McGrath v Campbell

[2006] NSWCA 180

Reported Decision: 68 NSWLR 229
(2006) NSW ConvR 56-159

Court of Appeal

CITATION:	McGrath & Anor v Campbell & Anor [2006] NSWCA 180
HEARING DATE(S):	15/6/06
JUDGMENT DATE:	7 July 2006
JUDGMENT OF:	Giles JA at 1; Hodgson JA at 2; Tobias JA at 6
DECISION:	a) Appeal allowed; b) Set aside the declaration and orders made by Barrett J on 29 June 2005; c) The proceedings be dismissed; d) The respondents pay the appellants’ costs of the proceedings at first instance and of the appeal but to have with respect to the latter a certificate under the Suitor’s Fund Act 1951, if otherwise qualified
CATCHWORDS:	EQUITY – equitable estates and interests – easement – implied easement created by Wheeldon v Burrows extended by Aldridge v Wright – effect of transfer of title under the Real Property Act 1900 – simultaneous transfers of title from a single vendor to separate purchasers – whether easement enforceable against successors in title – whether personal equity or right enforceable in personam exists between purchasers – REAL PROPERTY – easements – Torrens Title land – equitable easement – simultaneous transfer of tenements to different parties – whether equitable Wheeldon v Burrows easement can survive transfer to vendor’s successor in title – effect of registration under Real Property Act 1900
LEGISLATION CITED:	Conveyancing Act 1919 Land Transfer Act 1952 (NZ) Real Property Act 1900, s 42 Suitor's Fund Act 1951
CASES CITED:	Aldridge v Wright [1929] 2 KB 117 Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Breskvar v Wall (1971) 126 CLR 376 British Leyland Motor Corporation Ltd v Armstrong Patents Co Ltd [1986] AC 577 Canon Kabushiki Kaisha v Green Cartridge Co (Hong Kong) Ltd [1997] AC 728 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Crook v Hill LR 6 Ch 311 Dobbie v Davidson (1991) 23 NSWLR 625 Douglas v Baynes (1908) AC 477 Frazer v Walker [1967] 1 AC 569 Grgic v Australian & New Zealand Banking Group Ltd (1994) 33 NSWLR 202 Hamlyn v. Wood [1891] 2 QB 488 Hansford v Jago [1921] 1 Ch 322 Horsfall v Braye (1908) 7 CLR 629 Howitt v Fitzgerald (1898) 24 VLR 287 Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 Mayer v Coe [1968] 2 NSWR 747 Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32 Nelson v Walker (1910) 10 CLR 560 Pwllbach Colliery Co v Woodman [1915] AC 634 Sovmots Investments Ltd v Secretary of State for the Environment [1979] AC 144 Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722 Tarrant v Zandstra (1973) 1 BPR 9381 Wheeldon v Burrows [1879] 12 Ch D 31 Vassos v State Bank of South Australia [1992] V Conv R 54- 443 Wilcox v Richardson (1997) 43 NSWLR 4 Wilkinson v Adam 1 V&B 422 Williams v State Transit Authority (2004) 60 NSWLR 286
PARTIES:	Edward Bruce McGrath – First Appellant Margaret June McGrath – Second Appellant Leonard Joseph Campbell – First Respondent Margaret Anne Campbell – Second Respondent
FILE NUMBER(S):	CA 40622/05
COUNSEL:	A: Bernard Coles QC / Benjamin DeBuse R: Lindsay Foster SC / Mark Seymour
SOLICITORS:	A: Armstrongs Solicitors, Toronto R: Martin Trisley Solicitor, Newcastle
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 3897/01
LOWER COURT JUDICIAL OFFICER:	Barrett J
LOWER COURT DATE OF DECISION:	27/5/05
LOWER COURT MEDIUM NEUTRAL CITATION:	Campbell vMcGrath [2005] NSWSC 496

CA 40622/05
SC 3897/01

GILES JA
HODGSON JA
TOBIAS JA

Friday 7 July 2006

EDWARD BRUCE McGRATH & MARGARET JUNE McGRATH v LEONARD JOSEPH CAMPBELL & MARGARET ANNE CAMPBELL

Headnote
Facts:

Two adjoining lots were owned by a single registered proprietor. The northern lot (Lot 6) faced a main road, while the southern lot (Lot 12) was bounded by a street known as Brighton Avenue. A registered easement had been created over both lots in favour of a third adjoining property, which permitted access to the third lot from Brighton Avenue. The easement had also been used for some years as an access point for Lot 12, although this use had never been noted on the register.

In 1980, Lot 6 was sold to the respondents and Lot 12 was sold to the appellants and the transfers of title were recorded in the register as having occurred on the same day. The respondents continued to use the easement over Lot 12 to access Lot 6 until a dispute arose in 1995.

The respondents argued that the circumstances of the sale gave rise to an implied easement over Lot 12 for the benefit of Lot 6, and that the simultaneous transfers of the two lots gave rise to an equity or right in personam enforceable against the appellants. The appellants argued that the indefeasibility provisions of the Real Property Act 1900, and the circumstances of the transfers in this case, prevent the recognition of any such equity.

Held, allowing the appeal with costs:

1. A Wheeldon v Burrows easement is based upon the presumed intention of the grantor to grant to the grantee all easements that were created by the grantor while the properties were in common ownership. The Aldridge v Wright extension of the rule requires that there be an imputed intention on the part of a subsequent purchaser to take title subject to the burden of such an easement: [75]–[76]. Pwllbach Colliery Co v Woodman [1915] AC 634; Sovmots Investments Ltd v Secretary of State for the Environment [1979] AC 144; Wilcox v Richardson (1997) 43 NSWLR 4; Canon Kabushiki Kaisha v Green Cartridge Co (Hong Kong) Ltd [1997] AC 728; British Leyland Motor Corporation Ltd v Armstrong Patents Co Ltd [1986] AC 577 discussed.

2. To determine that the purchaser of a putative servient tenement has taken title subject to a Wheeldon v Burrows easement, it is necessary to establish that a term should be implied into the contract of sale to the effect that the land is sold subject to an implied easement in favour of the putative dominant tenement. To reach such a conclusion, the probability that such an implication was intended must be so strong that a contrary intention cannot be supposed: [77]; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 referred to.

3. At general law, the circumstances in which land is acquired may give rise to an implied easement of the Wheeldon v Burrows type, as extended by Aldridge v Wright. Under the Real Property Act 1900, such an easement can be no more than an equitable easement: [79]; Dobbie v Davidson (1991) 23 NSWLR 625 referred to.

4. Whether an equitable easement arose, and whether such an easement would be enforceable against the proprietors of the putative servient tenement, must depend on whether the circumstances were such that there was a personal equity against those proprietors: [83].

5. Under the Real Property Act 1900, an equitable easement of this type would be enforceable as a personal equity against the vendor of the land, but is not capable of being enforced against successors in title of the servient tenement: [102]–[104].

6. A personal equity will not be created in the case of simultaneous transfers of title in circumstances where the new owners of the putative servient tenement have not in any way contributed to the creation of the implied easement or conducted themselves in any way which could be regarded as unconscionable: [108].

7. It is in no way unconscionable to rely upon strict legal rights such as the indefeasibility provisions of the Real Property Act 1900. Further, mere knowledge on the part of the transferee of the putative servient tenement that both tenements are to be transferred by the common vendor simultaneously does not involve any conduct that may give rise to a personal equity: [108], [111]–[112].

CA 40622/05
SC 3897/01

GILES JA
HODGSON JA
TOBIAS JA

Friday 7 July 2006

EDWARD BRUCE McGRATH & MARGARET JUNE McGRATH v LEONARD JOSEPH CAMPBELL & MARGARET ANNE CAMPBELL

JUDGMENT

1 GILES JA: I agree with Tobias JA.

2 HODGSON JA: I agree with the orders proposed by Tobias JA and substantially with his reasons.

3 The decision of the primary judge proceeded by the following steps:

(1) The circumstances of the acquisition of Lot 6 by the respondents and Lot 12 by the appellants were such as would, at general law, give rise to an implied easement of the Wheeldon v. Burrows type.
(2) However, since no such easement was created in accordance with the requirements of the Real Property Act, it could be no more than an equitable easement.
(3) Such an equitable easement is binding as between the parties to its creation, though not as against successors in title to the servient tenement.
(4) Such an equitable easement can therefore be enforced as a personal equity against the appellants.

4 I agree with step (1). However, steps (2), (3) and (4) require close analysis of the kind undertaken by Tobias JA. The question whether an equitable easement arose, and whether that easement was enforceable against the appellants, depend on whether the circumstances were such that there was a personal equity against them. I agree with Tobias JA, for the reasons he gives, that the appellants’ involvement in the relevant transactions was not such as to give rise to a personal equity against them, even though it would have been sufficient at general law to give rise to a Wheeldon v. Burrows easement enforceable against them.

5 Accordingly, ss.42 and 43 of the Real Property Act preclude the recognition of any such easement; and thereby make it misleading to assert that there was an equitable easement of the Wheeldon v. Burrows type.

6 TOBIAS JA: This appeal concerns an implied or quasi easement over land under the Torrens system created by application of the rule in Wheeldon v Burrows [1879] 12 Ch D 31, as extended by the decision in Aldridge v Wright [1929] 2 KB 117. For the first time in a Torrens title jurisdiction, this appeal raises the question of whether such an easement also creates rights in personam or a personal equity enforceable by the registered proprietor of the putative dominant tenement against the registered proprietor of the putative servient tenement where each has acquired title by contemporaneous transfers from the common owner of both tenements. The primary judge, Barrett J, answered the issue so posed in the affirmative and the appeal is against that decision.

7 It has generally been accepted that, as a consequence of the decision of this Court in Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618, what is conveniently described as a Wheeldon v Burrows easement, although not noted on the certificate of title of the servient tenement, may be enforced against the registered proprietor of that tenement who created that easement but not against that proprietor’s successors in title. In the present case, the common owner or registered proprietor of the dominant and servient tenements who created the Wheeldon v Burrows easement contemporaneously transferred both tenements to different parties. The decision of the primary judge is the first occasion when it has been held that, in such circumstances, the effect of Aldridge v Wright is to subject the transferee of the servient tenement to the right of the transferee of the dominant tenement to enforce that easement by requiring the servient owner to execute an instrument in registrable form for the purpose of the Real Property Act 1900 (the RP Act) granting the easement.

8 The legal basis underpinning this right is founded upon the in personam exception to the indefeasibility provisions of the RP Act. Those provisions would otherwise result in the registered proprietor of the putative servient tenement holding the same tenement, subject only to such estates or interests as may be recorded in the Register and absolutely free from all other estates or interests, including implied easements: RP Act s42(1).

The relevant facts

9 On 24 April 1941, Edna Anne Chiplin (Mrs Chiplin) became the registered proprietor of the whole of the land in Certificate of Title Volume 3850 Folio 190, being Lot 12 and part of Lot 6 in DP 4929. This land was subject to a right of way 12 feet (3.66 metres) wide created by Transfer B307680, which was registered on 12 April 1926 (the 1926 ROW).

10 The 1926 ROW abutted the length of the eastern boundary of Lot 12 and intruded into Lot 6 for a distance of 4.57 metres. Its northern boundary coincided with the southernmost boundary of part of Lot 20 in DP 4929, which included an area of land excised out of Lot 6 and added to the main parcel of Lot 20, and which was the allotment adjoining Lot 6 on its eastern boundary. It was because of this excision that the Certificate of Title 3850 Folio 190 related to only part of Lot 6 as well as the whole of Lot 12. The grant of the 1926 ROW was for the benefit of Lot 20, which was, relevantly, the dominant tenement. Lot 20 ultimately became Lot 20 in DP 301366, whereas that part of Lot 6 included in Certificate of Title Volume 3850 Folio 190 became Lot 6 in Deposited Plan 656671. I shall hereafter refer to the relevant parcels as Lot 6, Lot 12 and Lot 20.

11 Lots 6 and 20 were bounded to the north by The Boulevarde, Toronto, being their only street frontage. Lot 12 was bounded to the south by Brighton Avenue, Toronto, being its only street frontage. The northern boundary of Lot 12 was the southern boundary of Lot 6.

12 At all material times prior to 1980, there was a weatherboard commercial building erected upon Lot 6. This building comprised two storeys at the front and one storey at the rear, and was known as No 4 The Boulevarde. Lot 6 had a frontage to The Boulevarde of 15.24 metres. For all intents and purposes, the building abutted the eastern boundary of Lot 6 but stood 1.15 metres clear of its western boundary. At the rear of the building was a weatherboard shed with a metal roof and carport.

13 There was a single storey weatherboard building with a tiled roof erected upon Lot 12. Although this building gave the appearance of being a dwelling, it was apparently used for commercial purposes. At its rear was a relatively large area covered with bitumen and used for car parking. Where the 1926 ROW met Brighton Avenue there was approximately five metres of bitumen, but the balance comprised a gravel track that was referred to in the evidence and by the primary judge as “the driveway”. I shall adopt the same terminology.

14 According to a survey that was said to have depicted the position of the driveway as at 1980, the driveway remained within the boundaries of the 1926 ROW to a point approximating the northern boundary of the bitumen carpark. The 1926 ROW then extended beyond its western boundary in a north-westerly direction, generally leading to the carport at the rear of the main building on Lot 6.

15 The primary judge found (at [20]) that during Mrs Chiplin’s ownership of Lots 6 and 12, the tenants of Lot 6 and their employees, customers and suppliers had used the driveway to access Lot 6. In particular, it would appear that for some years up to no later than 30 June 1979, the main building on Lot 6 was used as a supermarket and that vehicles supplying the supermarket, as well as its employees and some customers, regularly used the driveway over Lot 12 to access the supermarket. This use ceased when the supermarket closed on the expiration of its lease on 30 June 1979 and the lessees decided not to exercise an option in the lease to purchase Lot 6. At that point Mrs Chiplin decided to sell both lots.

16 At all material times before 1980, Lot 20 was owned by the family of the second respondent, Margaret Anne Campbell (Mrs Campbell). In 1980 both respondents occupied Lot 20 and used the 1926 ROW over Lot 12. At some point in 1979 or 1980 the first respondent, Leonard Joseph Campbell (Mr Campbell), became aware that Mrs Chiplin wished to sell her property comprising Lots 6 and 12. As a result of discussions between himself and the first appellant, Edward Bruce McGrath (Mr McGrath), Mrs Chiplin contracted to sell Lot 6 to Mr and Mrs Campbell (the Campbells) for $95,000 and Lot 12 to Mr and Mrs McGrath (the McGraths) for $40,000.

17 The primary judge found (at [5]) that both contracts were made “at or about the same time”. At the time of the trial, some 25 years had passed since the sale and transfer of Lots 6 and 12 to the Campbells and the McGraths respectively. By this time, many documents relating to the sale had been lost, including the original contracts. However, the two transfers, which were both registered on 3 February 1981, bore the same date, 9 September 1980. The primary judge inferred from this that both purchases were completed on that day. This was necessarily the case, as the documentary evidence revealed that the sale to the Campbells had been completed on 24 June 1980. That evidence did not reveal the date of completion of the sale to the McGraths, which may well have been 9 September 1980. However, for present purposes, there is no challenge to his Honour’s finding that the two sales were, relevantly, completed contemporaneously.

18 The primary judge stated (at [5]) that each of Lots 6 and 12 was a subdivided lot and the subject of a separate certificate of title before Mrs Chiplin transferred one lot to the Campbells and the other to the McGraths. However, this was also not correct. The transfer from Mrs Chiplin to the Campbells was of part of Lot 6 DP 4929 and was only part of the land comprised in Certificate of Title Volume 3850 Folio 190. The other part was Lot 12. Again, nothing turns on this factual error. The only prior encumbrance referred to in each transfer was ”B307680 Grant of Right of Way” which was, of course, the 1926 ROW which benefited only Lot 20.

19 However, the Campbells contended that, as the registered proprietors of Lot 6, they were entitled to an equivalent right of way over that part of the site of the 1926 ROW that lay within Lot 12, the dominant tenement in respect of the right of way so claimed, being Lot 6.

20 At the time the parties entered into their respective contracts and transfers with Mrs Chiplin, they were familiar with Lots 6 and 12 because of the proximity of their homes and business premises to those properties. Mr Campbell had visited Lot 20 since 1953. He and his wife had lived on that lot from 1957 to 1966 and conducted a newsagency business there from 1961 to 1981. Mr McGrath had conducted an upholstery business at 8 The Boulevarde, Toronto from 1976, that business having formerly been located in Victory Parade, Toronto. Furthermore, Mr McGrath had been a milkman in the 1960s and his milk run had included the relevant locality.

21 Accordingly, the primary judge found (at [53]) that the Campbells had observed Mrs Chiplin, her family members, the tenants of Lot 6 and their employees, suppliers and customers, regularly using the driveway over Lot 12 to access Lot 6 while Mrs Chiplin owned both lots.

22 Although Mr McGrath originally denied knowledge of the use of the driveway over Lot 12 to gain access to Lot 6 at the time of the 1980 transactions, he conceded in cross-examination that he was aware that in the 1970s the entrance from Brighton Avenue to Mrs Chiplin’s land was being used by both delivery vehicles and customers attending the supermarket premises at Lot 6. He further conceded that immediately prior to the sale, the entry from Brighton Avenue to Lot 12 had been generally used for both deliveries to and customer parking for the business located on Lot 6 and was used by Mrs Chiplin’s tenants for access to the building on that allotment.

23 Accordingly, his Honour found (at [53]) that Mr McGrath had been aware of the use of the driveway in the manner referred to in [21] above in and before 1980.

The circumstances of the sale of Lots 6 and 12

24 For the purposes of the 1980 transactions, Mrs Chiplin was represented by her son, Mr John Chiplin, Solicitor, who prepared the contracts on her behalf in relation to the sale of each of the lots. Both the Campbells and the McGraths engaged the firm of Baker, Love & Geddes, Solicitors of Wallsend, to act for them on the conveyance. Mr Ian Campbell, who was Mr Campbell’s cousin, was then a managing clerk with that firm and handled the matter on behalf of both purchasers. Regrettably, Mr Ian Campbell and Mr John Chiplin were deceased at the time of the hearing before the primary judge. Furthermore, relevant files and office records in the case of both legal representatives had been destroyed in the ordinary course of document management.

25 The surviving and available documentary evidence included a draft version of some proposed special conditions that were originally intended to be inserted in to the contracts for the sale of the two lots. The primary judge accepted (at [12]) that those draft special conditions were to be found in a letter from Mr John Chiplin to the Campbells dated 3 April 1980. Relevantly, the draft special condition proposed for the Campbells’ contract was in the following terms:

“The vendor will if the purchasers so wish include in the transfer the right of way over the strip of land twelve foot wide from Brighton Avenue in favour of the purchasers provided that the form of right of way is prepared by the purchasers at no expense to the vendor and is approved by the vendor.”

26 The same letter contained draft special conditions intended for the McGraths’ contract, of which the following is presently relevant:

“The purchaser acknowledges that the vendor has agreed with the purchasers of property adjoining and being part of lot 6 in Deposited Plan 4929 that the vendor will on transferof (sic) the subject property if required by the purchasers include in the transfer a right of way over the existing right of way twelve foot wide in favour of lot 6 and the purchaser will take no objection to or make no requisitions in connection with the grant of such a right of way.”

27 As the primary judge noted (at [17]), the draft special condition that was intended to attach to the Campbells’ contract required them to make a positive election to receive a transfer of a right of way to benefit Lot 6 over the site of the 1926 ROW, which otherwise benefited only Lot 20. However, his Honour found that there was insufficient evidence to ground a positive finding that either of the draft special conditions was included in either contract as exchanged. Although it is clear that the Campbells were aware of the proposed special conditions, there was no evidence that the special condition proposed for either contract came to the notice of the McGraths. This was because his Honour found (at [21]) that the late Mr Ian Campbell erroneously advised the Campbells that Lot 6 already had the benefit of the 1926 ROW and that, therefore, no new grant was necessary.

28 Both Mr and Mrs Campbell confirmed in evidence that they had received advice from Mr Ian Campbell that Lot 6 already had the benefit of the 1926 ROW, and that there was therefore no need to obtain a specific or further grant from Mrs Chiplin as contemplated by the draft special conditions. However, the primary judge also found (at [26]) that the McGraths had no knowledge of this advice, or that it had been given to the Campbells. This was because the McGraths had given evidence that they had no interaction with Mr Ian Campbell and that all documents in relation to their purchase of Lot 12 requiring execution were delivered to Mr McGrath’s then place of business by Mr Campbell and that Mr McGrath returned the documents to Mr Ian Campbell via Mr Campbell.

29 Accordingly, the primary judge’s conclusion with respect to these issues (at [30]) was that the McGraths were never informed about any right of way over the driveway on Lot 12 in favour of Lot 6. Further, his Honour was not prepared (at [31]) to accept that Mr Ian Campbell, with or without the assistance of Mr John Chiplin, had explained to the McGraths that Lot 12 was or would be burdened by a right of way in favour of Lot 6.

30 After settlement of the sales in September 1980, and until approximately 1995, the McGraths acquiesced to the Campbells’ use of the driveway for the purpose of accessing Lot 6. The primary judge found (at [39]) that that acquiescence was “in a spirit of neighbourliness at all relevant times”. Furthermore, he found that there was no evidence of any express or implied agreement by the McGraths to permit the Campbells and persons authorised by them to enjoy the benefit of a right of way over Lot 12. There was never any discussion with Mr McGrath to suggest that an easement, whether express or implied, existed over Lot 12 in favour of Lot 6 prior to the dispute between the parties in 1995, which ultimately resulted in the present litigation.

31 It was thus conceded before his Honour on behalf of the Campbells that any use by them of the driveway over Lot 12 for access to and egress from Lot 6 resulted from their independent belief, unknown to the McGraths, that Lot 6 had the benefit of a right of way over Lot 12.

32 In summary, the relevant factual position may be stated in terms of four observations. First, both the Campbells and the McGraths were aware that while Lots 6 and 12 were in Mrs Chiplin’s ownership, the driveway over Lot 12 had been used for the purpose of gaining access to the commercial building on Lot 6 by the tenants of that building, as well as their suppliers and customers. Second, the Campbells had been provided with advice by their solicitor, Mr Ian Campbell, that Lot 6 already had the benefit of a right of way over Lot 12 and that, as a consequence, it was unnecessary for the proposed special conditions to be included in the contracts for the sales of the two lots. Third, the McGraths were unaware not only of the advice so given by Mr Ian Campbell to the Campbells but also of the proposed draft special conditions. Fourth, although between 1981 and 1995 the driveway was used by the Campbells for the purpose of their gaining access to Lot 6, the McGraths acquiesced in that use only in the spirit of neighbourliness and did not, therefore, agree or represent in any way that the Campbells had any legal rights with respect to the use of the driveway for that purpose.

The decision of the primary judge

33 The Campbells contended before the primary judge that they were entitled to a right of way over Lot 12 in favour of Lot 6 on a number of grounds. All but one of these grounds was ultimately rejected. The Campbells had submitted that there was an implied grant by the vendor, Mrs Chiplin, of a right of way over Lot 12 in favour of Lot 6 along with a corresponding implied imposition of the burden of that right of way in the transfer of Lot 12 to the McGraths. The Campbells placed reliance upon the first of the two rules in Wheeldon v Burrows. These rules were stated by Thesiger LJ (at 49) in the following terms:

“The first of these rules is, that on the grant by the owner of a tenement of part of that tenement as it is then used and enjoyed, there will pass to the grantee all those continuous and apparent easements (by which, of course, I mean quasi easements), or, in other words, all those easements which are necessary to the reasonable enjoyment of the property granted, and which have been and are at the time of the grant used by the owners of the entirety for the benefit of the part granted. The second proposition is that, if the grantor intends to reserve any right over the tenement granted, it is his duty to reserve it expressly in the grant.”

34 The primary judge noted (at [44]) that the first rule contained five elements. These were set out in the following terms:

“first 'the grant by the owner of a tenement of part of that tenement’; second, grant of the part ’as it is then used and enjoyed’; third, the existence of ’continuous and apparent easements’ or ’quasi-easements’; fourth, that those easements ’are reasonably necessary to the property granted’; and fifth, that the easements ’have been and are at the time used by the owners of the entirety for the benefit of the part granted’.”

His Honour dealt with each of these five elements and determined that all were satisfied.

35 For the purposes of the first rule, the primary judge indicated (at [45]) that he was satisfied that Lots 6 and 12 constituted a single “tenement” when in the common ownership of Mrs Chiplin, and that Lot 6 was “part of that tenement”. His Honour also found that Lot 6 was transferred by Mrs Chiplin to the Campbells as it was “then used and enjoyed”. In respect of both these matters, he noted that there had been no submission by the McGraths to the contrary.

36 However, in their written submissions on the appeal, the McGraths contended that the only concession made before his Honour was that Lots 6 and 12 were under common ownership and that they had challenged the submission by the Campbells that both lots constituted a single tenement in the sense of old system title land where the root title does not depend on registration. It was therefore submitted on the appeal that common ownership of two separate lots could not be equated to a single right in respect of both of those lots. For reasons that will later become apparent, I do not find it necessary to conclusively deal with this challenge by the McGraths to his Honour’s findings. However, my prima facie view is that the fact that both Lots 6 and 12 were in common ownership did constitute them as a single tenement for the purposes of the first rule in Wheeldon v Burrows because, irrespective of whether the title to those lots was under old system or Torrens title, Mrs Chiplin could not create a valid easement over Lot 12 for the benefit of Lot 6 while both lots were owned by her in common.

37 The foregoing observations are subject to certain statutory exceptions where easements are created by force of a statute, such as under s88B of the Conveyancing Act 1919. The essential characteristic of an easement is that the dominant and servient tenements must not be both owned and occupied by the same person. Accordingly, while Lots 6 and 12 were in the common ownership of Mrs Chiplin, she could not create an easement over Lot 12 as the servient tenement in favour of Lot 6 as the dominant tenement.

38 It was therefore not open to Mrs Chiplin to create an easement over Lot 12 in favour of Lot 6 by way of transfer pursuant to s46 of the RP Act because she could not be both transferor and transferee at the same time. Accordingly, for the purpose of the rule in Wheeldon v Burrows, in my opinion it did not matter that Lots 6 and 12 were separate lots where they were in common ownership.

39 The McGraths also challenged the primary judge’s findings in respect of the other elements comprising the first rule in Wheeldon v Burrows, but again, I find it unnecessary to deal with these arguments. However, understandably, that challenge was but lightly pressed and, prima facie, had little merit.

40 As I have observed, a legal easement cannot be created (except by statute) over land which is in common ownership, whether or not that land comprises separate lots. This is because an easement is a right created over the land of one person in favour of the land of another. There can be no valid and legally effective grant of an easement where there is unity of ownership or possession with respect to the putative dominant and servient tenements. The first rule in Wheeldon v Burrows, therefore, looks to the creation of a de facto easement (referred to as an implied or quasi easement) which only ripens into a legal easement when there is a severance of title whereby the owner of the putative servient tenement transfers the putative dominant tenement to a third party.

41 In Wheeldon v Burrows itself, Thesiger LJ went on to state (at 49) that both of the rules to which he had referred were founded upon the maxim that a grantor shall not derogate from his grant. That principle supported the first rule because, as his Lordship pointed out (at 58-59),

“in the case of a grant you may imply a grant of such continuous and apparent easements or such easements as are necessary to the reasonable enjoyment of the property conveyed, and have in fact been enjoyed during the unity of ownership, but that, with the exception which I have referred to of easements of necessity, you cannot imply a similar reservation in favour of the grantor of land.”

Accordingly, his Lordship rejected the proposition that one could have both an implied grant and an implied reservation.

42 It follows that had Mrs Chiplin retained ownership of Lot 12, then the transfer of Lot 6 to the Campbells would have created as between those parties an implied right of way over Lot 12 for the benefit of Lot 6. However, Mrs Chiplin did not retain Lot 12 but conveyed it to the McGraths by transfer, which his Honour found took place simultaneously with the transfer to the Campbells of Lot 6.

43 As the primary judge observed (at [63]), this brought into play a variant of the rules in Wheeldon v Burrows. This variant was described in the following terms by Greer LJ in Aldridge v Wright at 131, who set it out as a fourth exception to those rules:

“4. Where an owner executes contemporaneous conveyances of adjoining plots with the houses erected on them, and there exists a made road across the land of one plot to an entrance to the house on the other plot, and it is proved that the road was constructed for the use of both houses, there will be implied a grant in the one conveyance of a right to use the road and a corresponding reservation in the other conveyance.”

44 The above passage was referred to by his Lordship as an exception to the second rule in Wheeldon v Burrows as it gave rise to an implied, as distinct from an express, reservation over the land which, under the first rule, the grantor retains. Greer LJ also stated the following further exception (at 130), which in my opinion overlaps with the fourth, in these terms:

“1. Where the owner of a house and adjoining land expressly sells the house and with it an apparent easement, such as a right to light or a physically defined right of way and at the same time sells the land, both purchasers being aware of the simultaneous conveyances, there is, in the conveyance of the land, a reservation of the right to the easement. If it were not so, the express or implied grant of the apparent easement would be nugatory.”

45 The primary judge then referred (at [64]) to Hansford v Jago [1921] 1 Ch 322. In that case, a row of houses that shared a common rear pathway leading to a street had been sold at auction to different purchasers on the same day. It was held that in equity there was but one transaction, as a consequence of the simultaneous sale of all the properties to different persons. Each purchaser was therefore entitled to an easement over the common pathway.

46 In [66] his Honour referred to the decision of the Full Court of the Supreme Court of Victoria in Howitt v Fitzgerald (1898) 24 VLR 287, a case that involved lots in a subdivision effected by the Crown in respect of which a drainage channel benefiting one or more lots and running through other lots existed prior to the subdivision. Lots enjoying the benefit of the drain, and through which it ran, were sold and granted on the same day by the Crown to the respective purchasers. It was held (at [396]) that the purchasers of the lots through which the drain ran were required to keep the drain open in favour of the other allotments

“by virtue of the well-recognised principle applied to ordinary vendors who subdivide and sell property one part of which can only be fully enjoyed by exercising rights over another part.”

47 The primary judge then summarised the relevant principle in these terms (at [68]):

“In cases of simultaneous (or near simultaneous) transfer of two relevant parcels to different purchasers, each of whom takes knowing of the other transaction, it will be presumed that the common transferor intends not only that the transferee of the putative dominant tenement is to have rights in respect of the putative servient tenement but also that the transferee of the latter is to take subject to the corresponding burden; while corresponding and parallel intentions will be imputed to the respective transferees. There is, in those circumstances, an inference as to the transferor’s intention both to burden and to benefit and as to the intentions of the respective transferees to take from the transferor accordingly.”

48 It will be noted from the first part of this statement of principle that it is based not upon the actual intention of either the common transferor or the respective transferees, but upon a presumed intention on the part of the common transferor and an imputed intention on the part of the respective transferees. In particular, according to the primary judge it is to be presumed merely as a consequence of there being simultaneous transfers of the two relevant parcels to different purchasers where each takes knowing of the other transaction, that the transferor’s “presumed” intention is to burden the putative servient tenement (as well as to benefit the putative dominant tenement) and that “corresponding and parallel intentions” are to be ”imputed” to the transferee of each tenement. In other words, even though there is no actual intention or understanding on the part of the transferee of the servient tenement that that transferee is to take the servient tenement burdened by an easement in favour of the transferee of the dominant tenement, such an intention on the part of that transferee is to be imputed. In my opinion, this is a critical factor when considering the effect of the indefeasibility provisions of the RP Act on the right and obligations of the transferees as registered proprietors of the respective putative tenements.

49 However, in the second part of his Honour’s statement of principle he switches from a presumed intention on the part of the common transferor and an imputed intention on the part of the transferees to an “inference” as to the transferor’s intention to burden the putative servient tenement and to benefit the putative dominant tenement, and as to the intentions of the respective transferees when taking their transfers from the transferor.

50 This switch or slide in terminology is significant. There is a real difference, in my opinion, between a person’s intention being inferred by a court and one which is presumed or imputed. An inferred intention of a person is one which is drawn from the facts and found to be that person’s actual intention. A presumed or imputed intention of a person is one which is attributed to that person by operation of law. There is a clear difference between a person’s actual intention and an intention which is presumed as a matter of law. I shall return to the significance of this difference to the present issue later in these reasons.

51 In my opinion, it is the exception to the second rule in Wheeldon v Burrows that is of particular relevance in the present case. It involves an implied (rather than an express) reservation by the common transferor of an easement over the putative servient tenement which, because of the contemporaneous transfers of that tenement and the putative dominant tenement, is in the circumstances said to have been intended by the transferor (grantor) and accepted by the transferee to burden the former tenement. However, an intention which is presumed or imputed by operation of law to the transferor and transferee of the putative servient tenement so as to give rise to an implied reservation of an easement over that tenement is one thing. An actual intention on the part of the transferor and the transferee of that tenement which is inferred from the proven facts to reserve over or burden that tenement with such an easement is another. As will be seen, the question is whether a Wheeldon v Burrows easement as extended by Aldridge v Wright is one based on a presumed or imputed common intention of the parties to the transactions or on an actual common intention of those parties inferred from the facts as found.

52 The primary judge took the issue a little further when, in [69], he stated that although the “contemporaneous conveyance” principle does not depend upon strict simultaneity, it nevertheless applied where there was, as a matter of reality

“a composite dealing with two parcels involving transfers to two transferees who take at or about the same time, with each taking in the knowledge that the other is taking and of the relevant physical features of the land. Those elements exist here.”

53 The primary judge then concluded this aspect of his judgment in the following terms:

“70. The circumstances of this case therefore warrant a finding of not only an intention on the part of Mrs Chiplin that the [McGraths] should take Lot 12 from her subject to the quasi-easement represented by the vehicular track providing access over Lot 12 to Lot 6 and that the [Campbells] should take Lot 6 with the benefit of that quasi-easement, but also corresponding intentions of the [McGraths] and the [Campbells] as the transferees of the respective lots from Mrs Chiplin under the transfers dated 9 September 1980.
71. The Wheeldon v Burrows principles as to implied easements, as they apply in cases of contemporaneous transfer of parts of a single tenement, therefore brought about, in equity, the result that Lot 6 had the benefit of, and Lot 12 was burdened by, the easement for which the [Campbells] contend in these proceedings.”

54 It is to be noted that in [70] the circumstances of the case (being, relevantly, that each of the McGraths and Campbells took their transfers in the knowledge that the others were also taking a transfer from Mrs Chiplin and that each was aware of the existence of the driveway over Lot 12 leading to Lot 6) resulted in his Honour expressing himself in terms of an intention on the part of Mrs Chiplin that the McGraths should take Lot 12 burdened by a quasi easement over the driveway and a corresponding intention on the part of the McGraths that they were taking Lot 12 so burdened.

55 However, given [68] of his Honour’s judgment (to which I have referred in [47] above) and my comments on those conclusions, I would not accept as correct a finding that there was to be inferred from the mere fact of knowledge of use of the driveway and contemporaneous transfers, an actual intention on the part of the McGraths to take a transfer of Lot 12 subject to an easement over that lot in favour of Lot 6.

56 The primary judge then turned to the impact of the RP Act upon an extended Wheeldon v Burrows implied easement. Having noted (at [72]) that the rule had been recognised as applying to Torrens title land in New South Wales so far as the creation of unregistered equitable interests was concerned, his Honour noted that the courts would

“enforce an in personam right to an implied easement by ordering actions of the parties necessary to bring about alteration of the register.”

57 His Honour then referred to Tarrant v Zandstra (1973) 1 BPR 9381 at 9384; Australian Hi-Fi Publications v Gehl at 632-624 and Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738 at 743.

58 Citing Frazer v Walker [1967] 1 AC 569 at 585 and Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 637-638, the primary judge observed (at [74]) that the

“principle of indefeasibility of title reflected in s.42 of the Real Property Act does not deny the right of a plaintiff to bring against a registered proprietor a claim in personam for such relief that a court acting in personam may grant”

59 His Honour then concluded (at [75]) in these terms:

“Because of the simultaneous transfers by Mrs Chiplin, the [Campbells] are not, as against the [McGraths] ‘subsequent’ owners of the servient Lot 12. As between the [McGraths] and the [Campbells], the [Campbells] effectively stand in the position of the grantor Mrs Chiplin. Hence this case fits within the in personam exception to statutory indefeasibility, and the Real Property Act does not prevent enforcement of the implied right of way.”

60 As will be seen, the difficulty with this aspect of his Honour’s decision is identifying the basis upon which the Campbells were able to allege an equity or an in personam right against the McGraths as the registered proprietors of Lot 12.

61 Finally, it was submitted that the effect of this Court’s decision in Williams v State Transit Authority (2004) 60 NSWLR 286 did not permit the enforcement of an implied Wheeldon v Burrows easement over Torrens title land as against the registered proprietor of the putative servient tenement who is not responsible for the creation of that easement. However, at [76] his Honour dismissed that argument on the basis that Williams concerned an alleged easement by prescription, it being held that the doctrine of lost modern grant was inadequate to support a prescriptive easement over Torrens title land. The Court of Appeal in that case, according to his Honour, had no occasion to consider the in personam exception to statutory indefeasibility, and as a consequence the decision in Williams was distinguishable from the present case.

62 Accordingly, on 29 June 2005 the primary judge formally declared that the Campbells were entitled to a right of way over Lot 12 comprising a strip 12 feet in width measured from the western boundary of Lot 12 and extending from the northern boundary thereof to the Brighton Avenue frontage of Lot 12. His Honour also ordered that the McGraths execute an instrument in registrable form for the purposes of the RP Act granting to the Campbells a right of carriageway appurtenant to Lot 6 effecting that strip of land within Lot 12 that had been declared to be a right of way. It is against those orders that the McGraths appeal to this Court.

The contentions on the appeal and their resolution

63 The McGraths essentially advanced two propositions on the appeal. The first was that the RP Act precluded the grant of any relief in the circumstances of the case. The second, which seemed to be allied to the first, was that, unless a combined Wheeldon v Burrows and Aldridge v Wright easement created a personal equity enforceable against the McGraths, the Campbells were not entitled to the relief that the primary judge granted.

The jurisprudential basis of a Wheeldon v Burrows easement as extended by Aldridge v Wright

64 I have already drawn attention to the finding of his Honour that, in the circumstances, two inferences should be drawn: that it was Mrs Chiplin’s intention to burden Lot 12 with a right of way over the driveway for the benefit of Lot 6, and that it was also the McGraths’ intention to accept the transfer of Lot 12 subject to that burden. The difficulty with inferring these intentions, as distinct from presuming or imputing any such intention on the part of Mrs Chiplin on the one hand and any corresponding intention on the part of the McGraths on the other, is referred to in [55] above. It is also difficult to reconcile such inferences with the primary judge’s finding (to which I have referred in [28] above) that the McGraths were never informed, and nor was it ever explained to them, that there was an implied right of way over Lot 12 in favour Lot 6 to which their purchase of Lot 12 was intended to be subject.

65 In the foregoing context, there is authority for the proposition that a Wheeldon v Burrows easement or, at the very least, the Aldridge v Wright extension of it, is based upon the common intention of the parties. But is that intention to be inferred as the actual common intention of the parties or as their presumed or imputed intention? In Aldridge v Wright, Scrutton LJ (at 125) referred to the following passage from Lord Parker’s speech in Pwllbach Colliery Co v Woodman [1915] AC 634 at 646-647, where his Lordship said:

“The second class of cases in which easements may impliedly be created depends not upon the terms of the grant itself, but upon the circumstances under which the grant was made. The law will readily imply the grant of a 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. … 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.”

66 After referring to the findings of fact of the trial judge, Scrutton LJ concluded in these terms (at 127):

“I think the grantee of No. 30, when his grantor claims to have impliedly reserved such a right from his grant, although it is not mentioned in his grant, is entitled to require the clearest evidence of an ‘intention of the parties’ that there should be reserved for the benefit of No. 28 an easement or quasi - easement to be used and enjoyed as of right. In my opinion the defendant has failed to show such a common intention or implied reservation in this case”.

67 In Sovmots Investments Ltd v Secretary of State for the Environment [1979] AC 144, the House of Lords held that the first rule in Wheeldon v Burrows related to voluntary conveyances and to contracts for the sale of land founded on the principle that a grantor could not derogate from his own grant and, therefore, had no application to a compulsory purchase. In the course of his speech, Lord Edmund-Davies noted (at 175) that:

“The line of cases to which Wheeldon v . Burrows belongs are all illustrations of rights resulting from the rule against derogation from grant, which Younger L.J. once described as ‘a principle which merely embodies in a legal maxim a rule of common honesty’”.

68 After quoting the classic passage from the judgment of Thesiger LJ, his Lordship observed that the basis of the proposition so stated was, as Lord Parker stressed in Pwllbach Colliery Co at 646, that:

“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”.

However, there could be no common intention between an acquiring authority and the party whose property is compulsorily taken. Accordingly, the very basis of implied grant of easements was absent in Sovmots .

69 It is difficult to determine from some of the foregoing passages whether their Lordships were referring to an actual or only a presumed common intention. The key, in my opinion, is that the relevant principle seems to be based on an implied term in the grant from which the grantor is not permitted to derogate.

70 That the rule in Wheeldon v Burrows is based on the presumed common intention of the parties was thus emphasised by Handley JA in Wilcox v Richardson (1997) 43 NSWLR 4 at 14 where his Honour observed:

“The rule in Wheeldon v Burrows illustrates the relevance of surrounding circumstances to the implication of terms and reflects the working out of the general principle ‘that a grantor shall not derogate from this grant’ (at 49). As Lord Wilberforce said in Sovmots Ltd v Environment Secretary [1979] AC 144 at 168: ‘The rule is a rule of intention, based on the proposition that a man may not derogate from his grant’.
Ad hoc implied terms, as explained in Codelfa (at 353), give effect to the presumed intention of the parties, but the leading cases referred to in Codelfa , and Codelfa itself, concerned contracts where the principle of non-derogation was not relevant. Horsfall v Braye (1908) 7 CLR 629 at 668, 645-648, cited in Codelfa , involved a grant of land, and the two lines of authority were there brought together.
… the rule in Wheeldon v Burrows is not a special rule of the law of conveyancing, but is only an illustration, in particular circumstances, of the operation of the ordinary rules governing implications in contracts: see Nelson v Walker (1910) 10 CLR 560 at 586-587; Sovmots Ltd v Environment Secretary … [1979] AC 144 at 175.”

71 In the passage from Nelson v Walker referred to by Handley JA in Wilcox (at 14), Isaacs J observed (at 586):

“To imply a grant the same degree of certainty must exist as would justify the implication of a term in a contract.”

His Honour then cited the opinion of Lord Atkinson, speaking for the Judicial Committee in Douglas v Baynes (1908) AC 477, where his Lordship said (at 482):

“The principle on which terms are to be implied in a contract is stated by Kay L.J. in Hamlyn v . Wood [[1891] 2 QB 488 at 494] in the following words: ‘The Court ought not to apply a term in a contract unless there arises from the language of the contract itself, in the circumstances under which it is entered into, such an inference that the parties must have intended the stipulation in question that the Court is necessarily driven to the conclusion that it must be implied.’ “

72 Isaacs J then continued in these terms:

“As to what amounts to necessary implication, we have the authority of Lord Eldon in Wilkinson v . Adam [1 V&B 422], and James L.J. in Crook v. Hill [LR 6 Ch 311 at 315] for saying it means ‘not natural necessity, but so strong a probability of intention that a contrary intention cannot be supposed,’ or as Lord Chelmsford phrased it in the House of Lords: … not ‘necessarily susceptible of only one interpretation, but that it is sufficient if it is indicated in a way that excludes the probability of an opposite intention’.”

73 In Canon Kabushiki Kaisha v Green Cartridge Co (Hong Kong) Ltd [1997] AC 728 at 736-737, Lord Hoffman, delivering the opinion of the Judicial Committee, referred to the speech of Lord Templeman in British Leyland Motor Corporation Ltd v Armstrong Patents Co Ltd [1986] AC 577 and observed that his Lordship

“found an analogy in the principle that a grantor may not derogate from his grant. … The principle of non-derogation is however based upon the presumed intention of the parties. The rights derived from the principle must …have a consensual origin. It is the conveyancing equivalent of an implied term derived, in a broad sense, from the construction of the transaction into which the parties have entered.” (Emphasis added.)

74 This difference between a presumed intention and an inferred actual intention was explained with particular clarity by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 346 when dealing with the difference between the implication of a term in a contract on the one hand and the rectification of a contract on the other. His Honour said:

“The implication of a term is to be compared, and at the same time contrasted, with rectification of the contract. In each case the problem is caused by a deficiency in the expression of the consensual agreement. A term which should have been included has been omitted. The difference is that with rectification the term which has been omitted and should have been included was actually agreed upon; with implication the term is one which it is presumed that the parties would have agreed upon had they turned their minds to it – it is not a term that they have actually agreed upon. Thus, in the case of the implied term the deficiency in the expression of the consensual agreement is caused by the failure of the parties to direct their minds to a particular eventuality and to make explicit provision for it. Rectification ensures that the contract gives effect to the parties’ actual intention; the implication of a term is designed to give effect to the parties’ presumed intention.”

75 The point I therefore seek to make is that the rule in Wheeldon v Burrows by which a grantor is bound, when he retains the putative servient tenement, to recognise an implied easement over that retained land in favour of the grantee of the land benefited, is based upon the presumed intention of the grantor to transfer to the grantee “all those continuous and apparent easements” which the grantor has himself created when the putative dominant and servient tenements were in the one ownership. The grantor is thus not permitted to derogate from his own grant and, accordingly, the provision of the easement is an implied term of the grant.

76 But in a case such as the present, to which Aldridge v Wright is said to apply, the purchaser of the putative servient tenement is a grantee and not a grantor. As a consequence, the principle of a grantor not being permitted to derogate from his grant has no direct application. Nevertheless, it seems to me that for that purchaser to take the servient tenement burdened by the implied easement which is the subject of the grant by the common grantor to the purchaser of the putative dominant tenement, it is still necessary for there to be imputed to the former purchaser an intention to take title subject to the burden of that easement.

77 Or, to consider the matter in the context of implied terms, the party asserting that the purchaser of the putative servient tenement from the common vendor takes title subject to a Wheeldon v Burrows easement must establish that, in accordance with the ordinary rules governing the implication of terms in a contract as established by cases such as Codelfa, there should be implied into the contract of sale from the common vendor to the purchaser of the putative servient tenement a term that the land being sold is subject to an implied easement in favour of the putative dominant tenement. The circumstances must be such that the probability that the implication of such a term was intended must be so strong that a contrary intention cannot be supposed.

78 In my opinion, there is no evidence from which such an intention could be imputed to the McGraths in the present case. There is certainly no evidence from which any such actual intention could be inferred. The McGraths’ knowledge was no greater than that, over the years, Mr McGrath had from time to time, as a consequence of his general knowledge of the locality, observed the driveway being used over Lot 12 to gain access to the commercial building on Lot 6 while Mrs Chiplin owned Lots 6 and 12.

79 One might accept, for present purposes, that had Lots 6 and 12 been under old system title, the authority of Aldridge v Wright may have carried the day in favour of the Campbells. According to Professor Butt in Land Law (2006, 5th ed) at 446, such an easement would be a legal and not merely an equitable interest. Professor Butt refers to the statement of Priestley JA in Dobbie v Davidson (1991) 23 NSWLR 625 at 646 to the effect that easements such as those arising under the doctrine of Wheeldon v Burrows are equitable, and suggests that this approach may be explained upon the basis that the easement in that case arose over Torrens title land and was, at the time of the litigation, unregistered. As an unregistered interest it could only be an “equitable” and not a “legal” interest. The finding by the primary judge in [71] that the Wheeldon v Burrows implied easement in the present case brought about “in equity, the result that lot 6 had the benefit of, and lot 12 was burdened by” may be explained in a similar way.

80 Although the implication of a Wheeldon v Burrows easement is based on the principle that the grantor may not derogate from his grant, it has nevertheless been accepted that, in determining whether Thesiger LJ’s first rule applies, one is required to look carefully at the circumstances in order to ascertain, for instance, whether the relevant easement was “used by the owners of the entirety for the benefit of the part granted”. I have already referred to the statement of Isaacs J in Nelson v Walker at 586, which supports the proposition that in order to imply in the relevant grant that the grantee was to have the benefit of the easement used by the grantor over the part granted, the same degree of certainty must exist as would justify the implication of a term in a contract.

81 The McGraths submitted that, consistent with the foregoing observations, a finding that a Wheeldon v Burrows easement existed in the present case was dependent upon whether, in the circumstances, it was possible to imply into the contracts for sale that the Campbells’ Lot 6 would have the benefit of a right of way over the driveway upon Lot 12 and that Lot 12 would burdened accordingly. It was submitted that the McGraths’ knowledge that the registered 1926 ROW already existed over Lot 12 in favour of Lot 20 was relevant to the presumption of a common intention to that effect. The inference to be drawn from that knowledge, so it was submitted, was that the McGraths actually intended to acquire Lot 12 subject only to the 1926 ROW, of which they were aware, and not subject to a right of way in favour of Lot 6 of which they were unaware.

82 Looking at all the circumstances, the question is whether the McGraths’ (or at least Mr McGrath’s) prior knowledge of the use of the driveway on Lot 12 to gain access to Lot 6 was of itself sufficient to imply a term in their contract with Mrs Chiplin that they were acquiring Lot 12 subject to a right of way over that driveway benefiting Lot 6. Although the Campbells submitted that such knowledge of itself might not be sufficient, the fact that the McGraths were aware of the simultaneous transfers by Mrs Chiplin of Lot 6 to the Campbells and Lot 12 to themselves, when added to their prior knowledge of the use of the driveway, gave rise to so strong a probability of a presumed intention on the part of the McGraths to acquire Lot 12 subject to a right of way benefiting Lot 6 “that a contrary intention cannot be supposed”.

Does a Wheeldon v Burrows easement as extended by Aldridge v Wright trump the indefeasibility provisions of the RP Act?

83 The answers to the questions posed in the previous paragraphs are relevant to the critical question of whether a Wheeldon v Burrows implied easement over Lot 12 for the benefit of Lot 6, which as a result of the simultaneous transfers of Lot 6 to the Campbells and Lot 12 to the McGraths, gave rise to an equity or right in personam enforceable against the McGraths as registered proprietors of Lot 12 on the basis that they were personally bound to recognise that equity and give effect to it as an exception to the indefeasibility provisions of the RP Act.

84 The governing provision of the RP Act establishing the indefeasibility of the estate of the registered proprietor of land under Torrens title is s42(1) which is, relevantly, in the following terms:

“Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in the land recorded in the folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in their folio, but absolutely free from all other estates and interests that are not so recorded except:
(a1) in the case of the omission … of an easement subsisting immediately before the land was brought under the provisions of this Act or validly created at or after that time under this or any other Act or a Commonwealth Act.”

85 It was common ground that the exception referred to in sub-paragraph (a1) above had no application to the present case. It was further common ground that if the McGraths were to take title to Lot 12 subject to the right of way claimed by the Campbells, it could only be upon the basis that the principle of indefeasibility encapsulated by s42(1), in the words of Mason CJ and Dawson J in Bahr v Nicolay (No 2) at 613 (omitting citations), did not preclude:

“a claim to an estate or interest in land against a registered proprietor arising out of the acts of the registered proprietor himself … Thus, an equity against a registered proprietor arising out of a transaction taking place after he became registered as proprietor may be in force against him … So also with an equity arising from conduct of the registered proprietor before registration … so long as the recognition and enforcement of that equity involves no conflict with ss 68 and 104 [of the Transfer of Land Act 1893 (WA), equivalent to ss42 and 43 of the RP Act]. Provided that this qualification is observed, the recognition and enforcement of such an equity is consistent with the principle of indefeasibility and the protection which it gives to those who deal with the registered proprietor on the faith of the register.
There is no fraud on the part of a registered proprietor in merely acquiring title with notice of an existing unregistered interest or in taking a transfer with knowledge that its registration will defeat such an interest”.

86 In the joint judgment of Wilson and Toohey JJ in the same case (at 637), their Honours referred to the fact that in accepting the general principle of indefeasibility of title, the Privy Council in Frazer v Walker (at 585) made it clear that

“this principle in no way denies the right of a plaintiff to bring against a registered proprietor a claim in personam , founded in law or in equity, for such relief as a court acting in personam may grant”.

87 Their Honours then referred to the following statement of the Privy Council in the same case with respect to claims in personam:

“The principle must always remain paramount that those actions which fall within the prohibition of ss 62 and 63 may not be maintained.”

The reference to ss62 and 63 is a reference to the Land Transfer Act 1952 (NZ), which roughly corresponds to s42 of the RP Act.

88 Their Honours then said (at 638, omitting citations)

“The point being made by the Privy Council is that the indefeasibility provisions of the Act may not be circumvented. But, equally, they do not protect a registered proprietor from the consequences of his own actions when those actions give rise to a personal equity in another. Such an equity may arise in conduct of the registered proprietor after registration. And we agree with Mahoney JA in Logue v Shoalhaven Shire Council that it may arise from conduct of the registered proprietor before registration.” (Emphasis added.)

89 In Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32, Kirby P (at 36), after referring to the statement in Frazer v Walker at 580 that a registered proprietor is “exposed to claims in personam”, referred to the statement of Street J in Mayer v Coe [1968] 2 NSWR 747 at 754 (approved in Breskvar v Wall (1971) 126 CLR 376) that a registered proprietor is

“subject to a personal obligation by which he may be bound in personam to deal with his registered title in some particular manner.”

90 As an equity may arise from events which occurred before registration, the Court is required to examine the pre-registration positions of the parties in equity in order to determine whether such an equity exists.

91 Mahoney JA in Gosper also considered this issue and, after quoting extensively from the judgment of Barwick CJ in Breskvar v Wall, observed (at 41):

“What was said in Frazer v Walker and Breskvar v Wall in relation to equities enforceable against the registered proprietor was further considered by the High Court in Bahr v Nicolay [No 2]. In that case, all members of the court accepted that, where a registered proprietor was bound in equity by matters affecting him personally , those equities could be enforced against him notwithstanding that he was registered as a proprietor of the land and the enforcement of those equities would, subject to what I shall say, be inconsistent with the nature of the title which prima facie registration had conferred upon him.” (Emphasis added.)

92 After referring to the passages from the joint judgment of Mason CJ and Dawson J on the one hand and Wilson and Toohey JJ on the other in Bahr v Nicolay [No 2], which I have quoted above, Mahoney JA made a number of observations arising out of those passages including the following (at 43):

“But, thirdly, not every right which, under the general law would be enforceable against the holder of the interest which the registered proprietors hold is enforceable against it under the Act. The cases which are so enforceable have been described as ‘personal equities’ and it will be convenient to use that term, though possibly inaccurately, to describe the rights which can in this way be enforced against a registered proprietor.”

93 His Honour then continued (at 45) in these terms:

“There has, I think, been no comprehensive definition of ‘personal’ equity for this purpose: the occasion for it has not previously arisen. The matter is, I think, to be decided upon considerations of substance rather than form or terminology. ‘Equity’ and ‘equitable interest’ refer, in Maitland ’s sense, simply to the fact that the person involved may invoke the assistance of the equity court or equity principles to achieve the relevant relief. And every equity or equitable interest is, in a sense, personal … But this does not mean that all equities or all equitable interests are ‘personal’ in the sense here relevant. If, then, there is to be a distinction between different kinds of equities or equitable interests, it is relevant to look to the reasons of substance behind the distinction.
Two suggestions at least emerge from the argument and the cases to which reference has been made: first, that the interests must not be inconsistent with the terms of policy of the Act; and, secondly, the ‘personal’ equities arise only from the acts of the new owner: see Breskvar v Wall (at 384-385).”

94 As to the last-mentioned matter, Mahoney JA observed (at 46) as follows:

“If it was the view of Barwick CJ [in Breskvar v Wall ] that a ‘personal’ equity may arise only from the acts of the owner himself, that view has, in my respectful opinion, not received general acceptance. The judgment of their Lordships in Frazer v Walker was delivered by Lord Wilberforce. His Lordship did not limit the ‘acts of a personal nature’ which could be relied upon to personal acts of the registered proprietor himself. He referred merely to ‘a claim in personam , founded in law or in equity for such relief as the court acting in personam may grant’ (at 585). And, I think, that the judges in Breskvar v Wall and Bahr v Nicolay [No 2] did not limit the matter in that way.
Such a limitation would, in my opinion, be unsatisfactory but would result in the new owner retaining the registered estate in circumstances in which he should not. The fiduciary duty cases would, I think, provide an illustration of this. If the retention of the land by the new owner would constitute a breach of his fiduciary obligations, the registration would, I think, be set aside even if the new owner had not himself induced and procured the registration.”

95 In Gosper, Mahoney JA noted that the mere fact that relevant instrument was void for forgery did not of itself give rise to a personal equity. He thus said (at 47):

“It is proper to accept that, on the existing state of the authorities, the mere fact of forgery of the instrument does not establish a ‘personal’ equity. It is therefore necessary to determine whether there is anything in the facts, other than the fact of the forgery of the document, which gives rise to such an equity against the company.”

96 The company in question (Mercantile Mutual Insurance Ltd) was the mortgagee of the land of which Mrs Gosper was the registered proprietor. A forged variation of the mortgage was executed and registered. Because it was the mortgagee, Mercantile Mutual held the certificate of title, subject to the ordinary obligations affecting a mortgagee that has such possession or custody. It then produced the certificate of title to the Registrar General for the purpose of procuring the requisition of the forged variation of mortgage. His Honour found that the company had no authority to produce or otherwise use the certificate of title for the purpose of enabling the variation to be registered. It had no implied authority as mortgagee under the valid existing mortgage standing in its name, and Mrs Gosper gave no authority for that purpose. Whether or not its production of the certificate was negligent was beside the point: the fact was that Mercantile Mutual produced the certificate of title to facilitate the registration of the forged variation of mortgage without authority to do so. His Honour held that the company used the certificate of title in breach of its obligations to Mrs Gosper and that such use of the certificate was a necessary step in securing the registration of the forged variation.

97 Accordingly, Mahoney JA concluded (at 49) that the registration of the forged instrument that has been produced by such a breach was sufficient to create in the relevant sense a “personal equity” against the company in favour of Mrs Gosper. The obligations of a mortgagee, whether strictly fiduciary or not, were in his Honour’s opinion such that the mortgagee should not be allowed to retain a benefit (the forged variation) procured by an act which constituted a breach of such obligations. The forged variation of mortgage was therefore set aside.

98 The purpose of referring so extensively to what Mahoney JA said in Gosper is to illustrate the point that in order for a “personal equity” to be created in favour of the Campbells enforceable against the McGraths, it was necessary that some conduct on the part of the McGraths (or those for whom they were responsible) constituted a breach of an obligation owed to the party seeking the benefit of the equity or was otherwise unconscionable.

99 Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722 also involved a forged instrument. Gleeson CJ, with whom Cripps JA agreed, cited (at 736-737) the following passage from the judgment of Hayne J in Vassos v State Bank of South Australia [1992] V Conv R ¶54- 443, where (at 65-180 to 65-181) his Honour said:

“For my part I consider it is clear that more than the bare fact of forgery (and thus an absence of assent) must be shown to found any in personam action of the kind spoken of in Frazer v Walker and subsequent cases … In the present case … it may well be that the bank did not act without neglect but there is in my view no material which would show that the bank acted unconscionably. There is no misrepresentation by it, no misuse of power, no improper attempt to rely upon its legal rights, no knowledge of wrongdoing by any other party. It obtained a mortgage, apparently regular on its face but which was in fact forged. Even if by making reasonable enquiries the bank could have discovered the fact of the forgery I do not consider that that fact alone renders its conduct unconscionable. I do not consider that the plaintiffs have any in personam right against the bank; all that they have shown in the mere fact of forgery of the instrument.”

100 In Story, Mahoney JA reiterated (at 739) the opinion he had expressed in Gosper that

”’personal equity’ arose because the mortgagee had without proper authority made the title deed available for registration of the mortgage and that wrong enabled registration of the forged mortgage and was essential to the registration of it. In the relevant sense, the wrong allowed the registration to be effected.”

His Honour then observed that conduct on the part of the registered proprietor that would constitute unconscientious behaviour would be sufficient to give rise to a “ personal equity ” in the relevant sense.

101 Finally, in Grgic v Australian & New Zealand Banking Group Ltd (1994) 33 NSWLR 202, Powell JA, with whom Meagher and Handley JJA agreed, expressed (at 222-223) the following with respect to what constituted “a personal equity” sufficient to be enforceable against a registered proprietor. His Honour said:

“I am of the view that the expressions ‘personal equity’ and ‘right in personam ’ encompass only known legal causes of action or equitable causes of action, albeit that the relevant conduct which may be relied upon to establish a ‘personal equity’ or ‘right in personam ’ extends to include conduct not only of the registered proprietor but also of those whose conduct he is responsible, which conduct might antedate or postdate the registration of the dealing which it has sought to removed from the Register.”

102 Under the former s42(1)(b) of the RP Act, it was apparent from the decision of this Court in Australian Hi-Fi Publications (at 627) that an easement by implication has limited enforceability under the rights in personam exception to indefeasibility of title. Such an easement was enforceable only as between the proprietors of the dominant and servient lands which were involved in the transaction which gave rise to the easement. Further, so long as the registered proprietor of the servient land at the time the easement arose remained registered as proprietor, the registered proprietor of the dominant land could seek a court order directing the servient proprietor to take all steps necessary (including executing the appropriate documents and lodging them for registration) to secure the benefit of the easement by having it registered. However, unless the easement was registered in this way, once the servient land was transferred to a new registered proprietor taking without fraud, the easement could no longer be enforced.

103 According to Woodman and Nettle, The Torrens System in New South Wales at 10245, the position under s42(1)(a1) is the same. Sections 46 and 47 of the RP Act describe formalities for creating valid easements, the assumption behind these formalities being that easements will be reduced to writing and registered, but that until that happens an easement cannot be said to be “validly created”. Accordingly, by limiting omitted easements to those that are “validly created” under the RP Act or some other Act, s42(1)(a1) precludes implied easements from being enforced against a registered transferee of that land or interest. However, according to the learned authors, it does not preclude the dominant owner from enforcing the implied easement against the servient land or interest where the ownership of the servient land or interest has not changed since the circumstances that gave rise to the implication of the easement.

104 In the 5th edition of Land Law, Professor Butt expresses a similar view (at 779). Although s42(1)(a1) precludes implied easements from being enforced against a later registered proprietor of the servient land, it should not negate the dominant owner’s right to enforce the implied easement against the servient land if its ownership has not changed since the circumstances that gave rise to its implication. The authority for this proposition cited in footnote 515 is the decision of the primary judge in the present case.

105 Yet the legal basis as to why a Wheeldon v Burrows easement binds in equity the registered proprietor of the retained land notwithstanding the indefeasibility of provisions of the RP Act has not always been made clear. It was not in issue in Australian Hi-Fi Publications for, as Mahoney JA noted at the commencement of his judgment (at 620), only one question was argued on the appeal in that case. That was, whether a Wheeldon v Burrows easement not noted on the relevant certificate of title can be enforced against a person who, after the creation of that easement by his predecessor in title, became the registered proprietor of the servient tenement under the RP Act.

106 I have already referred in [75] above to what, to me, is the true jurisprudential basis of a Wheeldon v Burrows easement at common law. Subject to the ultimate effect of this Court’s recent decision in Williams (see [61] above), it would seem that a common owner (registered proprietor) is bound by a personal equity to recognise that he or she has burdened the land retained by him or her (the servient tenement) by transferring to another that part of the land having the benefit of an implied easement which he or she as created (the dominant tenement) while both tenements were in common ownership and which it was his or her presumed intention to transfer with that benefit attached. Having impliedly granted to the transferee of the dominant tenement the benefit of that easement, it would be unconscionable for him or her to derogate from that grant.

107 The Campbells thus submit that the implied Wheeldon v Burrows easement in favour of Lot 6 arose upon the transfer by Mrs Chiplin of that lot to the Campbells. Had Mrs Chiplin retained ownership of Lot 12, the Campbells would have been entitled to enforce that interest against her. Furthermore, it was recognised as a consequence of the decision in Australian Hi-Fi Publication that if Mrs Chiplin had retained ownership of Lot 12 and subsequently sold it to the McGraths, they would have taken the land free of the implied right of way upon the registration of the transfer. But, it was submitted, the simultaneous transfers of Lot 6 to the Campbells and Lot 12 to the McGraths gave rise both to an implied right of way in favour of Lot 6 and an implied reservation of the right of way out of Lot 12.

108 As I have already acknowledged, the foregoing proposition may well be the case with respect to land under old system title. But in my opinion, the simultaneous transfers alone could not give rise to a “personal equity” binding upon the McGraths as the registered proprietors of Lot 12 in circumstances where they have not in any way contributed to the creation of the implied easement or conducted themselves in any way which could be regarded as unconscionable. In particular, their reliance upon their strict legal rights – that is, the indefeasibility of their title to Lot 12 effected by s42(1) of the RP Act – was in no way unconscionable.

109 On the contrary, the position in the present case is, if anything, analogous to the forgery cases where the registered proprietor of the relevant interest in respect of which equitable relief is sought, has done nothing to contribute either to the forgery or to the registration of the forged instrument. There must, in my opinion, have been some conduct on the part of the McGraths or those for whom they were responsible which would make it unconscionable for them to retain the benefit of the servient land free from the burden of the claimed right of way. In my view, there was no such conduct. Thus the mere simultaneous transfer of the two lots by Mrs Chiplin to the Campbells and McGraths respectively, and to the knowledge of each, was, in my opinion, insufficient to give rise to an equity binding upon the McGraths. This is so notwithstanding that Mr McGrath was generally aware that the driveway over Lot 12 had been used in the past to gain access to the rear of Lot 6, due to his familiarity with the locality.

110 I would add this. The Aldridge v Wright extension to a Wheeldon v Burrows easement is, as I have already noted, dependant upon the presumed intention of all three parties that the easement is to benefit the dominant tenement and to burden the servient tenement. This presumed intention is the basis for an implied term in the grant by the common vendor to the transferee/purchaser of each tenement. It arises by operation of law.

111 But mere knowledge on the part of the transferee of the putative servient tenement that both tenements are to be transferred by the common vendor simultaneously does not involve any relevant conduct on the part of that transferee. He or she has not created the easement and he or she is not a party to the transfer to the purchaser of the putative dominant tenement.

112 Although aware that such a transfer is to occur, the purchaser of the putative servient tenement is not only unaware of the terms of the contract between the common vendor and the purchaser of the putative dominant tenement but also has no control over those terms or, for that matter, when the transfer is to take place. There was no suggestion in the present case that the simultaneous transfers were due to any request or conduct on the part of the McGraths. As far as one can tell, it came about solely for the benefit and at the insistence of Mrs Chiplin. In these circumstances there was no conduct on the part of the McGraths to which any equity could attach to bind them personally.

113 One further aspect of the personal equity issue should be mentioned. The relief granted by the primary judge to the Campbells was analogous to rectification of the Register. The equitable basis of the remedy of rectification of a contract is that in its executed form the contract does not represent or embody the actual common intention of the parties: Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350; Codelfa at 346; see [74] above.

114 The requirement of an actual, as distinct from a presumed, common intention in the context of the equitable remedy of rectification, it seems to me, may be applied by analogy to the present case. In other words, no relevant equity arises to bind the McGraths unless it is established that it was the actual common intention of all three parties that Lot 6 should have the benefit of, and that Lot 12 should be subject to the burden of, a right of way over the driveway. In my view, even if that was the intention of Mrs Chiplin and the Campbells, it was not that of the McGraths.

115 Finally, I come to the recent decision of this Court in Williams v State Transit Authority of New South Wales. It is true, as the primary judge observed, that this case involved an easement by prescription. Mason P, with whom Sheller JA and myself agreed, noted (at 297 [111]) that text writers (including Professor Butt) had expressed the view that prescriptive easements based upon the doctrine of lost modern grant did not trump the registered proprietor’s indefeasible title by means of the statutory exception in s42(1)(a1) of the RP Act. At 300 [129] the President observed that it was

“to pile fiction upon fiction to extend the doctrine of lost modern grant into the Torrens system, because (assuming no relevant exception to s 42 or its equivalents) that system contemplates title at law as arising only upon registration.”

116 Special leave to appeal to the High Court from this Court’s decision in Williams was refused on 29 April 2005. In the 5th Edition of Land Law at 779, Professor Butt refers to Williams as requiring reconsideration of the in personam enforcement of (unregistered) implied easements. The learned author observed that this Court in Williams refused to recognise the in personam enforcement of prescriptive easements. He continued:

“Since prescriptive easements and implied easements share a common feature arising by operation of law and without any registrable dealing, refusal to recognise the in personam enforceability of prescriptive easements must logically cast doubt on the in personam enforceability of implied easements.”

117 In footnote 518 to the above passage, Professor Butt noted that the primary judge in the present case declined to apply this logic. However, the learned author observed that

“Given the relevant similarities between prescriptive and implied easements, it is difficult why it [the logic] should not apply.”

118 In my opinion, there is much force in Professor Butt’s observations about the effect of Williams upon implied easements of the Wheeldon v Burrows type. As he observes, and as I have endeavoured to demonstrate, such an implied easement arises out of the common intention of the relevant parties, which is presumed by operation of law. Prescriptive easements arise in a similar way. If prescriptive easements are trumped by the indefeasibility provisions of the RP Act, logic requires that those provisions should apply to implied easements in the same way.

119 However, it is unnecessary for me to express a concluded view on this issue. Turning to the Aldridge v Wright exception to the second rule articulated by Thesiger LJ in Wheeldon v Burrows, which presumes an implied reservation by the grantor over the servient tenement where there is a simultaneous transfer of both the putative dominant and servient tenements by the grantor to two separate ownerships, I do not consider that it is sufficient to give rise to a “personal equity” which bound the McGraths and which the Campbells were entitled to enforce against them. This is so notwithstanding the knowledge of the McGraths of the past use of the driveway over Lot 12 to gain access to the businesses conducted in the building upon Lot 6 and of their knowledge of the simultaneous transfer of Lot 6 to the Campbells.

120 Accordingly, for the aforementioned reasons, in my view the primary judge erred in his finding that the present case came within the in personam exception to statutory indefeasibility so that the RP Act did not prevent the enforcement by the Campbells against the McGraths of an implied right of way over the driveway on Lot 12.

Conclusion

121 It follows from the foregoing that, in my opinion, the following orders should be made:

a) Appeal allowed.

b) Set aside the declaration and orders made by Barrett J on 29 June 2005.

c) The proceedings be dismissed.

d) The respondents pay the appellants’ costs of the proceedings at first instance and of the appeal but to have with respect to the latter a certificate under the Suitor’s Fund Act 1951, if otherwise qualified.

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