Handley v Gunner

[2008] NSWCA 113

New South Wales

Court of Appeal

CITATION:	HANDLEY & Anor v GUNNER [2008] NSWCA 113
HEARING DATE(S):	11 April 2008
JUDGMENT DATE:	28 May 2008
JUDGMENT OF:	Mason P at 1; Hodgson JA at 110; Campbell JA at 117
DECISION:	Appeal upheld
CATCHWORDS:	REAL PROPERTY – Easements – particular easements and rights – rights of way - CONTRACTS – General contractual principles – discharge, breach and defences to action for breach – performance – whether respondent’s obligations under deed spent – where term requiring respondent to issue transfer at request of appellant - CONTRACTS – General contractual principles – construction and interpretation of contracts – implied term – duration of contract – whether implication in contract that term to be exercised within a reasonable time – whether reasonable time had elapsed
LEGISLATION CITED:	Limitation Act 1969 Suitor’s Fund Act 1951
CATEGORY:	Principal judgment
CASES CITED:	Bragg v Alam (1982) NSW Conv R 55-082 Bragg v Alam [1981] 1 NSWLR 668 Brambles Holdings Pty Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Carlton & United Breweries Ltd v Tooth & Co Ltd (Supreme Court of New South Wales, Hodgson J, 11 June 1985, unreported Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 Ellmore (Maitland) Pty Ltd v Tull (1995) 7 BPR 14,305 Gallagher v Rainbow (1994) 179 CLR 624 Geraghty v Russell (1874) 5 AJR 89 Hall v Busst (1960) 104 CLR 206 Maritime Services Board of NSW v Australian Shipping Commission (1991) 27 NSWLR 258 Neill v Public Trustee [1978] 2 NSWLR 65 Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 Partridge v Preddey (1904) 4 SR (NSW) 36 Reid v Moreland Timber Co Pty Ltd [1946] HCA 48 Rudi’s Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568 Short v Patrial Holdings Pty Ltd (1994) 6 BPR 13,996 Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238
TEXTS CITED:	JW Carter, et al, Cases and Materials on Contract Law in Australia, 5th ed (2007) LexisNexis Butterworths, Chitty on Contracts, 29th ed (1999) Sweet & Maxwell Voumard, The Sale of Land, 5th ed (1995) LBC Information Services
PARTIES:	Neil Charles HANDLEY & Anor v Norman Henry GUNNER
FILE NUMBER(S):	CA 40425/2007
COUNSEL:	Appellants: J Gleeson SC/ G A Rich Respondent: T G R Parker SC/ N J Owens
SOLICITORS:	Appellants: Manion McCosker Respondent: Beswick Solicitors
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 3498/2006
LOWER COURT JUDICIAL OFFICER:	Young CJ in Eq
LOWER COURT DATE OF DECISION:	14 June 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	NSWSC 601

CA 40425/2007

MASON P
HODGSON JA
CAMPBELL JA

Wednesday 28 May 2008

Neil Charles HANDLEY & Anor v Norman Henry GUNNER

JUDGMENT

1 MASON P: The appellants seek orders in the nature of specific performance to enforce a Deed entered into between themselves and the respondent on 28 February 1994. Their summons was dismissed by the Chief Judge in Equity on the grounds that they were asserting a right that did not arise under the Deed in the particular circumstances and that in any event an unreasonable time had elapsed for the enforcement of that right.

2 In 1994 four sets of parties owned adjacent blocks of land fronting or having access to Malton Road, Beecroft. Moving from west to east, the blocks were:

1. the Handley land (owned by the appellants) which was a rear battle-axe block accessing Malton Road only through a narrow corridor proceeding from that road;

2. the Brooks land which was similar in shape and access;

3. the Gunner land (owned by the respondent) which was roughly oblong in shape and abuts onto Malton Road. It was over 180m deep and almost two hectares in area;

4. the Brown land which was roughly square-shaped lying immediately to the east of a rear portion of the Gunner land but with no access to Malton Road except through a private road running northward from Malton Road and then westwards until it reached the south eastern corner of the Brown land. That road is known as Jona’s Road.

3 In 1994 title to the road was vested in Jona Holdings Pty Ltd, a company associated with Mr and Mrs Brown. But that title was subject to an agreement in favour of a company controlled by the appellants that armed the appellants with the capacity to require Jona’s Road to be transferred back to the appellants or their company (CB 21, 22).

4 From at least 1992 onwards the appellants, Mr Brooks and the respondent have at various times been interested in the development of their land by way of subdivision. Because of the terrain and perhaps other reasons, it would be advantageous to have additional access to Malton Road via an extension of Jona’s Road that passed westwards across the centre of the Gunner land. For such access to be of use to the appellants it would have to extend further westwards, across the Brooks land and into the Handley land at its south eastern corner.

5 The respondent has, until comparatively recently, been receptive to the appellants’ broad plan, but the owners of the Brooks land have been unwilling to burden their land with an easement in the appellants’ favour. By committing the respondent to take certain steps, the 1994 Deed sought to maximise the appellants’ opportunity to secure their long-term redevelopment goals awaiting the time that Mr and Mrs Brooks or the Brooks’ successor in title might come to the party.

6 With this background I set out the presently relevant terms of the 1994 Deed.

THIS DEED is made on the 28th day of February 1994
BETWEEN NEIL CHARLES HANDLEY and MARY MURIEL HANDLEY …
AND NORMAN HENRY GUNNER …
RECITALS:
A-E [recited the ownership of the Handley, Gunner, Brooks, Brown and Jona’s Road blocks in 1994]
…
F. Both Gunner and Handley wish to develop and to subdivide Gunner’s Land and Handley’s Land respectively and Gunner and Handley have agreed to assist each other to develop and subdivide their respective properties.
G. Handley has agreed to procure the transfer of Jona’s Road to Gunner and Gunner has agreed to transfer part of Gunner’s Land shown etched in red on the plan comprised in Schedule Two hereto being that part of Gunner’s Land which it is intended shall form part of the proposed Lot 1 in the Plan of Subdivision (as defined in this deed) (“ the Triangle” ) to Brown.
H. Gunner has agreed to grant certain rights of way and easements over Gunner’s Land in favour of Handley’s Land and Gunner has agreed not to grant similar rights of way and easements over Gunner’s Land in favour of Brooks’ Land without the consent of Handley.
I. Gunner has agreed to grant rights of way on easement over Gunner’s Land in favour of Brooks only at the direction of Handley only. Brown has consented to the transfer of the Jona’s Road to Gunner and to accept the transfer of the Triangle from Gunner.
J. The terms and conditions of this Deed are more fully set out in the operative provisions.
OPERATIVE PROVISIONS:
1. DEFINITIONS AND INTERPRETATIONS
1.1 In this Deed unless the context otherwise requires:
(a) words denoting the singular number shall include the plural and vice versa;
…
(e) references to any party to this Deed or any other agreement or document shall include the parties successors and permitted assigns;
(f) references to any document or agreement shall include references to such document or agreement as amended novated supplemented or replaced from time to time;
…
2. TRANSFERS OF LAND
2.1 Handley must procure the transfer by Brown to Gunner of Jona’s Road.
2.2 Gunner must transfer the Triangle to Brown.
2.3 Handley must procure the consent of Jona to the transfer by Brown to Gunner of Jona’s Road under Caveat registered No. Z56560.
3. REGISTRATION OF PLAN OF SUBDIVISION AND 88B INSTRUMENT
3.1.1 Gunner must do all things necessary to enable a plan of consolidation and subdivision substantially in the same form as the plan comprised in Schedule Three hereto (“ the Plan of Subdivision” ) to be registered at the Land Titles Office.
3.1.2 Gunner must create the easements and rights of way in substantially the same form as those set out in the draft 88B Instrument comprised in Schedule Four hereto ( “88B Instrument ” ) by registration of the 88B Instrument with the Plan of Subdivision.
…
3.3 Handley must do all things necessary to enable the Plan of Subdivision and the 88B Instrument to be registered at the Land Title Office.
…
3.5 Handley must procure Brown do all things necessary to enable the Plan of Subdivision and 88B Instrument (sic) .
…
4. BROOKS
4.1 Gunner must not to [sic] grant any rights of way over Gunner’s Land in favour of Brooks and/or Brooks’ Land through Gunner’s Land unless Handley has consented in writing.
4.2 Gunner must not allow Brooks access from Brooks’ Land to Malton Road, Beecroft by an agreement whether oral or in writing, or whether formal or informal unless Handley has consented in writing.
4.3 Gunner warrants that he has not entered into any agreement with Brooks, either orally or in writing, for [sic] formally or informally, that will enable Brooks access now or in the future to Malton Road, Beecroft through Gunner’s Land.
5. CREATION OF RIGHTS OF WAY AND EASEMENTS OVER GUNNER’S LAND IN FAVOUR OF BROOKS
5.1 Handley may by notice in writing require Gunner to do all things necessary to create the rights of way and easement over Gunner’s Land for the benefit of Brooks’ Land substantially in the same form as the Transfer comprised in Schedule Five hereto (“ the Brooks Transfer ”).
5.1.2 Prior to the transfer of Jona’s Road to Gunner and the Triangle to Brown Gunner must deliver the Brooks’ Transfer to Handley in registrable form.
5.1.3 Should the Brooks’ Transfer be lost or destroyed or for any other reason Handley may by notice in writing require Gunner to deliver to Handley within a reasonable time a transfer identical to and in substitution for the Brooks’ Transfer in registrable form.
5.2 Gunner’s obligations under Clause 5.1 include, without limitation:
(a) the signing of all documents and plans and instruments;
(b) complying with any requisition raised by the Land Titles Office and Office of State Revenue with respect to the Brooks’ Transfer or any substitute Transfer;
5.3 If all or any part of Gunner’s Land is sold prior to service of the notice referred to in Clause 5.1 Gunner must procure from any purchaser of all or part of Gunner’s Land prior to completion of such sale the execution by such purchaser of a deed with Handley in like form, substance and effect to the provisions of Clauses 4 and 5 of this Deed (whereby such purchaser must assume the obligations of Gunner contained in the abovementioned clauses with respect to that part of Gunner’s Land which such purchaser is purchasing) and such deed shall include a provision that any such Purchaser must procure the execution by any subsequent purchaser of an equivalent deed with Handley in like form, substance and effect to the provisions of Clauses 4 and 5 of this Deed.
5.4.1 If Gunner has sold part or all of Gunner’s Land Handley may serve a notice to require Gunner to provide to Handley within a reasonable time a transfer or transfers in registrable form in like form, substance and effect as the Brooks’ Transfer mutatis mutandis from the registered proprietors (collectively “ the Subsequent Purchaser ”) for the time being of all or any part of Gunner’s Land.
5.4.2 Handley may by notice in writing require Gunner to procure the registration of the transfers referred to in Clause 5.4.1 within a reasonable time.
5.4.3 Gunner’s obligations under Clause 5.4 shall include without limitation:
(a) the signing of and the procuring of the signing of all transfers and instruments;
(b) the procuring of the production of any relevant Certificates of Title at the Land Titles Office to enable registration of the substitute transfers;
(c) the procuring of the consent, mortgagee, chargee, caveator or any other person claiming an interest in the Subsequent Purchaser’s land to the registration of the substitute transfers;
(d) the procuring of the execution of the substitute transfers by any of the persons referred to in paragraph (c) above;
(e) complying with any requisition raised by the Land Titles Office and Office of State Revenue with respect to the substitute transfers.
6. NOTICES
…
7. STAMP DUTY
7.1 Gunner and Handley shall pay stamp duty and all costs of Surveyors, Solicitors, Valuers and Consultants equally.
8. Notwithstanding anything else contained in this Deed, Plan of Subdivision or the 88B Instrument, Handley shall not have to contribute to the cost of the Maintenance, Repair or Restoration of the Works “as defined in the 88B Instrument” unless and until the Brooks transfer, or any substitute transfer pursuant to Clause 5 of this deed is registered at the Land Titles Office.

7 Matters proceeded in a timely fashion and generally according to plan until about 1999.

8 The appellants procured the transfer by the Browns to the respondent of Jona’s Road (cl 2.1, 2.3) and the respondent transferred “the Triangle” to the Browns by way of a subdivision and consolidation with the Brown land (cl 2.2). I infer that these matters happened in or before 1995 (see cl 5.1.2), which was when the purported Brooks Transfer was delivered (see below).

9 The respondent and the appellants together caused the Plan of Subdivision (DP847605) and s88B Instrument contemplated by cl 3 of the Deed to be registered on 28 March 1995 (CB 58, 70-75). This, among other things, delineated a right of way 11m wide over the Gunner land with accompanying easements for services and drainage that broadly intersected the Gunner land and operated immediately in favour of the Handley land. The right of way effectively extended Jona’s Road across the Gunner land to the eastern boundary of the Brooks Land. The dominant tenement of that right of way was the Handley land, but the appellants’ capacity to get any practical enjoyment of their rights still depended upon getting the owner of the intervening Brooks land to agree to the further extension of Jona’s Road across the Brooks land to the Handley land.

10 The registered s88B Instrument enables the appellants and their successors in title to construct a driveway and associated drainage works over the Gunner land at Gunner’s cost (see CB 73). Thereafter the cost of maintenance of the works is to be borne as to 48% by Gunner and 26% by Handley (CB 74), subject (in Handley’s case) to the proviso that Handley does not have to contribute to the cost of maintenance, repair or restoration unless and until the Brooks transfer is registered: see Deed, cl 8. (The parties contemplated that the remaining 26% would be borne by “Brooks” when and if Brooks came to the party: see the terms of the specimen “Brooks Transfer” that is Schedule Five to the Deed.)

11 The driveway across the Gunner land has not yet been constructed.

12 None of these rights was of any practical benefit to the appellants unless Brooks could be brought to the party. To date this has not occurred. Clauses 4 and 5 of the Deed were the means chosen by the appellants to facilitate the long-term goal of extending Jona’s Road across the Brooks land. There was both a stick and a carrot directed at “Brooks”.

13 Clause 4 binds the respondent and his successors in title (see cl 1.1(e)) in various ways not to permit the owners of the Brooks land to obtain access to Malton Road via the Gunner land otherwise than with the appellants’ consent. This is the stick directed at the owners of the Brooks land.

14 Clause 5 is the carrot. It provides a means whereby the appellants can procure the respondent to execute a Transfer which (upon registration) would create a right of way over the Gunner land in favour of the owner of the Brooks land having the effect of extending Jona’s Road to and across the Brooks land to the eastern boundary of the Handley land. Armed with such a registrable instrument, the appellants are free to negotiate with the owners of the Brooks land in an endeavour to bring them aboard on mutually acceptable terms. Acceptance by Brooks and registration would create a right of way in favour of the Brooks land. From a conveyancing point of view, the appellants will also need to obtain their own easement over the Brooks land. When added to the easement to be granted by the respondent in favour of the appellants over the respondent’s land, this would enable the appellants’ land to enjoy access across the entirety of an extended, constructed Jona’s Road.

15 Clause 5.1 states the primary obligation, namely that “Gunner” should do all things necessary to create the stipulated rights of way and easement over Gunner’s land for the benefit of Brooks’ land if required by notice in writing from “Handley”. That notice is not in evidence, but there is clear evidence of attempts to perform subsequent steps contemplated by cl 5 commencing as early as 1995.

16 What did and did not happen subsequently is critical to the issues in this appeal.

17 In about 1994 or 1995 and prior to the transfer of Jona’s Road to him, the respondent executed and delivered to Mr Handley a Transfer purporting to grant the easement in favour of Brooks (“the first Transfer document”) (CB 76). It is in the form of a Transfer Granting Easement in a document apparently issued by the Registrar General. Apart from the presence of Mr Gunner’s signature and that of a witness, the document appears to be identical to that shown as “The Brooks Transfer” forming Schedule Five to the Deed (cf cl 5.1). There could be no question about the first Transfer document being “substantially in the same form as the Transfer comprised in Schedule Five” (see cl 5.1). The document was an exact replica with signatures added.

18 The problem was and is that the instrument delivered was always likely to encounter problems in becoming registered. In that sense, at least, it was not delivered by Gunner to Handley “in registrable form” as required by cl 5.1.2.

19 There appear to have been three aspects of the first Transfer document that (unless and until corrected) affected its capacity to be registered without difficulty, or at least have had such effect by reason of supervening events that were within the reasonable contemplation of all parties:

(1) the Torrens title reference to the dominant tenement (ie the Brooks land) is not stated in the Transfer;

(2) the servient tenement is identified as “FOLIO IDENTIFIER 615/752028” which was a correct description of the respondent’s land in 1994, but had ceased to be so in 1994 or 1995 in consequence of steps taken by the respondent to carve out “the Triangle” transferred to the Browns in 1995 in performance of cl 2 of the Deed; and

(3) the Annexure that describes in detail the right of way transferred by Mr Gunner as transferor to Mr and Mrs Brooks as transferee contains blanks when referring to the Deposited Plan describing the proposed right of way in detail.

20 The information required to complete the blanks in the reference to the dominant tenement and the Annexure was certainly ascertainable and it may well have been of the sort that the person with lawful custody of the transfer had authority to insert (see generally Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238).

21 It is unnecessary to dwell upon who may have been at fault in preparing a Transfer that had the problems I have identified, if problems they were. I content myself with observing that they stemmed from the executed document being identical in form to that annexed to the Deed. The drafter of the first Transfer document appears to have fallen into the mistake of reading cl 5.1 as if it did not contain the words “do all things necessary to create” and “substantially”, and as if the obligation was designed to achieve a futility.

22 Nothing in the evidence would appear to relieve the respondent of a share of responsibility for the relative ineffectiveness of the first Transfer document. It follows that he could not in justice seek to take advantage of the situation by arguing that any obligation arising under cl 5 on his part was spent in 1995 (see Bragg v Alam [1981] 1 NSWLR 668; appeal dismissed: Bragg v Alam (1982) NSW Conv R 55-082). In so observing, I do not perceive this lastmentioned point to have been taken by the respondent. As will appear, he was prepared in 1995 to deliver to the appellants one substitute “Brooks Transfer”, thereby (to use a rugby metaphor) moving off the original mark to some degree.

23 Matters intervened that created additional difficulties regarding the capacity of the first Transfer document to be registered even if promptly executed by “Brooks” as transferee. None of them were unforeseeable.

24 In about 1995, the respondent executed and delivered to the appellants a substitute Transfer in favour of Mr Brooks (“the first substitute Transfer document”) (J39; CB 50, 132P). It is a Transfer Granting Easement apparently in the form then approved by the Registrar General (CB 50-52). The following may be noted about this instrument:

(1) The servient tenement is identified as Folio Identifier 2/847605, ie the Gunner land after the 1995 subdivision involving the excision and transfer to Brown of the “the Triangle” contemplated by cl 2.2 of the Deed.

(2) The dominant tenement is identified as Folio Identifier 6/25800 which was then the Brooks land.

(3) There is a stated consideration of one dollar.

(4) The transferee is not stated on the form itself. Going by the document in evidence, a blank in the typed annexure describing the easement is filled in with handwriting stating the name “James Andrew Brooks”. (The date when this occurred is unknown. It is unlikely to have been 1995 because Mrs Brooks was then still alive: see below.)

(5) The detailed description of the easement is complete and includes references to DP 847605. It is otherwise in accordance with the specimen forming Schedule Five to the Deed (CB 48-9).

(6) The Transfer is signed by the respondent and witnessed. Naturally, there is no transferee’s signature.

25 As far as can be deduced, in 1995 the only “problem” with the immediate registrability of this instrument was the absence of a named transferee on the form itself (CB 50), a remediable matter in light of the principles about filling in blanks to which reference has already been made. The typed annexure left the name blank but, as indicated, someone has at some time added in handwriting “James Andrew Brooks” (CB 51). Naturally it required the owners of the Brooks land to execute as transferees, but this was never a prerequisite under the Deed. After all, cl 5 was designed to arm “Handley” with the right to present the unwilling “Brooks” with a registrable instrument as part of the carrot and stick strategy already referred to.

26 When the Deed was executed, Mrs Brooks and her husband were the registered joint tenants of the Brooks land. She died on 29 January 1996. A Notice of Death was registered, I infer, in 1996 (CB 215). Accordingly, Mr Brooks alone became the registered proprietor of that land and the person in whose favour any “Brooks transfer” would have to be executed by Mr Gunner or his successors if it was to be registered without requisition or difficulty.

27 From about 1992 Mr Handley and Mr Gunner had discussed the possible development of, inter alia, the Brooks land (CB 22). I infer from what follows that this development included its subdivision. Mr Handley has also, since 1998, participated with Mr Gunner and Mr Brooks in numerous strategic discussions over twelve months concerning an application to subdivide their respective properties. There was an application to Hornsby Council by surveyors jointly retained by the three interests and the retention of solicitors to represent them at a Commission of Inquiry (CB 22). These endeavours eventuated in approval that included permission to subdivide the Brooks land in 1999.

28 In 1999 the Brooks land was subdivided by Deposited Plan No 883724 (CB 68). This created two lots, the rear or northern one of which was transferred to Hornsby Council at some time. The portion that remained (lot 2 in DP 883724) was registered in Mr Brooks’ name on 3 December 1999 (CB 66). As indicated, the respondent was involved in the steps necessary to obtain subdivision approval for the Brooks land.

29 According to unchallenged evidence from Mr Handley, he has performed all obligations imposed on him by the Deed.

30 Nothing material appears to have occurred between 1999 and 2005 except the issuance of new forms by the Land Titles Office.

31 Commencing in December 2005 the appellants have been pressing Mr Gunner, without success, to sign a further substitute transfer of easement in favour of Mr Brooks which reflected the changes since the first substitute transfer (CB 23, 81). The appellants invoked the right conferred by cl 5.1.3 of the Deed.

32 The primary judge was informed (CB 8) that:

It is admitted or agreed that schedule 2 of the regulations governing the land titles office represent the continuing practice of the land titles office and that the defendant, in order to provide a transfer in registrable form, would either need to amend the existing transfer executed by him so that it amended the title particulars and the names of the parties, and initial and execute those changes, or a fresh form of transfer with those same alterations and additions entered on to that new form of transfer.

33 On 7 April 2006, the appellants’ solicitor tendered to the respondent an approved form of Transfer Granting Easement in which the Transferor is Mr Gunner and the transferee Mr Brooks (CB 87). The easement is described as:

RIGHT OF CARRIAGEWAY AND EASEMENT FOR SERVICES 11 WIDE AND VARIABLE AS SHOWN ON ANNEXURE ‘A’ ATTACHED

34 The annexure is a Plan reflecting the earlier transactions carried out by the parties in accordance with the Deed and the 1999 subdivision of the Brooks land. The dominant tenement is identified as 2/883724 (ie the current Brooks land, being lot 2 in DP 883724). The servient tenement is identified as 2/847605 (ie the current Gunner land).

35 This instrument would appear to be effective, if registered, to create a right of way in favour of Mr Brooks that embodies all of the incidents contemplated by Schedule Five of the Deed. In so observing, I assume that the proffered Transfer had the Annexure spelling out the detailed terms of the easement and associated rights (see CB 48-9). If it did not, then the omission was unintended and no point has ever been taken in that regard. I am satisfied that the letter was an unequivocal demand for performance of an obligation stemming from cl 5.1 of the Deed. The critical issue is whether that right had somehow been lost by effluxion of time and/or whether cl 5.1.3 contemplated a Transfer reflective of title particulars as distinct from those applicable when the Deed was executed.

36 The letter of 7 April 2006 identified the events necessitating the signing of a replacement Transfer as: the change of title reference to the Brooks land; the death of Mrs Brooks; and a change to the form of Transfer Granting Easement prescribed by the Department of Lands (CB 85). Each is a genuine or obviously relevant “reason” for invoking cl 5.1.3 of the Deed, assuming that cl 5.1.3 is not invalid or spent on one of the bases contended for by the respondent.

37 The appellants want the respondent to execute the Transfer so that they can stand armed and at the ready should Mr Brooks (or his successor in title) be persuaded by some means or another to accept a transfer that would perfect the right of way extending Jona’s Road up to and across his land, at the price of agreeing to share in its upkeep.

38 Correspondence from the respondent or his attorney during the first half of 2006 indicates a scattergun of stated reasons for his present unwillingness to sign any further Transfer regardless of its form. Initially the respondent questioned the need for any further documents to be signed to perfect the Deed, while indicating his unwillingness to contribute to the cost of building the road extension (CB 82); then he called for a copy of the Deed and the earlier executed Transfer (CB 89); then he asserted that the Deed had become obsolete, while calling upon Mr Handley to provide evidence of his capability of funding the construction of any roads (CB 91, 94); then he asked for further time to get advice from the person holding his power of attorney (CB 113); then he asserted that the Deed had become spent upon his execution of the two earlier transfers and he accused Mr Handley of delaying proceeding with the works (CB 132). He also asserted that a further transfer would “cause problems for my estate and my wife” (CB 132).

39 The letter of 5 June 2006 indicates that the respondent is seriously unwell, but ostensibly willing to consider mediation or arbitration through his attorney (CB 133).

40 The appellants and their solicitors have responded repeatedly and patiently to this stream of (at times) repudiatory assertions, providing information as requested and seeking to persuade the respondent to sign the document and avoid costly litigation. The respondent asked for further time to get legal advice (CB 149). His attorney Mr Lawrence then called upon Mr Handley to explain the urgency of the situation, adding (CB 151):

Mr Handley is requiring a granting of an easement for James Andrew Brooks, it cannot be considered as set out in your letter as a replacement transfer as Mr Gunner has already provided Mr Handley with a replacement transfer, which Mr Handley has chosen not to act upon. Mr Gunner is not refusing to provide Mr Brooks with right of carriageway. Any transfer given now has to be subject to lodgement of a subdivision plan as the road could have to change from the existing location because of a change in council rules as to subdivisions in their set area. And more importantly, the new bushfire act requires addressing prior to considering any subdivision.
Providing a transfer at this time could render the transfer useless unless there is an agreement as to the location or approval by council for the roadway. Mr Handley should act under the 88b Instrument to establish the above.

41 Patience exhausted, the appellants commenced proceedings in the Equity Division on 30 June 2006.

42 A letter from the respondent’s solicitors written after the proceedings had commenced stated that the respondent does not object to Mr Brooks having a right of carriageway. The letter went on to assert that “the problem lies in determining where the road for the subdivision will be located under the new rules from council because of the Bush Fire Act and a change in council policy”. Young CJ in Eq correctly observed that there was no evidence of any such difficulty (J44, J56).

43 At the first instance hearing, the respondent’s senior counsel raised six defences as follows:

(1) There was never any deed duly executed by Mr Gunner.

(2) The request to execute the extra transfer in 2006 was invalid.

(3) The obligation under clause 3 of the Deed was spent when the s88B instrument was registered on 28 March 1995.

(4) The Deed was spent as soon as Brooks’ land was subdivided.

(5) The request for a substitute transfer must take place within a reasonable time of 1994.

(6) The substitute transfer must be identical with the Brooks Transfer and the one proffered was not in that category.

44 Young CJ in Eq effectively rejected the first defence. Mr Gunner had executed a document that, if it differed in form from the Deed, was substantially similar to it. The Deed was enforceable as a contract for valuable consideration in any event.

45 Defences (2) to (4) were also rejected.

46 In rejecting the second defence, his Honour said (J22-24):

22 (2) It would seem quite clear that prior to December 2005, Mr and Mrs Handley requested Mr Gunner to sign the replacement transfer though the actual request does not appear to be in evidence. On 7 April 2006, the present solicitors for the plaintiffs did indeed make a formal demand.

23 The point that appears to be being made is that under clause 5.1 the Handleys may, by notice in writing, require Mr Gunner to do things once and once only and that because the initial attempts were irregular, it was too late for a formal notice to be given in April 2006.

24 I do not accept this submission. It seems to me that if the earlier notices were invalid, then there was no bar to giving the April 2006 notice, and likewise, if the earlier notices were valid, there was no need to give the April 2006 notice. Indeed, it seemed to me that this point was really just made by way of background rather than as a serious reason why the Handleys should not be given relief.

47 One aspect of the fourth defence was the contention that the proposed easement in favour of the Brooks land could not enure in favour of that part of the original Brooks land retained by Mr Brooks after the 1999 subdivision. His Honour rejected that defence, citing Gallagher v Rainbow (1994) 179 CLR 624 and Short v Patrial Holdings Pty Ltd (1994) 6 BPR 13,996.

48 The fifth and sixth defences were upheld and the reasoning on these matters was the primary focus of the appeal. His Honour held that the appellants were not entitled to relief because they had waited more than a reasonable time before making their 2005/2006 demand; and even when they did, they did not seek a replacement transfer in identical form to “the Brooks Transfer” (J63).

Analysis

49 As indicated, the appellants have done everything required of them under the Deed and the respondent has obtained the contracted-for benefits in their entirety. The appellants have relinquished to the respondent their control over the eastern part of Jona’s Road, by procuring its transfer to him, thereby giving him free access to the rear of his large block. The appellants have procured Brown to do all things necessary to enable registration of the Plan of Subdivision and s88B Instrument involving the enlargement of the respondent’s land. And the appellants have effectively committed themselves to sharing in the cost of maintaining the roadway and other works crossing the respondent’s land, subject to the registration of the Brooks transfer.

50 The only presently outstanding matter, and the entire goal of this litigation, is the procuring of the respondent’s witnessed signature on a piece of paper capable of registration (when accepted) that reflects the current title situation. The concession recorded in the transcript at CB 8 (set out above) discloses that minor amendments to the first substitute Transfer would suffice, if initialled by the respondent; alternatively, the execution of a fresh document in the current Land Titles Office format whose inserted contents are readily ascertainable.

51 The respondent has been willing to sign two previous documents intended to achieve exactly the same as the now proffered document.

52 At one level, this whole case is a storm in a teacup. But viewed from the appellants’ perspective, the finding as to unreasonable delay is tantamount to a determination that the Deed has come to an end.

53 The respondent’s resistance to signing a further replacement Transfer has not been justified on any basis other than that he no longer wishes to cooperate with the appellants. In other words, nothing in the evidence suggests that performance would entail any hardship to the respondent, including any hardship stemming from the grant of a right of way in favour of Brooks that would replicate the existing right of way in favour of the appellants. This at least is relevant to determining whether, if there is any requirement that something be done within a reasonable time, an unreasonable time has elapsed. Of course, if the respondent is within his rights under the Deed, then his motivation is irrelevant.

54 A futility argument has not been raised by the respondent, so there is no basis for concluding that the appellants have nothing to gain by obtaining a currently registrable “Brooks Transfer”.

55 It is vital to understand what, if anything, the respondent was being was being called upon to do in 2005/2006 in order to determine whether he would ever have been obliged to do it, as well as whether an unreasonable time for doing it had by then elapsed (assuming reasonableness of time is the touchstone).

56 The learned primary judge construed the relevant obligation under the Deed as one arising if and only if a request to execute an identical document to the specimen originally annexed to the Deed was made within a reasonable time (J42). The appellants submit that this misconstrued the effect of cl 5.1.3.

57 The respondent supports the reasoning of the trial judge. He contrasts the word “identical” in cl 5.1.3 with the words “in like form, substance and effect” in cl 5.4.1. Somewhat inconsistently in my opinion, he further submits that cl 5.1.3 imposed no more than an obligation to re-execute a transfer that he had already given (Respondent’s Written Submissions, para 18) which I take to be a reference to the first substitute Transfer document.

58 There is, with respect to his Honour, a degree of ambiguity as to the contractual event perceived to have set running the clock that the appellants were found to have unreasonably ignored. There is a passing reference to “15 years” in J42, a time interval that commenced in 1992 when the parties first began their discussions. Other passages referring to the lapse of 11 years after the date of the Deed (J48-9, 56) suggest that his Honour viewed entry into the Deed as setting time running. The passage at J24 set out above also appears to contemplate that the right to give a notice in 2006 may turn upon the “invalidity” of the two earlier notices.

59 Another portion of the reasons examined the time lapse from 1995 (see J43, 49, 56), presumably on the basis that the respondent’s plan of subdivision and s88B instrument were registered that year. Thus, his Honour records that everything else that was required to be done under the Deed was done by the middle of 1995 (J50).

60 In finding that the demand which the appellants were seeking to have enforced was first made in 2005/2006, his Honour said that attention needed to be focussed upon cl 5.1.3 of the Deed. He held that the document proffered to the respondent in 2006 was not one that he was obliged to execute because it was not “identical to and in substitution for” the document referred to in the Deed as “the Brooks’ Transfer” (J63). His Honour construed “identical” to mean “exactly the same”, “the very same” or “agreeing entirely in material, constitution, properties, qualities or meanings” (these meanings being derived from United States caselaw) (J59). An earlier passage also shows his Honour to have tested identicality by reference the actual document originally delivered (J57), ie the first Transfer document.

61 I respectfully disagree with this analysis. It has the effect of allowing the respondent to take advantage of the ineffectiveness of the first Transfer document notwithstanding that (a) the document was actually delivered; (b) the form of that document was the product of a misconstruction of cl 5.1; (c) the document was ineffective from the outset; and (d) the respondent was one of the parties to that document. I hasten to add that (a), (b) and (c) would be problems even if (d) were not.

62 Clause 5.1.3 needs to be interpreted in context and in light of the Deed as a whole, including the entirety of clause 5 itself.

63 The context was that the Deed was the means chosen by the parties to give effect to their mutual and individual interests in subdividing their respective blocks and thereby maximising the value of them. The respondent needed to obtain title to the original Jona’s Road in order to secure his preferred access to Malton Road and the ideal means of becoming able to subdivide his land and sell off its rear portion as a separate lot. The appellants wanted access to a westward extension of Jona’s Road for similar reasons.

64 Recital F captured the mutual aims. For convenience I repeat it:

F Both Gunner and Handley wish to develop and to subdivide Gunner’s Land and Handley’s Land respectively and Gunner and Handley have agreed to assist each other to develop and subdivide their respective properties.

65 Both parties knew that if and when Jona’s Road extended across the Gunner land there would be costs incurred in building and maintaining it. The Deed and the Brooks Transfer that it contemplated sought to share those costs as between the Gunner, Handley and Brooks interests.

66 The parties to the Deed knew that “Handley” needed to bring the reluctant “Brooks” to the party if the appellants were to realise their longer term goals. Both parties also knew that Mr and Mrs Brooks were reluctant to commit in 1994, hence the “carrot” and “stick” provisions in the Deed. In truth, everyone recognised that there would be an element of “wait and see” as far as concerned the Brooks response. It may also be inferred that part of the intended strategy was that the Brookses might warm to the project as it developed through its earlier stages, including the subdivision of the Gunner land and the registration of the s88B instrument that would define the legal incidents of the various easements.

67 The parties contemplated that steps needed to be taken that would take time and were not entirely within their control. These included procuring the consent of the Council to the subdivision embodied in the Plan of Subdivision and s88B Instrument that were registered in 1995.

68 The suggestion raised by Mr Gunner in correspondence and apparently also through his counsel at first instance to the effect that the appellants should have embarked upon the construction of the extension of Jona’s Road across the Gunner land prior to securing Mr and Mrs Brooks’ acceptance of the Transfer in their favour is both unrealistic and contrary to the spirit of the written agreement. That agreement contemplated that it was to be the respondent who bore the cost of constructing the road across his land, something that would have been both burdensome and pointless (at least so far as the parties were concerned) without the Brooks’ consent to the westward extension of the right of way. It does not lie in the respondent’s mouth to complain that this expenditure has been delayed.

69 The Deed might come to an end by performance, frustration, rescission, or termination for breach. But none of these events have occurred.

70 The Deed bears many signs of having been designed as an enduring obligation. In this regard I include the stipulations that references to any party extend to the successors and permitted assigns of that party (cl 1.1(e)) and that references to any document or agreement include references to such document or agreement as amended novated supplemented varied or replaced from time to time (cl 1.1(f)). Clause 5 itself contemplates substitute transfers (see 5.1.3, 5.2 and also cl 1.1(a)) as well as obligations falling on the respondent (or his successors or assigns) to execute substitute Deeds and transfers on various contingencies likely to happen well after the date of the Deed (see cl 5.4). Clause 4 binds “Gunner” not to do things in Brooks’ favour for an indefinite future period. Clause 8 addresses the burden of contributing to the “maintenance, repair or restoration” of the yet to be constructed works defined in the draft s88B Instrument over an indefinite period prior to the registration of “the Brooks transfer”.

71 As I have indicated, cl 5.1 of the Deed spelt out the respondent’s primary obligation, namely to do all things necessary to create the relevant rights over Gunner’s land for the benefit of Brooks’ land (see also Recital F). Obviously this meant all things that were within the respondent’s power. The content of those easement rights was identified in cl 5.1 as being “substantially in the same form as the Transfer comprised in Schedule Five hereto (‘the Brooks transfer’)”. This did not lock the parties into a situation where execution of the very Transfer in Schedule Five was the only means of achieving the relevant goal. Unfortunately, the use of the specimen document as the means of defining the scope of the obligation appears to have triggered confusion that has continued to this day.

72 When cl 5.1 is seen for what it truly is, and when the word “substantially” in that subclause is given the operation that the word demands, then it can be seen at once that some of the arguments raised by the respondent are quite untenable. The simple fact is that the respondent’s execution of the first Transfer document did nothing to advance the scheme of the Deed. It may have been identical in form to the transfer found in Schedule Five. But that transfer was deficient from the outset in effectuating the contractual scheme. No one suggests that an unreasonable time elapsed before the first Transfer document was executed.

73 In 1995 the parties sensibly, and in my view correctly, recognised the appellants’ entitlement to have at least one further transfer executed. The document I have described as the first substitute Transfer document, executed by the respondent in about that year, contained amendments necessary to accommodate the very dealings touching the Brown land and the Gunner land that the parties had arranged to happen in accordance with the Deed.

74 By 1995 the appellants had done all that they were then required to do under the Deed. And the respondent had obtained every benefit contracted for.

75 Mr and Mrs Brooks were still unwilling to come to the party.

76 Clause 5.1 may have used the term “the Brooks Transfer” to refer to the specimen in Schedule Five. But cl 5.1.2 used the same term to refer to an executed instrument. Clause 1.1(f) recognised that documents required in performance of the Deed may be “amended novated supplemented or replaced from time to time”. Clause 8 expressly contemplated a “substitute [Brooks] transfer pursuant to Clause 5”.

77 In this context, the respondent’s submission that cl 5.1.3 should be read as arming the appellants with a single opportunity to call for a replacement “Brooks’ Transfer” identical in form to the Transfer in Schedule Five must be rejected. Clause 5.1.3 should be given its plain meaning of enabling “Handley” to require “Gunner” to tender a substitute Transfer whenever the existing (executed) Brooks Transfer has been lost or destroyed or “any other reason” called for this to happen. The appellants could not use this power capriciously and oppressively. But a request for a replacement document to accommodate changes to the forms approved by the Land Titles Office occurring after the provision of the first substitute Transfer document was eminently reasonable.

78 It is unnecessary to determine whether more than one notice was permissible under cl 5.1 because that aspect of the clause is not directly applicable in the present case.

79 Since the respondent’s obligations under the Deed in this regard were not spent by virtue of the events of 1995 and since the Transfer proffered in 2006 described the easement and title details in appropriate terms then, subject to the question of delay addressed below, the respondent should have complied.

80 This leaves the questions whether (a) there is an implication that the rights under cl 5.1.3 could only be exercised within “a reasonable time”; (b) when that time started to run; and (c) whether an unreasonable time had in fact elapsed.

81 The Deed contains no time stipulation and it remains in force. No time bars stemming from the Limitation Act 1969 or the principles of equity are engaged.

82 The appellants draw attention to the fact that cl 5.1.3 stipulates a reasonable time for “Gunner” to respond to a notice in writing requiring him to deliver a substitute transfer. There is no time stipulation governing when “Handley” may call for the substitute. And there is certainly no stipulation that set time running from the date of the Deed.

83 These are all valid propositions, although they do not necessarily get the appellants home.

84 Furthermore, cl 5.1.3 conditions “Handley’s” right to call for a substitute Brooks Transfer upon “the Brooks’ Transfer” being lost or destroyed or some other reason occurring. Such events are obviously capable of occurring more than once and at no particular interval of time after execution of the Deed. The analogy of a covenant for further assurance is at least suggested.

85 It follows that I cannot accept a submission that would draw from the terms of the Deed an affirmative implication that the right conferred by cl 5.1.3 was exercisable once only or even within a reasonable time from the date of the Deed. I have yet to address whether such a time requirement enters because of other considerations and this will entail analysis of this Court’s decision in Ellmore(Maitland) Pty Ltd v Tull (1995) 7 BPR 14,305.

86 The respondent placed particular reliance on Ellmore. A contract for the sale of land entered into more than 12 years prior to the proceedings contained a condition that, following completion, the purchasers or their successors and assigns would, upon the written request of the vendor, lodge a plan of resubdivision in relation to a lot transferred so as to create two lots, and that upon registration of the plan one of the “new lots” would be transferred to the vendor without consideration.

87 It was held that the vendor’s contractual right to request the purchasers to seek a resubdivision enured only for a reasonable time after the date of completion of that contract; and that the vendor did not make this request within such a time.

88 The Court rejected the vendor’s submission that the request could be made at any time in the indefinite future. The implication of a reasonable time was derived from the terms of the contract considered in context (applying Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 345-356). That context included the fact that the relevant council was unable, unwilling and unlikely to consent to the further subdivision as at the date of contract (see p14,307).

89 Mahoney JA, with whose reasons Priestley JA and Sheller JA agreed, said (at pp14,307-8):

Where power is given to a party to a transaction to exercise a particular right and no time is specified for its exercise, it will commonly be implied that the right must be exercised within a reasonable time: see Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1 at 13 et seq; Amalgated Television Services Pty Ltd v Television Corporation Ltd (1969) 123 CLR 648 at 654, 655. As Dixon J said in Reid, "an implication of a reasonable time when none is expressly limited is, in general, to be made unless there are indications to the contrary". The reason for this is plain. It was referred to by Dixon J: otherwise "the land must be sterile in the hands of the owner in fee simple awaiting the pleasure of" the party who may give the notice but need not do so. The practical difficulties involved in the continued existence indefinitely of rights of the present kind suggest that the intention of the parties was, or is best to be effected by accepting, that the right must be exercised within a reasonable time.

In addition, where rights of property are created or may be terminated by the exercise of a right, the policies underlying the law of perpetuities and restraints upon alienation of land become relevant. Prima facie these considerations are applicable in the present case. In general terms, the law recognises the real difficulties which are apt to arise where rights are so structured that an interest in land may arise at an indefinite time in the future or the owner of land is prevented from dealing with it for an unacceptably long time. The recognition of these difficulties has influenced the development of the doctrines which limit the extent to which such rights may be created. Mr Greenwood, in his interesting submissions, has submitted that the present clause created rights which, though providing for the possibility of the creation of an interest in land in the indefinite future and though effectively preventing the purchasers dealing with the land in the meantime, yet escape the meshes of the law against perpetuities and the law against restraints on alienation. He submitted, for example, that these considerations do not apply where the right is of the nature of an option. But, however this be, there is in my opinion a predisposition of the law - illustrated by the cases referred to by, eg, Menzies J in the Amalgamated Television Services case - so to construe the terms of the arrangements made by parties as to avoid both the mischief falling within the terms of those doctrines and the practical problems which, within or without those doctrines, arise from indefinite restraints. That, in my opinion, is a matter to be taken into account in determining the construction of the present clause and the effect to be given to it. It is prima facie unlikely that the parties contemplated that there should, for the indefinite future, be a right in the vendor company to secure retransfer of the "new lot" referred to in CL38.

It is possible to conjecture that the parties were conscious of the difficulties which the existing planning restrictions imposed qua resubdivision and that their purpose in authorising a "request" to be made for such a resubdivision at the option of the vendor company was to enable that company to take advantage of any change in the planning restrictions or policy which might possibly occur at an indefinite time in the future. But the evidence before the judge was, in my opinion, not such as to establish that this was in fact in the contemplation of either or both of the parties: cf the Codelfa case at 352 et seq. If and to the extent that the evidence before the judge could be held to warrant the conclusion that such a factor was in contemplation, the result of it would, in my opinion, be the construction of cl 38 so as to allow a longer rather than a shorter period for the making of the "request". It would not be to provide a right to make the relevant request at any time in the indefinite future.

90 The Court found that more than a reasonable time had elapsed in Ellmore. The facts were necessarily quite different from the present case (see pp14,308-9). Furthermore, unlike the present case, there was nothing to show what the parties in Ellmore contemplated about the planning restrictions or likely attitude of the council at the time of their contract (see esp the final portion of the passage extracted above as well as p14,309).

91 The respondent submitted, nevertheless, that the reasoning in Ellmore supported Young CJ in Eq’s decision that the obligation in cl 5.1.3 must be construed as requiring the respondent to execute a replacement transfer only if requested to do so within a reasonable time after entering into the Deed. It was submitted, in effect, that the choice lay between an obligation resting upon the respondent, his successors and assigns stretching forward for an infinite time period and the type of implication found in Ellmore. It could not be the case that the present parties contemplated that the respondent’s land could be sterilised until the cows came home (my words).

92 I have found this aspect of the appeal to be finely balanced. But I conclude that a genuine call for a substitute Transfer under cl 5.1.3 may be made at least until Mr Gunner disposes of his land or dies. In other words, the text of cl 5.1.3 is too strong to substitute (by process of implication) the alternative contended for by the respondent, at least during the respondent’s tenure of the Gunner land. In reaching this view I have paid regard to what cl 5.1.3 does and does not state and all of the aspects about the enduring nature of the Deed. Unlike the situation in Ellmore with respect to the likely attitude of the council in that case, when the present Deed was entered into the parties clearly contemplated the possibility of a change of heart on the part of Brooks.

93 As regards the text of cl 5.1.3, I have in mind the three nominated triggering events and absence of any reference to a reasonable time running from the date of the Deed. I also have in mind the possibility of an entirely effective signed Transfer being handed over and accepted by Mr Brooks in say 1996 with a call to replace that document years later upon it coming to everyone’s attention that the document had been later lost by Mr Brooks. To qualify the apparent obligation stemming from the clear text of cl 5.1.3 by some implication that the putative loss occur within a “reasonable” time after 1994 strikes me as unrealistic and forced. Such a construction would not advance the concerns about sterilising land from alienation that underlay the reasoning in Ellmore.

94 The situation may be different if there were an attempt to impose an obligation touching a substitute Brooks transfer upon Mr Gunner’s successor in title. In other words, a call to enforce cl 5.4.1 might throw up issues of a different order. It is unnecessary to explore them in the present appeal.

95 Unlike the situation discussed in the final paragraph quoted above from Ellmore, the parties in the present case recognised the possible need for a time to elapse before “Brooks” might be brought to the party. They addressed it by the provisions contemplating that a “Brooks Transfer” might be procured in favour of Mr and Mrs Brooks’ successors and the other indications of the durability of cl 5.

96 The respondent further submitted that the Deed should be viewed as a commercial contract in which the ultimate goal was the subdivision of the Handley and Gunner land for profit (see Recital F). This was said to add additional support for the implication of a term that a substitute Transfer could only be called for within a reasonable time from the date of the Deed. These submissions about an implication resting upon the back of a generalised commercial purpose do not lie well in the mouth of the respondent who has effectively gained the benefit of the Deed in full and who suffers no hardship in being required to sign the document in question. In any event, their use to insert the putative implication into the particular clause strikes me as forced.

97 If there was any implication requiring something to be done by the appellants within a reasonable time, then that time started to run upon the occurring of the external event triggering the right in the appellants to call for it to be done. And what was reasonable in the circumstances had to be justified by what occurred as time elapsed, not as from the date of the Deed (see Rudi’s Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568 at 576).

98 Accordingly, the case law to which his Honour referred (J45-47) about determining the reasonableness of time for performing an obligation capable of performance at the outset of a transaction is, in my view, distinguishable.

99 No point has been taken about an action on the Deed being time-barred. And laches has not been raised.

100 Alternatively, the various matters I have referred to lead me to disagree with the primary judge’s conclusion that a more than reasonable time had elapsed.

101 When explaining his conclusion that the appellants had tarried for more than a reasonable time, his Honour lamented that he had been given very few facts on which to make this decision. He continued (J55-56):

55 … It would seem that the only reason why the plaintiffs did not seek the replacement transfer earlier was because they did not consider it was the appropriate time to finalise the subdivision. Apart from the matter of probable delay to which I have already referred, this was a matter wholly within the plaintiffs' camp and would not normally be a factor which the Court would take into account when assessing what is a reasonable time. It must be remembered that Cross J said in Re Longlands Farm [1968] 3 All ER 552, 556:

"[R]easonableness of the time must be determined as at the date of the contract and that what is reasonable must be judged by an objective test applicable to both parties."

56 There is some suggestion that the local government requirements have changed with respect to subdivisions over the last 11 years and although there is not substantial evidence of that, it is significant that the plaintiffs do not deny it. However, doing the best I can I must find that as a matter of fact in all the circumstances, a reasonable time had passed before 2005, and that the making of the demand was accordingly too late and ineffective.

102 I respectfully disagree with this analysis at several points.

103 In the first place, I fail to see the factual basis of the observation that the appellants had been guilty of delay because they did not consider it was the appropriate time to finalise the subdivision. On my understanding of the evidence, the difficulty still rests with the unwillingness of Mr Brooks to come to the party. On the current evidence, it is not yet established that Mr Brooks is prepared to sign the transfer (J53).

104 The Judge’s observation in the first section of J56 implies that the respondent has suffered some detriment through the lapse of time “over the last 11 years”. The relevance of this to the question of reasonable time is not readily apparent. In any event, the detriment appears not to be established on the evidence. At (J44), the Judge had observed that there was no evidence of any difficulty stemming from a suggested change of Council policy associated with the “Bush Fire Act”.

105 The time lapse was not unreasonable, in my view, even if running from the date of the Deed. The Deed contemplated a period of “wait and see”. There was no guarantee that the Plan of Subdivision and s88B Instrument contemplated by cl 3 of the Deed would be procured from the Hornsby Council within any finite period. Clauses 1.1(e) and 5.3 contemplate that the appellants’ rights would survive a transfer by Mr Brooks of his own land. The restraint upon “Gunner” giving “Brooks” alternative access to Malton Road that is embodied in cl 4 remains extant. The respondent’s land remains burdened with the easement in favour of the appellants identical in scope to that sought in favour of Mr Brooks.

106 The respondent invoked authorities that establish that a condition in a contract purporting to restrain indefinitely a person from alienating an interest in land will be void as against public policy (Hall v Busst (1960) 104 CLR 206 at 217-8, 223-4, 236, 246; Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 649).

107 In my opinion, these cases have no application to the present matter. The Deed does not prevent the respondent from disposing of his land. It only imposes certain contractual obligations upon him when and if he does so (see cl 5.3, 5.4.1). Unlike Hall, there is no restraint on alienation, whether in form or substance, and I can see no ground of public policy that should invalidate the Deed in whole or in part. I do not regard cl 4.2 as having such effect and, even if it did, it would not avail the respondent in the present matter of signing a substitute Transfer. I further observe that no claim of voidness for restraint on alienation and no submission that this translated into a reasonable time implication was taken at first instance.

108 There was a belated dispute about the competency of this appeal. It prompted the appellant to file a belated affidavit establishing that more than $100,000 was at issue. I am satisfied as to the appeal’s competency.

109 The following orders are proposed:

1. Appeal upheld.

2. Set aside orders dismissing the proceedings with costs made on 14 June 2007.

3. In place of those orders:

(a) order that the defendant shall within 21 days execute and deliver to the appellants a signed and witnessed form of Transfer Granting Easement so as to comply with cl 5.1 of the Deed as construed by the Court.
(b) liberty to the appellants to apply for further relief to give effect to the reasons of the Court.

4. Respondent to pay the costs of the proceedings and of the appeal. Respondent to have a Certificate under Suitor’s Fund Act 1951 , if qualified.

110 HODGSON JA: I agree with the orders proposed by Mason P, for the reasons he gives and the following additional reasons.

111 The 1994 Deed was drawn up with legal advice. At that time, and at the present, the Conveyancing Act 1919 (NSW) contained the following provision:

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,

……

112 As a result of the implementation of the 1994 Deed, and as contemplated by it, Gunner’s Land became subject to a registered easement in favour of Handley’s Land, which could be of practical benefit to Handley’s Land only if Handley could obtain an easement over Brooks’ Land linking to the easement over Gunner’s Land, so that access could be gained to Handley’s land via the combination of the two easements.

113 In my opinion, the intention of the parties was that, so long as this easement existed over Gunner’s Land, there should be an associated contractual right which would assist in achieving this, the only means by which that easement could become of practical benefit to Handley’s Land. In my opinion, it would not make sense for the easement to continue without that contractual right.

114 On the other hand, this would not make the contractual right a perpetual fetter on the use of Gunner’s Land, because it would be open for Gunner to apply for an order under s 89 for removal of the easement, on the basis that the easement ought to be deemed obsolete or that its continued existence would impede the reasonable user of Gunner’s Land without securing practical benefit to Handley, or that Handley “may reasonably be considered to have abandoned the easement”.

115 If such an application were made, in my opinion issues would be raised whether Handley had reasonably persisted in seeking an easement from Brooks (failing which, he may reasonably be considered to have abandoned the easement) or whether, in circumstances where Handley had persistently sought that consent and failed to obtain it, the easement secured practical benefits to Handley.

116 If those issues were resolved against Handley, and an order made to extinguish the easement, then the contractual right would cease to have any value to Handley and, consistently with the intention of the parties disclosed in the Deed, would come to an end.

117 CAMPBELL JA: I agree with Mason P, and the additional reasons of Hodgson JA but wish to give some additional reasons of my own concerning why there is no implied term in the Deed requiring any notice given under clause 5.1.3 to be given within a reasonable time of the Deed first being entered.

118 In Brambles Holdings Pty Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [28] Heydon JA adopted a taxonomy of four different types of implied terms in contracts, that had originally been given by Hodgson J (Carlton & United Breweries Ltd v Tooth & Co Ltd (Supreme Court of New South Wales, Hodgson J, 11 June 1985, unreported)). That taxonomy is:

“(i) Implications contained in the express words of the contract: see Marcus Clarke (Vic) Ltd v Brown (1928) 40 CLR 540 at 553–4.
(ii) Implications from the “nature of the contract itself” as expressed in the words of the contract: see Liverpool City Council v Irwin [1977] AC 239.
(iii) Implications from usage (for example, mercantile contracts).
(iv) Implications from considerations of business efficacy: see BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 at 26; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337.”

It is only the fourth type of implied term which could be applicable here.

119 As Mason J pointed out in Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at [3]; 345, and again at [25]; 353, deciding whether there is an implied term in a contract is an exercise of interpretation of that contract. It requires close attention to be paid to the detail of the particular contract that is in issue. Thus, generalisations in other cases about circumstances in which an implication of a requirement for some event to occur within a reasonable time being frequently made are of limited assistance.

120 The respondent in the present case placed reliance on the statement of Dixon J in Reid v Moreland Timber Co Pty Ltd [1946] HCA 48; (1946) 73 CLR 1 at 13:

“I think that the common implication would be made restricting the exercise of the right to a reasonable time. In other words, it should be understood as a right within a reasonable time to cut and remove the timber on the land. An implication of a reasonable time when none is expressly limited is, in general, to be made unless there are indications to the contrary: See Ellis v Thompson (1838) 3 M & W 445 [150 ER 1219]; Picturesque Atlas Co Ltd v Bradbury (1893) 19 VLR 439; Picturesque Atlas Co Ltd v Searle (1892) 18 VLR 633; Lynn v Creati (1892) 18 VLR 629.”

121 When Dixon J said that an implication of a reasonable time when none is expressly limited is, in general, to be made unless there are indications to the contrary, he did not state within what range of circumstances such an implication is “in general” to be made. He recognised at the outset of his judgment (at 9) that the question with which he was concerned was

“… one of interpretation; but it depends upon more than the mere construction of language. The considerations which must be taken into account include the character of the transaction, the nature of the subject-matter and the purpose of the particular provision to be interpreted.”

122 The transaction in question was for the sale of a saw milling business, of the lease of the premises on which the business was conducted, and of various rights to cut timber. The consideration was a fixed sum, plus a royalty for all timber cut from a particular area. The question at issue was whether the right to cut timber on that particular area was exclusive to the purchaser, or not. That question arose when the purchaser of the business did not exercise its right to cut the timber from that area, and the vendor purported to grant the right to cut timber from the same area to someone else. One of the arguments put was that there was no obligation on the purchaser to cut any timber from that site, so if the agreement were exclusive licence it would mean that the purchaser could indefinitely sterilise the timber on that land. It was for the purpose of dealing with that argument that Dixon J made the remark at 13 that I have earlier set out. He was providing a reason why the right to cut the timber was not one that had the effect, if unexercised, of indefinitely sterilising the land. The similarities between a right to cut and remove timber from land, and a contract for the sale of goods, are quite close. All the cases that Dixon J quoted in the passage I have set out, are contracts concerning the sale of goods in which it was held that there was an implication that delivery would take place within a reasonable time.

123 So far as the Handleys are concerned, clause 5.1.3 of the Deed creates a contractual power – it gives them the power to serve a notice in writing on Mr Gunner, which then triggers an obligation of contractual performance on Mr Gunner’s part. That in itself may serve to distinguish the present case from many other cases that have considered whether there is an implied term requiring a contractual obligation to be performed within a reasonable time.

124 There are various statements in textbooks to the effect that generally, where a contract does not specify the time for performance of an obligation, that obligation must be performed within a reasonable time (eg JW Carter, et al, Cases and Materials on Contract Law in Australia, 5th ed (2007) LexisNexis Butterworths, par [28-04]; Chitty on Contracts, 29th ed (1999) Sweet & Maxwell, par [21-020]). Such statements are empirical generalisations, not propositions of law – it well may be that in all or practically all contracts such an implication would be made, but that is because the tests for implication of the term are satisfied in relation to each particular contract.

125 The trial judge noted (at [54]) the similarity between clause 5.1.3 of the Deed and a covenant for a further assurance, and expressed the view that the decision of Molesworth J in Geraghty v Russell (1874) 5 AJR 89

“… makes it clear that despite the fact that a further assurance may not be required for some years, the promise to provide a further assurance does not enure forever.”

126 The usual role of a covenant for a further assurance was, in old system conveyancing, to ensure that if any interests in the land were found to be outstanding after a conveyance of the land had been made, the conveyor would get that interest in: Partridge v Preddey (1904) 4 SR (NSW) 36 at 40. However, the view has been expressed that under such a covenant a vendor may be called upon to exercise a duplicate of the conveyance if the original is burnt: Voumard, The Sale of Land, 5th ed (1995) LBC Information Services, par [14.070], footnote 20. It was such an extended sense of the covenant that was relied upon in Geraghty.

127 I respectfully do not agree that Geraghty stands for the proposition that the trial judge drew from it. Geraghty was a suit to compel a defendant to execute a duplicate of a conveyance that had formerly been executed, and was alleged to be lost. Molesworth J at 90 appears to accept that a covenant for further assurance can require a further conveyance to be executed if a purchaser wishes to subdivide his property. While it is clear that Molesworth J refused to order the execution of the duplicate conveyance, it is difficult to be sure of his reasons for taking that course. He commented, at 90:1, that there was “a palpable defect” in the evidence of the plaintiff in that his wife did not give evidence, and in particular she did not give evidence that the deed was lost. He recounts some material on the basis of which he expressed the view that he preferred the evidence of the plaintiff – but that further material seems to go to the question of execution of the deed in the first place, not its subsequent loss. Insofar as he gave reasons, it was that the deed

“… is one 18 years old, the efficacy of which has long been disputed, part of the land perhaps being the subject of the statute of limitations. A question should not be dragged from law to equity. In case of a grantor having no interest in the property, it would be hard to compel him to execute a duplicate conveyance upon an assertion of the loss of the original which perhaps might be the subject of an equitable mortgage or lien. There is here no distinct evidence of the language of the covenant sought to be enforced, no averment of conditions precedent to the right to enforce having been complied with.”

That the judge was not satisfied about the terms of the covenant he was asked to enforce, and not satisfied that the conditions for operation of the covenant had arisen, was ample basis for refusing to enforce it.

128 Molesworth J went on to grant an injunction against the Registrar of Titles bringing the land under the Torrens system, and against the vendor attempting to bring the land under that Act. That relief was given on the basis that the judge was satisfied that the vendor had wrongly sought to deprive the purchaser of a title that the vendor had granted to the purchaser.

129 In these circumstances, the conclusion that the trial judge drew from Geraghty is not one that I would draw from it.

130 While it is possible to point to examples of a contractual power that has been held not to be subject to an implied term requiring exercise within a reasonable time (eg Maritime Services Board of NSW v Australian Shipping Commission (1991) 27 NSWLR 258 at 278-9), and of a power of appointment created by a will that did not require exercise within a reasonable time (Neill v Public Trustee [1978] 2 NSWLR 65) whether such an implication is made in the present case depends upon the particular instrument that is the subject of this litigation. For the reasons given by Mason P the Deed does not contain an implied term requiring the contractual power under clause 5.1.3 to be exercised within a reasonable time. Rather, any implication that it contains about the time within which the contractual power under clause 5.1.3 may be exercised is, as Hodgson JA shows, tied to the duration of the easement that the Handleys have over Mr Gunner’s land.

131 I agree with the orders proposed by Mason P.

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