Paragreen v Lim Group Holdings Pty Ltd - [2020] VSCA 84

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0163

MICHAEL PARAGREEN	First Applicant
and
JUSTINE PARAGREEN	Second Applicant
v
LIM GROUP HOLDINGS PTY LTD (ACN 074 598 646)	Respondent

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JUDGES:	TATE, KAYE and NIALL JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	25 March 2020
DATE OF JUDGMENT:	8 April 2020
MEDIUM NEUTRAL CITATION:	[2020] VSCA 84
JUDGMENT APPEALED FROM:	[2018] VCC 1677 (Judge Macnamara)

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REAL PROPERTY – Appeal – Applicants registered proprietors of land which includes part of a laneway – Respondent has unregistered restrictive covenant over laneway pursuant to terms of settlement entered into with previous registered proprietor of applicants’ land – Vendor’s statement in applicants’ contract of sale of land attached terms of settlement – Whether trial judge erred in finding applicants bound by terms of settlement – Whether trial judge erred in finding it would be fraud under ss 42 and 43 of Transfer of Land Act 1958 for applicants to disregard restrictive covenant – Construction of contract of sale – Terms of settlement not included in definition of ‘documents concerning title’ – Applicants did not agree to be bound by terms of settlement – No evidence that applicants gave undertaking to be bound by terms of settlement – Knowledge by applicants of terms of settlement insufficient – Leave granted – Appeal allowed – Bahr v Nicolay (No 2) (1988) 164 CLR 604, Body Corporate No 12870 v Aldal Pty Ltd (2010) 29 VR 81 considered; Transfer of Land Act 1958 ss 42 and 43, Property Law Act 1958 s 79.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr S Palmer	Boris Pogoriller
For the Respondent	Mr J K Arthur	Ellinghaus Weill Lawyers and Consultants

TATE JA
KAYE JA
NIALL JA:

The applicants are the registered proprietors of the property known as Unit 3, 38 Walsh Street, West Melbourne. The respondent is the registered proprietor of the neighbouring property, 42–52 Walsh Street. The applicants’ property includes a strip of land (‘the laneway’) on its western side, which abuts the property of the respondent, and which is subject to a registered easement of carriageway in favour of the respondent’s land.

In proceedings in the County Court, the respondent claimed that the applicants had interfered with its rights to access and use the easement. In addition, the respondent also claimed that terms of settlement (‘Terms of Settlement’), that it had entered into with a previous registered proprietor of the 38 Walsh Street property, contained an unregistered restrictive covenant in the laneway, which precluded the applicants from parking their motor vehicle on it.

The judge, who heard the trial of the proceeding, rejected the claims made by the respondent based on the easement. His Honour held that the evidence did not establish any unreasonable interference by the applicants with the respondent’s rights to the easement. However, his Honour held that the Terms of Settlement contained such a restrictive covenant over the laneway, and that notwithstanding that it was unregistered, the applicants were bound by it…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] VSCA 84
Decision Date: 8 April 2020

CaseChat Overview and Summary

In the matter of Paragreen v Lim Group Holdings Pty Ltd, the applicants were the registered proprietors of a parcel of land that included a portion of a laneway. The respondents held an unregistered restrictive covenant over the laneway, stemming from a terms of settlement entered into with the previous proprietor of the applicants’ land. The applicants' contract of sale included a vendor's statement attaching the terms of settlement, but the terms themselves were not included in the definition of 'documents concerning title'. The applicants sought to disregard the restrictive covenant, arguing they were not bound by the terms of settlement and that enforcing the covenant would amount to fraud under sections 42 and 43 of the Transfer of Land Act 1958. The primary legal issues before the court were whether the trial judge was correct in finding the applicants bound by the terms of settlement and if enforcing the restrictive covenant would constitute fraud.

The court addressed the applicants' argument that they were not bound by the terms of settlement, noting that there was no agreement from the applicants to be bound by those terms, and no evidence suggesting they gave any undertaking to do so. The court emphasised that mere knowledge of the terms of settlement was insufficient to impose a binding obligation on the applicants. The court also considered the application of Bahr v Nicolay (No 2) and Body Corporate No 12870 v Aldal Pty Ltd in determining the extent of the applicants' obligations under the terms of settlement. The court concluded that the trial judge erred in finding the applicants bound by the terms of settlement and that enforcing the restrictive covenant would amount to fraud.

As a result of the court's reasoning, the appeal was allowed, and the respondents' claim was dismissed. The court granted leave to appeal, setting aside the trial judge's decision and ruling in favour of the applicants. The final orders reflected the court's determination that the applicants were not bound by the terms of settlement, and the restrictive covenant could not be enforced against them.

Orders