant to s 89(1)(a) and (c) of the Conveyancing Act because it was obsolete, impeded the reasonable use of the lot and because there was no practical benefit that would be lost or likelihood of harm to the Council if the Covenant were extinguished.

CONTRACTS — Formation — Agreement – the Council asserts it and the Club entered into a binding agreement pursuant to which the Council agreed to removal of the Covenant and in return the Club agreed to a new restriction that would require the Club on sale of Lot 9 to pay to the Council an amount based on what was described as the “Before and After Method” of valuation – whether the parties entered into a binding agreement – whether a typed name in email constitutes a signature – Masters v Cameron categories of agreement considered and whether the parties intended to make a concluded bargain; whether the requirements of s 54A of the Conveyancing Act were met – Held: no binding agreement was entered into between the parties. Alternatively, if there was a binding agreement, that agreement was abandoned by the parties.

Legislation Cited:

Conveyancing Act 1919 (NSW)

Electronic Transactions Act 2000 (NSW)

Environmental Planning and Assessment Act 1979 (NSW)

Interpretation Act 1987 (NSW)

Land and Environment Court Act 1979 (NSW)

Local Government Act 1919-1943 (NSW)

Woollahra Local Environmental Plan 2014 (NSW)

Cases Cited:

Ashfield Municipal Council v Australian College of Physical Education Ltd (1992) 76 LGRA 151

Australia & New Zealand Banking Group Ltd v Widin (1990) 102 ALR 289

Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622

Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404

Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153

Capital Club Pty Ltd v Commissioner of State Revenue [2007] VSC 108; (2007) 17 VR 357

Claremont 24-7 Pty Ltd v Invox Pty Ltd [No 2] [2015] WASC 220

Driscoll v Church Commissioners for England [1957] 1 QB 330

Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd [2000] NSWCA 28

Effeney v Millar Investments Pty Ltd [2011] NSWSC 708

Essendon Corporation v Cox [1967] VR 545

Fincob Pty Ltd v Campbelltown City Council [2010] NSWSC 349

Fitzgerald v Masters (1956) 95 CLR 420

Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157

Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke [2008] NSWSC 743; (2008) 14 BPR 26,131

Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd [2012] 1 WLR 3674

Harvey v Edwards Dunlop & Co Ltd (1927) 39 CLR 302

HDI Global Specialty SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296

John Hillam v JPSF Pty Ltd [2017] NSWSC 1510

Kassabian & Rawstron Investments Pty Ltd v Lagonicos (1993) NSW ConvR 55-690

Kastro Pty Ltd v ABD Holdings Pty Ltd [2008] NSWSC 1291

Laris v Lin (No 2) (2016) 18 BPR 35,917

Lizzio v Ryde Municipal Council (1983) 155 CLR 211

Loclot Pty Ltd v Pullen [2003] NSWSC 67

Masters v Cameron (1954) 91 CLR 353

Northern Territory v Griffiths [2019] HCA 7; (2019) 364 ALR 208

Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605

Re Markin; Re Roberts [1966] VR 494

Re Mason and the Conveyancing Act [1962] NSWR 762

Re Robinson [1972] VR 278

Re Truman, Hanbury, Buxton & Co Ltd’s Application [1956] 1 QB 261

Spencer v The Commonwealth of Australia [1907] HCA 82; (1907) 14 ALR 253

Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119

Stockport Metropolitan Borough Council v Alwiyah Developments [1983] 52 P&CR 278

Summers v Commonwealth (1918) 25 CLR 144

The Owners – Strata Plan 85044 v Murrell; Murrell v The Owners – Strata Plan 85044 [2020] NSWSC 20

Thomson v McInnes (1911) 12 CLR 562

Webster v Bradac (1993) 5 BPR 12,032

Welsh v Gatchell [2009] 1 NZLR 241

Texts Cited:

Edgeworth, B, Butt’s Land Law (Thomson Reuters, 7th ed, 2017)

Heydon, JD, Heydon on Contract (Thomson Reuters, 2019)

Category:Principal judgment
Parties: Double Bay Bowling Club (Plaintiff)
Council of the Municipality of Woollahra trading as Woollahra Municipal Council (Defendant)
Representation:

Counsel:
Mr J Lazarus SC with Mr M Sheldon (Plaintiff)
Mr T Lynch SC with Mr D Meyerowitz-Katz (Defendant)

Solicitors:
Lazarus Legal (Plaintiff)
HWL Ebsworth Lawyers (Defendant)
File Number(s): 2020/159028
Publication restriction: Nil

Judgment

  1. The Plaintiff, the Double Bay Bowling Club (“the Club”) (for whom Mr J Lazarus SC and Mr M Sheldon appear) is a company limited by guarantee and owns and operates a bowling club at 18 Kiaora Road, Double Bay in the eastern suburbs of Sydney NSW. The Club owns two parcels of land, one known as “Lot 101” on which the three lawn bowls greens and a clubhouse are located (and the address of which is 18 Kiaora Road, Double Bay) and another parcel “Lot 9” which is known as 42 Glendon Road, Double Bay. The rear of Lot 9 abuts Lot 101. Lot 9 for many years had a cottage on it which was used as a residence for the Club’s greenkeeper. In 2018 the cottage was demolished and there are now two townhouses being constructed on the site which are almost complete.

  2. The Defendant, Woollahra Municipal Council (“the Council”) (for whom Mr T Lynch SC and Mr D Meyerowitz-Katz appear), is a statutory body created under the Local Government Act 1919-1943 (NSW) (“the LGA”), the municipality of which includes Double Bay.

  3. Lot 101 and Lot 9 (together with another parcel of land which is known as “Lot 100”) were sold to the Club on 29 January 1948 by the Council and the sale included an agreement by the Club to a restricted covenant, the terms of which are as follows (at CB3 1262):

“And for the consideration aforesaid the Transferees for themselves their successors and assigns hereby covenant with the Transferror and its successors that the lands hereby transferred shall not except with the written consent of the Transferror or its successors be used for any purposes other than recreational purposes in connection with a Bowling Club as at present or in any other manner in the future constituted And that no building or buildings other than for such recreational purposes shall be erected on the said lands or any part thereof and that no such building shall be erected except of designs and materials and of heights and in accordance with plans and specifications first approved in writing by the Transferror or its successors And that the approval herein mentioned is in addition to and not in substitution for the approval mentioned in Division 4 of Part XI of the Local Government Act 1919-1946 and that there shall be no appeal from the decision of the Transferror or its successors as the case may be given under or in pursuance of the above rights or consent and approval And for the purposes of Section 88 of the Conveyancing Acts 1919-1943 It is hereby agreed and declared that:

1. The lands to which the benefit of this covenant is intended to be appurtenant are the lands comprised in and known as Glendon Road and Kiaora Road in the Municipality of Woollahra.

2. The land which is to be subject to the burden of the foregoing covenant is the land hereby transferred.

3. The said covenant may be released varied or modified by the Council or any successor of such Council constituted as such under the Local Government Act 1919-1946 or any Act amending the same Provided always that notwithstanding anything herein contained the benefit of the covenant herein set out shall not merge in the rights which the public or others may have in the abovementioned roads but shall remain separate and capable of being released varied or modified as above set out without any further consent or approval whatsoever.”

(Emphasis added).

I shall in the balance of these reasons refer to this as “the Covenant”.

  1. It should be noted that the Covenant identifies that the “lands to which the benefit of this covenant is intended to be appurtenant are the lands comprised in and known as Glendon Road and Kiaora Road in the Municipality of Woollahra.” In 1948 a restrictive covenant, even one obtained by a local council, had to benefit specific identified land.

  2. Between 2015 and 2016 there were discussions between representatives of the Club and the Council concerning the Covenant. This was in the context of the Club’s concerns as to declining membership and an associated decline in revenue. The Club in 2015 thought that it could build townhouses on Lot 9 and rent out these townhouses, thereby obtaining a degree of financial security for itself going into the future. The Club in the discussions with Council in 2015 indicated through two of its directors that it did not intend to sell the townhouses when constructed. The Council indicated a willingness to agree to effective removal of the Covenant, but was keen to ensure that if the townhouses were sold the Council would receive compensation in effect for removal of the Covenant. There is disagreement as to the outcome of those discussions, which I shall explain more fully below.

  3. The Club seeks an order pursuant to s 89(1) of the Conveyancing Act 1919 (NSW) (“Conveyancing Act”) that the Covenant be extinguished contending that it is “obsolete”, that continued existence of the Covenant would impede the reasonable user of the land subject to the Covenant and extinguishment of the Covenant will not injure the Council, and that Council has by its acts or omissions waived the benefit of the Covenant.

  4. The Council resists the claim for extinguishment on each of the grounds advanced by the Club. The Council also asserts that by an exchange of correspondence, the Council and the Club reached what the Council asserts was a binding agreement the terms of which were that:

  1. the Council would agree to the removal of the existing Covenant;

  2. the Club would agree to the imposition of a new “restriction” which would require the Club to pay compensation to the Council in the event that it sold Lot 9 or any of the townhouses to be built (“the Restriction”); and

  3. the compensation payable to the Council would be determined by an independent valuer and based on the “Before and After Method” of valuation. This method requires an assessment of the value of the land with the restrictive covenant in place and the value of the land without the restrictive covenant in place and the Club to pay the Council the difference between those two figures.

  1. Council’s Closing Submissions (“DCS”) at DCS 5 set out a convenient enumeration of the issues that remain for determination (estoppel and misleading and deceptive conduct having been abandoned by the Council) on the parties’ respective cases:

“Section 89 claim

(a) Is the Court’s discretion under s 89(1) of the Conveyancing Act 1919 (NSW) enlivened? This requires consideration of the following:

(i) is the Covenant now obsolete?

(ii) does the Covenant impede the reasonable user of the land without securing any practical benefit to the Council?

(iii) has the Council waived the benefit of the Covenant?

(iv) would the modification or extinguishment of the Covenant cause no substantial injury to the Council?

(b) If the answer to the previous question is “yes”, should the Court exercise its discretion to modify or extinguish the Covenant over Lot 9? If so, should the modification or extinguishment be conditional or unconditional?

Successors in title

(c) Is the question of whether the Covenant binds successors in title to the Club a justiciable controversy, in circumstances where there is no such person in existence?

(d) If the answer to the previous question is “yes”, is the Club entitled to a declaration that the Covenant does not bind successors in title to Lot 9?

Consent under the Covenant

(e) Has the Council, pursuant to the Covenant, given its written consent to the use of Lot 9 for any purpose other than recreational purposes in connection with a bowling club?

Clause 1.9A

(f) Does this Court have jurisdiction to determine whether cl 1.9A(1) of the

Woollahra Local Environment Plan 2014 (NSW) (“2014 LEP”) applies to the Covenant?

(g) If the answer to the previous question is “yes”, does cl 1.9(1) of the 2014 LEP apply to the Covenant?

Council’s cross-claim

(h) Did the Council and the Club, by correspondence between October 2015 and May 2016, enter into a binding agreement?

(i) If the answer to the previous question is “yes”, should the Council be granted specific performance of the Agreement?”

  1. In respect of [8(h)] and [8(i)] above, many issues are advanced by the Club as to why it asserts that there was no binding agreement between itself and the Council and, alternatively, if there was an agreement why it is not enforceable. One of the matters pleaded by the Club was abandoned, namely the defence of common mistake: see paragraph 43 of the Plaintiff’s Supplementary Submissions (“PSS”).

  2. In its case the Club led evidence from Mr Barry Lazarus, who was cross examined and who at all relevant times has been a director and chairman of the Club and the principal person acting on behalf of the Club in connection with the development of Lot 9 and negotiations with the Council. He is also a solicitor and his firm, Lazarus Legal, acts for the Club in these proceedings. To avoid confusion with references to Mr J Lazarus SC I shall refer to Mr Barry Lazarus as Mr B Lazarus.

  3. I received from the Club two sets of written submission: the Plaintiff’s Opening Submissions (“POS”) and the Plaintiff’s Supplementary Submissions (“PSS”). From the Council I received written Opening and Closing Submissions (“DOS” and “DCS”).

  4. The Club also relied on the evidence of Mr Robert Fetherston, who was for a number of years the greenkeeper of the Club, and Ms Jillian Sneyd, a town planner. Mr Fetherston was not cross examined.

  5. The Council relies on the evidence of Ms Toni Zeltzer, Mr Tom O’Hanlon, Mr Tony Myers, Mr Zubin Marolia, and Mr Nick Economou all of whom are Council employees or officers. Ms Zeltzer, Mr O’Hanlon and Mr Marolia were cross examined.

  6. The Council led evidence from Mr David Ryan, a town planner, and Mr Darren Keen, a valuer, both of whom were cross examined, and from a Mr Anthony St Leon who was not cross examined.

Short History of Lots 9, 100 and 101 prior to September 2015

  1. I set out a short history of the land that is not the subject of any dispute (and which is taken principally from a Report of Council dated 31 August 2015, at CB4 2517):

  1. In 1940, Council purchased the parcel of land, which later became Lots 100 and 101 DP 614016, from the Metropolitan Water, Sewerage & Drainage Board (now known as Sydney Water) for £1,599, based on Council’s agreement with the Board that the land would only be used for recreational purposes.

  2. In 1941, Council purchased the land of adjoining Lot 101, which became Lot 9 DP 32788, from Winifred Dingle for £1,150.

  3. In 1942, Council leased the whole of the above lands to Double Bay Bowling Club Limited.

  4. In 1948, Council sold the whole of the above lands to Double Bay Bowling Club Limited, for £8,525 subject to the creation of the Covenant. Council reserved the right to release vary or modify the Covenant.

  5. In 1973, the Club requested a zoning change from Residential 2(b) to Open Space to reduce its rate burden. Council supported the rezoning of the land to recreational purposes in connection with a bowling club.

  6. In 1975, the whole of the Club was rezoned to Open Space Recreation (Private) 6(b) by Interim Development Order No. 15.

  7. In 1976, the Club proposed to build six townhouses on the southern end of the site (being Lot 100 DP 641016) requiring another rezoning and a partial release of the Covenant. The then Metropolitan Water, Sewerage & Drainage Board advised Council that the requested release of the Covenant was a matter for Council to decide. The Board also advised that a monetary contribution should be sought from the Club for the purchase of Open Space land elsewhere in the Municipality.

  8. At its meeting on 14 March 1977, Council agreed to partially release the Covenant for Lot 100 DP 614016, subject to the Club paying a monetary contribution for Open Space, a dedication of 300m2 for public garden and recreation space, and a restriction on the number of townhouses to be developed on the site.

  9. At its meeting on 11 December 1978, Council resolved to agree to the Club’s request to increase the number of townhouses, subject to the Club making a monetary contribution in lieu of the proposed dedication of 300m2 of land.

  10. On 29 August 1980, the Interim Development Order No. 15 was altered to allow part of the then Club site Lot 100 DP 614016, to be developed for the purpose of residential flat building of no more than 12 dwellings. The monetary compensation payable to Council for contribution to open space was $153,461 for 1,040m2 equating to $147.55 per m2. Approval was granted in accordance with BA 1145/80.

  11. On 20 August 1981 Council released the Covenant for Lot 100 DP 614016, and Lot 100 was sold to a developer.

  12. Lot 100 was an area of approximately 3,254m2. Lot 101 is an area of 8,860m2 and Lot 9 approximately 500m2: see T175-176.

  13. In 1988 the remaining Club site comprising Lot 101 DP 614016 and Lot 9 DP 32788 were zoned Residential 2(b) under Local Environment Plan No. 27. The present zoning for the site under Woollahra Local Environmental Plan 2014 (NSW) (“WLEP 2014”) permits residential development.

  14. In 2011 the Club requested Council to release the Covenant in relation to the remainder of the site, comprising Lot 101 DP 614016 and Lot 9 DP 32788. Research was undertaken by Council’s Property staff and the information was provided to Council’s consultant HWL Ebsworth (“HWL”) to seek their advice as to the course of action available to Council in this matter.

  15. HWL reviewed the information and also undertook further investigations regarding the Club’s request and to identify matters Council should consider when deciding whether to release the Covenant and if so, what monetary compensation should reasonably apply and whether Council should impose (as a condition precedent of release) any limit on development.

  16. Some months later, Council received a letter from the Club’s then solicitors Diamond Conway Lawyers, which advised that the Club no longer wished to have the Covenant removed.

  17. In March 2015 Council again received a request from the Club to remove the Covenant from Lot 9 DP 32788 only, with an estimated area of 495.4m2 for the possibility of developing the site to accommodate three units or townhouses in compliance with the current zoning of the property. In 2015 Lot 9 had a single storey cottage which as at 2015 was rented out as a residential dwelling to the Club’s greenkeeper.

History of Lot 9 in and after September 2015

  1. To these facts there need to be added the following further matters occurring from September 2015 onwards:

  1. On 7 September 2015 the Council resolved (see CB4 2542):

“A. THAT Council proceed with the release of the Covenant D796733 following advice from Council’s consultant lawyer HWL Ebsworth Lawyers by undertaking the following actions:

i. Notifying the Club that Council will release the existing Covenant subject to Council imposing a new Covenant or restriction on the title on Lot 9 DP 32788 with the following conditions:

a) Should the land or any part of the land (including any strata lot) be sold or the covenant or restriction is modified or released, compensation will be payable to Council based on a valuation methodology, as agreed by Council and the Club;

b) The new covenant or restriction is to be in place prior to the removal of the existing covenant;

c) All of the Council’s costs including but not limited to legal and registration fees are to be paid by the Club.

B. THAT upon completion of Part A, Council authorise the Mayor and General Manager to execute and affix the council Seal to all necessary documentation to effect the removal of the covenant from Lot 9 DP 32788 only and creation of the new covenant.”

  1. On 29 October 2015 the Council wrote to the Club (at CB4 2583) advising of the resolution and stating:

“…we will agree to release the present Covenant & create a new Covenant on Title so that in the event the land is sold or if any of the units or townhouses proposed to be constructed on the land are sold then Council will be entitled to monetary compensation by a method agreed between Council & [the Club].”

The letter of 29 October 2015 further stated that Council had taken advice from McGees Property (Mr St Leon was the author of that advice) that the most suitable method is the “Before and After Method” which Council “believes to be in the best interest of both parties”. The letter then said:

“We therefore recommend the “Before and After Method” as the means by which the compensation is determined so that if at a later date, [the Club] decides to sell the land or any of the improvement that may be constructed upon the land, there is an agreed method in place which is understood and agreed to by both parties”.

The letter invited comments from the Club: see CB4 2583-2584.

  1. Reference was made on 1 November 2015 at an AGM to the negotiations by the Chairman (Mr B Lazarus), the Secretary and others with the Council “to partially lift the Club’s grounds Covenant to allow residential development of the greenkeeper’s cottage for continuing residential use”: see CB4 2585.

  2. On 13 November 2015 Mr B Lazarus wrote (at CB4 2614) to the Council on behalf of the Club stating:

“I have had a discussion with Mr Tony Myers and confirm we have no objection to adopting the “Before and After Method”.

Please confirm your understanding that the land value will be based upon Council’s rate value.

We request that you now move forward with the removal of the covenant as the Club proposes to brief architects to prepare plans to enable us to submit a DA to Council.”

  1. On 18 November 2015 the Council wrote to the Club (at CB4 2651) stating:

“Council acknowledges your advice that [the Club] has agreed to adopt the “Before and After Method” as the valuation methodology to be used when it is time to determine compensation due to [the Council] should [the Club] decide to sell the land or any of the improvements erected upon the land.

In order that the assessment is transparent and fair and equitable to all parties, the Land Value will be assessed by an independent valuer as at an agreed date of valuation.

Council’s rate value is not appropriate as that valuation is usually only assessed once every three (3) years which may be disadvantageous, if not inaccurate, to the financial outcome of [the Club] in view of rising land values.

Should you have any questions or require further information please call Tony Myers…”

  1. On 2 February 2016 the Club’s directors (at CB4 2655) resolved:

“Covenant and feasibility study follow-up

Barry Lazarus with Peter Wyner to formalise Council / DBBC Covenant lift agreement by contacting Woollahra’s solicitor, Tony Myer.

The likely construction on the site is to be Dual Occupancy (2) Units. Land size restricts the development to two. Rough costing by Barry Lazarus indicated a gross favourable investment income with potential of Capital gain. Concept plans to be commissioned at $150 per hour and thereafter a feasibility study based on construction estimate of $1.2m for both units. Internal and external funding (mortgage) to be compared.”

  1. At a directors meeting on 1 March 2016 Mr B Lazarus reconfirmed that only two townhouses could be built on Lot 9: CB4 2657. The minutes note Mr B Lazarus “received advice that the current market rental can be achieved at $3000 per week for each townhouse.”

  2. Following a follow-up email from Council of 12 May 2016, on 19 May 2016 in an email Ms Caroline Van, a solicitor in the employ of Mr Lazarus’ law firm, wrote to Council (at CB4 2659):

“We refer to your letter dated 18 November 2015 and your email dated 12 May 2016.

We are instructed to advise that [the Club] agrees with the proposed course of action as set out in Council’s letter under reply, i.e. for the land value to be assessed by an independent valuer at an agreed date of valuation.

In the circumstances we would appreciate Council proceeding to arrange the covenant documents and await to receive same in due course.”

It should be noted that the email signature to this email read “Caroline Van Solicitor | Assistant to Barry Lazarus Lazarus Legal Group Pty Ltd”.

  1. On 5 July 2016 Ms Van (as a solicitor and as an assistant to Mr B Lazarus) wrote to the Council (at CB4 2823):

“We refer to your email received on 22 June 2016 at 1:42pm.

We advise Council has been aware of Double Bay Bowling Club’s intention of removing the covenant since the middle of May 2016. There is absolutely no reason why this matter should be [delayed] any further. Council’s solicitors, HWL Ebsworth, is a large firm and there are other solicitors at the firm that could provide Council with the quotation and to prepare the necessary documents to release the existing covenant.

In the circumstances, we await to receive to receive the quotation and to prepare the necessary documents to release the existing covenant as soon as possible.”

  1. On 17 August 2016 Mr Brian Olliver of HWL wrote to Ms Wendy Williams (Property Officer at the Council) stating (at CB4 2715):

“I estimate costs of up to $1850 (calculated at our partner hourly rate for Council) plus GST and out of pocket disbursements to prepare the initial draft documents and provide appropriate advice to Council regarding enforcement of the Restriction on Use. At this stage, we are unable to estimate our further costs to amend the initial draft Restriction if required by Council and to negotiate and finalise any amendments required by the Club. Therefore, there may be some additional costs for any additional such work.”

  1. On 18 August 2016 the Council wrote to the Club seeking its agreement to pay the estimated fee of $1,850. Ms Van, by email of 26 August 2016, said that the Club agreed: CB4 2722. In that email Ms Van asked again as to when the Club could expect to receive the documents.

  2. On 26 August 2016 Ms Williams of the Council advised Ms Van (at CB4 2722):

“Thank you for your confirmation, we will instruct our solicitor to proceed with the matter and let you know when you will receive the draft document.”

  1. On 23 November 2016, Ms Van asked for an update (see CB4 2820) and the response was Ms Williams was waiting for a response from Council’s solicitors and “will get back to you when I can” (CB4 2820).

  2. On 18 July 2017 the Club lodged a Development Application Form (“DA”) with the Council for demolition of the cottage on Lot 9 and construction of dual occupancy building with basement parking level and Strata Title subdivision (CB4 2839). The DA contained the following:

“Demolition of existing dwelling house and construction of an attached dual occupancy building with basement parking level and Strata Title subdivision.”

It also contained the following words at the bottom of that panel:

“single storey residence (Double Bay Bowling Club greenkeeper) and including DBBC WC facilities”.

The “change of use” box was not ticked.

  1. On 3 January 2018 the Council gave a Development Consent (No. 336/2017/1) to the dual occupancy plan: CB5 3029-3078.

  2. After consent was obtained the Club commenced demolition of the cottage and the outdoor toilet.

  3. During the course of construction there have been two problems. First there has been litigation brought by the owners of No 31 Glendon Road against the Club. Those proceedings (which are ongoing) relate to piling work conducted by the Club’s building and the alleged consequences of that work and have proven to be very expensive for the Club (which has incurred costs of in excess of $300K). Secondly the costs of construction have proven to be far in excess of what was anticipated.

  4. On 16 January 2020, Mr B Lazarus, as solicitor acting on behalf of the Club, wrote to the Council (CB5 3556). That letter advised the Council:

“Whilst it has always been the intent of the Club that the residential properties were to be held by the Club as rental properties and not to be sold, circumstances have arisen during the construction of the two residential properties that has caused the cost of the build to escalate significantly, namely legal action with the neighbours.

As a result of the escalation of costs, it is more than likely that the Club will need to sell at least one of the townhouses in order to recover the significant cost of the build.”

In the letter Mr B Lazarus noted that the Covenant remained on the title and then said:

“The purpose of this letter is to request that Council now proceed with the release of [the Covenant] pursuant to and in accordance with the recommendation from the Corporate and Works Committee Report.”

  1. On 22 January 2020 the Council’s solicitor HWL wrote to Mr B Lazarus at Lazarus Legal and enclosed a Release of the Covenant and a new version of the restriction sought by the Council (CB5 3559). The proposed restriction included a detailed Annexure A which set out a number of provisions including the following:

“2. Covenant D796733

2.1 The Registered Proprietor and the Prescribed Authority each irrevocably acknowledge the following:

(a) that prior to the date of this Restriction on Use, the Land was subject to the Covenant;

(b) that under the Covenant, the Land must not except with the written consent of the Prescribed Authority, be used for any purpose other than recreational purposes in connection with a bowling club and no building or buildings other than for recreational purposes shall be erected on the Land;

(c) that at the request of the Registered Proprietor, the Prescribed Authority agreed to release the Covenant without the Prescribed Authority seeking any monetary compensation subject to the creation of this Restriction on Use thereby enabling the Registered Proprietor to undertake the Proposed Development if approved by the Prescribed Authority.

(d) that the Proposed Development is approved under the Development Consent; and

(e) that construction of the Approved Development has commenced on the Land.

3. Terms of Restriction of Use

3.1 The Registered Proprietor irrevocably covenants as follows:

(a) that neither the Land nor any part of the Land (including any strata title lot) shall be transferred, assigned or otherwise disposed of; and

(b) that the Registered Proprietor (including any registered mortgagee of the Land or any other person having an interest in the Land) shall not seek any order in accordance with Section 89 of the Conveyancing Act 1919.

3.2 If:

(a) the Land or any part of the Land (including any strata title lot) is transferred, assigned or otherwise disposed of (including by any mortgagee exercising a power of sale); or

(b) this Restriction on Use is modified or extinguished (either wholly or partially)

then the Registered Proprietor or any mortgagee exercising a power of sale must pay the Compensation to the Prescribed Authority within fourteen (14) days of determination of the Compensation in accordance with this Restriction.

3.3 If the Compensation is payable in accordance with clause 3.2:

(a) the Compensation shall be determined by a Valuer as agreed by the Registered Proprietor and the Prescribed Authority in writing or failing such agreement, by a Valuer as nominated by the then President of the Institute upon the written request of either or both of the Registered Proprietor and the Prescribed Authority; and

(b) the Compensation shall be determined by the Valuer in accordance with the “Before and After Method” of comparing the assessments of the value of the Land in accordance with the following formula:

A = B – C

where:

“A” is the amount of the Compensation;

“B” is the value of the Land not subject to the Covenant; and

“C” is the value of the Land subject to the Covenant.

3.4 The Valuer’s determination of the Compensation shall be final and binding on the Registered Proprietor and the Prescribed Authority.

3.5 The Valuer’s costs of determining the Compensation in accordance with clause 3.3 shall be paid by the Registered Proprietor and the Prescribed Authority in equal shares.”

  1. On 29 January 2020 the Council wrote to Mr B Lazarus as Lazarus Legal pointing out that the Council had resolved to release the Covenant but only subject to the imposition of a new restriction (CB5 3567):

“Council resolved on 7 September 2015 to release the present Covenant subject to creation of a new Restriction on Title Lot 9/ DP 32788 so that in the event the land is sold or if any of the units or townhouses proposed to be constructed on the land are sold, then Council will be entitled to monetary compensation by a method agreed between Council & [the Club].

I note that construction of the new dwellings on lot 9/ DP 32788 is a breach of the existing Covenant D796733.

However, please be aware that Council will not release the existing Covenant until:

a) the parties agree on the methodology for determination of any compensation or an amount of agreed compensation and that the new Restriction (including providing the agreed methodology or an acknowledgement of the agreed amount) is registered; or

b) the agreed compensation is paid to Council.”

The letter drew attention to the terms of Annexure A (to HWL’s letter of 22 January 2020) and then said:

“Because the Club is currently uncertain of the compensation amount determined in accordance with the Restriction Clause 3.3 (b) we propose that the Council now seek quotations and engage a registered Valuer to determine the compensation amount. The cost of the valuation will be shared, notwithstanding whether the Club signs the Restriction.

We look forward to receiving your comments.”

  1. On 14 February 2020 HWL wrote to Mr B Lazarus (as Lazarus Legal) (at CB5 3570) stating:

“Notwithstanding Council’s Resolution made on 7 September 2015 to release the Covenant, the Club remains bound by the Covenant until the Covenant is formally released. As we have previously advised you, Council will not release the Covenant until the new Restriction on Use is registered.

In the meantime, Council reserves all of Council’s rights under the Covenant.

As Council require this matter to be finalised without further delay, would you please advise us whether Council’s proposal to now obtain determination of the compensation amount is acceptable to the Club.”

  1. On 28 April 2020 Mr B Lazarus, as chairman of the Club, wrote to the Council (CB5 3573) stating:

“Whilst we re-iterate that it was always the Club’s intention to retain the two townhouses as rental properties and not to sell them, the unforeseen circumstances that have arisen, as briefly outlined above, have resulted in considerable construction delays, and the cost of the build exponentially escalating, and the substantial legal fees incurred and which are continuing to be incurred in defending the Supreme Court proceedings have severely impacted on the Club. These issues together with the Club’s continuing trading losses in its operational activities, and now in 2020 further exacerbated by the Covid-19 lockdown, resulting in the Club being in total lockdown, have severely impacted on Club’s cash flows and financial position. The Club has formed a view that it has no alternative but to sell at least one of the townhouses and the Club is reliant on the return of capital it has invested in this project to date. The sale of one of the townhouses should enable the Club to recover the majority of the capital invested in the development to enable the Club to continue to exist. Clearly the Club cannot afford and is not in a position to pay compensation to Council based upon the proposed “before and after” method.

The purpose of this letter is [to] seek Council’s urgent consent for the removal of the covenant on 42 Glendon Road, so as to permit the Club to sell at least one of the residential units to repay its debts and obligations, and to secure the Club’s future ability to continue to operate as a recreational bowling club, as it has done for the past 76 years. The Board on behalf of the members wish to thank Council in anticipation of receiving a favourable response to this request.”

  1. On 28 May 2020 the Club commenced these proceedings having received no reply prior to that date to the letter of 28 April 2020 referred to in (22) above.

Further Factual Matters

  1. There are some additional factual matters to which reference needs to be made:

  1. The cottage on Lot 9 was used as a temporary clubhouse for a short period before 1948 (i.e. even before the Club purchased Lots 9, 100, and 101) and from 1948 until 1954 when the current clubhouse on Lot 101 was completed. The cottage was in or shortly after 1954 turned back into a residential cottage.

  2. For many years the cottage was used as a residence by a greenkeeper employed or, in later years, contracted by the Club. Between 1991 and 1993 a Ms Cheryl Hayne occupied Lot 9 under a lease. Ms Hayne was not a member of the Club and not a greenkeeper: see the Affidavit of Mr Fetherston of 28 October 2020. Mr Fetherston was apprentice greenkeeper from 1982 to 1986 and greenkeeper at the Club from 1991 and continuing (on a contract, but not as an employee). He became a member of the Club in 1991. Between 1993 and 2018 Mr Fetherston lived at Lot 9 until the cottage on Lot 9 was demolished as part of the dual occupancy work.

  3. Mr Fetherston remains the Club’s greenkeeper. He also is and for some years has been the greenkeeper for another bowling club: see paragraph 1 of his Affidavit of 24 July 2020, CB1 136. The Club’s previous greenkeeper, Mr Colin Groch, was also the greenkeeper for City Bowling Club and Rose Bay Bowling Club.

  4. There are now two townhouses on Lot 9 nearing completion. The lot has not yet been subdivided.

  5. The Club intends to progress with subdivision and sell at least one of the townhouses, subject to the removal of the Covenant.

  6. The Club decided in early 2016 that it would not be able to accommodate a greenkeeper on Lot 9 in the new development and it has no intention of using the townhouses for anything other than sale or rental at a commercial rate.

  7. There was at all times up to 2018 an outdoor toilet on Lot 9. The toilet was accessed by Club members from the greens on Lot 101 and was beyond the gate at the rear of Lot 9: see the Affidavit of Mr Fetherston at paragraph 4, CB1 136. It was used by Club Members until it was, along with the cottage, demolished (see paragraph 13 of the Affidavit of Mr Fetherston at CB1 137). There was, in effect, agreement that the outdoor toilet was not of importance in the case: see T258.4.

  8. The sport of lawn bowls is in decline and many clubs in or around the Woollahra area have closed: see the Affidavit of B Lazarus of 1 August 2020 (CB1 152).

  1. Use of Lot 9 for any purpose in connection with the bowling club (other than rental at a market rate or sale) would not be financially viable and would have a significant impact on the Club: see the Affidavit of B Lazarus of 9 September 2020 at paragraph 3 (CB2 854), and his Affidavit of 1 August 2020 at paragraphs 41 and 43 (CB1 151), and T106.47-107.42 and T101.5-37.

  2. Since 2015 it has been the Club’s intention to develop Lot 9 for residential purposes.

  3. Since 1954 Lot 9 has been used exclusively as a residence, save for the outdoor toilet on Lot 9.

  4. Lot 9 is within the R3 Medium Density Residential Zone (“R3 Zone”) of the WLEP 2014. Lawn bowls is not a permitted use in the R3 Zone.

  5. The Club is facing significant financial stress because the costs of construction of the townhouses has exceeded the anticipated costs, not only because of litigation with the owners of No 31 Glendon Road, an adjoining property to Lot 9.

  6. The Club has experienced a decline in revenue from its operations during the COVID-19 period and its restrictions and effect on patronage: see paragraph 44 of Mr B Lazarus’ Affidavit of 1 August 2020 (CB1 152).

  7. When the Council received and considered the 2017 DA the Council officers who dealt with the DA were not aware of the Covenant or of the discussions between the Council and the Club to which I have earlier referred: see paragraph 8 of Mr Economou’s Affidavit of 28 August 2020 (CB2 904) and paragraph 137 of the Affidavit of Mr Marolia of 28 August 2020 (CB2 922).

Legislative Provisions

  1. The following legislative provisions are relied on by the parties:

  1. Section 54A of the Conveyancing Act:

“54A Contracts for sale etc of land to be in writing

(1) No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.

(2) This section applies to contracts whether made before or after the commencement of the Conveyancing (Amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court.

(3) This section applies and shall be deemed to have applied from the commencement of the Conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act 1900.

(4) A contract referred to in subsection (1) is not invalidated or rendered unenforceable only because it has been created in electronic form and electronically signed or attested.”

  1. Section 89(1) of the Conveyancing Act:

“89   Power of Court to modify or extinguish easements, profits à prendre and certain covenants

(1)  Where land is subject to an easement or a profit à prendre or to a restriction or an obligation arising under covenant or otherwise as to the user thereof, the Court may from time to time, on the application of any person interested in the land, by order modify or wholly or partially extinguish the easement, profit à prendre, restriction or obligation upon being satisfied—

(a)  that by reason of change in the user of any land having the benefit of the easement, profit à prendre, restriction or obligation, or in the character of the neighbourhood or other circumstances of the case which the Court may deem material, the easement, profit à prendre, restriction or obligation ought to be deemed obsolete, or that the continued existence thereof would impede the reasonable user of the land subject to the easement, profit à prendre, restriction or obligation without securing practical benefit to the persons entitled to the easement or profit à prendre or to the benefit of the restriction or obligation, or would, unless modified, so impede such user, or

(b)  that the persons of the age of eighteen years or upwards and of full capacity for the time being or from time to time entitled to the easement or profit à prendre or to the benefit of the restriction, whether in respect of estates in fee simple or any lesser estates or interests in the land to which the easement, the profit à prendre or the benefit of the restriction is annexed, have agreed to the easement, profit à prendre, restriction or obligation being modified or wholly or partially extinguished, or by their acts or omissions may reasonably be considered to have abandoned the easement or profit à prendre wholly or in part or waived the benefit of the restriction wholly or in part,

…

(c)  that the proposed modification or extinguishment will not substantially injure the persons entitled to the easement or profit à prendre, or to the benefit of the restriction or obligation...”

  1. Sections 4.3, 4.65 and 4.66 of the Environmental Planning and Assessment Act 1979 (NSW) (“EPA”):

“4.3   Development that is prohibited (cf previous s 76B)

If an environmental planning instrument provides that—

(a)  specified development is prohibited on land to which the provision applies, or

(b)  development cannot be carried out on land with or without development consent,

a person must not carry out the development on the land.

Maximum penalty—Tier 1 monetary penalty.

4.65   Definition of “existing use” (cf previous s 106)

In this Division, existing use means—

(a)  the use of a building, work or land for a lawful purpose immediately before the coming into force of an environmental planning instrument which would, but for this Division, have the effect of prohibiting that use, and

(b)  the use of a building, work or land—

(i)  for which development consent was granted before the commencement of a provision of an environmental planning instrument having the effect of prohibiting the use, and

(ii)  that has been carried out, within one year after the date on which that provision commenced, in accordance with the terms of the consent and to such an extent as to ensure (apart from that provision) that the development consent would not lapse.

4.66   Continuance of and limitations on existing use (cf previous s 107)

(1)  Except where expressly provided in this Act, nothing in this Act or an environmental planning instrument prevents the continuance of an existing use.

(2)  Nothing in subsection (1) authorises—

(a)  any alteration or extension to or rebuilding of a building or work, or

(b)  any increase in the area of the use made of a building, work or land from the area actually physically and lawfully used immediately before the coming into operation of the instrument therein mentioned, or

(c)  without affecting paragraph (a) or (b), any enlargement or expansion or intensification of an existing use, or

(d)  the continuance of the use therein mentioned in breach of any consent in force under this Act in relation to that use or any condition imposed or applicable to that consent or in breach of any condition referred to in section 4.17(1)(b), or

(e)  the continuance of the use therein mentioned where that use is abandoned.

(3)  Without limiting the generality of subsection (2)(e), a use is to be presumed, unless the contrary is established, to be abandoned if it ceases to be actually so used for a continuous period of 12 months.

(4)  During the period commencing on 25 March 2020 and ending on 25 March 2022, the reference to 12 months in subsection (3) is taken to be a reference to 3 years.”

  1. Sections 20(1)(e), 20(2), 57 and 58 of the Land and Environment Court Act 1979 (NSW) (“LEC Act”):

“20   Class 4—environmental planning and protection, development contract and strata renewal plan civil enforcement

(1)  The Court has jurisdiction (referred to in this Act as “Class 4” of its jurisdiction) to hear and dispose of the following—

... (e)  proceedings referred to in subsection (2).

(2) The Court has the same civil jurisdiction as the Supreme Court would, but for section 71, have to hear and dispose of the following proceedings—

(a) to enforce any right, obligation or duty conferred or imposed by a planning or environmental law, a development contract or a strata renewal plan,

(b) to review, or command, the exercise of a function conferred or imposed by a planning or environmental law, a development contract or a strata renewal plan,

(c) to make declarations of right in relation to any such right, obligation or duty or the exercise of any such function,

(d) whether or not as provided by section 68 of the Supreme Court Act 1970—to award damages for a breach of a development contract…

57   Class 1, 2, 3 and 8 proceedings—appeals

(1)  A party to proceedings in Class 1, 2, 3 or 8 of the Court’s jurisdiction may appeal to the Supreme Court against an order or decision (including an interlocutory order or decision) of the Court on a question of law.

(2)  On the hearing of an appeal under subsection (1), the Supreme Court shall—

(a)  remit the matter to the Court for determination by the Court in accordance with the decision of the Supreme Court, or

(b)  make such other order in relation to the appeal as seems fit.

(3)  Despite subsection (1), an appeal does not lie to the Supreme Court against an order or decision of the Court that has been made by a Commissioner or Commissioners, other than a decision of the kind referred to in subsection (4)(a) or (b).

(4)  Despite subsection (1), an appeal does not lie to the Supreme Court against any of the following orders or decisions of the Court except by leave of the Supreme Court—

(a)  a decision on a question of law determined by a judge pursuant to a reference under section 36(5),

(b)  a decision of a Commissioner or Commissioners made after a judge’s determination referred to in paragraph (a), where the judge’s determination is itself the subject of an appeal to the Supreme Court,

(c)  an order or decision made on an appeal under section 56A,

(d)  an interlocutory order or decision,

(e)  an order made with the consent of the parties,

(f)  an order or decision as to costs.

58   Class 4 proceedings—appeals

(1)  Where a party to proceedings in Class 4 of the Court’s jurisdiction is dissatisfied with an order or decision (including an interlocutory order or decision) of the Court, the party may appeal to the Supreme Court against the order or decision.

(2)  On the hearing of an appeal under subsection (1), the Supreme Court shall—

(a)  make an order reversing, affirming or amending the order or decision appealed against,

(b)  remit the matter to the Court for determination by the Court in accordance with the decision of the Supreme Court,

(c)  make an order directing a rehearing of the proceedings in respect of which the order or decision appealed against was made, or

(d)  make such other order in relation to the appeal as seems fit.

(3)  Despite subsection (1), an appeal does not lie to the Supreme Court against any of the following orders or decisions of the Court except by leave of the Supreme Court—

(a)  an interlocutory order or decision,

(b)  an order made with the consent of the parties,

(c)  an order or decision as to costs.

(4)  The amendment made to this section by the Courts Legislation Further Amendment Act 1995 does not operate to require leave to appeal against an order or decision of the Court if, when the order or decision was made, an appeal lay as of right.”

  1. Section 50(3) of the Interpretation Act 1987 (NSW):

“50 Statutory corporations

… (3)  Every document requiring authentication by a statutory corporation may be sufficiently authenticated without the seal of the corporation—

(a)  in the case of a corporation that has 2 or more members—if it is signed by the president, chairperson or other principal officer of the corporation or by any member of the staff of the corporation authorised to do so by the president, chairperson or other principal officer,

(b)  in the case of a corporation sole—if it is signed by the person by whom the corporation is constituted or by any member of the staff of the corporation authorised to do so by that person, or

(c)  in the case of a corporation that has no members—if it is signed by the person for the time being managing the affairs of the corporation or by any member of the staff of the corporation authorised to do so by that person.”

  1. Section 9(1) of the Electronic Transactions Act 2000 (NSW) (“the Electronic Transactions Act”):

“9  Signatures

(1) If, under a law of this jurisdiction, the signature of a person is required, that requirement is taken to have been met in relation to an electronic communication if—

(a) a method is used to identify the person and to indicate the person’s intention in respect of the information communicated, and

(b) the method used was either—

(i) as reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement, or

(ii) proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence, and

(c) the person to whom the signature is required to be given consents to that requirement being met by way of the use of the method mentioned in paragraph (a).”

  1. Sections 1.9A(1),(2) and (3) of the WLEP 2014:

“1.9A   Suspension of covenants, agreements and instruments

(1)  For the purpose of enabling development on land in any zone to be carried out in accordance with this Plan or with a consent granted under the Act, any agreement, covenant or other similar instrument that restricts the carrying out of that development does not apply to the extent necessary to serve that purpose.

(2)  This clause does not apply—

(a)  to a covenant imposed by the Council or that the Council requires to be imposed, or

(b) to any relevant instrument within the meaning of section 13.4 of the Crown Land Management Act 2016, or

(c)  to any conservation agreement within the meaning of the National Parks and Wildlife Act 1974, or

(d)  to any Trust agreement within the meaning of the Nature Conservation Trust Act 2001, or

(e)  to any property vegetation plan within the meaning of the Native Vegetation Act 2003, or

(f) to any biobanking agreement within the meaning of Part 7A of the Threatened Species Conservation Act 1995, or

(g)  to any planning agreement within the meaning of Subdivision 2 of Division 7.1 of the Act.

(3)  This clause does not affect the rights or interests of any public authority under any registered instrument…”

The Town Planners’ Evidence

  1. Ms Sneyd’s evidence on what appears to be the more significant issues was to the following effect:

  1. Use of Lot 9 (and Lot 101) for bowling club purposes has been prohibited since 1995 save and to the extent that the Club has existing use rights: see the Supplementary Report of Jillian Sneyd dated 21 August 2020 (“the Sneyd Supplementary Report”) at CB2 479 and the Report of Jillian Sneyd dated 6 August 2020 (“the Sneyd Report”) at CB1 181-182.

  2. WLEP 2014 excludes the use of Lot 9 as a “recreational facility (outdoor)” or a “registered club”: see the Sneyd Report at CB1 183.

  3. A bowling club is not a permitted recreational facility as defined in WLEP 2014: see the Sneyd Report at CB1 183.

  4. Lot 101 can, however, continue to be used as a bowling club because existing use rights are protected (by reason of s 4.11 and s 4.66 of the EPA), and the Council has acknowledged those rights: see the Sneyd Supplementary Report at CB2 477-478 and T156.27-42.

  5. “Existing use rights” can only be relevant where the use being made of the land is not otherwise permitted by the planning instrument.

  6. If there were any existing use rights in relation to use of Lot 9 as a use ancillary to a bowling club they were abandoned by reason of the demolition of the cottage and construction of the townhouses: see the Sneyd Supplementary Report at 14.11 at CB2 486, and may have been abandoned in 1954 when the cottage was reconverted back to a residence (T152.41-153.8) although she thought that in a “town planning sense” use of Lot 9 as a residence for a greenkeeper was an ancillary use and therefore “permissible as an existing use rights”: T154.7.

  7. The Covenant seeks to enforce a prohibited use of Lot 9: see the Sneyd Supplementary Report at CB2 479.

  8. The townhouses are incapable of being used consistent with the Covenant: Sneyd Report at CB1 184-186.

  9. In 1948 there was no planning legislation in force which permitted Council to control the use of the land and the Covenant was imposed as a substitute for planning controls: Sneyd Report at CB1 189.

  10. The Covenant is obsolete in that its original purpose is no longer served: Sneyd Report at 17.5-17.8 at CB1 189-190. Any useful purpose expired more than 60 years ago.

  11. Planning controls that Council might want to put in place can now be achieved through the EPA: Sneyd Report CB1 191.

  12. Residential use of Lot 9 will ensure that the scale and type of development is “more consistent with that of the remainder of Glendon Rd than a bowling club use”: Sneyd Report at 19.4 at CB1 191.

  13. “Limiting the use of Lot 9 to a bowling club use would not be beneficial from the perspective of amenity and traffic impacts on Glendon Road which is of a purely residential character. Equally, in light of the approved and partially constructed dual occupancy development on Lot 9, there would be no impact upon traffic in Kiaora Rd in limiting the use of Lot 9 to a bowling club use”: Sneyd Report at 19.6 at CB1 192.

  14. “The use of Lot 9 to provide for example additional access to the Bowling Club lands would be likely to have a detrimental impact upon the residential amenity of Glendon Road properties by additional traffic making use of Glendon Road”: Sneyd Report at 19.7 at CB1 192.

  1. The evidence of Mr Ryan, the Council’s expert, was to the following effect:

  1. Mr Ryan accepts [19](1), (2), (3), (4), (5) and (9): see the Report of Mr Ryan dated 4 September 2020 (“the Ryan Report”) at CB2 932, and see T205.45, T210.39 and T211.38.

  2. Mr Ryan does not agree that the Covenant has become obsolete. He contends that use of Lot 9 for the purpose of housing a greenkeeper employed by the Club is incidental to a recreational purpose of the Club and therefore is a use that can continue to be made of any residential dwelling on Lot 9, i.e. the former cottage or the townhouses.

  3. Mr Ryan is of the view that using Lot 9 as a residence for a greenkeeper will not adversely impact on the residential amenity of Glendon Road: see paragraph 93 of the Ryan Report at CB2 942.

  4. The Club has not lost existing use rights to continue to use Lot 9 for a recreational purpose of a bowling club.

  5. Whether or not the Club’s greenkeeper resides at Lot 9 is just a matter of convenience not an essential part of his employment by the Club: T201.38-46.

  6. Mr Ryan did not agree with [19](14) – in his view use of Lot 9 in accordance with the Covenant would not involve any increase in traffic and parking, and I take him to not agree with [19](12) and (13) because he thinks that use as a residence for a greenkeeper is still a residential use, albeit an ancillary purpose of the Club.

  7. Whether the greenkeeper is employed solely by the Club or by other bowling clubs makes no difference as to whether his residence at Lot 9 is ancillary to the purpose of the Club (T201.50-202.14), nor would it matter that he lived there with his family (T202.43).

  8. Mr Ryan thought that if the greenkeeper did any work for the Club that would make his occupation of Lot 9 an ancillary use for the Club: T203-204.

  9. Mr Ryan posited the use of one of the townhouses as accommodation for a greenkeeper and the other for someone who has a connection or a role to play with the Club. He is of the view that the Council’s approval of a dual occupancy to replace the cottage is not of itself evidence of abandonment or extinguishment of the ancillary recreational use: see paragraph 72 of the Ryan Report at CB2 940.

  10. Mr Ryan contended that the Covenant imparts “a public benefit in providing recreational facilities to the local community accessible via Council’s nominated roads”: paragraph 74 at CB2 941.

  11. Mr Ryan agreed that neither of the townhouses could be used as a clubhouse for the Club: see T208.36.

Council’s Cross Claim

  1. There are many issues raised by the Club. I will not deal with all of them because I am persuaded that (a) there was no enforceable binding agreement, and (b) that if there was a binding agreement it was abandoned by the parties.

  2. In relation to the first point at [103(a)], it is necessary, as the Club insisted, to focus on the pleading of the agreement by the Council in paragraph 12 of its Cross Claim in which the Council identifies the binding agreement as having been wholly in writing and constituted by two pieces of correspondence, namely: a letter dated 18 November 2015 (see [16(5)] above, CB4 2651) said to be the offer and the email of 19 May 2016 (see [16(8)] above, CB4 2659) said to be the acceptance (see paragraphs 11 to 13 of the First Cross Claim at CB1 92-93). Prior correspondence cannot be relied on to establish the terms of the asserted agreement, unless the prior correspondence is referred to in the documents relied on as forming the contract. Although the letter of 13 November 2015 is not expressly referred to I think it can be inferred that it is identified by the reference in the 18 November 2015 letter to “your advice that [the Club] has agreed to adopt the “Before and After Method” as the valuation methodology to be used.” The letter of 29 October 2015, however, is not referred to expressly or impliedly in the letter of 18 November 2015. The DCS sought to move away from the pleaded basis of “offer” and “acceptance” by reference at paragraph 143 to Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153 in which it was held that agreements can be formed by a course of conduct or correspondence: see [71]-[81].

  3. There are a number of problems with the Council’s reliance on an agreement constituted by the letters of 13 and 18 November 2015 and the email of 19 May 2016:

  1. The email of 19 May 2016 advises that the Club agrees with the land value to be assessed by an independent valuer at an agreed date of valuation. It does not actually state acceptance of all the terms of the letter of 18 November 2015.

  2. The letter of 18 November 2015 spoke of a valuation “at an agreed date of valuation” thus recognising that there would need to be further negotiations as to the precise date of valuation. In January 2020: see [16]-[17] above, the Council sought the Club’s agreement to a valuation at the time the Covenant is lifted and the Restriction is imposed, rather than as at the time Lot 9 is sold.

  3. The letters of 13 and 18 November 2015 and the email of 19 May 2016 contained no mechanism for appointment of a valuer or how to resolve any difference as to who should be the valuer (in contrast, for example, to the terms contained in HWL’s draft sent on 22 January 2020: see CB5 3562 and 3564).

  4. The email of 19 May 2016 is not signed by the Club. Indeed it is not signed by Ms Van either unless the use of her typed name on the email is a signature. On the issue of signature the Electronic Transactions Act by s 9 does permit the requirement of a signature to have been met by a name or an email provided that method is “reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement”: s 9(1)(b)(i). Section 9 also requires that the person to whom the signature is required to be given consents to that requirement being met by a name on an email rather than by an actual signature. There are a number of cases which have considered this or analogous legislation: see Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119, Claremont 24-7 Pty Ltd v Invox Pty Ltd [No 2] [2015] WASC 220, Welsh v Gatchell [2009] 1 NZLR 241 and John Hillam v JPSF Pty Ltd [2017] NSWSC 1510, and see also Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd [2012] 1 WLR 3674 which, although not dealing with a similar legislative provision, is relied on by the Council. It is not necessary to reach a concluded view on the point because in my view what Ms Van was doing by the letter was communicating the Club’s instructions, and I do not think objectively she can be taken to have, by means of that email which dealt only with the method of valuation, entered into a binding agreement on behalf of the Club. I do not accept the Council’s assertion that Ms Van was writing as a representative of the Club rather than as a solicitor – her email commences “we are instructed to advise” which is inconsistent with Council’s contention, and I read that as an indication that she was acting as the Club’s solicitor or on behalf of Mr B Lazarus acting as such.

  5. There is no evidence of authorisation by the Club for Ms Van to enter into an agreement to bind the Club.

  6. In terms of the three categories of agreement identified in Masters v Cameron (1954) 91 CLR 353 at 360 or four categories taking into account Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 625-626, there are a number of factors which lead to the conclusion that the parties objectively did not intend to make a concluded bargain unless and until the formal contract was executed:

  1. the nature of the subject matter;

  2. the identity of the contracting parties – a local council and an incorporated club;

  3. the request for provision of documents by the Club;

  4. the fact that what was addressed in the email of 19 May 2016 was only one aspect of the matter and that the letter to which the email was responding was not a complete articulation of the agreement;

  5. the identity of the author of the email.

In relation to the first point, the subject matter was the creation or disposition of an interest in land. I deal separately below with the requirement for writing, but the fact that this was the subject matter which required the creation of formal documentation encourages the view that the parties would only intend to be bound by the completion of formal documentation. In Kastro Pty Ltd v ABD Holdings Pty Ltd [2008] NSWSC 1291 Brereton J (as his Honour then was) said at [26]:

“[26] In the context of a commercial lease for a term exceeding three years — which, therefore, has to be registered for practical purposes — it is improbable that parties intended to be bound before the terms of the formal lease were settled by solicitors and exchanged, especially if the parties had in mind the preparation of a formal document. In that respect, consensus on the commercial terms in which a lease is given is not equivalent to an intention that the consensus should, without more, be legally binding [Gobblers Inc Pty Ltd v Stevens (1993) NSW ConvR 55-665 (Cohen J); Kassabian & Rawstron Investments Pty Ltd v Lagonicos (1993) NSW ConvR 55-690 (McLelland CJ in Eq); Longpocket Investments Pty Ltd v Hoadley (1985) 3 BPR 9606 (NSWCA); Blackburn Developments No 19 Pty Ltd v Downs Surgical (Australia) Pty Ltd (1974) 2 BPR 9141 (Helsham J); Landsmiths Pty Ltd v Hall [1999] NSWSC 735; (1999) 9 BPR 17,057 (Young J); Long v Piper [2001] NSWCA 342; [2002] ANZ ConvR 43; (2002) NSW ConvR 56–000, [51]–[55]; Hali Retail Stores Pty Ltd v Hafaz [2007] NSWSC 412, [17] (Brereton J)].”

(Emphasis added).

As McLelland CJ in Eq said in Kassabian & Rawstron Investments Pty Ltd v Lagonicos (1993) NSW ConvR 55-690:

“There must be more than the arrival by the parties at a consensus. The parties must intend that the consensus at which they have arrived should there and then constitute a binding contract…”

Whilst this is not a case involving a lease, it is an agreement concerning an interest in land that had to be registered to be effective. Prior communications leading up to the offer and acceptance which are not contained in a single document can be relevant in determining whether the parties objectively intended to bind themselves: see Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605 per Bathurst CJ at [15], Beazley P at [64]-[65] and [72] and Meagher JA at [162]. I am unable to draw the conclusion from that correspondence that the Council and the Club intended the exchange of correspondence to constitute a binding agreement without formal execution of the relevant documentation.

  1. Section 54A of the Conveyancing Act which I will deal with separately.

  2. The correspondence from the Council earlier this year (see [16(19)] to [16(21)] above) not only does not assert a binding agreement, but seeks to introduce new terms, which is inconsistent with the Council’s assertion that there was in May 2016 a binding agreement.

  1. I should add that the DCS place reliance on earlier “agreements” made between the Council and the Club (for example relating to the payment of legal fees in 2011), but the subject matter of those earlier agreements was not the creation or disposition of an interest in land that required documentation to be lodged at the Land Title Office.

  2. Section 54A of the Conveyancing Act relevantly requires that proceedings cannot be brought in respect of a disposition of land unless the agreement or some memorandum or note thereof is “signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.” The Council accepted that the removal of the Covenant and the creation of the Restriction amounted to a disposition of an interest in land and that writing and signature was required. There are four issues facing the Council:

  1. There is no evidence that Ms Van was lawfully authorised by the Club to enter into a binding agreement on behalf of the Club and the Council in the terms asserted by the Council. As I have indicated she was communicating as a solicitor on her client’s instructions on a narrow question.

  2. The incompleteness of the exchange of correspondence.

  3. The Club’s constitution provided how contracts and agreements were to be entered into by the Club: see cl 58 at CB4 2294-2297 and cl 98 at CB4 2309.

  1. In relation to [107(1)], in Pavlovic (supra) at [137]-[139] Beazley P (with whom Bathurst CJ was in general agreement and with whom Meagher JA agreed) said:

“[137] It is well settled, and was acknowledged by both parties, that solicitors have the authority to conduct negotiations on behalf of their clients as to the terms of a contract between parties: see Pianta v National Finance & Trustees [1964] HCA 61; 180 CLR 146; Nguyen v Taylor (1992) 27 NSWLR 48; Summit Properties Pty Ltd v Comserv (No 784) Pty Ltd (1981) 2 BPR 9173 at 9176 per Street CJ. In Pianta Barwick CJ, at 152, explained the position as follows:

So far as the solicitor is concerned, however, the terms of his retainer are clearly enough defined in the evidence. He was retained, in the capacity of a solicitor, to settle written terms of sale which he could advise his clients to accept and sign. For this purpose, he could negotiate and agree with the representatives of the respondent the terms which the respondent could be expected to accept or, if the representatives were so authorized, which they could accept on behalf of the respondent and which the solicitor could advise his clients as satisfactory in their interest. But this does not confer on the solicitor authority to contract on behalf of the clients to sell the land. If he is to have that authority it must be given expressly or by necessary implication.

[138] Menzies J pointed out, at 154, that without “clear and cogent evidence”, a solicitor’s authority does not extend to the authority to bind one’s client to contractual obligations. See also Kent v Hogarth [1995] QCA 472 per Pincus JA at [11].

[139] The principle was stated succinctly by Street CJ in Summit Properties v Comserv (N0 784) at 9176:

Authority to negotiate terms and to make arrangements for execution falls short of authority to commit the client fully to a contractual obligation …”

Here there is no clear and cogent evidence that Ms Van was authorised to contract on behalf of the Club.

  1. The issue at [107(2)] is a further answer to the Council’s claim. The letter of 19 May 2016 does refer to an earlier letter of 18 November 2015 and I have held that the 13 November 2015 letter is implicitly referred to so it is certainly permissible to look at all three of these communications to ascertain the terms, but the letters of 13 and 18 November 2015 and the email of 19 May 2016 taken together do not contain all of the terms of the agreement for which the Council contends which is a requirement for the purpose of s 54A: see Thomson v McInnes (1911) 12 CLR 562, Harvey v Edwards Dunlop & Co Ltd (1927) 39 CLR 302, Australia & New Zealand Banking Group Ltd v Widin (1990) 102 ALR 289 (Hill J, with whom Wilcox and Foster JJ concurred), Butt’s Land Law (supra) at [4.210], and Heydon on Contract (J. D. Heydon, Thomson Reuters, 2019) at 6.320. The two letters and the email do not refer to the Council’s agreement to release the Covenant or to the Council’s requirement that the Club pay all legal fees.

  2. In view of the other matters identified, it is not necessary to give consideration to [107(3)] above.

  3. In relation to the second point at [103(b)] if, contrary to my conclusion, there was a binding agreement, then in my view the parties objectively must be taken to have abandoned the agreement:

  1. The Club on four occasions sought the documents to progress the matter (i.e. on 19 May 2016 (CB4 2659), on 26 August 2016 (CB4 2722), on 10 November 2016 (CB4 2821) and on 23 November 2016 (CB4 2820)) and the Council did not provide any documents as requested. The Club had made it clear that it wanted the Covenant removed before it submitted a DA to Council: see CB4 2614 (the letter of 13 November 2015). The Club submitted the first DA in late 2016 and then, having withdrawn that on the suggestion of Council, submitted the second DA on 18 July 2017.

  2. In 2017 the Club lodged its application for Development Consent and the Council did not indicate that it required execution of documents constituting removal of the Covenant and imposition of the Restriction before approving the DA and granting consent.

  3. In neither the Council’s letter of 14 February 2020 (see [16(21)] above) nor in HWL’s letter to the Club was it asserted that there was a finalised contract all the terms of which had been agreed, rather:

  1. there was the assertion that until the parties should “agree on a methodology for the determination” or the Covenant will not be released: see [16(21)] above;

  2. HWL’s letter contained terms that had not been discussed previously; and

  3. in its letter of 14 February 2020 HWL asked the Club to advise whether the Club was agreeable to “now obtain determination of the compensation amount”: see [16(21)] above. The requirement that the Club pay compensation even before completion of the townhouses, let alone sale and let alone the receipt of the sale proceeds would place an additional significant burden on the Club.

  1. The Club’s letter to the Council of 16 January 2020 (see [16(18)] above) was the first letter after more than three years from the Club to the Council. The letter does not, as the DCS asserts, seek implementation of the agreement which the Council says was made on 19 May 2016, but rather is focused on the recommendation in the Council’s committee report that the Covenant be removed and made no reference to the Restriction or to compensation. It seems that by his letter of 16 January 2020 Mr B Lazarus was endeavouring to obtain the benefit of release of the Covenant without the Club having to pay the price that Council had previously indicated it would require.

  2. The Club’s letter to the Council of 28 April 2020 (see [16(22)] above) sought agreement to removal of the Covenant without any compensation payable.

  3. Neither party, at any time between May 2016 and May 2020, asserted reliance on a binding agreement said to have been created in May 2016 and the Council did nothing to promote or finalise this agreement. November 2016 was the last occasion on which the Club called on the Council to provide the documents necessary to achieve release of the Covenant, at least. The words of Dixon CJ and Fullagar J in Fitzgerald v Masters (1956) 95 CLR 420 at 432 (set out in paragraph 281 of the POS) seem apt here:

“There can be no doubt, where what has been called an “inordinate” length of time has been allowed to elapse, during which neither party has attempted to perform, or call upon the other to perform, a contract made between them, it may be inferred that the contract has been abandoned …”.

See also Summers v Commonwealth (1918) 25 CLR 144 at 151-152 per Isaacs J.

Summary

  1. I conclude therefore that:

  1. There was no binding agreement between the Club and the Council.

  2. Alternatively, if there was a binding agreement contrary to the finding in (1), that agreement was abandoned by the parties.

  3. The Covenant should be extinguished pursuant to s 89(1)(a) and (c) of the Conveyancing Act.

Costs

  1. It was agreed that the issue of costs should be deferred until after judgment had been given in respect of the substantive issues.

Form of Orders

  1. The Club should within three days prepare and provide to the Council proposed form of orders reflecting the conclusions at [112] above but also including proposed orders in respect of costs. The Council should within a further three days advise as to whether it consents to or disputes the form of the orders contained in the Club’s draft. If the Council disputes the form of orders it should provide to the Club its proposed orders (by track changes to the Club’s draft). The Club should provide a copy of the agreed orders or disputed orders to my Associate by 10:00am on Wednesday, 16 December 2020.

  2. I will list the matter (for hearing on the form of orders and directions in respect of the costs issue should there be no agreement on that) on Thursday, 17 December 2020 at 10:00am, but if agreement is reached, that date can be vacated.

Decision last updated: 18 December 2020

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