Kitching v Phillips - [2011] WASCA 19

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: KITCHING -v- PHILLIPS [2011] WASCA 19

CORAM: PULLIN JA
NEWNES JA
MURPHY JA

HEARD: 1 NOVEMBER 2010

DELIVERED : 28 JANUARY 2011

FILE NO/S: CACV 156 of 2009

BETWEEN: JOHN JAMES KITCHING
First Appellant
PAULINE KITCHING
Second Appellant
AND
KELVIN KEITH PHILLIPS
SHARON NELLIE PHILLIPS
First Respondents
LIONEL ALFRED GEORGE HODGSON
EVELYN JUNE HODGSON
Second Respondents

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :JENKINS J
Citation  :KITCHING -v- PHILLIPS [2009] WASC 396
File No  :CIV 2479 of 2008

Catchwords:

Easements - Implied easements - Equitable easements - Nonderogation from grant - Implied terms - Estoppel - Torrens title

Legislation:

Property Law Act 1969 (WA), s 33
Trade Practices Act 1974 (Cth), s 52
Transfer of Land Act 1893 (WA), s 68

Result:

Appeal dismissed

Category: A

Representation:

Counsel:

First Appellant               :     Mr J R Ludlow
Second Appellant          :     Mr J R Ludlow
First Respondents         :     Mr M J Hawkins
Second Respondents     :     Mr M J Hawkins

Solicitors:

First Appellant               :     In person
Second Appellant          :     In person
First Respondents         :     Peel Legal
Second Respondents     :     Julienne Penny & Associates

Case(s) referred to in judgment(s):

Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth of Australia (1977) 139 CLR 54, 71
Auerbach v Beck (1985) 6 NSWLR 424
Barclays Bank Plc v Boulter (1999) 1 WLR 1919
Barry v Heider (1914) 19 CLR 197
Birmingham, Dudley and District Banking Co v Ross (1877) 38 Ch D 295
Bishop v Taylor (1968) 118 CLR 518
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Breen v Williams (1996) 186 CLR 71
Browne v Flower [1911] 1 Ch 219
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Cable v Bryant [1908] 1 Ch 259
Clos Farming Estates Pty Ltd v Easton [2002] NSWCA 389
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Crabb v Arun District Council [1976] 1 Ch 179
Dabbs v Seaman (1925) 36 CLR 538
Delohery v Permanent Trustee Co of NSW (1904) 1 CLR 283
Esanda Ltd v Burgess (1984) 2 NSWLR 139
Gallagher v Rainbow (1994) 179 CLR 624
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1
Gemmell Power Farming Co Ltd v Nies (1935) 35 SR (NSW) 469
Hawkins v Clayton (1988) 164 CLR 539
Heimann v Commonwealth of Australia (1938) 38 SR (NSW) 691
Helicopter Sales Pty Ltd v Rotor Work Pty Ltd (1974) 132 CLR 1
Horsfall v Braye (1908) 7 CLR 629
Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133
JLCS Pty Ltd v Loft City Steakhouse Pty Ltd [2008] FCA 867
Keberwar Pty Ltd v Harkin (1987) 9 NSWLR 738
Khoury v Government Insurance Office of NSW [1984] HCA 55; (1984) 165 CLR 622
Kitching v Phillips [2009] WASC 396
Lace v Chantler [1944] 1 KB 368
Lyttelton Times Co Ltd v Warners Ltd [1907] AC 476
May v Belville [1905] 2 Ch 605
Maybury v Atlantic Union Oil Co Ltd (1953) 89 CLR 507
McGrath v Campbell (2006) 68 NSWLR 229
Mills v Stokman (1967) 116 CLR 61
Milne v James (1910) 13 CLR 168
Nelson v Walker (1910) 10 CLR 560
Nickerson v Barraclough (1981) 1 Ch 426
Nordern v Blueport Enterprises Pty Ltd (1996) 3 NZLR 450
North Sydney Printing Pty Ltd v Sabemo Investment Corporation Pty Ltd (1971) 2 NSWLR 150
Parramore v Duggan (1995) 183 CLR 633
Pwllbach Colliery Co Ltd v Woodman [1915] AC 634
Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81
Re Ellenborough Park [1956] 1 Ch 131
Riley v Penttila [1974] VR 547
Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 350; (2008) 38 WAR 350
Shepperd v The Council of the Municipality of Ryde (1952) 85 CLR 1
The Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd [2008] WASCA 180; (2008) 37 WAR 498
Trustees Executors and Agency Co Ltd v Peters (1960) 102 CLR 537
Tuckett v Brice [1917] VLR 36
Walsh v Lonsdale (1882) 21 Ch D 9
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Ward v Kirkland [1967] 1 Ch 194
Westfield Management Pty Ltd v Perpetual Trustees Co Ltd (2007) 233 CLR 528
Wheeldon v Burrows [1879] 12 Ch D 31
Wilcox v Richardson (1997) 43 NSWLR 4
Yau's Entertainment Pty Ltd v Asia Television Ltd (2002) FCA 338

PULLIN JA: I agree with Murphy JA.
NEWNES JA: I agree with Murphy JA.
MURPHY JA:

Introduction

This is an appeal against the primary judge's decision to the effect that the appellants (Mr and Mrs Kitching) do not have an easement to use land, of which the respondents are registered proprietors, for the purposes of training Mr and Mrs Kitching's dogs. For the reasons which follow, the trial judge has not been shown to be in error, and I would dismiss the appeal.

Background facts found by judge

The Lakes Road Pastoral Co Pty Ltd (the developer) owned a large parcel of land in Nambeelup. In 1988, the developer offered the sale of the land in subdivided lots. At that time, Mr and Mrs Kitching were looking for a property to purchase where they could live and keep more than three dogs. They wanted to be close to facilities which they would use to train their dogs. Mr and Mrs Kitching approached Mr McNally, the developer's representative. They were given a copy of the subdivision approval and a diagram showing the proposed subdivision. The diagram showed 30 lots, each having an area of two hectares, offered for sale, and showed a larger lot in the middle of the subdivision marked Lot 81, with a notation 'POS', which stands for 'public open space'.
The subdivision approval contained condition 7 which provided, in effect, that within two years of the date of the document (ie, within two years from 30 April 1987) proposed Lot 81, which 'may include a communal training area', should be transferred free of cost to the local authority, on the basis that the local authority would lease it back to the developer for use and management of the land by the lot owners as a communal training and obedience area.
They were also given a pamphlet headed 'Nambeelup Park - Kennel Zone'.
The pamphlet stated that the zoning catered for all types of canine interests, and that the lots had specifically been designed to cater for the domestic requirements of the greyhound enthusiast. It also stated (Kitching v Phillips [2009] WASC 396) [12]:

Although each lot will individually provide ample exercising areas an area has been set aside for communal use in the 'training and obedience areas'. Walkways have been located so that easy and safe access is gained to the communal area by occupiers of all lots.

Mr McNally also told Mr and Mrs Kitching that Lot 81 would remain open space for all lot owners to use for the purpose of a communal training and obedience area.
On 21 December 1988, Mr and Mrs Kitching entered into a contract to purchase Lot 61 for the sum of $34,000. Lot 61 had direct access to Lot 81, the area marked as public open space. The written text containing the contractual terms made no mention of the open space. There was a condition of the contract to the effect that the plan of subdivision had not been registered. A plan of part of the subdivision was attached to the contract. It showed the location of Lot 61 within the subdivision, and a part of Lot 81. The description of Lot 81 was incomplete, but it included the words 'open', 'space' and 'reserve'.
On 2 November 1989, the titles to the lots in the subdivision (including Lot 61 and Lot 81) were issued to the developer.
Condition 7 of the subdivision approval, however, had not been complied with (compliance was due by April 1989), and has never been complied with. The Western Australian Planning Commission, apparently erroneously, believed when approving the subdivision plan for registration, that condition 7 had been complied with, when it had not.
On 23 November 1989, the contract with Mr and Mrs Kitching settled, and they became the registered proprietors of Lot 61.
The certificate of title for Lot 61 made no mention of Lot 81 or of any right of access over Lot 81. The certificate of title for Lot 81 also made no reference to any right of access over, or use of, Lot 81 in favour of the owners of Lot 61 or other lot owners. (There were, however, public access ways to Lot 81 from public roads within the subdivision).
After settlement of Lot 61, Mr and Mrs Kitching used Lot 61 and Lot 81 to exercise their dogs. They also started building a house on Lot 61. In 1998, the house was completed and they moved in.
In the meantime, the developer was deregistered as a company, although it was reregistered in 1998 to allow Mr McNally to obtain a judgment debt against it. Lot 81 was auctioned to meet the judgment debt, but the property was passed in. Also, around this time, the local authority arranged for easements for fire protection and drainage to be placed on the title to Lot 81.
In 2001, Mr Hodgson negotiated to purchase Lot 81 on behalf of himself and his wife (the second respondents to the appeal and the second defendants in the action below). He was not told of any easement claimed by Mr and Mrs Kitching, but was aware that the land was zoned 'special use kennels'. On 14 September 2001, Mr and Mrs Hodgson entered into a contract to purchase Lot 81, and became registered proprietors thereof on 12 April 2002. They built a house on Lot 81 and erected fences on it.
Mr and Mrs Hodgson later applied to subdivide Lot 81 into two lots. On 8 June 2005, Lot 81 was subdivided into lots number 500 and 501 respectively. Mr and Mrs Hodgson's home was located on Lot 501.
Also on 8 June 2005, an easement was created across the narrowest part of Lot 501, giving access from the end of one public road, across Lot 501, onto another public road.
Lot 501 is a 2.13 hectare property and is that part of the former Lot 81 which is furthest away from Lot 61 owned by Mr and Mrs Kitching. Lot 501 does not share a common boundary with Lot 61. There is a considerable amount of scrub on Lot 501 and Mr and Mrs Kitching, up to 2004, regularly used part of Lot 501 to exercise their dogs, although due to the size of the block and the presence of scrub, their activity was not observed by the Hodgsons.
On 29 November 2005, Mr and Mrs Phillips (the first respondents to the appeal and the first defendants in the action below) entered into a contract to purchase Lot 500 from the Hodgsons. They had no notice of the easement claimed by Mr and Mrs Kitching. They became registered proprietors of Lot 500 on 1 March 2006.
Each of Mr and Mrs Hodgson and Mr and Mrs Phillips were issued with a certificate of title which, in the second schedule referring to 'encumbrances', made no mention of the land being subject to an easement in favour of Lot 61.

The easement claimed by Mr and Mrs Kitching

In the court below, Mr and Mrs Kitching sued Mr and Mrs Phillips and Mr and Mrs Hodgson claiming, inter alia, a declaration that Mr and Mrs Kitching, as owners of Lot 61, were the beneficiaries of an easement over Lot 500 and Lot 501. The declaration sought in the prayer for relief was, relevantly, in these terms:
[A] declaration that [Mr and Mrs Kitching], as registered proprietors of Lot 61, are the beneficiaries of an Easement allowing the registered proprietors of Lot 61, in common with the owners of all other ... Lots in the relevant subdivision, to enjoy [Lots 500 and 501] ... as a dog training and obedience area.
Mr and Mrs Kitching's case was to the effect that the easement precluded the construction of any dwellings or other buildings on the land originally designated as Lot 81; ie, it precluded the Hodgsons and the Phillips having houses on their properties.

The grounds and bases of appeal

The grounds of appeal are discursive and lack clarity. At the hearing of the appeal, counsel for Mr and Mrs Kitching said, in effect, that there were five bases upon which the judge erred in holding that Mr and Mrs Kitching had not established an easement of the kind alleged.
The five bases were:
(a)that on the proper construction of the sale agreement between the developer and Mr and Mrs Kitching dated 21 December 1988 (the written contract) and the registered transfer of land (the transfer), the developer had granted an easement of the kind alleged;
(b)that on the proper construction of the written contract and the transfer, there was an implied term to the effect that the developer had granted an easement of the kind alleged;
(c)that an easement of the kind alleged was implied by law on the basis of the doctrine of non‑derogation from the grant;
(d)that there was an equitable easement arising from a partly performed oral contract, collateral to the written contract, by which the developer agreed to grant Mr and Mrs Kitching an easement of the kind alleged; and
(e)that there was an equitable easement arising from an estoppel by which the developer was estopped from contending that it had not granted an easement of the kind alleged.
It is important to notice, at the outset, two propositions advanced by counsel for Mr and Mrs Kitching in the appeal. The first proposition was to the effect that the parties' actual or imputed intention was to grant an easement, whether or not condition 7 of the subdivision approval was complied with. Thus, it was said, that irrespective of the operation of condition 7 of the subdivision approval, there was an implied (or inferred) term that the developer would grant to Mr and Mrs Kitching an easement over proposed Lot 81.
Secondly, and inconsistently with the first proposition, it was said that the parties' actual or imputed intention was to grant an easement if condition 7 of the subdivision approval was not complied with. In other words, with respect to this second proposition, any implied term for the grant of an easement was conditional upon there being non‑compliance with condition 7.
In relation to each of the five alleged bases of error, counsel also said that the judge erred in fact in failing to find that:
(a)Lot 61 was a different type of lot from a residential lot, and was created for, and only for, the kennelling of dogs;
(b)the training of kennelled dogs 'off premises' is a necessary part of their overall training, because it helps them to become accustomed to interaction with other people and other dogs in a different environment; and
(c)there was no public open space in or near the estate of which Lots 61 and 81 formed part.

Relevant findings of the judge

The express findings of the judge relied upon by Mr and Mrs Kitching in relation to the actual inferred, or presumed, intention of the parties are:
(a)the parties to the written contract intended that, together with other lot owners, the owners of Lot 61 would have unrestricted access to proposed Lot 81 to exercise and train their dogs and that Lot 81 was not simply intended to be public open space (reasons [50], [55]);
(b)the right of access was not intended to be by way of an easement over Lot 81, but was intended to be by the means identified in the subdivision approval, namely, the transfer of Lot 81 to the local authority and the lease back to the developer (reasons [50], [58]); and
(c)the parties never turned their minds to the prospect that the sale of Lot 81 to the local authority and the lease back to the developer for the purposes of providing an area for the training and exercise of dogs may not eventuate (reasons [58]).
The judge did not, in making the above findings as to intention, expressly relate those findings to the proper construction of the written contract. This reflected the particular way in which Mr and Mrs Kitching had formulated their claims in the statement of claim. Nevertheless, in my view, underlying her Honour's express findings on intention, and implicit within them, was a finding that, on the proper construction of the written contract, the parties to it agreed that the plan of subdivision would not be registered, and thereby the obligation to proceed to settlement would not be triggered, unless condition 7 had been complied with (the subdivision term).
In my view, her Honour's implicit finding to which I have referred, and the express findings referred to above, were correct.

The written contract, the transfer, subdivision approval, and planning

It is convenient to record in more detail the terms of the written contract, the transfer of land, the subdivision approval and the relevant planning scheme.

The written contract

The written contract was for the sale of 'Lot 61 Windfire Grove Mandurah 6210' for $34,000. It provided that the purchasers (Mr and Mrs Kitching) acknowledge that the plan of subdivision had not yet been registered. It also provided, relevantly, for settlement within seven days after written notice by the developer to the effect that the diagram or plan of subdivision was in order for dealing at the Office of Titles. It also annexed the diagram, referred to in [4] above, showing Lot 61 as contiguous to Lot 81. The written contract incorporated the 1985 joint form of general conditions for the sale of land.
As noted above, on its proper construction, the written contract included the subdivision term.

The transfer

The transfer from the developer to Mr and Mrs Kitching referred to the consideration as $34,000 and described the land as Lot 61 in Plan 17071, being the whole of the land in certificate of title volume 1848, folio 336. It specified the estate and interest being transferred as fee simple.
It also provided:
The TRANSFEROR for the consideration herein expressed HEREBY TRANSFERS TO THE TRANSFEREE the estate and interest herein specified in the land above described subject to the encumbrance as shown hereon.
The encumbrances were shown as 'nil'.
Then, following the above provision, there was a notation marked '(a)', opposite which were the words:
Here set forth any Easements to be created as appurtenant to the land commencing with the words 'together with' ... .
There was nothing recorded in the transfer against notation '(a)'.

Planning approval

By letter dated 30 April 1987, the then State Planning Commission wrote to the local authority in the following terms, relevantly, in respect of the subdivision proposed by the developer:
The Commission has considered the application relating to the above described land and is prepared to approve a Diagram or Plan of Survey in accordance with the sketch plan submitted provided that the conditions set out below are fulfilled within two years from the date of this letter.
Under the Commission's procedures all conditions must be complied with before submission of survey documents for the Commission's approval. Surveyors should attach certificates clearing conditions to the survey documents when they are submitted.
CONDITION(S):
...
7.The proposed Lot 31 [sic ‑ 81] shown on the plan of subdivision as open space and which may include a communal training area, being the subject of a separate Diagram of Survey to be transferred free of cost to the Local Authority ...
...
The Commission imposed Condition No 7 on the basis that the subject land is to be leased back to the subdivider for the use and management of the land by the lot owners as a Communal Training and Obedience area.

Planning scheme

The Town Planning Scheme provided, relevantly:
1.Subdivision of Special Use Zone to be generally in accordance with the plan of subdivision.
2.Minimum lot size shall be 2 hectares.
3.Within Special Use Zone - Kennels:
(a)the intent is to create an area specifically for the provisions of kennels to permit the keeping, breeding or boarding of more than two dogs;
(b)the following uses are permitted ‑
-Kennels;
-Public Recreation, where it is an incidental use;
-Dwelling House, where it is an incidental use;
(c)the following uses are not permitted unless specific approval is granted by Council ‑
-Veterinary Clinic;
-Cattery;
(d)all other uses not included in (b) and (c) above are not permitted.
...
(g)no person shall keep dogs or permit dogs to be kept unless a person responsible for the dogs is resident on the land.

Easements - principles

An easement may be defined as a right annexed to land, to utilise other land of different ownership in a particular manner (not involving the taking of any part of the natural produce of the land or any part of its soil), or to prevent the owner of the other land from utilising his or her land in a particular manner. Positive easements give rights of entry onto the other person's land to enable something to be done on the land. Negative easements confer no right of entry on the other person's land, but give the right to prevent something being done on that land. (See Butt, Land Law (6th ed) [1607] ‑ [1608]).
Easements have four essential requirements. They were referred to by Buss JA (McLure P and Murray AJA agreeing) in The Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd [2008] WASCA 180; (2008) 37 WAR 498 [51]:
The essential features of an easement are these. First, there must be a dominant tenement and a servient tenement. Secondly, the easement must 'accommodate' (that is, confer a benefit on) the dominant tenement. Thirdly, the dominant tenement and the servient tenement must not be held and occupied by the same person. Fourthly, the right must be capable of forming the subject matter of a grant. See Re Ellenborough Park [1956] Ch 131, 163; London & Blenheim Estates Ltd v Ladbroke Retail Parks Ltd [1994] 1 WLR 31, 36.
The land to which the easement is appurtenant is the dominant tenement, and the land which is subject to the easement is the servient tenement. An easement is not merely a personal right - it is attached to the dominant tenement for the benefit of that land: Gallagher v Rainbow (1994) 179 CLR 624, 633. An easement does not, however, create an estate in the servient tenement - an easement is a privilege without profit, and relates only to the user of the servient tenement; it confers neither seisin nor possession in the servient tenement: Parramore v Duggan (1995) 183 CLR 633, 642. It is not possible to assign an easement apart from the dominant tenement to which it is appurtenant: Tuckett v Brice [1917] VLR 36, 57.
Easements, being incorporeal hereditaments, must generally originate in a grant: Riley v Penttila [1974] VR 547, 559; Delohery v Permanent Trustee Co of NSW (1904) 1 CLR 283, 308. For land under the general law, the express grant of a legal easement must be by deed: s 33 Property Law Act 1969 (WA).
On the other hand, equity has never insisted on a formal deed for the disposition of an interest in land and, in accordance with the principle in Walsh v Lonsdale (1882) 21 Ch D 9, an equitable easement may arise where there is a specifically enforceable agreement, for valuable consideration, to grant an easement. Equity will lend its aid by ordering that a deed be executed by the holder of the servient tenement to convey the legal interest, or by an injunction restraining the servient tenement holder from disturbing the rights of the holder of the dominant tenement. As such an interest is only enforceable in equity (until grant by deed), it does not, under the general law, bind a bona fide purchaser of the legal estate of a servient tenement for value without notice: Milne v James (1910) 13 CLR 168, 174 ‑ 176, 179 ‑ 180, 187 ‑ 188; Mills v Stokman (1967) 116 CLR 61, 71 ‑ 72, 75, 77, 79 (a profit a prendre case).
An owner who alienates part of his or her land may seek to 'reserve' in favour of the part of the land retained, an easement over the part that has been granted away. Under the general law, a legal easement could not be created by express reservation. Thus, under the general law, where the owner of the land, A, conveys part of the land to a purchaser, B, and A attempts to 'reserve' part of the land conveyed for A's use, the 'reservation', to be effective at law, requires B to execute the conveyance, with the result that it is considered that B has granted (or 'regranted') an easement to A: see Butt, Land Law [1634]; 'Easements and Restrictive Covenants in Australia', Bradbrook and Neave (2nd ed [4.3]). The express reservation would, however, bind the purchaser in equity: May v Belville [1905] 2 Ch 605. There is presently no statutory modification to the general law in this State.
An easement may also be 'reserved' in favour of a grantor of land under the doctrine of easements of necessity (as to which see North Sydney Printing Pty Ltd v Sabemo Investment Corporation Pty Ltd (1971) 2 NSWLR 150; Nickerson v Barraclough [1981] 1 Ch 426), and where, in respect of the grant or alienation of real property, it is necessary to give effect to the common intention of the parties (see [53] ‑ [58] below).
In relation to the express grant of an easement under the general law by deed, the general principle is that the instrument should be construed according to its natural and ordinary meaning, read in the light of the circumstances existing and known to the parties at the time of its creation and, in the absence of a contrary indication, it is construed against the grantor of the easement: Gallagher v Rainbow (639 ‑ 640).
An implied term for the grant of an easement may also be ascertained as part of the process of the proper construction of a demise or conveyance, including by reference to admissible extrinsic circumstances: Wilcox v Richardson (1997) 43 NSWLR 4, 13. An easement may thus be implied as a matter of proper construction, because it is necessary for the enjoyment of some other right expressly granted in the instrument (eg, the express right to draw water from a spring implies the right to go to the spring for that purpose): Pwllbach Colliery Co Ltd v Woodman [1915] AC 634, 646 (see also [53] ‑ [58] below).
Extrinsic material concerning facts and circumstances known at the time of the original grant are not, however, admissible in construing the grant of an easement under the Torrens system (see [61] below).
Relevantly, in relation to the arguments raised by counsel for Mr and Mrs Kitching in this appeal, the law may also imply the grant, or (less commonly as grants are usually read contra proferentem) the reservation, of an easement, having regard to the maxim of non‑derogation from grant. The principle is stated in Birmingham, Dudley and District Banking Co v Ross (1877) 38 Ch D 295, where Bowen LJ said (313):
[A] grantor having given a thing with one hand is not to take away the means of enjoying it with the other.
Higgins J in Nelson v Walker (1910) 10 CLR 560, 592 referred with approval to the passage in Bowen LJ in Birmingham v Ross cited above. See also Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 350 [93] ‑ [97]; (2008) 38 WAR 350, 375 ‑ 376.
The principle is one of general application in the construction of conveyances and demises: Megarry & Wade, The Law of Real Property (5th ed 858); Nordern v Blueport Enterprises Pty Ltd (1996) 3 NZLR 450, 454. The maxim may thus operate by which rights are implied which are proprietary in nature, even though they may not be strictly characterised as easements according to the law of easements: Browne v Flower[1911] 1 Ch 219, 225 ‑ 226; Ward v Kirkland [1967] 1 Ch 194, 226; Megarry & Wade, 849.
The maxim of non‑derogation was expressed by McHugh JA (Samuels & Priestley JJA agreeing) in Keberwar Pty Ltd v Harkin (1987) 9 NSWLR 738, 741 (572):
If the sale of land is made for a particular purpose, the vendor is

under an obligation not to render the land sold unfit or materially less fit for that purpose: Browne v Flower [1911] 1 Ch 219 at 225‑226 and Nelson v Walker (at 582). If a vendor sells part of his land, knowing that the purchaser intends to erect a building upon that land, the vendor impliedly undertakes not to use his adjoining land so as to injure or interfere with the building: Siddons v Short, Harley & Co (1877) 2 CPD 572 at 577. However, a right in the purchaser is only implied if, having regard to the circumstances, the parties must be taken to have contemplated that the land retained by the vendor would not be used by him in a manner inconsistent with that right: Nelson v Walker .
Whilst McHugh JA was referring, in the context of the case before him, to a grant by sale, the maxim applies equally to a demise: see, eg, Nordern v Blueport.
The maxim has been seen as an aspect of a wider consideration by which the law gives effect to the common intention of the parties in relation to the grant or demise of real property. In Lyttelton Times Co Ltd v Warners Ltd [1907] AC 476, 481, Lord Loreborn, speaking for the Privy Council, referred to the maxim of non‑derogation from grant affecting the grantor (vendor/lessor) and to a 'similar and equally binding duty' affecting the grantee that may arise in certain cases when land is sold to a purchaser or leased to a lessee. His Lordship said (481):
The maxim that a grantor cannot derogate from his grant expresses the duty ordinarily laid on a man who sells or leases land. But it does not touch a similar and equally binding duty that may in certain cases be laid on a man who buys or hires land. If A lets a plot to B, he may not act so as to frustrate the purpose for which in the contemplation of both parties the land was hired. So also if B takes a plot from A, he may not act so as to frustrate the purpose for which in the contemplation of both parties the adjoining plot remaining in A's hands was destined. The fact that one lets and the other hires does not create any presumption in favour of either in construing an expressed contract. Nor ought it to create a presumption in construing the implied obligations arising out of a contract. When it is a question of what shall be implied from the contract, it is proper to ascertain what in fact was the purpose, or what were the purposes, to which both intended the land to be put, and, having found that, both should be held to all that was implied in this common intention.
Lyttleton v Warners was one of the cases relied on by Lord Parker of Waddington in Pwllbach v Woodman, in which his Lordship enunciated the principles by which the law may imply easements known as 'intended easements' or 'common intention easements' (646 ‑ 647):
The law will readily imply the grant or reservation of such easements as may be necessary to give effect to the common intention of the parties to a grant of real property, with reference to the manner or purposes in and for which the land granted or some land retained by the grantor is to be used. See Jones v Pritchard and Lyttelton Times Co v Warners. But it is essential for this purpose that the parties should intend that the subject of the grant or the land retained by the grantor should be used in some definite and particular manner. It is not enough that the subject of the grant or the land retained should be intended to be used in a manner which may or may not involve this definite and particular use.
With reference, inter alia, to Ward v Kirkland and Pwllbach v Woodman, in Auerbach v Beck (1985) 6 NSWLR 424, Powell J (affirmed on appeal (1986) 6 NSWLR 454, 461), said (443 ‑ 444):
[T]he authorities establish that it is open to the court to imply into a conveyance or demise the grant of such rights as are absolutely necessary to the enjoyment of the subject matter of the conveyance or demise, or ... such rights as are reasonably necessary for the use and enjoyment, in the way contemplated by the parties to the conveyance or demise, of the subject matter of the conveyance or demise.
Implied easements, in respect of continuous and apparent easements, or 'quasi‑easements', existing at the time that land is severed by a grant, which are recognised by the law in accordance with the principle enunciated by Thesiger LJ in Wheeldon v Burrows [1879] 12 Ch D 31, 49, are also based on the maxim of non‑derogation of grant: Nelson v Walker (582 ‑ 583); Wilcox v Richardson (14); Kebewar Pty Ltd v Harkin (741).
An easement implied by law from the conveyance or demise of real property, by reference to the maxim of non‑derogation of grant, is based on the presumed intention of the parties: Wilcox v Richardson (14); McGrath v Campbell (2006) 68 NSWLR 229, 242 ‑ 244. It has been said to be illustrative, in particular circumstances, of the ordinary rules governing the implication of terms by reference to admissible extrinsic evidence: ibid.
If there is anything in the terms of the grant (conveyance or demise) itself which negatives the asserted implication, it cannot arise. Similarly, where the grant is preceded by a contract which is intended to be given effect to by the conveyance or demise, if there is anything in the underlying contract which is inconsistent with the asserted implied easement, it cannot arise: Nelson v Walker (584).
The easement which is implied by law from the conveyance or demise of real property by reference to the maxim of non‑derogation is a legal interest under the general law: Parramore v Duggan (649). Because it is implied in the grant, it is not merely a covenant enforceable in equity: Cable v Bryant [1908] 1 Ch 259, 264; Dabbs v Seaman (1925) 36 CLR 538, 550 ‑ 551; JLCS Pty Ltd v Loft City Steakhouse Pty Ltd [2008] FCA 867 [329 ‑ [31].
If the conveyance mistakenly grants an easement inconsistent with the underlying agreement, the conveyance may be rectified under the equitable doctrine of rectification: Horsfall v Braye (1908) 7 CLR 629.
Rules concerning the use of extrinsic evidence in the construction of contracts between parties, as explained in authorities such as Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 350 ‑ 352, do not apply to the construction of easements in instruments registered under the Torrens title. This is because the Torrens system operates as a system of title by registration, with the maintenance of a publicly accessible register containing the terms of the dealings with land under that system. See Westfield Management Pty Ltd v Perpetual Trustees Co Ltd (2007) 233 CLR 528, 531 ‑ 532, 539 ‑ 540. In Westfield Management v Perpetual Trustee, the court said, at [38] ‑ [39]:
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 importance this has for the construction of the terms in which easements are granted has been remarked by Gillard J in Riley v Penttila and by Everett J in Pearce v City of Hobart. The statement by McHugh J in Gallagher v Rainbow, that: '[t]he principles of construction that have been adopted in respect of the grant of an easement at common law … are equally applicable to the grant of an easement in respect of land under the Torrens system' is too widely expressed. 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.
Section 68 of the Transfer of Land Act 1893 (WA) (the TLA), as it applied when the appellants, and when the respondents, obtained registered title, provided, relevantly:
Notwithstanding the existence in any other person of any estate or interest whether derived by grant from the Crown or otherwise which but for this Act might be held to be paramount or to have priority the proprietor of land or of any estate or interest in land under the operation of this Act shall except in case of fraud hold the same subject to such encumbrances as may be notified on the folium of the register book constituted by the certificate of title; but absolutely free from all other encumbrances whatsoever except ... Provided always that the land which shall be included in any certificate of title or registered instrument shall be deemed to be subject to the reservations exceptions conditions and powers (if any) contained in the grant thereof and to rights subsisting under an adverse possession of such land and to any public rights of way and to any easements acquired by enjoyment or user or subsisting over or upon or affecting such land and ... notwithstanding the same respectively may not be specially notified as encumbrances on such certificate or instrument. (emphasis added)
(A proviso similar to the proviso referred to above, now appears in s 68(1A) of the TLA. Also, in 1989 when the appellants obtained registered title, the TLA did not contain pt IVA, dealing with easements on subdivision plans and diagrams.)

Disposition of the appeal

The first alleged basis of error

The first alleged error involves the contention that the grant of an easement was an unexpressed term in the transfer and in the written contract. It was submitted that the term was to be inferred as having been actually intended by the parties to be a term of their agreement. In this regard, the observations of Deane J in Hawkins v Clayton (1988) 164 CLR 539, 570 were relied upon.
Inferred terms of the kind referred to by Deane J in Hawkins v Clayton typically arise where there is no formal written agreement between the parties: Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 422; Breen v Williams (1996) 186 CLR 71, 90 ‑ 91. It is often not easy to distinguish inference from implication: ibid. See also Yau's Entertainment Pty Ltd v Asia Television Ltd (2002) FCA 338 [27] ‑ [36].
In this case, where there was a formal written contract, and a formal conveyance (the transfer), I see no scope for inferring a term of the kind alleged. The parties have gone to considerable lengths to record their bargain in writing. It may not be supposed that there was the conferral of an incorporeal right in perpetuity, by way of a term actually intended by the parties, but left unexpressed in the written record of their bargain, in both the written contract and the transfer. There has been no claim for rectification.
The matters referred to in [68] ‑ [76] below in relation to the second basis of alleged error and the first, second and third criteria mentioned in that regard, would also, in my view, serve to deny the existence of the alleged actual inferred term.
I would not accept Mr and Mrs Kitching's first contention.

The second alleged basis of error

The transfer, by its express terms, did not contain the grant of an easement over Lot 81. There was no reference to an easement in the space specifically designated for the recording of any easement appurtenant to Lot 61. There is nothing on the face of the transfer which would justify the implication of the term alleged. Moreover, extrinsic evidence of matters known to Mr and Mrs Kitching and the developer at the time of the transfer is inadmissible as an aid in its construction, at least as against the respondents: Westfield Management v Perpetual Trustee (539 ‑ 540).
Insofar as it is alleged that the written contract contained an implied term for the grant of the easement, Mr and Mrs Kitching seek to invoke a term to be implied, in order to give effect to the presumed intention of the parties: Breen v Williams (281); BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 282 ‑ 284; Byrne v Australian Airlines Ltd (422, 441). Such a term must be reasonable and equitable; it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; it must be obvious that 'it goes without saying'; it must be capable of clear expression; and it must not contradict any express term of the contract: BP Refinery v Shire of Hastings (282 ‑ 284); Codelfa v State Rail Authority (347); Khoury v Government Insurance Office of NSW [1984] HCA 55; (1984) 165 CLR 622, 636.

For the purposes of the last‑mentioned criterion, an implied term will contradict an express term of the contract if it is inconsistent with the express terms properly construed, including where there is an express term which appears to be intended to cover the field that would otherwise be occupied by the implied term and where it appears on the face of the agreement that the parties have adverted to the point and deliberately abstained from dealing with it: Gemmell Power Farming Co Ltd v Nies (1935) 35 SR (NSW) 469, 476 ‑ 477; Heimann v Commonwealth of Australia (1938) 38 SR (NSW) 691, 694 ‑ 695; Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth of Australia (1977) 139 CLR 54, 72 ‑ 73; Trustees Executors and Agency Co Ltd v Peters (1960) 102 CLR 537, 545 ‑ 546; Helicopter Sales Pty Ltd v Rotor Work Pty Ltd (1974) 132 CLR 1, 12.
In my view, the judge did not err in holding that there was no implied term of the written contract for the grant of an easement. In my opinion, the alleged implied term does not fulfil the criteria referred to in BP Refinery v Shire of Hastings in the following respects.
First, the implied term alleged by Mr and Mrs Kitching is not reasonable, in circumstances where the parties agreed, in effect, that the sale was conditional upon the developer selling Lot 81 to the local authority in compliance with condition 7 of the subdivision approval.
By the subdivision term the parties did not contemplate that Lot 81 would be retained by the developer on the basis that it would be made subject, in perpetuity, to use by the owners of Lot 61 and other lot owners for the training of dogs. Rather, it was contemplated that the local authority would become the registered proprietor of Lot 81 and, as registered owner, it would be responsible for arranging a lease to the developer, for a term, and upon conditions, by which the other lot owners could use the land for the training of dogs. The local authority itself incurred no contractual obligation to Mr and Mrs Kitching to hold the land subject to the alleged easement for the training of dogs, and it could not, at law or in equity, validly grant a lease to the developer for that (or any other) purpose for a term in perpetuity: Bishop v Taylor (1968) 118 CLR 518, 523; Lace v Chantler [1944] 1 KB 368, 370. Here, the clear intention was to transfer Lot 81 to the local authority (perhaps, although it is not clear, with a view to preserving flexibility in the event that the general character and zoning of the area changed over time), rather than to create an easement by which the land could be burdened in perpetuity for the private use of Lot 61 or other lot owners in the training of dogs.
Secondly, the implied term is not necessary to give business efficacy to the written contract, and nor is it so obvious that it 'goes without saying'. By the subdivision term, the parties, in effect, made completion of the written contract conditional upon compliance with condition 7 of the subdivision approval. If the condition were not fulfilled, Mr and Mrs Kitching could terminate the written contract. If the developer represented, by words or conduct, falsely, that condition 7 had been fulfilled when it had not, Mr and Mrs Kitching would have claims for fraudulent misrepresentation (if the misrepresentation satisfied the criteria for deceit) or for contravention of s 52 of the Trade Practices Act 1974 (Cth). An implied term of the kind suggested by Mr and Mrs Kitching would involve, impermissibly, the rewriting of the contract for sale between the developer and Mr and Mrs Kitching.
Thirdly, in my view, it has not been shown to be capable of clear expression. The inconsistencies referred to in [26] ‑ [27] above in relation to the potential scope for its operation indicate a lack of clarity in the formulation of the alleged term.
Finally, the alleged implied term would also, in my view, be inconsistent with the terms of the written contract in that, properly construed, the written contract gave Mr and Mrs Kitching a right to terminate if condition 7 of the subdivision approval had not been complied with. The right to terminate if the agreed basis for access to the communal dog training area did not eventuate, is inconsistent with the written contract conferring a right of access to and use of the land in perpetuity in any event.
The alleged facts which, Mr and Mrs Kitching say, the judge ought to have found (see [28] above), would not lead to a different construction of the written contract. Those matters are all consistent with the operation of the subdivision term. Accordingly, it is unnecessary to consider another issue raised as to whether, even accepting those additional matters, the alleged easement satisfies all the essential features of an easement. In particular, it is unnecessary to consider whether the right claimed is more in the nature of a jus spatiandi: Re Ellenborough Park [1956] 1 Ch 131, 176, or whether it is inconsistent with the servient owner's exclusive possession of the site: cf Clos Farming Estates Pty Ltd v Easton [2002] NSWCA 389 [45] ‑ [47]. Nor is it necessary to consider whether it satisfied the second essential feature of an easement and whether, in that regard, the right alleged is in the nature of a mere personal convenience: Nelson v Walker (582); Re Ellenborough Park (170).
Finally, I should note that in oral submissions, counsel for Mr and Mrs Kitching placed considerable reliance on the decision of the High Court in Shepperd v The Council of the Municipality of Ryde (1952) 85 CLR 1. In that case, the Municipality of Ryde had created a subdivision on which it was constructing 2,500 homes. The council advised potential purchasers, by pamphlet, that the scheme included a complete range of services, including park areas. The plaintiff applied for a house in the scheme and received an offer from the council to acquire a home which was opposite two park areas. The plaintiff discussed the importance of the park areas with a council officer, and the council officer pointed to two pieces of land on the plan, and confirmed that they would both be park areas. A few days later, the plaintiff advised the council that he would purchase the house, and again he mentioned the importance of the park areas. A contract for sale was then executed. The contract referred to the land the subject of the contract for sale as being 'part of the Vendor's Housing Project ... and being Allotment No ... '. About a year after the plaintiff acquired the house, the council resolved that the two park areas should be subdivided and houses built on those allotments. The plaintiff applied for an interlocutory injunction to restrain the proposed alienation of the two park areas. The plaintiff failed in the Supreme Court, but succeeded in the High Court. The High Court held, in effect, that there was arguably a collateral contract, as well as an implied term of the sale contract, to the effect that the council would not depart from the housing scheme, and would not use or permit the two areas in dispute to be used for any purpose other than a park.
In relation to the argument concerning a collateral contract, Dixon, McTiernan, Fullagar and Kitto JJ said (13):
It is, we think, a reasonable construction of the Council's action in putting forward the project as the basis upon which the intending purchaser could proceed, if it is treated as amounting to or involving an undertaking or promise by the Council to him that they would adhere to and maintain the project, if he would become a purchaser of a lot which he might select and they might allocate to him. The reluctance of courts to hold that collateral warranties or promises are given or made in consideration of the making of a contract is traditional. But a chief reason for this is that too often the collateral warranty put forward is one that you would expect to find its place naturally in the principal contract. In a case like the present it is, we think, otherwise. Doubtless the main contract might have included a clause by which the Council undertook not to depart from the housing scheme. But it seems to be not unnatural that the parties should treat the contract as devoted to the purchase of the lot which the individual purchaser acquired, the existence and stability of the project of which the transaction was an outcome being presupposed as something antecedent upon which the purchaser might implicitly rely. It is the common intention that he would so rely upon it and on that basis proceed to contract to buy the particular lot allocated to him. It is because of this that the assurance which is embodied in the plan, when it is read in the light of the pamphlet, obtains its effect as a collateral promise.
In relation to the alleged implied term, their Honours said (17):
As we have said we think that the facts and circumstances make a prima-facie case for understanding the Council as making a collateral promise to adhere to the project and so not to use or permit the use of the areas in dispute for any purpose but a park.
But such an interpretation of what occurred before the execution of the contract is needless if from the document itself, interpreted in the light of the admissible circumstances, an implication arises binding the Council to adhere to the project. The foregoing discussion of the considerations which affect the question of a collateral contract covers much of the ground upon which the propriety of such an implication rests. But the cardinal question is the meaning and effect of the description, in the contract, of the allotment of land sold as part of the vendor's Housing Project No 4 and being allotment No 85. If this is only an identification of the block of land, it can raise no implication. By an identification of the land we mean a description for ascertaining precisely where it lies on the earth's surface and what are its dimensions and where are its boundaries. If on the other hand it means to describe the land as possessing attributes or incidents which flow from the project, there may be room for implication. It is to be observed that the expression is 'part of the vendor's Housing Project' and not 'being allotment 85 on the plan of the vendor's Housing Project'. The housing project consists of the scheme or design considered as a planned work or, perhaps, conception. The reference to the project makes it both legitimate and necessary to resort to evidence to ascertain what is the project and what are its constituent parts or features. (emphasis added)
Mr and Mrs Kitching rely upon both aspects of the decision in Shepperd v Ryde in support of their appeal in this case.
I will address the collateral contract issue later. In relation to the implication of a term, the decision in Shepperd v Ryde does not, in my view, assist Mr and Mrs Kitching for two reasons. First, the description in the written contract of the property sold is merely by way of identification only. It does not describe the land in Lot 61 as possessing any attributes or incidents concerning or affecting Lot 81. Secondly, even if the written contract contained an implied promise to give effect to the subdivision scheme, in this case, the subdivision did not contemplate the developer granting an easement over Lot 81, but rather the sale of the land to a third party, namely, the local authority, with the provision of a communal area for the training of dogs to be effected once the local authority had acquired the land.
The second alleged basis of error has not been established.

The third alleged basis of error

Counsel for Mr and Mrs Kitching contends that the principle of non‑derogation of grant, at least as it applies in this case, involves the implication of an easement, upon the proper construction of the written contract and the transfer, read in light of the extrinsic circumstances.
For the reasons given in relation to the second basis of alleged error, the grant of an easement is not, in my view, to be implied.

The fourth alleged basis of error

As best I understand it, counsel for Mr and Mrs Kitching contends that there was an oral collateral contract of the kind referred to by the High Court in Shepperd v Ryde, which was specifically enforceable by reference to the doctrine of part performance. In this regard, counsel for Mr and Mrs Kitching submitted, in effect, that there was a collateral contract to the effect that, in consideration for Mr and Mrs Kitching entering into the written contract, the developer agreed to grant Mr and Mrs Kitching an easement over Lot 81. For the purpose of establishing a collateral contract, counsel (again, as best I understand it) relies upon the finding in her Honour's reasons at [13] to the effect that the developer's representative told Mr and Mrs Kitching 'that Lot 81 would remain open space for all lot owners to use for the purpose of a communal training and obedience area', and relies on the diagram attached to the written contract.
In my view, the submission of a collateral contract cannot be accepted, and her Honour was correct in finding no oral or other collateral contract (reasons [89], [91]). My reasons are twofold. First, the statement by the developer's agent as found by her Honour and the diagram annexed to the written contract must be shown to be promissory of an easement in the context in which the communications were made: Esanda Ltd v Burgess (1984) 2 NSWLR 139, 146. In my view, the oral statement and the diagram attached to the written contract were to be understood in the context that the creation of a communal area for the training of dogs was to be effected under the subdivision by the transfer of Lot 81 to the local authority and a lease back to the developer. Unlike in Shepperd v Ryde, where the ownership of the parkland was to be retained by the vendor/subdivider, proposed Lot 81 was to be transferred to the local authority. In this case, unlike Shepperd v Ryde, if there were to be any agreement between the developer and Mr and Mrs Kitching additional to or qualifying that intended arrangement, 'you would expect to find its place naturally in the principal contract' (Shepperd v Ryde (13)).
Secondly, even if promissory, it would not be enforceable as it would, for the reasons outlined earlier, be inconsistent with the written contract: Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133, 146 ‑ 147; Maybury v Atlantic Union Oil Co Ltd (1953) 89 CLR 507, 517; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, 5.
The fourth alleged basis of error has not been established.

The fifth alleged basis of error

Counsel for Mr and Mrs Kitching submits that the agent's statement (reasons [13]), and 'the other evidence led at trial including the unusual purpose and configuration of the estate, and the unique size, positioning and zoning of Lot 81' induced Mr and Mrs Kitching to believe, or meant that the developer 'acquiesced with knowledge that [they] would believe, or at least assume' that if they purchased Lot 61, 'they would be entitled to enter Lot 81 with their dogs for the asserted purpose' (written submissions par 82). It is submitted that, in reliance upon that belief or assumption, they entered into the written contract and were required to accept the transfer and to proceed to completion, even after there had not been compliance with condition 7 of the subdivision approval. They refer to the primary judge's reasons [27] to the effect that Mr and Mrs Kitching purchased Lot 61 based, in part, on the representations contained in the pamphlet and the oral statement of the developer's agent.
They contend that an equitable easement arose in consequence by reason of an estoppel. Mr and Mrs Kitching refer to Crabb v Arun District Council [1976] 1 Ch 179 and Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.
In my view, her Honour did not err in finding that an estoppel did not arise. The assumption or belief said to be engendered is that Mr and Mrs Kitching 'would be entitled' to enter Lot 81 with their dogs for training and obedience purposes. The asserted assumption begs the question of the nature of the assumed entitlement. In the context of this transaction any assumption of an entitlement to enter and use the land in Lot 81 rested not upon assumed rights secured simply by dint of transfer and ownership of Lot 61, but upon an assumed entitlement arising from the operation of condition 7 of the subdivision approval. Her Honour, in my opinion, correctly observed that 'Mr and Mrs Kitching assumed not that they would be granted an easement by [the developer] but that condition 7 would be fulfilled' (reasons [102]). Also, by reason of the subdivision term, the written contract did not require Mr and Mrs Kitching to proceed to completion absent compliance with condition 7.
The fifth alleged basis of error has not been established.

The bona fide purchaser defence

In the appeal both respondents also sought to rely on the proposition that if there were an equitable easement arising from the original transaction with the developer, the respondents were not bound because they were bona fide purchasers for value of the legal estate without notice. The primary judge did not address the matter, as it was unnecessary in light of her other reasons. It appears that only Mr and Mrs Phillips pleaded the defence of bona fide purchaser for value without notice and the facts said to give rise to it. The question of whether facts constitute notice within the meaning of the doctrine of the bona fide purchaser defence is a question of law: Barclays Bank Plc v Boulter (1999) 1 WLR 1919, 1924.
Like her Honour, it is strictly unnecessary for me to deal with this issue in light of my earlier reasons. However, the following observations may be made.
By s 85 of the TLA, every registered instrument, including relevantly each of the transfers of land registered by the respondents, operates, upon registration, with the same effect as if it were a deed. In other words, upon registration the respondents obtained what the general law would regard as the legal estate.
Milne v James was a case in which the plaintiff (appellant), who was the registered proprietor of land under the TLA in Western Australia, sought to assert certain proprietary rights against the defendant (respondent). The defendant contended that the asserted rights violated an equitable easement arising from an allegedly specifically enforceable agreement which had been entered into between the parties' predecessors in title. There were two questions before the court. One was whether the defendant had shown that there was a specifically enforceable agreement entered into by the predecessors in title. The second was whether the plaintiff had notice of it when it became the registered proprietor of its land.
Barton J said (179 ‑ 180):
As Burnside J observed in his judgment after trial, 'it is clear that at law an easement can only be created by an instrument under seal, but if there be an agreement to grant an easement for a good and substantial consideration, equity considers it, as between the parties and persons taking with notice, as granted'. The agreement relied on being merely verbal, and the controversy not being between the immediate parties to it, but between their successors in title, the defendant, now respondent, cannot validly answer the claim of the plaintiff, the appellant, unless he [the defendant] affirmatively establishes, first, the existence of an agreement enforceable between the parties as he seeks to enforce it, and next, that the appellant [plaintiff] purchased with notice of it. Otherwise the appellant is entitled under his certificate to free and absolute dominion over the wall and any erection added to it, in terms of his claim.
See also Griffiths CJ (176) and O'Connor J (187 ‑ 188) to similar effect.
Counsel for Mr and Mrs Kitching submitted that these observations were technically obiter, and that the court, in Milne v James, does not appear to have been required directly to consider the proper construction of s 68 of the TLA. I note here that the proviso in s 68 of the TLA appears to be the same at the time of the events in Milne v James as at the time of the events in this case.

As I understand it, counsel for Mr and Mrs Kitching contends that the words 'subsisting over or upon or affecting such land' in the proviso in s 68, properly construed, protect easements enforceable in equity by contract or estoppel against subsequent registered proprietors who bona fide purchase the servient tenement for value without notice.
I am not persuaded by that submission. Even if the observations in Milne v James were not technically binding (a point which it is unnecessary to consider further), they are, at the very least, highly persuasive. Moreover, they accord with the design of the TLA, expressed by Isaacs J in Barry v Heider (1914) 19 CLR 197, 213, and referred to with approval in Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81 [51]:
[L]egislation such as the Real Property Act1900 (NSW) is not intended to interfere with the ordinary operation of contractual relations or with the effect of instruments at law. The purpose of the Act is to simplify and facilitate dealings with land, including mortgages. The court referred to statements by Isaacs J in Barry v Heider:
They have long, and in every State, been regarded as in the main conveyancing enactments, and as giving greater certainty to titles of registered proprietors, but not in any way destroying the fundamental doctrines by which Courts of Equity have enforced, as against registered proprietors, conscientious obligations entered into by them …
The Land Transfer Act does not touch the form of contracts. A proprietor may contract as he pleases, and his obligation to fulfil the contract will depend on ordinary principles and rules of law and equity, except as expressly or by necessary implication modified by the Act.
In my view, Mr and Mrs Phillips clearly had no notice of the alleged equitable easement.
Accordingly, I would be inclined to the view that, at least in relation to Mr and Mrs Phillips, who pleaded the defence, the alleged equitable easement, on either basis claimed by Mr and Mrs Kitching, could not prevail against them.
In the end, however, it is unnecessary to reach a concluded view on this, or on the other general questions raised as to the proper construction of the proviso in s 68 of the TLA. These issues would require a close examination of the text of the Act as a whole, and of the history and purpose of the proviso in s 68, which the parties have not undertaken in this appeal.

Other matters

Mr and Mrs Kitching also challenged the primary judge's approach to her provisional assessment of damages in the event that the court found that there was an easement granted in favour of Mr and Mrs Kitching as alleged (see reasons [107] ‑ [110]). In light of the foregoing, it is unnecessary to address this issue.
Also, counsel for Mr and Mrs Phillips said that they had not been served with the notice of appeal within the stipulated time. The point did not receive any real attention at the hearing, but to the extent that Mr and Mrs Kitching require an extension of time in respect of the appeal concerning Mr and Mrs Phillips, I would decline the application as, in my view, the appeal has no prospects of success.

Conclusion

For the foregoing reasons, I would dismiss the appeal.