Jeshing Property Management Pty Ltd(ACN 617 076 338) and Xiaoyan Bao v Qi Yang

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0068

JESHING PROPERTY MANAGEMENT PTY LTD (ACN 617 076 338)	First Applicant
AND
XIAOYAN BAO	Second Applicant
v
QI YANG & ORS (ACCORDING TO THE ATTACHED SCHEDULE)	Respondents

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JUDGES:	NIALL, OSBORN and HARGRAVE JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	8 May 2023
DATE OF JUDGMENT:	14 August 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 185
JUDGMENT APPEALED FROM:	Jeshing Property Management Pty Ltd & Bao v Yang & Ors [2022] VSC 306 (Matthews AsJ)

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REAL PROPERTY – Torrens system – Restrictive covenants – Appeal from decision of associate judge refusing to make declaration under s 84 of the Property Law Act 1958 that land not affected by restrictive covenants – Whether associate judge erred in construction of restrictive covenants – Whether purchaser bound by restrictive covenant including single dwelling restriction notified on certificate of title or whether limited to original transferee or direct transferees of original transferee – Construction of restrictive covenants – Scope of admissible evidence to construe restrictive covenants – Evidence of similarly worded restrictive covenants affecting surrounding land not admissible – Evidence of great-great-grandparent title to land prior to subdivision referred to in restrictive covenants and retained by Registrar of Titles admissible – Appeal dismissed.

Transfer of Land Act 1958, ss 27(6)(c), 27(11)(a), 27A(2)(a), 27B(1), 27B(11), 27BA, 27C, 27F(3)(d).

Deguisa v Lynn (2020) 268 CLR 638, Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528 applied; Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 considered.

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Counsel
Applicants:		Mr S R Horgan KC with Ms E Delany
First and Second Respondents:		Mr T J North KC with Ms E Peppler
Third and Fourth Respondents:		Mr D Batt KC with Mr A A Walker
Fifth to Seventh and Twelfth Respondents:		Ms N Blok
Solicitors
Applicants:	J T Lawyers
First and Second Respondents:	SLK Lawyers
Third and Fourth Respondents	Best Hooper Lawyers
Fifth to Seventh and Twelfth Respondents	Mitrakas, Savas & Co

TABLE OF CONTENTS

The history of the title to the Land

Associate Judge’s Reasons

Grounds of appeal

Ground 1: Was evidence of the network of like covenants admissible to construe the Covenants?

Ground 2: Can regard be had to the great-great-grandparent title in construing the Covenants?

Ground 3: Can the contra proferentem rule apply to construe the Covenants?

Ground 3: Can the ‘general proposition’ in Fitt apply to construe the Covenants?

Ground 4: Do the Covenants continue to restrict the use of the Land?

SCHEDULE OF PARTIES

NIALL JA
OSBORN JA
HARGRAVE JA:

This application for leave to appeal concerns the meaning and effect of two covenants (‘the Covenants’) notified on the certificate of title to the land known as 16 St Georges Road, Toorak (‘the Land’). The Land is a large regularly shaped block of 4,256m². The context of the dispute is that the owner of the Land, Xiaoyan Bao (the second applicant, hereafter ‘the owner’), wants to subdivide it into five vacant residential lots and sell those lots as individual blocks. The owners of some neighbouring lands which are benefitted by the Covenants (the respondents, hereafter ‘the neighbouring owners’)[1] oppose the proposed subdivision, on the ground that it is forbidden by the single dwelling restriction in one of the Covenants. The owner contends that the Covenants do not, on their proper construction, continue to burden the Land so as to prevent the proposed subdivision.
[1]There were various ‘camps’ of respondents who were separately represented. See Jeshing Property Management Pty Ltd v Yang [2022] VSC 306, [42] (‘Reasons’).
In the proceeding below, the owner and her agent, Jeshing Property Management Pty Ltd (the first applicant), sought a declaration under s 84(2) of the Property Law Act 1958 that the Land is not affected by the Covenants, because the burden of the Covenants does not extend to bind any interest in the Land beyond the interests of: (1) the original transferee under the transfer of land containing the Covenants and his heirs, executors or administrators; or (2) any ‘direct’ transferee from the original transferee. As the owner is an applicant for leave to appeal, it is unnecessary to refer to the agent again unless the context requires.
The neighbouring owners were joined as defendants in the proceeding, and opposed the making of the declaration sought. They contended that the single dwelling restriction was unlimited in time and thus continues to burden the Land.
The proceeding was tried before Matthews AsJ. The associate judge decided that the Covenants continued to burden the land and thus refused to make the declaration sought.[2] The owner seeks leave to appeal against that decision.
[2]Reasons.
With one uncontroversial exception concerning a quarrying restriction, the associate judge also dismissed the owner’s alternative case seeking to have the Covenants modified under s 84(1) of the Property Law Act 1958 so as to permit the proposed subdivision. The owner does not seek leave to appeal against this aspect of the associate judge’s decision.
In order to understand the associate judge’s reasons and the issues on appeal, it is first necessary to set out the history of the title to the Land.

The history of the title to the Land

The Land in its present form is the product of various historic subdivisions, amalgamations and transfers. Commencing with what is identified in the Reasons as the great-great-grandparent title, there was a very large parcel of land known as the ‘Beaulieu Estate’ owned by Mr Mars Buckley.
After Mr Buckley died, his widow, Mrs Elizabeth Buckley, entered into an arrangement with Mr Lachlan MacKinnon (a solicitor) for the subdivision and sale of lots in the great-great-grandparent title to various purchasers. The subdivision and sale of the lots occurred between 1912 and 1915.[3]
[3]Ibid [19].
The subdivision is shown on a plan which comprises part of the great-great-grandparent title. The lots which were transferred out of the great-great-grandparent title under the subdivision, including the Land, are coloured pink on the plan. Each transferred lot has the dealing number of the instrument of transfer written on it. A copy of the plan appears on the next page of these reasons.

Diagram of subdivision and transfers out of great-great-grandparent title, from

certificate of title volume 1997 folio 399334

Two of the lots transferred out of the great-great-grandparent title are now comprised in the certificate of title to the Land. First, the larger lot was transferred under instrument of transfer number 674226 and became the land in certificate of title volume 3557 folio 376 (‘first great-grandparent title’ or ‘parcel B’). Second, the smaller lot was transferred under instrument of transfer number 703483 and became the land comprised in certificate of title volume 3670 folio 972 (‘second great-grandparent title’ or ‘parcel C’). The reference in the copy plan of subdivision to the second transfer (703483) is illegible on the above copy. It is contained in a very thin strip of land depicted across the top of the lot identified by the first transfer (674226).
Importantly, each of the two instruments of transfer out of the great-great-grandparent title contained one of the Covenants at issue — the ‘parcel B’ or ‘major’ covenant and the ‘parcel C’ or ‘minor’ covenant respectively. Further, each of the instruments of transfer identifies the registered proprietor or proprietors of the great-great-grandparent title ‘for the time being’ as the beneficiary of the covenant.
Significantly for the issues on appeal, almost all of the other lots transferred out of the great-great-grandparent title were also made subject to restrictive covenants in a similar form to the major covenant. The Reasons describe this as a ‘network of covenants’, as follows:
The outcome is a network of covenants within the boundaries of the Beaulieu Estate, each sharing a similar burden and similar benefits in respect of the surrounding land, though not every parcel is burdened by a covenant or takes the benefit of each other covenant. Most, but not all, of the land in the Beaulieu Estate takes the benefit of either or both of the Covenants.[4]
[4]Ibid [26].
The first and second great-grandparent titles were consolidated in a subsequent certificate of title volume 3678 folio 427 (described in the Reasons as the grandparent title).[5] Finally, the Land in its current iteration was created upon the transfer of the whole of the land in certificate of title volume 3693 folio 518 (described in the Reasons as the parent title)[6] into the present certificate of title volume 9700 folio 219. The current certificate of title contains a ‘Land Description’ which describes the Land by reference to the parent title, as ‘Lot 1 on Title Plan 888511F’, and as created by the instrument of transfer from the parent title. Each of the two Covenants is noted on the certificate of title by reference to the dealing numbers of the two transfers of land from the great-great-grandparent title which contained the Covenants.
[5]Ibid [15].
[6]Ibid [15].
The text of the parcel B covenant or major covenant is relevantly as follows:
I ELIZABETH MARION BUCKLEY of “Beaulieu” Toorak widow being registered as the proprietor of an estate in fee simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of … DO HEREBY at the request and by the direction of the [solicitor] TRANSFER to the said Robert McDonald ALL my estate and interest in ALL THAT piece of land … being part of the land particularly described in Certificate of Title … Volume 1997 Folio 399334 and more particularly delineated and colored red on the plan drawn in the margin hereof TOGETHER with a right of carriage way over the land … AND the said Robert McDonald for himself his executors administrators and transferees hereby covenants with the said Elizabeth Marion Buckley and her transferees the registered proprietor or proprietors for the time being of the land in Certificate of Title Volume 1997 Folio 399334 that no shops laundries factories works schools almshouses or churches shall be or be allowed to be erected on the said land nor shall any halls or buildings of any kind to be used wholly or partly for any religious educational or charitable purpose or for public entertainment of any kind whatsoever or any hoarding for advertisement be erected or be allowed to be erected on the said land and that no quarrying operations shall at any time hereafter be carried on in or upon the said land and no marl stone earth clay gravel or sand shall at any time hereafter be dug carried away or removed from the said land and that not more than one dwelling house shall be erected on the said land and no dwelling house except one constructed at a cost of not less than One thousand five hundred pounds (exclusive of all architects fees and the cost of erecting any out-buildings and fences) shall be erected or be allowed to be erected on the said land.[7]
[7]Emphasis added.
The text of the parcel C covenant or minor covenant is relevantly as follows:
I ELIZABETH MARION BUCKLEY of Beaulieu Toorak widow being registered as the proprietor of an estate in fee simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of … DO HEREBY at the request and by the direction of the [solicitor] TRANSFER to the said Robert McDonald All my estate and interest in ALL THAT piece of land … being part of the land particularly described in Certificate of Title … Volume 1997 Folio 399334 and more particularly delineated and colored red on the plan drawn in the margin hereof TOGETHER with a right of carriage way over the land … AND the said Robert McDonald for himself his heirs executors administrators and transferees hereby covenants with the said Elizabeth Marion Buckley and her heirs executors administrators and transferees the registered proprietor or proprietors for the time being of the balance of the land in the said Certificate of Title Volume 1997 Folio 399334 as follows: –
(a). No shops laundries factories works schools almhouses or churches shall be or be allowed to be erected on the said land nor shall any halls or buildings of any kind to be used wholly or partly for any religious educational or charitable purpose or for public entertainment of any kind whatsoever or any hoarding for advertisement be erected or be allowed to be erected on the said land.
(b). No quarrying operations shall at any time hereafter be carried on in or upon the said land and no marl stone earth clay gravel or sand shall at any time hereafter be dug carried away or removed from the said land.[8]
[8]Emphasis added.
As the associate judge noted, is immaterial in the context of the owner’s proposed development that the single dwelling restriction contained in the major covenant affects parcel B (the larger parcel) and not parcel C (the thin strip of land).[9]
[9]Reasons, [35].
It should also be noted that the Covenants describe beneficiaries of the Covenants (or covenantees) in different terms. In the major covenant, they are described as ‘[Mrs] Buckley and her transferees the registered proprietor or proprietors for the time being of the land’ in the great-great-grandparent title. In the minor covenant, they are described as ‘[Mrs] Buckley and her heirs executors administrators and transferees the registered proprietor or proprietors for the time being of the balance of the land’ in the great-great-grandparent title. The only difference is the addition of the underlined words.
Further, the Covenants describe the covenantors in different terms. In the major covenant, they are described as ‘Robert McDonald for himself his executors administrators and transferees’. In the minor covenant, they are described as ‘Robert McDonald for himself his heirs executors administrators and transferees’. The only difference is the addition of the underlined word.

Associate Judge’s Reasons

The associate judge set out the history of the title to the Land, the nature of the dispute and the submissions of the parties. The submissions of the parties required the associate judge to consider the applicable law as to the approach to construction of the Covenants, including whether any evidence beyond the words of the Covenants themselves was admissible as surrounding circumstances to aid in the construction task.
As to the general approach to the construction of the Covenants, the associate judge noted that there was substantial agreement between the parties.[10] In that regard, her Honour referred[11] to the general propositions accepted by Cavanough J in Prowse v Johnstone,[12] where his Honour stated:
The parties seem to be in agreement about two general propositions relating to the construction of restrictive covenants, each of which I accept. First, the words of a restrictive covenant are generally to be given their meaning ‘in common vernacular use’, that is to say, they are generally to be interpreted in their ‘colloquial or ordinary sense, not in any technical or legal sense’. In other words, as the plaintiff submits, the words of a restrictive covenant are generally to be given their ‘ordinary and everyday meaning’. Second, the words of a restrictive covenant must always be construed in their context and upon a reading of the whole of the instrument.[13]
[10]Ibid [94].
[11]Ibid [62].
[12][2012] VSC 4.
[13]Ibid [52] (citations omitted).
The associate judge also referred to submissions of the parties that: (1) evidence of objective matters such as the location, nature and surface of the land,[14] or technical terms used in the Covenants, such as surveying terms, could be the subject of evidence;[15] and (2) regard could be had to matters of ‘common or commercial sense’.[16]
[14]Reasons, [66].
[15]Ibid [66], [87(a)].
[16]Ibid [101].
As the associate judge noted, however,[17] there was substantial disagreement between the parties as to the admissibility of contextual or ‘extrinsic’ evidence to construe the Covenants, and whether other constructional aids could be employed in construing the Covenants.
[17]Ibid [94].
As to the admissibility of extrinsic evidence to construe the Covenants, the associate judge considered the decisions of the High Court in Westfield Management Ltd v Perpetual Trustee Co Ltd[18] and Deguisa v Lynn,[19] and the decision of the New South Wales Court of Appeal in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council.[20]
[18](2007) 233 CLR 528 (‘Westfield’).
[19](2020) 268 CLR 638 (‘Deguisa’).
[20][2010] NSWCA 64 (‘Phoenix’).
Based on her understanding of these decisions, the associate judge held that evidence of other covenants, contained in the other transfers of land out of the great-great-grandparent title as part of the original subdivision, was admissible in construing the Covenants.[21] The associate judge took this evidence into account in construing the Covenants, referring to it as evidence of a ‘network of similar covenants within the Beaulieu Estate’[22] or a ‘network of similarly worded covenants’.[23]
[21]Reasons, [100].
[22]Ibid [123].
[23]Ibid [125].
In light of this evidence, reference to the whole of the terms of the Covenants, and other constructional aids, the associate judge held that the ordinary meaning of the Covenants construed in this context was that the single dwelling restriction was an enduring one which continues to bind the owners of the Land from time to time.[24]
[24]Ibid [123]–[131].
The associate judge commenced her construction task by summarising the rival contentions of the parties. Her Honour noted that the parties had focused narrowly on the words ‘his … transferees’,[25] that both rival submissions required the Court to read in words,[26] and that there was force in both submissions.[27] In other words, that there was ambiguity if there was focus on those words only. The associate judge considered, however, that the parties had focused too narrowly on the expression ‘his … transferees’, such that they had neglected proper reference to the words of the Covenants as a whole.[28] In her Honour’s view, the Covenants should not be construed solely by reference to the ordinary or grammatical meaning of the operative words at issue, but by reference to the words of the Covenants as a whole construed in accordance with ‘established principles of construction’ including reference to such contextual material as may be admissible in accordance with the decisions of the High Court in Westfield and Deguisa.[29]
[25]Ibid [118].
[26]Ibid.
[27]Ibid [119].
[28]Ibid [120].
[29]Ibid [120]–[122].
On this basis, the associate judge expressed her conclusions on the construction issue in the following way:
123When reading the whole of the Covenants, particular regard should be had to the nature and terms of the restrictions imposed. Each of the Covenants prohibits the building of a wide variety of public buildings including schools, shops, factories, churches, or any halls for any religious educational or charitable purpose or public entertainment. The Covenants also provide that no quarrying operations or similar earthwork activities be carried out on the Land ‘at any time hereafter’. The Major Covenant adds the restriction on the number and value of any residences to be built on the Land. I consider that, when taken as a whole, the reasonable reader of the register would take these provisions to impose a more durable kind of restriction than that proposed by the Plaintiffs. Without regard at this point to the evidence put before me in respect of the Modification Applications, it is likely that a reasonable reader of the Covenants and of the network of similar covenants within the Beaulieu Estate would discern a purpose of controlling the nature of development on the Land and its neighbouring properties, in order that a certain standard of amenity be protected from land-use which may create noise, traffic, pollution or other nuisance or hazard. It would seem inconsistent with that discernible intention that the protection of amenity only last so long as the Land or indeed its neighbouring properties are in the hands of the first two transferees in time, especially as the protections concern matters such as the construction of schools, churches, and substantial dwelling houses which bear no immediate or clear relationship to the passing of title between transferees. Put another way, the nature of the restrictions imposed in the Covenants evince an intention that those restrictions be maintained across time, and do not support the Plaintiffs’ submission that they were intended to lapse upon the passing of the Land from the second to the third transferee.
124Further, the prohibition on quarrying or other earthworks ‘at any time hereafter’ clearly indicates an intention that at least that restriction run with the Land indefinitely. …
125These views are bolstered with regard to the likely commercial or practical rationale for the Covenants, though I do not give this great weight by itself. … For the reasons already stated in relation to the admissibility of evidence concerning covenants within the larger estate, prospective purchasers would be on notice of the network of similarly worded covenants and, had they known or suspected that those covenants did not in fact protect them in the long-term, the value of the Land may decrease. Further, the evident purpose of the covenants in achieving amenity benefits for the residents of land within the Beaulieu Estate, including the stateliness of single dwellings on such large lots and the generous space between them, would be defeated if the Land could be otherwise developed following two transfers of the title. Similarly, this evident purpose of the Covenants for the covenantee, ie Mrs Buckley, would be defeated if the restrictions only burdened the Land when owned by Mr McDonald or his direct transferee.[30]
[30]Ibid [123]–[125] (emphasis added).

The associate judge then referred to other matters as bolstering her conclusion, including:
(1)the ‘general proposition’ stated by Gillard J in Fitt v Luxury Developments Pty Ltd,[31] that ‘[i]f the wording [of a covenant] is that it is made by the covenantor for himself his heirs and assigns then as a general proposition the burden will normally run with the land’;[32] and
(2)that the Court was entitled to apply the contra proferentem rule of construction against the owner, standing in the shoes of the covenantor, as a last resort if ambiguities in the Covenants could not be otherwise resolved.[33]
[31][2000] VSC 258 (‘Fitt’).
[32]Reasons, [75] citing Fitt [2000] VSC 258, [157]. See also Reasons, [110], [128].
[33]Reasons, [109], [129].

Grounds of appeal

As she did before the associate judge, the owner contends that the Covenants should be construed grammatically on their face, without any reference to other facts or documents or, indeed, to the objective purpose of the Covenants. She complains that the associate judge erred by construing the Covenants:
(1)in the context of, and by reference to, the ‘network’ of like covenants given by other transferees out of the great-great-grandparent title (grounds 1 and 2);
(2)in the context of, and by reference to, the original title from which the subdivision creating the Land and other titles in that network was derived, namely, the great-great grandparent title (ground 2);
(3)by reference to the contra proferentem rule of construction and the ‘general proposition’ arising from Fitt[34] concerning the construction of restrictive covenants (ground 3); and
(4)by ‘ignoring the plain and ordinary meaning of the text of the covenants in favour of imputed historic intentions with respect to the duration of the covenants’ (ground 4).
[34][2000] VSC 258.
As appears below, ground 1 is made out. The associate judge erred in considering the network of like covenants contained in other transfers of land out of the great-great-grandparent title. On this basis, we would grant leave to appeal generally. However, for the reasons given in considering ground 4, the appeal should be dismissed. Notwithstanding the identified error, it remains for this Court to consider the proper construction of the Covenants. Without referring to the network of similarly worded covenants, we agree with the associate judge as to the proper construction of the Covenants.

Ground 1: Was evidence of the network of like covenants admissible to construe the Covenants?

In Westfield,[35] the High Court (Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ) considered the proper construction of an easement noted on the title of Torrens system land in New South Wales. At trial, the primary judge had considered extrinsic evidence, including evidence of a preceding oral agreement between the parties to the easement at the time it was made. The High Court held that such evidence was inadmissible as an aid to construing the easement because ‘more fundamental considerations … concern[ing] the operation of the Torrens system of title by registration’[36] were at issue, as follows:
These concern the operation of the Torrens system of title by registration, with the maintenance of a publicly accessible register containing the terms of the dealings with land under that system. 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 (NSW), did not apply to the construction of the Easement.
Recent decisions, including Halloran v Minister Administering National Parks and Wildlife Act 1974, Farah Constructions Pty Ltd v Say-Dee Pty Ltd, and Black v Garnock, have stressed the importance in litigation respecting title to land under the Torrens system of the principle of indefeasibility expounded in particular by this Court in Breskvar v Wall.
… 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 the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.[37]
[35](2007) 233 CLR 528.
[36]Ibid 539 [37].
[37]Ibid 539 [37]–[39] (citations omitted).
In Phoenix,[38] the Court of Appeal in New South Wales (Spigelman CJ, Campbell JA and Handley AJA) considered the interpretation of a registered lease. Commenting on the above statement in Westfield, the Court emphasised that it was only the ‘rules of evidence assisting the construction of contracts inter partes’ which do not apply to the construction of instruments subject to indefeasibility under the Torrens system of title by registration.[39] On this basis, the Court in Phoenix considered that the statements of the High Court in Westfield ‘do not deny the applicability of the principle whereby a document will be construed as having the meaning that a reasonable reader, with such knowledge of the surrounding circumstances as is available to him or her, would attribute to it’.[40] The Court had earlier set out the general principles concerning the construction of contracts, which apply to leases, as involving the ‘ascertainment of the meaning which a document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract’.[41]
[38][2010] NSWCA 64.
[39]Ibid [158].
[40]Ibid (emphasis added).
[41]Ibid [153], referring to Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [40].
Moreover, in passing, the Court in Phoenix noted the statement of the High Court in Westfield that, even where indefeasibility is involved, extrinsic evidence may be admissible to make sense of terms or expressions found in registered instruments which may not be ‘fully understandable as a matter of general knowledge’.[42]
[42]Ibid [157], referring to Westfield (2007) 233 CLR 528, 540 [44].
In Deguisa,[43] the certificate of title to land registered in South Australia contained a memorandum of encumbrance recording that the land was part of a ‘common building scheme’, but neither the certificate of title nor the referenced memorandum of encumbrance made any mention of the other lots intended to be benefitted by the encumbrance. As in this case, the encumbrance included a restriction on the building of more than one dwelling on the land. There was also evidence that, with two exceptions, all of the lots comprising the subdivision from the grandparent certificate of title included the same single dwelling covenant.
[43](2020) 268 CLR 638.
In these circumstances, the owners of the subject land intended to subdivide it and build two townhouses. Neighbouring landowners filed a caveat seeking to restrict the nature and extent of the subdivision and proposed building and sought an injunction preventing construction of the townhouses. The principal issue in the case was whether the common building scheme was sufficiently notified on the certificate of title to the land for the purposes of s 69 of the Real Property Act 1886 (SA).
The neighbouring landowners were successful before the trial judge and on appeal (Peek and Hughes JJ, Kourakis CJ dissenting).[44] The High Court (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ) unanimously allowed the appeal. In the Court’s view, it was necessary for the identity of the other lots in the common building scheme which were benefitted by the restrictive covenants to be identified in the certificate of title or in the memorandum of encumbrance. As they were not so notified, the land was not encumbered by the restrictive covenants contained in the memorandum of easement.[45] In the course of their reasons, the High Court stated that the reasons in Westfield supported the following proposition:
unless reference to an interest is endorsed on the certificate of title or incorporated by reference in a registered instrument notified on the certificate of title, the interest has not been notified on the certificate of title.[46]
[44]Ibid 653–6 [40]–[51].
[45]Ibid 663–8 [72]–[89].
[46]Ibid 662–3 [71] (emphasis added).
Consistent with this summary of Westfield, the High Court concluded its judgment in Deguisa with the following statement:
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.[47]
[47]Ibid 668 [88] (emphasis added).
Having reviewed Westfield, Deguisa and Phoenix, the associate judge held that the only documents which were admissible to construe the Covenants were ‘limited to the instruments themselves [the Covenants], and “instruments referred to in such instruments which were themselves registered”’.[48] This was a reference to the summary by the High Court in Deguisa as to the effect of a statement in the reasons of Barwick CJ in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd.[49] On this basis, the associate judge held that the principles stated in Deguisa permitted the Court to have regard to ‘other covenants contained in instruments of transfer out of the great-great-grandparent title, as corresponding covenants affecting other parts of that estate’.[50] The associate judge considered that the ‘network’ of covenants which were granted in respect of other properties transferred out of the great-great-grandparent title were admissible ‘as material referred to in the relevant instrument or instruments referred to in that instrument’; and that it was on this basis ‘possible to trace the benefit of the Covenants back to the Great Great Grandparent Title and identified covenants within the network in the Beaulieu Estate’.[51] In other words, the associate judge held that reference could be made to the Covenants, the great-great-grandparent title which was referred to in the Covenants, the transfers of land referred to in the great-great-grandparent title, and the covenants contained in those transfers.
[48]Reasons, [99], referring to Deguisa (2020) 268 CLR 638, 658 [58].
[49](1971) 124 CLR 73, 76 (‘Bursill’).
[50]Reasons, [100].
[51]Ibid.
The associate judge said also that the parties were in agreement that she could have regard to other covenants contained in instruments of transfer out of the great-great-grandparent title. The neighbouring owners support the associate judge’s finding that there was such an agreement. On this basis, they contend that the owner should not be allowed to raise a new point on appeal. The owner disputes that there was any such agreement. It is unnecessary to resolve that dispute in these reasons. As in Westfield,[52] the issue raises fundamental considerations concerning the operation of the Torrens system of title by registration and must be determined according to law and not any agreement between the parties.
[52](2007) 233 CLR 528, 539 [37].
The neighbouring owners support the decision of the associate judge to admit evidence of the network of similarly worded covenants in other transfers from the great-great-grandparent title. They contend that the statements in Westfield and Deguisa must be read and understood in the context of their own facts and circumstances, and that, in any event, the other covenants were admissible in accordance with those statements as part of the objective factual context in which the Covenants were entered into.
As to the context of the statements in Westfield, the neighbouring owners contend that the High Court determined only that evidence of subjective intentions and expectations of the party to the easement at issue were inadmissible. As to the context of the statements in Deguisa, the neighbouring owners contend that the High Court was concerned with an incomplete encumbrance and what documents could be referred to to make it complete by identifying the benefited covenantees. This case concerns a different question, namely, whether other registered instruments may be referred to in construing the Covenants.
Nevertheless, the neighbouring owners correctly acknowledge that the statements in Westfield and Deguisa contain important and fundamental statements concerning the operation of the Torrens system of title by registration and the need for interests to be clearly notified on the certificate of title. On this basis, and as the neighbouring owners submit, in construing a registered instrument regard may be had to the objective factual context represented by other registered instruments which are referred to in the instrument to be construed. However, the difficulty for the neighbouring owners is that they seek to go a step further. They contend that the other covenants in the network of similarly worded covenants relied on by the associate judge are admissible to construe the Covenants because it is necessary to look at the great-great-grandparent title to determine the land which is benefited by the Covenants and, in doing so, reference must be made to the transfers of land referred to in the great-great-grandparent title which contain the other covenants.
We do not accept the contentions of the neighbouring owners on this issue. For the reasons given below, reference to the great-great-grandparent title falls within the principles stated in Westfield and Deguisa. It is an instrument expressly referred to in the Covenants and identifies by number the other transfers of land made as part of the subdivision recorded in the plan forming part of the great-great-grandparent title. It is not, however, necessary to look at those instruments of transfer in order to identify the benefited land under the Covenants. This is because the new certificates of title created by those transfers from the great-great-grandparent title are recorded under the dealings columns of the great-great-grandparent title. Thus, by reference to the Covenants and the great-great-grandparent title referred to in the Covenants, a purchaser of the Land would know all that is necessary to identify the lands which are benefited by the Covenants. It is unnecessary to search the dealing numbers of the other transfers of land in order to obtain this information. Thus, unlike in Deguisa, the Covenants were complete and bound the Land, subject to their proper interpretation.
It would in our view offend the principles stated in Deguisa to allow reference to the network of similarly worded covenants contained in the other transfers from the great-great-grandparent title. As the High Court noted in its introductory statements in Deguisa:[53]
the Torrens system is characterised by the guarantee of the State that the title which it produces to a person seeking to take an interest in a parcel of land is an accurate and comprehensive statement of the state of the title to that land, as to both the title of the registered owner and the interests of others in that land.[54] With the benefit of that guarantee, a person dealing with a registered proprietor of land need look no further than the registered title and the interests notified on it in order to ensure that his or her dealing does not miscarry.[55]
[53](2020) 268 CLR 638, 644 [2] (emphasis added) (citations in original).
[54]Whalan, The Torrens System in Australia (1982) 20.
[55]Ibid 13–20; Breskvar v Wall (1971) 126 CLR 376, 385.
The only interests notified on the certificate of title to the Land are the Covenants, by reference to the instruments of transfer which contained them. As discussed, the Covenants referred to the great-great-grandparent title and it is permissible to refer to that title to both complete the Covenants and to construe them. However, the associate judge’s extension of the scope of admissible evidence to include the network of other covenants was in error. The transfers of land containing those other covenants were not ‘incorporated by reference’ in the certificate of title or the Covenants,[56] or even referred to in them.[57] In accordance with Westfield and Deguisa, the fact that the other transfers are referred to in the great-great-grandparent title is an insufficient basis to make them admissible to construe the Covenants.
[56]Deguisa (2020) 268 CLR 638, 663 [71].
[57]Ibid 668 [88], 658 [58].
Ground 1 is made out.

Ground 2: Can regard be had to the great-great-grandparent title in construing the Covenants?

Notwithstanding the above, the owner contends that no reference can be had to the great-great-grandparent title. She relies on the statement of the High Court in Deguisa that, in the circumstances of that case, the appellants were not required to make searches in relation to cancelled certificates of title, as they were ‘no longer part of the Register Book’.[58] That statement in the High Court’s reasons referenced the South Australian legislation. The owner contends that the effect of the relevant provisions of the Transfer of Land Act 1958 (Vic) (‘the Act’) in the present case is to similar effect. We do not accept the owner’s contentions.
[58]Ibid 665 [80].
The owner contends that, upon cancellation, the great-great-grandparent title was no longer part of the Register Book. She relies on ss 27B(11) and 27BA of the Act to support this contention. The provisions relied on do not state that a cancelled certificate of title ceases to be part of the Register if, as here, the Registrar of Titles continues to retain it on the Register.
Section 27B(11) provides that, on the production of a new certificate of title for a folio of the Register or the deletion of a folio from the Register, ‘any certificate of title subsisting for that folio ceases to have effect, and … subject to section 27BA, [the Registrar] must destroy it’. Section 27BA(1) provides that ‘[i]f a folio of the Register has been deleted or amended, the Registrar is not required to destroy the certificate of title for that folio if the Registrar ensures that the certificate of title is marked, stamped or otherwise rendered unusable’. In this case, after completion of the subdivision and the issue of new certificates of title, the great-great-grandparent title ceased to have effect under s 27B(11). However, it was not destroyed by the Registrar, but marked ‘CANCELLED’ and thus rendered unusable under s 27BA(1). The Registrar did not exercise the discretion in s 27BA(2) to return the certificate of title to ‘the last registered proprietor shown on the deleted or amended folio of the Register to which that certificate of title related’. As explained in the next paragraph, the Registrar retained the cancelled great-great-grandparent title as part of the Register and it was searchable by reference to its volume and folio number.
The Registrar was entitled to retain the great-great-grandparent title on the Register pursuant to the following provisions of the Act:
(1)Section 27F(3)(d) provides that a reference in the Act to the Register ‘includes a reference to the Register Book consisting of original registered Crown grants, original registered certificates of title and registered instruments’. Section 27B(1) defines a certificate of title as a document in writing containing information ‘on a folio of the Register as at the date of production of the certificate of title’ (emphasis added). The great-great-grandparent title comprised an original registered certificate of title containing such information as at the date it was produced. That certificate of title has, despite deletion of the folio relating to it, been retained pursuant to s 27BA(1).
(2)Section 27(11)(a) gives the Registrar a discretion, following cancellation of a folio, to ‘make any other amendments in the Register that he or she considers necessary because of the creation amendment or cancellation of the folio’. Section 27A(2)(a) allows the Registrar to record ‘other information’ which is ‘required or authorised by or under this Act or any other Act’ to be recorded in an ‘appropriate part of the Register’.[59] The Registrar was entitled to retain the cancelled folio on the Register as ‘other information’ if he or she considered it necessary to do so.
(3)Section 27(6)(c) gives the Registrar a wide discretion to record ‘any other information that the Registrar thinks appropriate to record on [a] folio’. In accordance with s 27(6)(c), the certificate of title identifies the transfers which contain the Covenants and the terms of the transfers relevantly incorporated the great-great-grandparent title by reference.[60] It was open to the Registrar to conclude that the retention of the great-great-grandparent title on the Register was necessary to enable the effect of the transfers noted on the certificate of title to be ascertained by reference to the Register.
[59]See also s 27C(1) which provides that the Registrar ‘must keep a record of all dealings recorded in, or action taken in respect of, any folio of the Register, and any other information in relation to folios of the Register that the Registrar thinks fit’. Section 27C(2) provides that the record of dealings, but not the other information, is not part of the Register.
[60]Deguisa (2020) 268 CLR 638, 662–3 [71], summarizing the effect of the decision in Westfield. Quoted at [36] above.

The statement in Deguisa which is relied upon by the owner does not prevent reference to the great-great-grandparent title in construing the Covenants. Unlike Deguisa, this is a case where the relevant cancelled title is expressly referred to in the Covenants which are noted on the title to the Land. The situation in Deguisa was different. The question there was whether an open-ended search of the Register should have been made to locate a registered instrument which would complete an otherwise incomplete encumbrance.
Ground 2 is not made out.

Ground 3: Can the contra proferentem rule apply to construe the Covenants?

In Ferella v Otvosi,[61] Hamilton J reviewed the authorities and texts and held that, in case of doubt or ambiguity, a covenant or grant (such as a restrictive covenant) should be construed against the covenantor or grantor.[62] However, his Honour emphasised that this application of the contra proferentem rule was to be utilised as a matter of ‘last resort … only if the meaning remains in doubt or ambiguous after other rules of interpretation have been resorted to’.[63]
[61](2005) 64 NSWLR 101.
[62]Ibid 108 [21].
[63]Ibid 108 [23].
The owner contends that use of the contra proferentum rule is inconsistent with the decisions in Westfield and Deguisa, because successors in title to the original parties to a restrictive covenant will know nothing about which party was the proferens for the purposes of applying the rule. In this regard, the owner relies upon the statement in Cheshire and Fifoot Law of Contract where the contra proferentem rule is described as: ‘… if a term of a contract is ambiguous, it should be construed contra proferentem, that is, against the party by whom, or in whose interest, it was formulated or included’.[64] The owner submits that the identity of the relevant party will be a matter of speculation when successors in title come to construe a restrictive covenant under the Torrens system. For example, in this case, it may be reasonably hypothesised that the party in whose interest the restrictive covenant was formulated and included in the transfers of land from Mrs Buckley to Mr McDonald, was Mrs Buckley as the vendor of the land.
[64]NC Sneddon and RA Bigwood, Cheshire and Fifoot Law of Contract, (LexisNexis Butterworths, 11^th Australian ed, 2017) 470 [10.33].
It is unnecessary to decide this question, which was only briefly explored in argument. This is because, for the reasons below, we take the view that there is no residual ambiguity in the meaning of the relevant terms of the Covenants when construed as a whole.

Ground 3: Can the ‘general proposition’ in Fitt apply to construe the Covenants?

In Fitt, Gillard J considered the requirements of an effective restrictive covenant which will ‘run with the land’. On the question of construction of the covenant in issue, Gillard J stated: ‘If the wording is that it is made by the covenantor for himself his heirs and assigns then as a general proposition the burden will normally run with the land’.[65] No authority was given for this statement. In our view, the ‘general proposition’ formulated by Gillard J is of no assistance in determining a case such as the present. Of course, a covenant in such terms will ‘run with the land’ for a time, because it extends to assigns who are not contracting parties. Such a proposition says nothing about the construction issue which arises in this case. The general proposition did not, therefore, bolster the conclusion reached by the associate judge in construing the Covenants.
[65]Fitt [2000] VSC 258, [157].
This aspect of ground 3 is established, but nothing turns on this issue.

Ground 4: Do the Covenants continue to restrict the use of the Land?

The owner contends that the Covenants should be construed by reference to the text of the Covenants alone. On this basis, the owner contends that the construction task for the Court is to give the words ‘his … transferees’ their ordinary meaning, and that the duration of the Covenants is limited to Mr McDonald’s transferees (and not any subsequent transferees) and that no other interpretation is open on the text of the Covenants. Moreover, the owner contends that no ambiguity is involved.
In support of this strictly grammatical interpretation, the owner relies on the dictionary definitions of ‘his’ contained in the Macquarie Dictionary online (‘the possessive form of he, used predicatively or absolutely: this book is his …’) and the Collins English Dictionary online (‘to indicate that something belongs or relates to a man, boy, or male animal’).
Further, the owner relies on the statement of Mukhtar AsJ in Pollard v Registrar of Titles, that ‘[t]he reference to transferees of the covenantee can only be reference to the immediate transferees of the covenantee as any subsequent transferee would not be a transferee of the covenantee.’[66]
[66][2013] VSC 286, [21].
The owner makes the same submission in respect of the phrase ‘his heirs executors administrators’. She contends that the Covenants run with the Land only for such period of time as the registered proprietor of the Land was Mr McDonald or his immediate transferees, including by a transfer to an heir, executor or administrator. In other words, the Covenants would bind Mr McDonald’s heirs or personal representatives in the event of his death, but would not bind any transferee from an heir or personal representative.
The owner proposes a narrow construction of the Covenants. For the following reasons, that narrow construction should be rejected.
As the associate judge correctly stated,[67] the principles to be applied in construing restrictive covenants are the same ‘established principles’ as apply to the construction of contracts, except the rules of evidence as to the admissibility of extrinsic evidence of surrounding circumstances are constrained by the decisions in Westfield and Deguisa. This is evident from the judgment of the Court of Appeal in New South Wales in Phoenix,[68] and the judgment of this Court in Barport Pty Ltd v Baum.[69] On this basis, the principles stated by the High Court in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd,[70] with such adaptions as are necessary to reflect the decisions in Westfield and Deguisa, should apply to the construction of the Covenants, as follows:
(1)The meaning of the phrase at issue is to be determined objectively, by reference to its text, context (the entire text of the Covenants as well as any registered instrument or statutory provision referred to in the text of the Covenants) and purpose.[71]
(2)In determining the meaning of the relevant terms of the Covenants, it is necessary to ask what a reasonable person in the position of Mrs Buckley and Mr McDonald would have understood those terms to mean. That enquiry requires consideration of the language used by the parties in the Covenants, the circumstances addressed by the Covenants and the commercial purpose or objects of the Covenants.[72]
(3)A construction of the relevant words in the Covenants which accords with commercial sense and commercial convenience should be preferred over one which does not.[73]
[67]Reasons, [120]–[122].
[68][2010] NSWCA 64, [158].
[69][2019] VSCA 167, [68].
[70](2015) 256 CLR 104.
[71]Ibid 116 [46].
[72]Ibid 116 [47].
[73]Ibid 117 [51].
The words which must be construed are not simply ‘his … transferees’ but the composite and conjunctive phrase ‘for himself his [heirs][74] executors administrators and transferees’. Even when considered alone, this phrase is apt to describe a class including derivative transferees from Mr McDonald, which extends to each transferee who takes after him (broad meaning), and not simply to his ‘direct transferees’ as sought in the proposed declaration (narrow meaning). Reference to the text of the Covenants as a whole confirms that the broad meaning should be preferred to the narrow meaning.
[74]Minor covenant only.
First, the objective intention for the Covenants to continue to burden transferees of the Land beyond direct transferees of Mr McDonald is apparent from the words describing the covenantee or beneficiary of the Covenants, namely Mrs Buckley ‘and her transferees the registered proprietor or proprietors for the time being’ of the land comprised in the great-great-grandparent title. If the identity of the burdened party is limited as the owner suggests, there is a disconformity between the duration of the beneficial interest under the Covenants and the obligation created by the Covenants. The phrase ‘her transferees’ in the description of Mrs Buckley as covenantee means every transferee who takes after her and mirrors the language used for Mr McDonald. The words ‘the registered proprietor or proprietors for the time being’ limit the operation of the Covenants in favour of her transferees only for such time as they are registered proprietors. In circumstances where there is a clear objective intention to benefit the owners of the land comprised in the great-great-grandparent title for the time being (including transferees of part of that land such as the neighbouring owners), it is unlikely that the original parties the Covenants intended the narrow meaning as to the duration of the burden of the Covenants. Such a result would be inconsistent with a construction resulting in the ‘congruent operation’ to the various components of the Covenants as a whole.[75]
[75]Wilkie v Gordian Runoff Ltd (2005) 221 CLR 552, 529 [16].
Second, the likelihood of the broad meaning being intended is reinforced by the nature of the restrictions in the Covenants. Those restrictions prohibit development of the Land for the purpose of predominantly long-term land uses, some of which are permanently prohibited. In particular, the restrictions include the single dwelling restriction in the major covenant. Moreover, the permanent restriction on quarrying which is expressed to operate ‘at any time hereafter’ would be rendered meaningless by a covenant that only survived a single transfer.
Read as a whole, the restrictions concern the ongoing amenity of the benefited land. Further, reference to the great-great-grandparent title discloses that the Covenants were granted in the context of transfers in a subdivision of large blocks of land from a large estate. This supports the objective intention of the restrictions in the Covenants to secure an enduring high level of residential amenity for the land comprised in the great-great-grandparent title.
Third, adoption of the narrow meaning would produce absurd results which offend both common sense and commerciality. For example, if Mr McDonald died before transferring the Land, only his personal representatives would be bound, and not any transferee from them. Further, any transferee from Mr McDonald could easily avoid the burden of the Covenants by further transfer to an associated party. In circumstances where it was clearly intended to benefit the owners of the land comprised in the great-great-grandparent title for the time being, it would be unreasonable to attribute the narrow meaning to the parties.
Fourth, we reject the owner’s reliance on the statement of Mukhtar AsJ in Pollard v Registrar of Titles.[76] That statement does not establish any general principle of application to other restrictive covenants. It was simply a statement by Mukhtar AsJ in the context of the instrument which he construed.
[76][2013] VSC 286.
Ground 4 is not made out.
Conclusion
For the above reasons, leave to appeal will be granted but the appeal will be dismissed. On their proper construction, the Covenants continue to burden the Land. The associate judge was right to refuse to make the declaration sought by the owner.
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SCHEDULE OF PARTIES

JESHING PROPERTY MANAGEMENT PTY LTD (ACN 617 076 338)	First applicant
XIAOYAN BAO	Second applicant
and
QI YANG	First respondent
XIAOYU ZHU	Second respondent
DAVID NEIL PRIOR	Third respondent
PHILIP HARRY GOODMAN	Fourth respondent
MARY-ANN MITRAKAS	Fifth respondent
DARRYL LINDSAY WASHINGTON	Sixth respondent
JULIA WASHINGTON	Seventh respondent
SIMON KESSEL	Eighth respondent
JULIE MIRIAM KESSEL	Ninth respondent
FANNIE MAN YING WONG	Tenth respondent
HOI TO WONG	Eleventh respondent
DFP INVESTMENT GROUP PTY LTD	Twelfth respondent
ST CATHERINE’S SCHOOL	Thirteenth respondent

[2023] VSCA 185

14 August 2023