Jaggumantri v Registrar-General

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
JAGGUMANTRI v REGISTRAR-GENERAL
[2023] SASC 74
Judgment of the Honourable Justice Blue
REAL PROPERTY - TORRENS TITLE - MORTGAGES, CHARGES AND ENCUMBRANCES
The applicant is the registered proprietor of land situated at Burton. The second interested party, ASIC, is the owner of the property rights vested in the encumbrancee by an encumbrance registered on the certificate of title to the land.
The applicant seeks a declaration that the encumbrance has created no rights or obligations that are binding on her and has been inutile since the date of acceptance by ASIC of payment by her in satisfaction of money secured by the encumbrance. She seeks an order under section 64 of the Real Property Act 1886 (SA) directing the first interested party, the Registrar-General, to remove the encumbrance from the title or alternatively that the Registrar of the Court execute a discharge of the encumbrance.
It appears that Mirago Pty Ltd was the developer of a subdivision of which the applicant’s land formed part and each purchaser of an allotment in the subdivision executed an encumbrance in favour of Mirago in similar terms. The applicant’s predecessor in title, the Defence Housing Authority, executed the encumbrance over the applicant’s land.
By clause 1 of the encumbrance, the encumbrancer covenanted to pay 10 cents to the encumbrancer on 30 June each year thereafter for the next 3,999 years.
By clause 2 of the encumbrance, the encumbrancer covenanted not to do or suffer to be done various things on the land, including not to erect or suffer to be erected more than one main dwelling house or a house other than one made of brick, brick veneer or masonry with a tiled or coloured bonded metal roof.
On 12 November 2014 ASIC deregistered Mirago pursuant to subsection 601AA(4a) of the Corporations Act 2001 (Cth).
On 20 February 2023 the applicant’s solicitor sent a letter to ASIC attaching a cheque for $399.90 representing the amount that would have been paid to Mirago over the lifetime of the Encumbrance. On 28 February 2023 ASIC banked the cheque.
Held:
1By reason of ASIC’s acceptance of the payment of $399.90, the applicant’s obligations to pay the rent-charge under the encumbrance have been discharged (at [67]).
2Because there is nothing in the encumbrance or memorial that identifies that the encumbrance is provided for the benefit of Mirago as owner of any other land or for the benefit of any land or other land, the restrictive covenants contained in the encumbrance are not binding on the applicant (at [74]).
3The applicant is entitled to a declaration that at and from the date on which ASIC accepted payment by her in satisfaction of the money that the encumbrance secured, the encumbrance creates no rights or obligations that are binding on her and is inutile (at [77]).
4Because the applicant has established an entitlement to such a declaration, the giving of a direction under section 64 of the Real Property Act 1886 (SA) would be ancillary to substantive relief granted in her favour and the Court therefore has power to give such a direction (at [80]).
5However, the preferable order is to direct that the Registrar of the Court execute a discharge of the encumbrance if ASIC does not do so after being served with the orders made by the Court (at [81]).

Real Property Act 1886 (SA) s 128, s 130A, s 132, s 133, s 135, s 135A, s 136, s 249; Corporations Act 2001 (Cth) s 601AA, s 601AD, s 601AE, referred to.
Burke v Yurilla Pty Ltd (1991) 56 SASR 382 ; Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 ; Deguisa v Lynn [2020] HCA 39 ; Elliston v Reacher [1908] 2 Ch 374; National Executors & Trustees Co of Tasmania Ltd v Edwards [1957] Tas SR 182 ; Netherby Properties Pty Ltd v Tower Trust Ltd [1999] SASC 247; Pirie v The Registrar-General (1962) 109 CLR 619 ; Tulk v Moxhay (1848) 2 Ph 774 , considered.

JAGGUMANTRI v REGISTRAR-GENERAL
[2023] SASC 74
Civil

BLUE J: The applicant Srividya Jaggumantri is the registered proprietor of land situated at 14 Pintillo Court Burton (the Land). The second interested party, the Australian Securities and Investments Commission (ASIC), is the owner of the property rights vested in the encumbrancee by Encumbrance no 10494606 (the Encumbrance) registered on the certificate of title to the Land.
Ms Jaggumantri seeks a declaration that the Encumbrance has created no rights or obligations that are binding on her and has been inutile since the date of acceptance by ASIC of payment by her in satisfaction of money secured by the Encumbrance. She seeks an order under section 64 of the Real Property Act 1886 (SA) (the Act) directing the first interested party, the Registrar-General, to remove the encumbrance from the title or alternatively that the Registrar of the Court execute a discharge of the Encumbrance.
Background
As at 2005 certificate of title volume 5935 folio 390 related to allotment 701 in deposited plan 66494 (allotment 701). Evidence was not adduced as to the identity of the registered proprietor but, by reason of the facts below, it is likely to have been Mirago Pty Ltd (Mirago). As Ms Jaggumantri bears the onus of proof, I assume (against her) that Mirago was the registered proprietor.
On 15 September 2005 a plan of division of allotment 701 was approved by the Registrar-General and became deposited plan 69113 (the Deposited Plan). The Deposited Plan created 61 allotments, including 47 residential allotments (the Subdivision). This included allotment 32 being 14 Pintillo Court Burton.
On 21 September 2005 the Registrar-General issued certificate of title volume 5949 folio 503 in respect of allotment 32. Evidence was not adduced of the identity of the registered proprietor, but again I assume that it was Mirago.
On 21 September 2005 the Registrar-General also issued certificates of title in respect of allotments 31 and 33. I assume that on the same date the Registrar-General issued certificates of title for all of the allotments in the Subdivision and that all certificates of title showed Mirago as the registered proprietor.
On 30 June 2006 two documents were lodged with the Registrar-General for registration in respect of title to the Land. The first was a transfer (the DHA Transfer) of the fee simple to the Defence Housing Authority (DHA). Evidence was not adduced as to the identity of the transferor but it is likely to have been Mirago.
The second document was the Encumbrance. The Encumbrance was dated 30 June 2006. The encumbrancer was DHA and the encumbrancee was Mirago.
By clause 1 of the Encumbrance, the encumbrancer covenanted to pay if demanded 10 cents to the encumbrancer on 30 June each year thereafter for the next 3,999 years.
By clause 2 of the Encumbrance, the encumbrancer covenanted not to do or suffer to be done various things on the Land, including:
·not to re-subdivide the Land (clause 2.6);
·not to erect or suffer to be erected more than one main dwelling house (clause 2.1.1) or a house other than one made of brick, brick veneer or masonry (clause 2.1.3.2) with a tiled or coloured bonded metal roof (clause 2.1.3.3);
·not to construct a garage (clause 2.2), fence (clause 2.3), air-conditioner, solar water heating system (clause 2.11), rainwater tank (clause 2.12), clothesline (clause 2.13) or garden design (clause 2.14) other than in accordance with specified requirements.
By clause 2.8 the encumbrancer covenanted not to transfer any interest in the Land without first causing the transferee to execute a covenant under seal in favour of the encumbrancer covenanting to observe all of the terms of the Encumbrance or a new encumbrance in the same terms.
The chausette to clause 2 provided:
TO THE INTENT that the burden of these covenants set forth in this clause 2 hereof which may fun [sic] with and bind the said land and every part thereof and to the intent that the benefit thereof may be annexed to and devolve with the said land.
Clauses 3 to 5 were ancillary to clauses 1 and 2.
On 18 January 2007 the DHA Transfer and the Encumbrance were registered by the Registrar-General.
In the meantime, on 30 September 2005 and 21 October 2005 transfers of each of allotments 31 and 33 to different persons were lodged for registration and in due course registered. At the same time, encumbrances over each of allotments 31 and 33 were lodged for registration and in due course registered. I assume (against Ms Jaggumantri) that the encumbrances were in similar if not identical terms to the Encumbrance. I also assume that all of the allotments in the Subdivision were in due course sold by Mirago and each purchaser entered into an encumbrance in similar if not identical terms to the Encumbrance.
On 27 February 2008 a transfer by DHA to Ms Jaggumantri of the fee simple in the Land was lodged for registration. On 17 March 2008 it was registered. Despite clause 2.8 of the Encumbrance, DHA did not require Ms Jaggumantri to execute a covenant under seal in favour of Mirago covenanting to observe the terms of the Encumbrance or a new encumbrance in the same terms.
On 9 September 2014 Mirago lodged with ASIC an application for voluntary deregistration pursuant to subsection 601AA(1) of the Corporations Act 2001 (Cth) (the Corporations Act). On 12 November 2014 ASIC deregistered Mirago pursuant to subsection 601AA(4a) of the Corporations Act.
At the time of its deregistration, there were three directors of Mirago, being Mr Siciliano, Mr Imbrogno and Mr Fiorita.
In or before March 2022 Ms Jaggumantri sought finance from a bank to be secured by a mortgage over the Land. In March 2022 the bank sent an email to her saying that, to assess the application, it required clarification of the nature of the Encumbrance.
On 27 June 2022 Ms Jaggumantri’s solicitor, Mr Brohier, sent an email to ASIC requesting discharge of the Encumbrance.
On 5 July 2022 a senior lawyer in the Property Law Group at ASIC sent a letter to Mr Brohier saying that, as a matter of policy, ASIC will not discharge an encumbrance unless it has expired because it is not ASIC that benefits from the encumbrance but rather the local community, neighbours etc. However, she said that ASIC had no objection to the titles office removing an encumbrance if it sees fit to do so. She said that, if Ms Jaggumantri applied to the Court for removal by the titles office of the encumbrance, ASIC would not need to be made a party.
On 6 September 2022 Ms Jaggumantri instituted this action, joining the Registrar-General and ASIC as interested parties.
On 4 October 2022 Mr Brohier served the originating documents in the proceeding on the Registrar-General and ASIC. Ultimately, the Registrar-General filed a notice of acting but ASIC did not.
In November 2022 Mr Brohier sent letters to Mr Siciliano and Mr Imbrogno informing them of the proceeding and enquiring whether they took any issue with removal of the encumbrance. Mr Siciliano telephoned Mr Brohier and informed him that he wanted to be neutral about the matter and silent on the issue.
In December 2022 Mr Brohier spoke by telephone to Mr Fiorita, who said that he wanted nothing further to do with the matter and was content to adopt the position of Mr Siciliano and stay silent on the issue. Mr Imbrogno did not respond to Mr Brohier’s letter.
On 20 February 2023 Mr Brohier sent by email and post a letter to ASIC attaching a cheque for $399.90 representing the amount that would have been paid to Mirago over the lifetime of the Encumbrance.
On 28 February 2023 ASIC banked the cheque.
On 6 March 2023 the senior lawyer in the Property Law Group at ASIC informed Mr Brohier that the funds would be received by ASIC as unclaimed monies and the former directors of Mirago could apply to have the funds released to them.
On 8 March 2023 the senior lawyer in the Property Law Group at ASIC sent an email to the Court reiterating that, as a matter of policy, ASIC will not discharge an encumbrance unless it has expired. She said that Mr Brohier had been advised not to join ASIC as a party and it was highly irregular for them to have done so. She reiterated that ASIC did not oppose the relief sought. She said that ASIC did not wish to be heard further and did not intend to appear at the forthcoming hearing.
On 17 April 2023 following a telephone conversation, the senior lawyer in the Property Law Group at ASIC sent an email to Mr Brohier saying that ASIC does not have power to remove encumbrances from titles. She said that the usual process in these types of applications is that the applicant only joins the Registrar-General and not ASIC.
The legislative regimes
Encumbrances
In 2007, when the Encumbrance was registered, the provisions of the Act relating to encumbrances included the following provisions.
Section 128 addressed both mortgages and encumbrances. Insofar as it addressed encumbrances, it provided:
128—Lands, how mortgaged or encumbered
Whenever … any land is intended to be charged with, or made security for, the payment of an annuity, rent-charge, or sum of money, in favour of any person, the registered proprietor shall execute an encumbrance in the appropriate form.
In 2016, section 128 was amended[1] to remove the provision addressing encumbrances (leaving the provision addressing mortgages) and its former provision addressing encumbrances was effectively re-enacted as section 128B. For convenience, I refer to the Act in its form before the 2016 amendments.
[1] By the Real Property (Electronic Conveyancing) Amendment Act 2016 (SA).
Section 130A implied a covenant to pay the annuity, rent-charge or sum of money in an encumbrance:
130A—Implied covenant in encumbrance
In every encumbrance executed after the twenty-third of December, 1893, unless it is therein otherwise provided, there shall be implied a covenant by the encumbrancer with the encumbrancee that he will pay the annuity, rent-charge or other sum of money thereby secured at the times and in the manner therein mentioned.
Sections 132 to 136 gave to a mortgagee or encumbrancee a remedy by way of power of sale in case of default. They relevantly provided:
132—Nature of mortgage and encumbrance, and procedure in case of default
Every mortgage and encumbrance under this Act shall have effect as a security, but shall not operate as a transfer of the land thereby charged and in case default be made in the payment of the principal sum, interest, annuity, or rent-charge, or any part thereof thereby secured, or in the observance of any covenant therein expressed or implied, and such default be continued for the space of one month, or for such other period of time as may therein for that purpose be expressly limited the mortgagee or encumbrancee may give to the mortgagor or encumbrancer notice in writing to pay the money then due or owing on such mortgage or encumbrance, or to observe the covenants therein expressed or implied, as the case may be, and that sale will be effected if such default be continued, or may leave such notice on the mortgaged or encumbered land, or at the usual or last known place of abode in South Australia of the mortgagor or encumbrancer.
133—Power of sale
If such default be continued for the further space of one month from the date of such notice, or for such other period as may in such instrument be for that purpose limited, the mortgagee or encumbrancee is hereby authorised and empowered to sell the land so mortgaged or encumbered, or any part thereof, and all the estate and interest therein of the mortgagor or encumbrancer, and either altogether or in lots, by public auction or by private contract, or by both such modes of sale, and subject to such conditions as he may think fit, and to buy in and resell the same without being liable for any loss occasioned hereby, and to make and execute all such instruments as shall be necessary for carrying the sale thereof into effect.
…
135—Appropriation of proceeds
The purchase-money to arise from the sale of any such land shall be applied: First—In payment of the expenses occasioned by such sale: Secondly—In payment of the moneys which may then be due or owing to the mortgagee or encumbrancee: Thirdly—In payment of subsequent mortgages or encumbrances, if any, in the order of priority; and the surplus, if any, shall be paid to the mortgagor or encumbrancer, as the case may be.
135A—Mode of payment of encumbrance
(1)All moneys which by reason of any sale by an encumbrancee or otherwise shall become applicable to the payment of an encumbrance shall be applied firstly in payment of the moneys then actually due to the encumbrancee, and if the encumbrance shall not then be satisfied the surplus shall be paid to the Public Trustee who shall invest the same upon Government securities or upon loan to the Treasurer and shall hold such surplus and the investments and income thereof upon trust to satisfy the accruing payments of the annuity, rent-charge, or other sum of money secured by the encumbrance and subject thereto for the person entitled to such moneys after payment of the encumbrance.
…
136—Transfer upon sale by mortgagee or encumbrancee
(1)Upon the registration of a transfer by a mortgagee or encumbrancee exercising the power of sale conferred by this Act the estate or interest of the mortgagor or encumbrancer passes to the transferee—
(a)     freed and discharged from the mortgage or encumbrance and from all estates, interests and rights to which the mortgage or encumbrance has priority,
but—
(b)     subject to all estates, interests and rights that have priority to the mortgage or encumbrance.
(2)The registration of a transfer by a mortgagee or encumbrancee exercising the power of sale conferred by this Act is not prevented by a caveat or an instrument that has effect as a caveat where the caveat or the instrument relates to an estate, interest or right to which the mortgage or encumbrance has priority and, upon registration of the transfer—
(a)     any such caveat; and
(b)     the registration of any such instrument that has effect as a caveat,
shall be deemed to have been cancelled.
…
In the present case, it is common ground that the amount of 10 cents per year payable under the Encumbrance is a rent-charge within the meaning of section 128.[2] For ease of reference, I refer in this section only to rent-charges but in general terms the same considerations apply to annuities or sums of money secured by encumbrances.
[2] See National Executors & Trustees Co of Tasmania Ltd v Edwards [1957] Tas SR 182 as the meaning of a rent-charge under the general law.
An encumbrance registered under section 128 can secure payment of a perpetual rent-charge: there is no requirement that it be limited in time.[3] An encumbrance may contain covenants other than covenants creating or associated with the rent-charge (extraneous covenants).[4] If such extraneous covenants are invalid or unenforceable, that does not affect the validity of the encumbrance insofar as it secures payment of the rent-charge.[5]
[3]    Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 at 231-232 per Bray CJ and 253 per Zelling J.
[4]    Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 at 232 per Bray CJ, 246 per Hogarth J and 253 per Zelling J; Burke v Yurilla Pty Ltd (1991) 56 SASR 382 at 392 per Debelle J (with whom King CJ and Cox J agreed).
[5]    Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 at 232 per Bray CJ, 246 per Hogarth J and 253 per Zelling J; Burke v Yurilla Pty Ltd (1991) 56 SASR 382 at 392 per Debelle J (with whom King CJ and Cox J agreed).
Restrictive covenants

A land owner can by deed or agreement give an undertaking to another person (a covenant)[6] in relation to the development or use of the land. The covenant might restrict the development or use of the land (a negative covenant) or oblige the land owner to undertake a particular development or use of the land (a positive covenant). Entry into such a covenant is enforceable personally between the parties. The benefit of the covenant can be assigned by the covenantee to another at common law or in equity.[7] The benefit of the covenant can be transferred by the covenantor to another by novation.
[6] Technically and historically a covenant must be contained in a deed and a term of an agreement not made by deed is not a covenant. However, in common usage, a covenant can encompass a term of an agreement not made by deed and, for convenience, I use the term covenant in this sense.
[7] See Bradbrook and Neave Easements and Restrictive Covenants in Australia 2 ed (2000) [12.8].
Turning from personal to proprietary interests, equity has since 1848[8] recognised and enforced covenants restricting the use of land, and treats them as creating proprietary interests (such that the burden of the covenant passes with ownership of the burdened land), provided that certain conditions are satisfied (restrictive covenants). The conditions are:
1The covenant must be made by deed (in which case consideration is not required) or agreement (in which case consideration is required).[9]
2There must be land identified which is burdened by the covenant.[10]
3There must be land identified which is benefited by the covenant: the covenant cannot merely be for the benefit of the covenantor other than as owner of land benefited by the covenant.[11]
4There must be an intention manifested that the burden of the covenant run with the burdened land.[12]
5The covenant must be negative in nature.[13]
[8] Tulk v Moxhay (1848) 2 Ph 774 (41 ER 1143) per Lord Cottenham LC.
[9] See Bradbrook and Neave Easements and Restrictive Covenants in Australia 2 ed (2000) [13.25] ff and [13.64] ff.
[10] Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 at 235-236 per Bray CJ and 248 per Hogarth J; Burke v Yurilla Pty Ltd (1991) 56 SASR 382 at 389 per Debelle J (with whom King CJ and Cox J agreed); Deguisa v Lynn [2020] HCA 39 at [72] per Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ.
[11] Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 at 235 per Bray CJ, 246 per Hogarth J and 253 per Zelling J; Burke v Yurilla Pty Ltd (1991) 56 SASR 382 at 392 per Debelle J (with whom King CJ and Cox J agreed); Deguisa v Lynn [2020] HCA 39 at [72] per Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ. See Bradbrook and Neave Easements and Restrictive Covenants in Australia 2 ed (2000) [14.30] ff.
[12] See Bradbrook and Neave Easements and Restrictive Covenants in Australia 2 ed (2000) [14.26] ff and Moore, Gratton and Griggs Australian Real Property Law 7 ed (2020) [18.50].
[13] Haywood v Brunswick Permanent Benefit Building Society (1881) 8 QBD 403 at 405. See Bradbrook and Neave Easements and Restrictive Covenants in Australia 2 ed (2000) [12.8].
If these conditions are satisfied, the burden of a restrictive covenant will pass with ownership of the burdened land.[14]
[14] See Bradbrook and Neave Easements and Restrictive Covenants in Australia 2 ed (2000) Chapter 14.
If these conditions are satisfied, the benefit of a restrictive covenant will pass with ownership of the benefited land without express assignment[15] provided that a further condition, which has two alternatives, is satisfied. The alternatives are:
1An intention that the benefit of the covenant run with the benefited land is expressed in the restrictive covenant (typically by being expressed to be made for the benefit of the specified land or to be made for the benefit of the covenantee, their successors and assigns in the covenantee’s capacity as owner of the land in question).[16]
2The restrictive covenant is given as part of a “scheme of development” or “building scheme”,[17] which in turn has the following elements:[18]
(a)The current owners of the benefited and burdened land both derived title from the same vendor.
(b)The vendor had laid out an estate for sale in lots subject to restrictions on all lots consistent with a general scheme of development.
(c)The vendor sold the lots subject to restrictions imposed for the benefit of all of the lots.
(d)The current owners or their predecessors in title purchased their lots from the vendor on the footing that the restrictions were to enure for the benefit of the other lots.
[15] The benefit can be expressly assigned at law or in equity as part of or at the time of the transfer of the benefited land. See Bradbrook and Neave Easements and Restrictive Covenants in Australia 2 ed (2000) [13.25] ff and [13.64] ff.
[16] See Bradbrook and Neave Easements and Restrictive Covenants in Australia 2 ed (2000) [13.28] ff and Moore, Gratton and Griggs Australian Real Property Law 7 ed (2020) [18.65] ff.
[17] Elliston v Reacher [1908] 2 Ch 374.
[18] Elliston v Reacher [1908] 2 Ch 374 at 384 per Parker J; Deguisa v Lynn [2020] HCA 39 at [11] per Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ. See Bradbrook and Neave Easements and Restrictive Covenants in Australia 2 ed (2000) [13.82] ff.
Like equitable interests generally, a restrictive covenant is not enforceable against a bona fide purchaser for value of the burdened land without notice.
Restrictive covenants in registered encumbrances
A restrictive covenant cannot be registered as an instrument under the Act.[19]
[19] Burke v Yurilla Pty Ltd (1991) 56 SASR 382 at 386 per Debelle J (with whom King CJ and Cox J agreed). The position is different in some other jurisdictions in Australia.
However, section 249 of the Act contains provisions for the preservation of equitable interests despite the system of title by registration enacted by the Act. It provides:
249—Equities not abolished
(1)Nothing contained in this Act shall affect the jurisdiction of the Courts of law and equity in cases of actual fraud or over contracts or agreements for the sale or other disposition of land or over equities generally.
(2)And the intention of this Act is that, notwithstanding the provisions herein contained for preventing the particulars of any trusts being entered in the Register Book, and without prejudice to the powers of disposition or other powers conferred by this Act on proprietors of land, all contracts and other rights arising from unregistered transactions may be enforced against such proprietors in respect of their estate and interest therein, in the same manner as such contracts or rights may be enforced against proprietors in respect of land not under the provisions of this Act: Provided that no unregistered estate, interest, contract, or agreement shall prevail against the title of any bona fide subsequent transferee, mortgagee, lessee, or encumbrancee, for valuable consideration, duly registered under this Act.
Section 249 must be read subject to the indefeasibility provisions contained in Part 6 of the Act.
Since at least 1928 a device has been adopted of including restrictive covenants in a memorandum of encumbrance creating a rent-charge which memorandum is registered under section 128 (now section 128B) of the Act.[20] Although doubts were expressed by the Full Court in Clem Smith Nominees Pty Ltd v Farrelly[21] and by Perry J in Netherby Properties Pty Ltd v Tower Trust Ltd[22] as to whether this practice resulted in a subsequent registered proprietor being bound by the restrictive covenants, the Full Court in Burke v Yurilla Pty Ltd[23] held that it was effective provided that certain conditions were met.
[20] Burke v Yurilla Pty Ltd (1991) 56 SASR 382 at 386 and 393-394 per Debelle J (with whom King CJ and Cox J agreed).
[21] (1978) 20 SASR 227.
[22] [1999] SASC 247.
[23] (1991) 56 SASR 382.
It is now clearly established that one condition which must be met is that, not only must there be benefited land which is identified as required under the general law as described above, but also the benefited land must be identified in the registered encumbrance or by express reference in a memorial on the certificate of title to other registered instruments that so identify the benefited land. Indeed, all of the elements for the existence of a restrictive covenant under the general law (described above) must be identified in the registered encumbrance or by express reference in a memorial on the certificate of title to other registered instruments that so identify the benefited land.
In Clem Smith Nominees Pty Ltd v Farrelly[24] Adelaide International Raceway Pty Ltd (AIR) owned land at Virginia on which was constructed a motor racing circuit. Mallala Motor Racing Co Pty Ltd owned land at Virginia on which was constructed a motor racing circuit. The Mallala company sold the Mallala land to Mr and Mrs Farrelly, who executed a memorandum of encumbrance in favour of AIR, its successors and assigns encumbering the land with payment of an annual rent-charge of $1 payable on each 30 June. The encumbrance also included restrictive covenants precluding use of the land for motorsport. The encumbrance was registered on the certificate of title. Mr and Mrs Farrelly sold the Mallala land to Clem Smith Nominees Pty Ltd. Clem Smith Nominees sought determination of the question of law whether it was bound by the restrictive covenant in the encumbrance.
[24] (1978) 20 SASR 227.
The Full Court held that Clem Smith Nominees was not bound by the covenant because there was nothing in the encumbrance indicating that the restrictive covenant was intended to benefit other land.
Bray CJ said:
… I am of opinion that under the Torrens system it is essential before the burden of a restricted covenant can be held to run with the land that the land entitled to the benefit of the covenant shall be capable of identification in some way from the registered document containing the covenant or, at least, from other related documents which can be discovered by a search in the Land Titles Office.[25]
Hogarth J said:
As an alternative argument, Mr Williams submitted that the land of Adelaide International at Virginia should be regarded as the dominant tenement for whose benefit the covenant had been given. There are a number of problems about this proposition. The Virginia land was not identified in the encumbrance as land for whose benefit the encumbrance was given.[26]
Zelling J said:
In my opinion, the judgement of Richards J in RJ Finlayson Limited v Elder Smith & Co Limited states the position correctly. He said: The position appears to be that surrounding circumstances cannot annex the benefit of a covenant to land; the instrument containing the covenant must itself show an intention to annex it, and then circumstances may be used in order to identify the land to which the parties intended to annex it.”
…
In my opinion, the covenants here were not annexed to any land and there is no intention deducible from the encumbrance to show the intention to annex them.[27]
[25] At 237.
[26] At 249.
[27] At 255, 256.
In Burke v Yurilla Pty Ltd[28] Yurilla owned 10 allotments in a subdivision at Bellevue Heights. It transferred the allotments to Mitcham Council. Mitcham Council executed an encumbrance in favour of Yurilla encumbering the land with payment of an annual rent-charge of one shilling payable on each 9 March until 2000. The encumbrance also included restrictive covenants precluding subdivision or construction of a building other than a single residential dwelling at a cost of not less than £3,250. The encumbrance was registered on the certificate of title. Mr Burke ultimately purchased one of the allotments. Mr Burke sought determination of the question of law whether he was bound by the restrictive covenants in the encumbrance. He joined Yurilla and the ultimate purchasers of the remaining allotments as defendants.
[28] (1991) 56 SASR 382.
A question of law was stated to the Full Court whether the covenants were enforceable against Mr Burke by virtue of the operation of the Act. Mr Burke put only two contentions to the Full Court. First he contended that section 249 of the Act did not preserve restrictive covenants against the indefeasibility provisions of the Act. Secondly, he contended that the effect of section 97 of the Act was to exclude obligations other than the one implied by that section. The Full Court rejected those two contentions. It held that there was nothing in the Act that rendered the covenants unenforceable against Mr Burke. However, Mr Burke did not argue that the covenants were unenforceable because the encumbrance did not indicate that the covenants were intended to benefit other land or identify that land.
In Netherby Properties Pty Ltd v Tower Trust Ltd[29] Tower Trust Ltd owned land at Netherby. It subdivided the land into 43 allotments. The purchaser of each allotment entered into an encumbrance in identical terms in favour of Tower encumbering the land with payment of an annual rent-charge of one shilling payable on each 30 June. The encumbrance also included restrictive covenants precluding subdivision or construction of a building other than a single residential dwelling at a cost of not less than £2,000. Each encumbrance was registered on the respective certificate of title. The plaintiff Netherby Properties ultimately purchased one of the allotments.
[29] [1999] SASC 247.
Netherby Properties instituted an action contending that the restrictive covenants were not enforceable against it. Perry J held that they were not enforceable because the fact that the covenants were intended to benefit other land and the identity of that land were not identified in the encumbrance itself and were not readily ascertainable from the register (even though those facts were proved by the plan of division and the covenants over the other titles).
In Deguisa v Lynn[30] Betty Fielder and Keith Ayton owned land at Fulham. They subdivided the land into 54 allotments. The purchaser of each allotment (except two allotments) entered into an encumbrance in identical terms in favour of Ms Fielder and Mr Ayton encumbering the land with payment of an annual rent-charge of one shilling payable on each 30 June. The encumbrance also included restrictive covenants precluding construction of a building other than a single residential dwelling and specifically precluding construction of flats or units. Each encumbrance was registered on the respective certificate of title. The defendants Mr Deguisa and Ms McKenzie ultimately purchased one of the allotments (lot 3). The executors of the estate of Ms Fielder instituted an action to enforce the restrictive covenants. One of the executors was also the owner of one of the allotments in his own right.
[30] [2020] HCA 39.
The High Court held that the restrictive covenants were not enforceable against the defendants because the land benefited by the covenants was not identified on the defendants’ certificate of title or in the encumbrance. Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ said:
… The text of s 69 of the Act, the statutory context in which it is to be construed, and the authoritative judicial exposition of the purpose of the Act, combine to support the conclusion that a person dealing with a registered proprietor of land is not to be regarded as having been notified of an encumbrance or qualification upon the title of the registered proprietor that cannot be ascertained from a search of the certificate of title or from a registered instrument referred to in a memorial entered in the Register Book by the Registrar‑General.
…
In South Australia, advantage has been taken of s 128 of the Act, which provides for the execution in the appropriate form of an encumbrance where "land is intended to be charged with, or made security for, the payment of ... [a] sum of money, in favour of any person". The courts have upheld the practice of annexing the restrictive covenant of a common building scheme to an encumbrance which secures the payment of a sum of money. This practice facilitates the registration of an instrument which gives notice on the certificate of title of the burden of the restrictive covenant and of the other lots in the scheme which benefit from it. It must be understood that the rent charge in an encumbrance creates an interest in land, but a restrictive covenant of itself does not.
…
As a matter of the ordinary and natural meaning of the language of s 69 of the Act, and in conformity with the authoritative exposition of the purpose of the Torrens system in Westfield, any intending purchaser of Lot 3 was notified by entry on the present certificate of title only of the memorialised Memorandum of Encumbrance, and of the terms of that instrument. There was no notification on the present certificate of title of the other lots that were benefited by the restrictive covenants in the Memorandum of Encumbrance. Those lots were not identified in the Memorandum of Encumbrance.
…
[I]n Re Dennerstein … Hudson J … [said] that a notification of an encumbrance that arises under a building scheme:
"will not be effective to bind transferees of the land unless not only the existence of the scheme and the nature of the restrictions imposed thereunder, but the lands affected by the scheme (both as to the benefit and the burden of the restriction) are indicated in the notification, either directly or by reference to some instrument or other document to which a person searching the register has access".
To similar effect, in Clem Smith Nominees Pty Ltd v Farrelly, Bray CJ said that on the facts of that case, there was:
"absolutely nothing in the encumbrance from which any land entitled to the benefit of a covenant can be identified or defined, there is absolutely nothing to suggest that the covenants were imposed for the benefit of any land at all".
…
The respondents referred to the decision of the Supreme Court of South Australia (Debelle J, with whom King CJ and Cox J agreed) in Burke v Yurilla SA Pty Ltd, where Debelle J said:
"Provided that the person intending to deal with the registered proprietor is able to identify the land which is entitled to the benefit of the covenant either from the encumbrance or from other related documents which can be discovered on a search of the Lands Titles Office, the purchaser would have notice from the Register itself of the restrictive covenant and its terms".
But the issue is not whether it is possible that an exhaustive search in the Lands Titles Office or elsewhere might unearth "other related documents", like the grandparent certificate of title in the present case, which no longer form part of the Register Book but which, as it happens, are still kept in the Lands Titles Office notwithstanding the absence of any legislative requirement in that regard.
In Netherby Properties Pty Ltd v Tower Trust Ltd Perry J held that the restrictive covenants upon which the defendant in that case relied were not enforceable against the plaintiff because the registered memorandum of encumbrance did not identify the lots intended to benefit from the covenants. Referring to the reasons of Debelle J in Burke v Yurilla, Perry J said:
"When Debelle J uses the expression 'provided the land entitled to the benefit of the covenant can be identified from the Register', ... what is envisaged is that the quasi dominant tenement can be readily identified from the register, without a complex inquiry of the kind referred to by Hudson J.
... [D]etails must appear in the encumbrance or on the certificate of title upon which the encumbrance is registered, from which the nature and extent of the scheme, and the identity of the land to be benefited, must clearly appear." (emphasis in the original)
…
A person who seeks to deal with the registered proprietor in reliance on the State's guarantee of the title of the registered proprietor disclosed by the certificate of title in the Register Book (or its electronic equivalent) is not to be put on inquiry as to anything beyond that which is so notified. A common building scheme can operate consistently with the scheme of the Act in relation to the enforceability of the benefit of a restrictive covenant only if those rights Are notified on the certificate of title of the burdened land, or by express reference in a memorial on the certificate of title to other registered instruments which contain that information. Anything less is inconsistent with the natural and ordinary meaning of the text of s 69 and the purpose of the Act.
The present certificate of title to Lot 3 did not contain a memorial that disclosed any registered instrument showing the other lots said to have the benefit of the restrictive covenants. On that basis the appellants' principal contention must be accepted.[31]
[31] At [9], [14], [73], [76]-[78], [81]-[83], [88]-[89]. (Footnotes omitted)
Cancellation of entry

Section 64 of the Act provides:
64—Power of court to direct cancellation of certificate or entry
In any proceeding in the Court respecting any land, or any transaction, contract, or application relating thereto, or any instrument or record affecting any such land, it shall be lawful for the Court to direct the Registrar-General to cancel, correct, record, substitute, issue, or make any certificate of title, or any memorial or entry in the Register Book, or otherwise to do such acts and make such entries as may be necessary to give effect to any judgment, decree, or order of such Court given or made in such proceeding, and the Registrar-General shall obey every such direction.
Deregistration of corporations
Part 5A.1 of the Corporations Act provides for the deregistration of companies. Section 601AA provides for voluntary deregistration. It relevantly provides:
601AA Deregistration—voluntary
Who may apply for deregistration
(1)     An application to deregister a company may be lodged with ASIC by:
(a)     the company; or
(b)     a director or member of the company; or
(c)     a liquidator of the company.
If the company lodges the application, it must nominate a person to be given notice of the deregistration.
Circumstances in which application can be made
(2)     A person may apply only if:
(a)     all the members of the company agree to the deregistration; and
(b)     the company is not carrying on business; and
(c)     the company’s assets are worth less than $1,000; and
(d)     the company has paid all fees and penalties payable under this Act; and
(e)     the company has no outstanding liabilities; and
(f)     the company is not a party to any legal proceedings.
…
Deregistration procedure
(4)     If:
(a)     ASIC decides to deregister the company under this section; and
(b)     ASIC is not aware of any failure to comply with subsections (1) to (3);
ASIC must:
(c)     give notice of the proposed deregistration on ASIC database; and
(d)     publish notice of the proposed deregistration in the prescribed manner.
(4A)When 2 months have passed since the publication of the notice under paragraph (4)(d), ASIC may deregister the company.
…
Subsection 601AD(1) provides that the company ceases to exist on deregistration:
601AD Effect of deregistration
Company ceases to exist
(1)A company ceases to exist on deregistration.
Note: Despite the deregistration, officers of the company may still be liable for things done before the company was deregistered.
Sections 601AD and 601AE provide that all company property other than trust property vests in ASIC on deregistration and ASIC has all of the powers of an owner of such property. They relevantly provide:
601AD Effect of deregistration
…
Other company property vests in ASIC
(2)On deregistration, all the company’s property (other than any property held by the company on trust) vests in ASIC. If company property is vested in a liquidator (other than any company property vested in a liquidator on trust) immediately before deregistration, that property vests in ASIC. This subsection extends to property situated outside this jurisdiction.
Rights and powers in respect of property
(3)Under subsection … (2), … ASIC takes only the same property rights that the company itself held. If the company held particular property subject to a security or other interest or claim, … ASIC takes the property subject to that interest or claim.
Note:    See also subsection 601AE(3)—which deals with liabilities that a law imposes on the property (particularly liabilities such as rates, taxes and other charges).
…
(4)     ASIC has all the powers of an owner over property vested in it under subsection (2).
Note:    Section 601AF confers additional powers on ASIC to fulfil outstanding obligations of the deregistered company.
…
601AE What the Commonwealth or ASIC does with the property
…
Property vested in ASIC
(2)     If property vests in ASIC under subsection 601AD(2), ASIC may:
(a)     dispose of or deal with the property as it sees fit; and
(b)     apply any money it receives to:
(i)defray expenses incurred by ASIC in exercising its powers in relation to the company under this Chapter; and
(ii)     make payments authorised by subsection (3).
ASIC must deal with the rest (if any) under Part 9.7.
…
Obligations attaching to property
(3)Any property that vests in … ASIC under subsection 601AD … (2) remains subject to all liabilities imposed on the property under a law and does not have the benefit of any exemption that the property might otherwise have because it is vested in …ASIC. These liabilities include a liability that:
(a)     is a security interest in or claim on the property; and
(b)     arises under a law that imposes rates, taxes or other charges.
Extent of Commonwealth’s and ASIC’s obligation
(4)… ASIC’s obligation under subsection (2A) or (3) is limited to satisfying the liabilities out of the company’s property to the extent that the property is properly available to satisfy those liabilities.
…
The hearing
Ms Jaggumantri tendered her affidavits made on 2 September 2022 and 15 May 2023 and affidavits made by Mr Brohier on 19 December 2022, 30 January 2023, 6 March 2023 and 19 April 2023.
ASIC did not appear. As observed above, it contended that it ought not to have been joined as a party. While ASIC was free to decide whether to oppose, not oppose or consent to the application, its contention that it ought not have been joined as a party is misconceived. All of Mirago’s rights under the Encumbrance vest in ASIC under sections 601AD and 601AE of the Corporations Act. ASIC is a person against whom final relief is sought in the action and whose interests may be directly and adversely affected by the orders sought in the action. ASIC therefore falls within the definition of respondent contained in rule 21.1(3) of the Uniform Civil Rules 2020 (SA). It ought therefore to have been joined as a respondent. In any event, ASIC falls within the definition of an interested party because it is a person who should be given the opportunity to be heard in relation to the proceeding and who must be joined to be bound by the result.
The Registrar-General appeared. Although the Registrar-General did not adopt a formal position in relation to the relief sought, he made submissions for the assistance of the Court.
The rent-charge component of the Encumbrance
Ms Jaggumantri contends that, by ASIC’s acceptance of her payment of $399.90, her obligations to pay the rent-charge of 10 cents per year for 3,999 years under the Encumbrance have been discharged.
It is likely that Mirago, and in turn ASIC, was not obliged to accept a lump-sum upfront payment in satisfaction of the encumbrancer’s obligation to make annual payments under the Encumbrance. There is no express provision for such payment and no evident basis for implying an entitlement to make such a payment. The tenor of the Encumbrance suggests the contrary. I proceed on the assumption that ASIC was not obliged to accept the tender by Ms Jaggumantri of the sum of $399.90.
However, ASIC did in fact accept the payment of $399.90 from Ms Jaggumantri. That amount was tendered on the express basis that it represented the amount that would have been paid to Mirago over the lifetime of the Encumbrance. ASIC not only banked the cheque but also said that it received the funds as unclaimed monies and the former directors of Mirago could apply to have the funds released to them.
In these circumstances, Ms Jaggumantri’s obligations to pay the rent-charge of 10 cents per year for 3,999 years (if demanded) under the Encumbrance have been discharged.
The restrictive covenant component of the Encumbrance
The restrictive covenants contained in the Encumbrance are extraneous to the obligation to pay the rent-charge and are not themselves registrable. In those circumstances, regardless of the enforceability of the restrictive covenants against Ms Jaggumantri in equity, it is arguable that Ms Jaggumantri is entitled to have the Encumbrance discharged. However, Ms Jaggumantri does not advance this contention and I do not decide it.
Ms Jaggumantri contends that the restrictive covenants contained in the Encumbrance are not enforceable against her as the registered proprietor of the Land and as a purchaser for value from DHA which in turn was a successor in title to Mirago.
The operative clause of the Encumbrance is relevantly in the following terms:
ENCUMBRANCER (full name and address)
Defence Housing Authority of 125 Port Road Hindmarsh 5007
ENCUMBRANCEE (full name, address and mode of holding)
Mirago Pty Ltd (ACN 062 595 895) of 12 Parkside Drive Gulfview Heights 5096
OPERATIVE CLAUSE  THE ENCUMBRANCER ENCUMBERS THE ESTATE AND INTEREST IN THE LAND ABOVE DESCRIBED FOR THE BENEFIT OF THE ENCUMBRANCEE SUBJECT TO THE ENCUMBRANCES AND OTHER INTERESTS AS SHOWN HEREON WITH AN ANNUITY OR RENT CHARGE OF
(a)     insert the amount of the annuity or rent charge     (a) TEN CENTS ($0.10)
(b)    state the term of the annuity or rent charge     (b) TO BE PAID TO THE
ENCUMBRANCEE (sic) TO BE PAID TO THE ENCUMBRANCEE IF DEMANDED
(c)     state the times appointed for payment of the annuity or rent charge.   (c) AT THE TIMES AND IN
THE MANNER FOLLOWING AT THE TIMES AND IN THE MANNER FOLLOWING FOR THE NEXT 3999 YEARS
The Encumbrance then provides as follows:
IT IS COVENANTED BETWEEN THE ENCUMBRANCER AND ENCUMBRANCEE AS FOLLOWS:
Clause 1 then provides for payment of the rent charge. Clause 2 provides for the restrictive covenants. Clauses 3 to 5 are ancillary.
Unlike the encumbrances in the authorities referred to above, there is nothing in the Encumbrance that identifies that the encumbrance is provided in favour of successors or assigns of Mirago. Like the encumbrances in Clem Smith Nominees Pty Ltd v Farrelly,[32] Netherby Properties Pty Ltd v Tower Trust Ltd[33] and Deguisa v Lynn,[34] there is nothing in the Encumbrance that identifies that the encumbrance is provided for the benefit of Mirago as owner of any other land or for the benefit of any land or other land. There is nothing in the memorial on the certificate of title to the Land referring to the Encumbrance that identifies any of these matters.
[32] (1978) 20 SASR 227.
[33] [1999] SASC 247.
[34] [2020] HCA 39.
If regard were had to the Deposited Plan, the certificates of title of the other 46 allotments in the Subdivision and the encumbrances over each of those allotments which I have assumed were registered on the title of those allotments, it might be inferred that there was a common building scheme and an intention that the restrictive covenants contained in each encumbrance were intended to benefit each other allotment. However, there is nothing express in any of the instruments registered or presumably registered by the Registrar General to this effect.
In the circumstances, the decision of the High Court in Deguisa v Lynn[35] is directly applicable. The restrictive covenants contained in the encumbrance are not binding on Ms Jaggumantri.
[35] [2020] HCA 39.
It may be that the restrictive covenants are not binding on Ms Jaggumantri because, at the time of its deregistration, Mirago did not own or have an interest in any of the allotments in the Subdivision and ASIC, as its successor in title, does not have such an interest. The judgment of Kitto J (with whom Own J agreed) in Pirie v The Registrar-General[36] suggests that a restrictive covenant is not enforceable against a successor to the covenantor if the person entitled to the benefit of the covenant ceases to have an interest in the land benefited. However, in Deguisa v Lynn,[37] the High Court declined to decide the question of standing in that case and it is unnecessary to decide this question in the present case.
[36] (1962) 109 CLR 619 at 628 per
[37] [2020] HCA 39.
Remedies
Ms Jaggumantri seeks a declaration that at and from the date on which ASIC accepted payment by her in satisfaction of the money that it secured the Encumbrance creates no rights or obligations that are binding on her and is inutile.
For the reasons given above, Ms Jaggumantri has established the factual and legal basis for the making of such a declaration. It is appropriate to exercise the discretion to make such a declaration.
Ms Jaggumantri also seeks an order under section 64 of the Act directing the Registrar-General to remove the Encumbrance from the certificate of title.
Ms Jaggumantri contends that section 64 confers upon the Court an independent, or free-standing, power to direct the Registrar-General to cancel, correct, record, substitute, issue or make any certificate of title or any memorial or entry in the Register Book. I reject that contention. The power conferred by section 64 is only ancillary to a judgment, decree, or order of the Court given or made in a substantive proceeding in the Court respecting land, a transaction, contract, or application relating to land, or an instrument or record affecting land.
As Ms Jaggumantri has established an entitlement to a declaration that the Encumbrance creates no rights or obligations binding on her, the giving of a direction under section 64 would be ancillary to substantive relief granted in her favour. The Court therefore has power to give such a direction.
However, I accept the Registrar-General’s submission that the preferable order is to direct that the Registrar of this Court execute a Discharge of Encumbrance in a form approved by the Registrar-General in order to discharge the Encumbrance if ASIC does not do so after being served with the orders made by the Court.
Conclusion
The rent-charge secured by the Encumbrance has been discharged by ASIC’s acceptance of payment by Ms Jaggumantri. The restrictive covenants contained in the Encumbrance do not bind Ms Jaggumantri and will not bind any successor in title to her.
Ms Jaggumantri is entitled to a declaration to this effect and to an order directing the Registrar of this Court to execute a Discharge of Encumbrance if ASIC does not do so after being served with the orders of the Court.
I will hear the parties concerning the wording of the orders to be made.

[2023] SASC 74

17 May 2023