IMO Davies and McDonald
[2013] VSC 236
•8 May 2013
| Do Not Send for Reporting | ||
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
SCI 2012 06632
IN THE MATTER of the Property Law Act 1958 Section 84
- and –
IN THE MATTER of an application by GLENN STEVEN DAVIES and WARREN JAMES McDONALD for the discharge and or modification of the restrictive covenants contained in Instruments of Transfer Nos 2542125 and 2492985 registered in the Land Titles Office in the Register Book and imposed upon the land more particularly described in Certificates of Title Vol 9353 Folio 829 and Vol 7928 Folio 137
| GLENN STEVEN DAVIES and WARREN JAMES McDONALD | Plaintiffs |
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JUDGE: | LANSDOWNE AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 March 2013 | |
DATE OF JUDGMENT: | 8 May 2013 | |
CASE MAY BE CITED AS: | IMO Davies and McDonald | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 236 | |
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REAL PROPERTY - restrictive covenant – construction - apparent error in the description of the benefited land – application relisted for further submissions as to its proper construction – Property Law Act 1958 s84(c) –Re Dennerstein [1963] VR 688 - Westfield Management Limited v Perpetual Trustee Co Limited (2007) 233 CLR 528.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Ms L. Harrison | Aughtersons Solicitors |
HER HONOUR:
Introduction
This is an application made pursuant to s 84 of the Property Law Act 1958 for discharge or modification of two restrictive covenants which affect land known as 10 and 12 Derby Road, Kilsyth. The plaintiffs are the registered proprietors of the land known as 10 Derby Road, Kilsyth which is more particularly described in Certificate of Title Volume 9353 Folio 829. At the time the application was filed, the first named plaintiff had entered into a contract for the purchase of the neighbouring property at 12 Derby Road, Kilsyth, being the land in Certificate of Title Volume 7928 Folio 137, with the registered proprietors thereof, which contract was due for completion on 1 March 2013. The application for discharge or modification of the covenant affecting that land is made with the consent of the persons who were the registered proprietors at the time the application was filed.
The bulk of the land known as 10 and 12 Derby Road consists of Lots 82 and 83 on Plan of Subdivision LP 22317 respectively. Those lots are each burdened by the same restrictive covenant. The particular aspect of the restrictive covenant which the plaintiffs seek to discharge or modify is the restriction of each lot to one single dwelling. The plaintiffs wish to construct nine units on the two blocks combined.
Section 84 of the Property Law Act relevantly provides as follows:
84 Power for Court to modify etc restrictive covenants affecting land
(1)The Court shall have power from time to time on the application of any person interested in any land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon by order wholly or partially to discharge or modify any such restriction (subject or not to the payment by the applicant of compensation to any person suffering loss in consequence of the order) upon being satisfied –
(a)that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material the restriction ought to be deemed obsolete or that the continued existence thereof would impede the reasonable user of the land without securing practical benefits to other persons or (as the case may be) would unless modified so impede such user; or
(b)that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the restriction whether in respect of estates in fee-simple or any lesser estates or interests in the property to which the benefit of the restriction is annexed have agreed either expressly or by implication by their acts or omissions to the same being discharged or modified; or
(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction:
Provided that (proviso not presently relevant).
(2)(Not relevant)
(3)The Court may before making any order under this section direct such inquiries (if any) to made of any local authority or such notices (if any) whether by way of advertisement or otherwise to be given to such of the persons who appear to be entitled to the benefit of the restriction intended to be discharged, modified or dealt with as, having regard to any inquiries, notices or other proceedings previously made given or taken the Court thinks fit.
(4)-(6) (Not relevant)
In this case, the plaintiffs seek discharge or modification of the restrictive covenants pursuant to paragraphs (a) and (c) of s 84(1).
Restrictive covenants are an early form of town planning control. They are, however, different from town planning controls imposed by legislation and implemented by local authorities in that they are a private agreement between the transferor of land and the transferee. The agreement is not limited, however, to those persons but, where properly annexed to the land, runs with the land. The effect is that land burdened by a restrictive covenant continues to be so burdened even though it is subsequently transferred to persons other than the original transferee who entered into the original covenant. Similarly, land benefitted by a restrictive covenant continues to be so benefitted notwithstanding that the land has been subsequently transferred from the original persons who owned the land at the time of the original transfer containing the covenant.
Because a restrictive covenant, although it runs with the land, is fundamentally a private agreement only those persons with an interest in the land with the benefit of the covenant may object to an application to discharge or modify it. This restriction is reflected, for example, in sub-s (3) of s 84 which empowers the Court to direct notice to be given of the application to persons who “appear to be entitled to the benefit of the restriction intended to be discharged, modified or dealt with”.
It is usual in applications for the discharge or modification of restrictive covenants for the Court on the first occasion to make directions pursuant to s 84(3), requiring the plaintiff or plaintiffs to notify either all of such persons or an appropriate sub-set of such persons to give persons with an interest in land with the benefit of a covenant an opportunity to object to the application if they wish. If there are such objectors then, if they wish to be heard on the application, they are joined as defendants to it, with the rights of a party to call evidence, cross examine the plaintiff’s witnesses and make submissions. If there are no objector defendants, then the application is heard unopposed, although the Court of course must still be satisfied that the requirements for discharge or modification are met. On occasion, an objector seeks to voice an objection but not become a party to the proceedings. It is a matter for the Court what weight, if any, to afford such an objection.
History of these proceedings
The particular complication in this application is that there is in each covenant what appears to be an error in the description of the benefited land. The benefited land is described by reference to the grandparent title of the land then being transferred, not the current or parent title as is usual. The plaintiffs, through their counsel, disclosed this feature on the first return date of the plaintiff’s originating motion, 12 December 2012. The application was, of course, at that time unopposed. The submission for the plaintiffs was then, and has remained, that even if the reference to the grandparent rather than the parent title was an error, it could not now be rectified and the benefited land could only be the land remaining in the grandparent title as at the date of each transfer. That remaining land was in each case only two small strips of land, proximate to Lots 82 and 83, which were subsequently further subdivided.
On the basis of that submission, I made orders for direct notification to the registered proprietors and mortgagees of all the lots that now constitute the land remaining in the grandparent title as at the date of the creation of the restrictive covenants over the subject land. In addition, I directed that the plaintiffs display in large form a notice on the properties themselves of their intention to seek discharge or modification of the covenant.
The plaintiffs through their solicitors complied with those orders. The solicitors for the plaintiffs subsequently received communications from the registered proprietors of the properties on either side of the subject land, being 14 Derby Road, Kilsyth and 8 Derby Road, Kilsyth, who indicated that they objected to the application. Mr Vaughan, who is the owner of 8 Derby Road, attended in person on the next court date, 6 February 2013, and indicated that in addition to his own interest as registered proprietor of 8 Derby Road, Kilsyth, he sought to represent the proprietor of Unit 3, 677 Mt Dandenong Road, Kilsyth, a Mr John Rafferty. Counsel for the plaintiffs conceded that the property known as Unit 3, 677 Mt Dandenong Road, Kilsyth is a property with the benefit of the covenants (being within the land remaining in the grandparent title as at the creation of the restrictive covenants) but said that the registered proprietor of that property is a company, not Mr Rafferty in person. Counsel for the plaintiffs also contended that neither 14 Derby nor 8 Derby Road, Kilsyth are benefited lots. Mr Vaughan indicated that there was an issue as to whether or not his land was benefited land, and I urged him to obtain legal advice.
I adjourned the hearing of the application on 6 February 2013 to a later date to enable the persons who had indicated objection a further opportunity to obtain legal advice and consider their position. By order two made that day I directed that any person or entity who is entitled to the benefit of the covenant burdening either Lot 82 or Lot 83 who wishes to become a defendant to the application was required to notify both the solicitors for the plaintiffs and the Court and to attend court either in person or by legal representative on the next occasion.
Before the next occasion the registered proprietor of Unit 3, 677 Mt Dandenong Road, Kilsyth, John Rafferty and Associates Pty Limited, gave consent through its director, Mr John Rafferty, to the application. On the next court date, 13 March 2013, there was no appearance by any objector, however the Court received a letter from Mr and Mrs Reynolds of 14 Derby Road, Kilsyth dated 6 March 2013 which maintained their objection to the discharge or modification of the covenants and raised a question as to whether their land was in fact a benefited lot, together with other land in addition to that conceded by the plaintiffs to be benefited. The full text of this letter is set out later in this judgment.
As indicated, the question as to which land benefits from the covenants created by the original transfers of Lots 82 and 83 arises because of the description of the benefited land in the covenant contained in the transfers. The benefited land is described as being the land (other than the land being transferred) comprised in a Certificate of Title which in fact was not the parent title of the land being transferred, but the grandparent title. Most of the land in that grandparent title, including the land which later became Lots 82 and 83 and was the subject of these transfers, had already, prior to the transfers, been transferred out of that grandparent title. If the benefited land in the covenants had been described as the land then comprised in the parent title (other than the land being transferred), then the land now owned by Mr and Mrs Reynolds would be benefited land, together with many other parcels of land- indeed almost the whole of the subdivision.
I caused a copy of Mr and Mrs Reynolds’ letter and the enclosure to be made available to counsel for the plaintiffs on 13 March 2013. Her submission is that the covenants must be read strictly, and the benefit thereof be limited to the land in fact described even if, as she concedes, the description may have been an error. If so read, the only benefitted lots in respect of either covenant are the lots she identified on the first occasion the matter was in Court, 12 December 2012. The registered proprietors and mortgagees of the lots now constituting those two small portions have all been directly notified in compliance with the orders made on 12 December 2012 and none have objected to the plaintiffs’ application, and indeed one of the registered proprietors, being John Rafferty and Associates Pty Limited, now consents. The plaintiffs accordingly say that Mr and Mrs Reynolds and Mr Vaughan have no right to object to their application and that, on its merits, their application should be granted.
I reserved judgment to enable consideration of the authorities on which the plaintiffs rely as to the interpretation of covenants.
Creation of the covenants
The land in question in this application is comprised substantially of two lots in Plan of Subdivision LP22317, being Lots 82 and 83. I say substantially because each of these lots as they appear on that subdivision have subsequently had land added or shortly to be added so that the whole of the land known as 10 and 12 Derby Street is somewhat larger than the lots on the subdivision.
The land was part of a large parcel of land initially registered to Robert Timms, Frederick Timms and Robert Timms the younger by Certificate of Title Volume 7319 Folio 1463778 issued 14 October 1949. Most of that Certificate of Title was cancelled and a new Certificate of Title in the name of the same registered proprietors issued on 26 April 1950. The new Certificate of Title was Volume 7706 Folio 118. Only two small portions of land remained in the initial title Volume 7319 Folio 1463778 following the issue of the new Certificate of Title. Both those portions of land are in the far south-east corner of the sub-division close to Lots 82 and 83, as they became.
The initial transfer out of the new Certificate of Title 7706 Folio 118 was to Timms Subdivisions Pty Ltd on 10 November 1950. The land was then further subdivided. Lots 82 and 83, as they were at that time, appear on the plan of subdivision LP22317 endorsed upon Certificate of Title 7706 Folio 118 and annexed to it.
It is apparent from the transfer endorsed on that Certificate of Title that Lot 83, as it then was (now No. 12 Derby Road), was transferred by Timms Subdivisions Pty Ltd out of its parent title to Leslie and Mary Spinks in May 1952. The land thus transferred became Certificate of Title Volume 7928 Folio 137. That remains the title reference for 12 Derby Road.
The adjoining lot, Lot 82, now 10 Derby Road as it then was, was transferred by Timms Subdivisions Pty Ltd to Leslie Spinks in February 1953. The land thus transferred became Certificate of Title Volume 7972 Folio 058. An additional portion of land was subsequently added to the land known as 10 Derby Road, and a new Certificate of Title issued bearing the current Certificate of Title reference Volume 9353 Folio 829. This additional portion of land, at the rear of the land known as 10 Derby Road, is not subject to a restrictive covenant.
By an adverse possession claim, an additional portion of land may shortly be added to Lot 83, again at the rear of the block. This portion of land is also not subject to a restrictive covenant.
The restrictive covenants the subject of this application that burden Lots 83 and 82 were created by the transfers to Leslie Spinks and then to Leslie and Mary Spinks on 23 May 1952 (transfer 2492985) and 10 February 1953 (transfer 2542125) respectively. The relevant portions of transfer 2492985 are as follows:
TIMMS SUBDIVISIONS PROPRIETARY LIMITED …being registered as the proprietor of an estate in fee simple in the land hereinafter described……DOTH HEREBY TRANSFER to the said Leslie Alfred Spinks and Mary Patricia Spinks as Joint Tenants All its estate and interest in ALL THAT piece of land being Lot 83 on Plan of Subdivision 22317 lodged in the Office of Titles and being part of Crown Allotment 36A Parish of Mooroolbark County of Evelyn and being part of the land more particularly described in Certificate of Title entered in the Register Book Volume 7319 Folio 778 AND the said Leslie Alfred Spinks and Mary Patricia Spinks DO HEREBY for themselves their heirs executors administrators and transferees COVENANT with the said Timms Subdivisions Proprietary Limited and its transferees registered proprietor or proprietors for the time being of the land now comprised in the said Certificate of Title other than the land hereby transferred that they their heirs executors administrators and transferees shall not at any time hereafter excavate carry away or remove or permit to be excavated carried away or removed any earth clay stone gravel or sand from the said land hereby transferred except for the purpose of preparing for the foundations of any building to be erected thereon or use the said land or allow or permit it to be used in any manner for making bricks tiles or pottery ware AND FURTHER shall not at any time hereafter build construct or erect or cause to be built constructed or erected on the said Lot on the said Plan of Subdivision any building other than one dwelling house with out-buildings such dwelling house exclusive of out-buildings to be of at least One thousand two hundred and fifty pounds in value AND the above restrictive covenants shall appear as encumbrances on the Certificate of Title to issue in respect of the land hereby transferred and shall run with the said land.
The transfer 2542125 in respect of Lot 82 is relevantly identical save that the Certificate of Title details are given as Volume 7319 Folio 1463778. Counsel for the plaintiffs has not specifically addressed this difference in the folio number but it appears from the material before me including the copy Certificates of Title and the expert report of Mr Easton, that it is the same Certificate of Title to which reference is made in each case.
Error in the description of the land
It can be seen that the land that is identified in each of the transfers as having the benefit of the single dwelling covenant is described as the land “now comprised in the said Certificate of Title other than the land hereby transferred” (emphasis added) i.e. by reference back to the Certificate of Title reference given by way of identification of the land being transferred. In each case the land being transferred is identified both by lot number on Plan of Subdivision LP22317 and as being part of the land in Certificate of Title Volume 7319 Folio 778 (being the transfer in respect of Lot 83, numbered 2492985) or as Volume 7319 Folio 1463778 (being the transfer in respect of Lot 82, numbered 2542125).
The Certificate of Title description of the land being transferred on each transfer appears to be an error. I am satisfied from examination of Certificate of Title Volume 7319 Folio 1463778 (the longer folio number being endorsed on the Certificate of Title itself) that that title was by 1952, the time of the first transfer of one of the subject lots, the grandparent, not the parent title of the lot. By the time of these transfers the land being transferred was contained in Certificate of Title Volume 7706 Folio 118. I am fortified in this conclusion by other matters that appear on the publicly available documents. First, on each transfer there appears to be a handwritten annotation commencing “7706-118” (i.e. the actual current title of the land being transferred). The annotation appears in the margin adjacent to the words “the said Certificate of Title other than the land hereby transferred” which appear in the Covenant section of the transfer. If it is relevant, I note also that there are ticks that appear on the description of the land by Lot number and Plan of Subdivision on each transfer, but not on the Certificate of Title description. I do not know the significance, if any, of these ticks.
Next, examination of the two Certificates of Title in question shows that the transfers (as identified by their dealing numbers and by the parties) are registered on the later title, Volume 7706 Folio 118, not on the grandparent title Volume 7319 Folio 1463778. Thus the error in description of the Certificate of Title reference of the land being transferred (which was additionally and correctly identified by lot number) did not prevent registration of the transfer on the correct title.
This account of the history of the titles appears uncontroversial. The plaintiffs rely on the expert report of Mr Robert Easton, an experienced town planning consultant, who sets out in his report essentially this account of the grandparent and parent title of the land being transferred. He concludes as to identification of the benefited land:
It may well have been that the person who drafted the covenant intended to refer to the newer title. However they did not.[1]
[1]Expert report of Easton Consulting dated October 2012 being exhibit RWE-1 to the affidavit of Robert Walter Easton sworn 3 December 2012, at [4.5].
The letter from Mr and Mrs Reynolds annexes a report from a title searcher that recites a similar account. The Reynolds letter states in full as follows:
We understand this matter is before the Court today with the Plaintiffs being Glen (sic) Steven Davies and Warren James McDonald.
We are not in a position to oppose the application as at this time we are not deemed to beneficiaries to the said covenants.
Therefore this correspondence is sent to voice an objection to the removal of the covenants.
We advise that under the application for removal of the covenant to the Shire of Yarra Ranges submitted by Quelch Town Planning on behalf of the Plaintiffs we were beneficiaries to both covenants however under the current application where Easton Consulting have been employed they do not see it in the same light.
However we enclose correspondence from Feigl & Newell, who undertook the initial searches for Quelch Town Planning, dated 4 February 2013 wherein after consultation with a representative of the Titles Office they again under the methodology used would see this property along with many others as beneficiaries to the covenants in question.
We perceive there will be detriment to the surrounding properties should the covenant be removed. We believe it will ultimately change forever the character of this area. The removal of the covenants will allow for the planning of high density housing in minimal space. This area characteristically consists of larger blocks with a natural green atmosphere generous front set-backs and protection for neighbours of inappropriate medium density housing.
We have resided at 14 Derby Road, Kilsyth for a little over 26 Years and there are residents of this street who have lived here for much longer who have now retired and who enjoy the quietness and character of the street and have chosen to remain. We ourselves have never contemplated moving residence hoping our chosen way of life would be protected by the very covenants the Plaintiffs are now asking to be removed.
We would ask if it is permissible that our objection be taken into account.
Attached to that letter is a document on the letterhead of Feigl & Newell Pty Ltd, described on the letterhead as “Professional Title Searchers”, dated 4 February 2013 and addressed to “To Whom it May Concern”, headed “Re property: 10 Derby Road, Kilsyth” which relevantly states as follows:
We have been advised by Michael Sleurink, Application Section from the land Titles Office;
1.At the time of Transfer 2542125 being drawn up, the benefitting land was the land remaining untransferred in certificate of Title Volume 7319 Folio 778.
2.At the time of Transfer 2542125 being lodged in the Titles Office 13.02.1953, it would appear that the majority of Volume 7319 Folio 778 (including subject land) was cancelled into Certificate of Title Volume 7706 Folio 118 in 1950.
Therefore it would appear that the benefitting land is the land remaining untransferred in V.7319 F.778 and V.7706 F.118 other than the land in transfer 2542125.
(Emphasis added)
Where the plaintiffs and their expert Mr Easton, and Mr and Mrs Reynolds, and, apparently, Feigl & Newell Pty Ltd, disagree is as to the significance of this apparent error in the description of the land being transferred, and consequentially in the land with the benefit of the covenants created by those transfers.
The plaintiffs do not dispute that the covenants burden each of the lots in question, but say that the benefitted land can only be that land that is identified or benefitted expressly in the covenant. If they are correct, then all registered proprietors and mortgagees of that land, being the land remaining in the grandparent title at the time of the transfers, have been notified pursuant to the earlier orders I made in these proceedings, and none object and one consents.
The alternative interpretation advanced by Feigl & Newell Pty Ltd, is that, as well as the land untransferred out of the title which is expressly stated, being the grandparent title, the benefited land includes the land untransferred out of the actual current or parent title.
If this contention (both titles) is correct, or the covenant in the transfers had referred correctly to the parent title of the land being transferred, then there would have been many more parcels of land with the benefit of the restrictive covenants. Mr Easton at p 8 of his report sets out a table of transfers from the actual parent title, Certificate of Title Volume 7706 Folio 118. I have also compared this table to the actual Certificate of Title as exhibited. What the table and the Certificate of Title show is that Lot 81, presumably now 8 Derby Road, had already been transferred out of the parent title prior to the transfers of Lots 83 and 82. Accordingly, even if the transfers had correctly recorded the parent title, Lot 81 would not have been a benefited lot. The table in the Certificate of Title shows, however, that Lot 84, presumably now 14 Derby Road the property owned by Mr and Mrs Reynolds, was transferred out of the parent title later than both of the Lots here in question. Accordingly, that land would have been a benefited lot, amongst many others, if the correct title reference had been given in the transfers.
What land has the benefit of the covenants?
It is necessary to determine which land has the benefit of the covenants, to determine the class of potential objectors and so to ensure that that class is sufficiently notified, before determination of the application on its merits.
In support of the plaintiffs’ proposition, that only the title specifically referred to as being the land with the benefit of the covenants, being the grandparent title, can determine the benefited land, counsel for the plaintiffs relies on two authorities Re Dennerstein[2] and Westfield Management Limited v Perpetual Trustee Co Limited[3] (“Westfield”). Counsel has also referred me to a relevant article by learned author Peter Butt, Interpreting Registered Torrens Title Instruments: To What Extent is Extrinsic Evidence Admissible?[4]
[2][1963] VR 315.
[3](2007) 233 CLR 528.
[4](2013) ALJ 15.
Re Dennerstein concerned a single dwelling restrictive covenant contained within the transfers of land out of the Como estate in South Yarra. The Court had held in an earlier judgment that the covenant was ineffective to attach its benefit to any land and so it was simply a covenant in favour of the original transferors and their successors, and did not run with their land. The objectors then sought to argue that the evidence disclosed a common building scheme and by that means the benefit of the covenant was attached to their land. The objectors argued that, although the covenant did not in terms identify any benefited land, the existence of a common building scheme could be ascertained “as a matter of reasonable inference” by inspection of the transfer, the plan of subdivision to identify other lots and transfer of those lots.[5]
[5]Op cit, at p696 line 31.
The Court rejected this submission. Hudson J. held that:
In my view, a purchaser of land under the Transfer of Land Act is not bound to prosecute inquiries and searches and make deductions such as would be involved if (counsel for the objectors’) contentions were accepted. Even when all the materials and evidence in relation to the circumstances under which an estate has been subdivided and sold are available it is not by any means easy to determine whether the sale of the allotments in the estate has been made under or pursuant to a common building scheme. To require a person interested in purchasing one of those allotments to make this determination after obtaining the necessary evidence perhaps years after the original sale if it is available would render conveyancing a hazardous and cumbersome operation, and, in the case of dealings in land under the operation of the Transfer of Land Act, would defeat the object of the Act and destroy in large measure the efficacy of the system sought to be established thereby.[6]
[6]Ibid, at lines 35-49
His Honour held that the notification on title of a common building scheme must identify the scheme, its restrictions, the lands benefited and the lands burdened “either directly or by reference to some instrument or other document to which a person searching the register has access” to bind transferees of the land.[7] In the case before him, the covenant set out the restriction, but did not identify any building scheme nor the benefited land and accordingly was ineffective to bind a subsequent transferee.
[7]Ibid, at lines 56-57.
In Westfield the High Court in strong terms in a joint judgment reiterated that it is the intent of the Torrens system that the register alone provide third parties “with the information necessary to comprehend the extent or state of the registered title to the land in question.”[8] That case concerned an easement granting a right of way under one commercial building in Sydney to another. The current owner of the benefited land sought to utilise the right of way to allow access not just to its benefited land from the burdened land, but also across its benefited land, to adjacent land also owned by it. The High Court confirmed the decision of the Court of Appeal that the trial judge had been in error in the construction of the easement, and that on its true construction, determined by examination of the terms alone, it conferred only a grant of access to the benefited land. At first instance, the trial judge had admitted extrinsic evidence as to the intention of the parties at the time of the grant of the easement. The High Court held that this was not permissible:
To put the matter shortly, rules of evidence assisting the construction of contracts inter partes, of the nature explained by authorities such as Codelfa Construction Pty Ltd v State Rail Authority of NSW, did not apply to the construction of the Easement.[9] (citations omitted)
[8]Op cit, at p531.
[9]Ibid, at p539.
The Court gave as the reason for this:
The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.[10] (citations omitted)
[10]Ibid.
The Court referred as an exception to this principle (although unnecessary for that decision and apparently not the subject of argument) that evidence is admissible “to make sense of that which the Register identifies by the terms or expressions found therein. An example would be the surveying terms and abbreviations which appear on the plan found in this case on the DP”.[11]
[11]Op cit, at p540.
Neither of these cases is exactly on all fours with this case. In Re Dennerstein the restriction contained no description of the benefited land. Here by contrast there is a description; the land is, however, arguably, described incorrectly. In Westfield there was no difficulty in construing the easement on its face- it contained a description of the right granted, the burdened land and the benefited land. What the current title holder of the benefited land sought to do in that case was introduce extrinsic evidence to support a broader construction of the right granted. In this case, by contrast, the covenant contains an error in the description of the burdened land, the land being transferred, and it is that error that has been carried over into the description of the benefited land. The fact that the description was an error was apparently recognised by the Land Titles Office at the time, because the transfer is registered on a different title, the parent title, to the title referred to as the description of the land, the grandparent title.
Arguably then, no extrinsic evidence would be required to put a third party making enquiry in relation to the subject land by search of the Register on notice that there may be an error in the description of the benefited land. A search of the title of the subject land reveals the covenant by dealing number; a search of the dealing, being the transfer creating the covenant, shows the grandparent title there referred to; a search of that title does not show registration of the transfer but does show that most of the title was cancelled and a new title issued; and a search of that new title shows that the transfer was registered on it, not the earlier title, thus revealing the error.
The article to which counsel for the plaintiffs has referred me also takes the view that the rationale of Westfield is that “a person inquiring about the extent of rights under a registered easement should not have to resort to information beyond the Register to establish facts or circumstances existing at the time the easement was created.”[12] Interpreting the intention of the covenants in this case to be that their benefit extends to the land remaining untransferred out of the true current title, the parent, rather than grandparent title, does not offend that principle.
[12]Op cit, at p18.
The article also refers to other authority that may be relevant, including a discussion of this issue in a recent Victorian case concerning a restrictive covenant, Prowse v Johnstone[13]. Cavanough J made some observations as to construction of restrictive covenants in that case, in dicta, which may support an argument that it is possible to construe the covenants in this case as properly referring to the parent title, not the grandparent title, in the case of the benefited land as well as the burdened.[14] As set out below, I will give the plaintiffs a further opportunity to address the issue, and this and any other further authority can be considered at that time.
[13][2012] VSC 4.
[14]Ibid, at [57]-[58].
In short, I do not consider it unarguable that the description of the benefited land should properly be read, by reference to information on the Register alone, as the land yet untransferred out of the parent, rather than the grandparent title, being the same correction to the title details of the benefited land that was effected in relation to the burdened land by registration of the transfer. At present I cannot see a basis for the interpretation advanced in the letter from Feigl & Newell Pty Ltd, that the benefited land is the land remaining untransferred out of both the grandparent and parent titles, but I do not at this stage express a concluded view.
The question now becomes how to proceed.
Course to be adopted
The plaintiffs have not had the opportunity to address this analysis of the facts in detail. In fairness to them, I will now give them that opportunity by relisting the application for further submissions and evidence if required. That relisting will also serve two other important purposes.
The first is to give the plaintiffs the opportunity to address the implication arising from the fourth and fifth paragraphs of the letter from Mr and Mrs Reynolds in which they refer to the application submitted to the Shire of Yarra Ranges on behalf of the plaintiffs for removal of the covenant. That reference suggests that the plaintiffs may have been aware, either from advice they had obtained, or in response to their application, of an interpretation of the covenants by an apparently experienced title searcher that would confer the benefit of the covenants on the land now owned by Mr and Mrs Reynolds, and many other parcels. There is no reference to these events in the evidence relied upon by the plaintiffs in this application, including in the expert report of Mr Easton, nor has counsel for the plaintiffs advised the Court of any such prior opinion. The adjournment will give the plaintiffs the opportunity to give evidence on this issue, including by further expert report, if they so wish.
For the reasons set out below, I will direct that the plaintiffs provide Mr and Mrs Reynolds with a copy of these reasons and the orders I will make. Thus, the third matter which the adjournment will permit is further consideration by Mr and Mrs Reynolds, or indeed other potential beneficiaries of the covenants, as to whether or not they wish to be joined to the proceeding as defendants to contest the application. If the Court determines, either by way of preliminary question or at trial on all issues, that their land is benefited land, they have standing to contest the merits of the application.
In making this direction I have taken into account that Mr and Mrs Reynolds and other potential beneficiaries have already had some opportunity to consider becoming defendants. First, notice of the application was not restricted to direct notification to the landholders of the land remaining untransferred out of the grandparent title. More public notice was also given by advertisement on the land itself.
Next, objectors to the application who became aware of it by the forms of notification employed have already been given two opportunities to seek to become defendants and have not chosen to do so. Those opportunities have also been accompanied by a recommendation by the Court that legal advice be obtained, and it appears that Mr and Mrs Reynolds had already obtained legal advice prior to 6 February 2013. It appears that that advice at least touched on the question as to whether or not they are beneficiaries, although the letters to and from their solicitors and those of the plaintiffs do not contain any detailed analysis of the question, merely the assertion by the solicitors for the Reynolds that they are, and the competing assertion by the solicitors for the plaintiffs that they are not, beneficiaries.[15]
[15]Affidavit of Glen Egerton sworn 1 February 2013 at [15] and Exhibit GE-9 thereto.
Notwithstanding these matters, I remain concerned that the issue as to which land benefits from the covenants has not been fully ventilated. I was not referred to the authorities now relied upon by the plaintiffs until Mr and Mrs Reynolds raised the issue of interpretation of the covenants, and I have not heard the plaintiffs’ detailed submissions on those and other relevant authorities. Further, there is no current contradictor to the plaintiffs’ contention. On the basis of their letter, it may be that Mr and Mrs Reynolds are operating on the assumption that Mr Easton’s opinion as to the benefited land is conclusive. As indicated, that is not necessarily the case. Further, if Mr Easton was not aware of the alternative interpretation of the covenants when he wrote his report, the plaintiffs may wish him to supplement it by addressing that interpretation.
I have also given consideration as to whether there should be any broader further notification to potential beneficiaries of the covenants, to allow those persons as well as Mr and Mrs Reynolds to contest the issue as to the interpretation of the covenant if they so wish. If the covenants are properly to be read as referring to the parent title then, as Mr Easton’s report shows, almost the whole of the subdivision is benefited land of one or both of the covenants. Considering only land proximate to 10 and 12 Derby Road, on this interpretation the benefited land would include the two lots further to the east of 14 Derby Road, all the lots on the eastern side of Hansen Road towards Hansen reserve, two at the west of the rear of 10 Derby Road, fronting onto Mount Dandenong Road and some in the block bounded by Derby Road, Hansen Road, Eothen Lane and Ashby Way.
On balance I do not consider it appropriate to require that further notification, pending determination of what land is indeed benefited land. No potential objector being an owner of one of those lots has sought to be heard in response to the advertisement on the land itself. These reasons will, however, be publicly available and owners of other land that may be benefited are at liberty to also seek to become defendants to be heard on the issue.
Orders
I will make the following orders to give effect to these reasons:
1. The application is adjourned for further hearing to Friday 7 June 2013 at 9.30am in Court 3, 436 Lonsdale St Melbourne.
2. The plaintiffs are required to send to Mr and Mrs Reynolds of 14 Derby Road a copy of these reasons and the orders that accompany them by post within 3 days of receipt.
3. Any person with an interest in land that would be benefited land if the benefited land in either covenant is properly to be read as the land remaining in the parent title Volume 7706 Folio 118 as at the date of the transfer may seek to be heard on the proper construction of the covenants by taking the following steps:
(a) notifying the solicitors for the plaintiff of that intention by Friday 31 May 2013.
(b) attending on the adjourned date and seeking to be joined as a defendant.
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