Wegner v Pereira
[2025] VSC 387
•1 July 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2024 03026
BETWEEN:
| GRAHAM WEGNER & ANOR (according to the attached Schedule) | Plaintiffs |
| v | |
| JOSEPH JUSTINO PEREIRA & ANOR (according to the attached Schedule) | Defendants |
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JUDGE: | Irving AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 13 March 2025 |
DATE OF JUDGMENT: | 1 July 2025 |
CASE MAY BE CITED AS: | Wegner v Pereira |
MEDIUM NEUTRAL CITATION: | [2025] VSC 387 |
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PROPERTY LAW — Real Property — Preliminary trial of questions under r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) — Whether plaintiffs’ land has benefit of restrictive covenant burdening defendants’ land — Whether subject land is part of a building scheme — Whether defendants were notified of building scheme in the absence of notice of scheme on certificate of title or any other registered instrument noted on certificate of title — Notice of building scheme, nature of restrictive covenant and identity of lands affected by building scheme must be present on certificate of title or instrument noted on certificate of title — Not permissible to rely on evidence extraneous to certificate of title and instruments referred in it to show knowledge of building scheme under Torrens principle.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr G Nash KC of counsel | Access Law |
| For the Defendants | Mr W Rimmer of counsel | KO Construction Law |
TABLE OF CONTENTS
Introduction................................................................................................................................... 1
The parties’ materials................................................................................................................... 2
Relevant history of the land......................................................................................................... 2
Question 1: Does the restrictive covenant in registered instrument of transfer No. AN882546V benefit the Wegner Land?.................................................................................................. 5
Analysis................................................................................................................... 5
Question 2: Does the Covenant benefit the land described in folio of the Register volume 12140 folio 102, of which the second plaintiff and his wife (now deceased) are the registered proprietors?.......................................................................................................................... 6
Construction of the intended land to be annexed with the benefit of the Covenant excludes lot A........................................................................................................................... 7
The defendants’ submissions................................................................................ 7
The plaintiffs’ submissions................................................................................. 11
The defendants’ submissions in reply............................................................... 15
Analysis................................................................................................................. 19
The ownership of further subdivided lots being parts of cancelled lot A was not ascertainable on the date of the transfer..................................................................................... 23
The defendants’ submissions.............................................................................. 23
The plaintiffs’ submissions................................................................................. 23
Analysis................................................................................................................. 26
The legislative scheme supports the defendants’ submissions that the cancelled lot A was not land comprised in PS701111J as at 30 May 2017........................................ 26
The defendants’ submissions.............................................................................. 26
The plaintiffs’ submissions................................................................................. 30
Analysis................................................................................................................. 30
Question 3: Assuming for the purpose only of this preliminary question that a building scheme was created over plan of subdivision PS701111J at the time each of the plaintiffs’ and the defendants’ predecessors in title took transfers of their respective lots in that plan from the common vendor: Are the plaintiffs now entitled in equity by reason of that building scheme to enforce the covenant entered into by the defendants’ predecessors in title with the common vendor, against the defendants as current registered proprietors of the land described in folio of the Register volume 11564 folio 395?.......................................... 30
The defendants’ submissions.............................................................................. 31
The plaintiffs’ submissions................................................................................. 32
The defendants’ submissions in reply............................................................... 34
Analysis................................................................................................................. 35
Question 4: Is the land described in folio of the Register volume 11564 folio 395 subject to the covenant?............................................................................................................................ 36
Question 5: Is the covenant enforceable?................................................................................. 36
The defendants’ submissions.............................................................................. 36
The plaintiffs’ submissions................................................................................. 37
Analysis................................................................................................................. 37
The plaintiffs’ standing to otherwise seek declarations........................................................ 38
Conclusion.................................................................................................................................... 39
HIS HONOUR:
Introduction
This proceeding concerns the identification of land carrying the benefit of a covenant burdening the defendants’ land and, in the event there is no identifiable benefitting land, the enforceability of that covenant.
Graham Wegner, the first plaintiff, is the registered proprietor of the land known as 9 Currawong Close, Cowes in the State of Victoria (Wegner Land). Graham Frederick Baker, the second plaintiff, is a joint registered proprietor of the land known as 6 Cuttlefish Place, Cowes (Baker Land). Joseph Justino Periera and Rowena Judeline Periera, together the defendants, are the registered proprietors as tenants in common of 11 Currawong Close, Cowes (Pereira Land). By this proceeding the plaintiffs seek to enforce the restrictive covenant AN882546V (Covenant) which is registered on the title to the Pereira Land. The Pereiras, by counterclaim, seek a declaration that the Pereira Land is not subject to the Covenant and that the Covenant is unenforceable against them.
On 4 December 2024, on the application of the defendants and with the consent of the parties, the Court made orders pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), for a preliminary trial of a number of questions. For the reasons given below, I have decided those questions should be answered as follows:
Question 1: Does the restrictive covenant in registered instrument of transfer no. AN882546V (covenant) benefit the land described in folio of the Register volume 11564 folio 400, of which the first plaintiff and his wife (now deceased) are registered as joint proprietors?
Answer: No
Question 2: Does the covenant benefit the land described in folio of the Register volume 12140 folio 102, of which the second plaintiff and his wife are registered as joint proprietors?
Answer: No
Question 3: Assuming for the purpose only of this preliminary question that a building scheme was created over plan of subdivision no. PS701111J at the time each of the plaintiffs’ and the defendants’ predecessors in title took transfers of their respective lots in that plan from the common vendor: Are the plaintiffs now entitled in equity by reason of that building scheme to enforce the covenant entered into by the defendants’ predecessors in title with the same common vendor, against the defendants as current registered proprietors of the land described in folio of the Register volume 11564 folio 395?
Answer: No
Question 4: Is the land described in folio of the Register volume 11564 folio 395 subject to the covenant?
Answer: No
Question 5: Is the covenant enforceable?
Answer: No
The parties’ materials
The defendants relied on the following at the trial of the preliminary questions:
(a) affidavit of Kelvin Le Marquand Oldridge sworn 17 October 2024;
(b) defendants’ submissions on preliminary questions filed 13 December 2024; and
(c) defendants’ submissions in reply on preliminary questions filed 13 February 2025.
The plaintiffs relied on the following on the trial of the preliminary questions:
(a) affidavit of Gabriel Kuek affirmed 15 January 2025;
(b) affidavit of Gabriel Kuek affirmed 16 January 2025; and
(c) plaintiffs’ submissions opposing the defendants’ application filed 31 January 2025.
Following the hearing, on 19 March 2025, the parties contacted the Court with further brief submissions and an authority they, by mutual consent, requested the Court to consider.
I have considered this material in reaching my decision.
Relevant history of the land
The first plaintiff is the successor in title to the Wegner Land which is lot 557 on Plan of Subdivision 701111J (PS701111J). PS701111J was registered in the name of Southern Sustainability Developments (Cowes) Pty Ltd (SSD) on 15 April 2015. It was common ground that PS701111J made up part of a progressive residential development known as the Seagrove Estate. PS701111J comprised thirteen residential lots, namely, lots 517, 518, 519, 553, 554, 555, 556, 557, 558, 559, 560, 561 and 562, R1, Reserve No 1 and Lot A.
On 8 May 2015, SSD transferred Lot 557 on PS701111J (the Wegner Land) to the predecessor in title of the first plaintiff.
On 13 September 2016, Lot A on PS701111J was cancelled pursuant to Plan of Subdivision 728721D, but remained in SSD’s ownership.
On 3 February 2017 SSD, as vendor, entered into a contract of sale with Michael Carpetto and Christian Maglalang, as purchasers, in respect of the Pereira Land. The contract included the Covenant as ANNEXURE A. The section 32 Vendor’s Statement accompanying the contract included:
(a) a Register Search Statement of Lot 558 of PS701111J, which included a diagram of PS701111J showing Lot A as included in PS701111J;
(b) a search of PS728721D (Lot A of PS701111J);
(c) a search of PS716652N (which was part of Lot A on PS701111J);
(d) Planning Permit 110449; and
(e) Amended Planning Permit 110449a, with a diagram showing residential lots in the Seagrove Estate including the Wegner Land, the Baker Land and the Pereira Land.
On 30 May 2017 the Transfer of Land for the Periera Land from SSD to Caporetto and Maglalang was registered subject to the Covenant. The covenantors made the covenant with, ‘the Transferor its successors and assigns the registered proprietor or proprietors for the time being of all the land comprised in the Plan of Subdivision or any part or parts thereof’. The Covenant noted that ‘Plan of Subdivision’ means ‘plan of subdivision PS701111J’.
On 14 February 2018 the first plaintiff and his wife (now deceased) became the registered proprietors of the Wegner Land.
On 11 January 2019, Lot A on PS728721D was cancelled pursuant to Plan of Subdivision 746652N, but remained in SSD’s ownership.
On 6 August 2019, while Lot A of PS728721D remained in SSD’s ownership, it was further subdivided pursuant to Plan of Subdivision PS808680V, creating twenty nine residential lots and a residual Lot A.
On 21 August 2019, SSD transferred Lot 590 on PS808680V (the Baker Land) to the second plaintiff and his wife, who became the registered proprietors.
On 2 February 2021, Caporetto and Maglalang, as vendors, signed a contract of sale with the defendants, as purchasers, of the Pereira Land, subject to the Covenant. On 1 April 2021 the Transfer of Land for the sale of the Periera Land with the Covenant was lodged at the Titles Office and registered on 30 May 2021.
The defendants’ conveyancing file for the purchase of the Periera Land included the following documents:
(a) a register search of PS701111J which included a diagram showing Lot A as part of PS701111J;
(b) an agreement, AC896749X, under s 173 of the Planning and Environment Act 1987 (Vic) (PEA), which included a diagram of the Seagrove Estate Staging Plan which included the Wegner Land, the Baker Land and the Pereira Land;
(c) a second agreement, AE380248G, under s 173 of the PEA, registered on 29 May 2006 in respect of Certificate of Title Volume 10928 Folio 783, being the parent title to PS701111J;
(d) a third agreement, AF268136M, under s 173 of the PEA, registered on 13 August 2007 which included a diagram of the Seagrove Estate Staging Plan which included the Wegner Land, the Baker Land and the Pereira Land;
(e) a statement of adjustments including a register search of PS701111J containing a diagram showing Lot A as part of PS701111J.
Question 1: Does the restrictive covenant in registered instrument of transfer No. AN882546V benefit the Wegner Land?
In Re Hunt,[1] Lansdowne AsJ noted:
There are three ways by which a person who is not the original transferor/covenantee may obtain the benefit of a restrictive covenant. These are:
(a)By becoming the owner of land to which the benefit of the covenant has been annexed;
(b)By express assignment of the benefit of the covenant in respect of land which he or she owns; or
(c)By virtue of the land in question being part of a building scheme, which imposes reciprocal rights and obligations (i.e. benefit and burden) on all land in a defined area.
Question 1 is directed towards whether the first plaintiff has the benefit of the Covenant by virtue of becoming the owner of land to which the benefit of the covenant has been annexed.
Both parties rightly agreed that a covenantee cannot annex the benefit of a covenant to land which the covenantee does not own when the covenant was created, unless the covenant is given as part of a building scheme.[2]
Analysis
The first plaintiff is the successor in title to the Wegner Land. The Wegner Land was transferred out of PS701111J on 8 May 2015. The Covenant was entered into on 17 May 2017, at which time the transferor, SSD, no longer owned the Wegner Land.
Accordingly, the first plaintiff does not have the benefit of the Covenant by its express annexure to the Wegner Land.
Question 2: Does the Covenant benefit the land described in folio of the Register volume 12140 folio 102, of which the second plaintiff and his wife (now deceased) are the registered proprietors?
An analysis of the history of what happened to the land that was originally lot A on PS701111J after its cancellation as a lot on PS701111J shows that:
(a) on 13 September 2016, the original lot A on PS701111J was further subdivided and cancelled on the registration of PS728721D, which created 27 residential lots and a new lot A;
(b) on 11 January 2019, lot A on PS728721D was further subdivided and cancelled on registration of PS716652N, which created a new lot A on PS716652N; and
(c) on 6 August 2019, lot A on PS746652N was further subdivided and cancelled on registration of PS808677J, which created a new lot A on PS808677J and six residential lots, including the Baker Land being lot 590 on PS808677J.
If a person traced the land that was the original lot A to that part of that land which is now the Baker land, they would discover that the Baker land was, at 31 May 2017 (the date the covenant was created) part of what then was cancelled original lot A; part of what then was a live folio of the Register for the new lot A on PS728721D; and still owned by the transferor, SSD.
The defendant made three arguments to contend that the transferor, SSD, did not succeed in annexing the benefit of the Covenant to any part of what was the original lot A:
(a) the construction of the intended land to be annexed with the benefit of the Covenant excludes lot A which was cancelled on the date of the Covenant;
(b) it was not possible to ascertain on the date of transfer the ownership of the further subdivided lots being parts of the cancelled lot A; and
(c) the legislative scheme supports the defendants’ submissions that the cancelled lot A was not land comprised in PS701111J as at 30 May 2017.
It is convenient to deal with each of these arguments in turn.
Construction of the intended land to be annexed with the benefit of the Covenant excludes lot A
The defendants’ submissions
The defendants submitted that the scope of the land the parties intended to have the benefit of the Covenant depends on the construction of the words, “the whole of the land comprised in the Plan of Subdivision”. The defendants identified the principles applicable to the construction of registered instruments under the Transfer of Land Act 1958 (Vic) (TLA) by reference to the Victorian Court of Appeal’s decision in Jeshing Property Management Pty Ltd v Yang[3] (Jeshing) and the cases referred to in that judgment, as well as the High Court of Australia cases of Westfield Management Ltd v Perpetual Trustee Co Ltd[4] (Westfield) and Deguisa v Lynn[5] (Deguisa).
In Jeshing, the Victorian Court of Appeal referred to the holding of the High Court in Westfield that extrinsic evidence was inadmissible as an aid to construing an easement because more fundamental considerations concerning the operation of the Torrens system of title by registration were at issue. The Victorian Court of Appeal identified these concerns by reference to the following passage in Westfield:
These concern the operation of the Torrens system of title by registration, with the maintenance of a publicly accessible register containing the terms of dealings with land under that system. To put the matter shortly, rules of evidence assisting the construction of contracts inter partes, of the nature explained by authorities such as Codelfa Constructions Pty Ltd v State Rail Authority (NSW), did not apply to the construction of the Easement.
Recent decisions, including Halloran v Minister Administering National Parks and Wildlife Act 1974, Farah Constructions Pty Ltd v Say-Dee Pty Ltd, and Black v Garnock, have stressed the importance in litigation respecting the title to land under the Torrens system of the principle of indefeasibility expounded in particular by this Court in Breskvar v Wall.
…The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.[6]
The Victorian Court of Appeal in Jeshing then referred with approval to the New South Wales Court of Appeal’s restatement of this principle in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council,[7] where,
…the [New South Wales] Court [of Appeal] emphasised that it was only the ‘rules of evidence assisting the construction of contracts inter partes’ which do not apply to the construction of instruments subject to indefeasibility under the Torrens system of title by registration. On this basis, the Court in Phoenix considered that the statements of the High Court in Westfield ‘do not deny the applicability of the principle whereby a document will be construed as having the meaning that a reasonable reader, with such knowledge of the surrounding circumstances as is available to him or her, would attribute to it’.
In Deguisa the High Court considered a notation of a building scheme on a restrictive covenant that was registered on a certificate of title. The issue was whether the other lots in the building scheme which were benefitted by the restrictive covenant pursuant to that building scheme were required to be identified either in the certificate of title or in the memorandum of encumbrance. The High Court held that:
…unless reference to an interest is endorsed on the certificate of title or incorporated by reference in a registered instrument notified on the certificate of title, the interest has not been notified on the certificate of title.[8]
In Deguisa the High Court concluded by holding:
A person who seeks to deal with the registered proprietor in reliance on the State’s guarantee of the title of the registered proprietor disclosed by the certificate of title in the Register Book (or its electronic equivalent) is not to be put on inquiry as to anything beyond that which is so notified. A common building scheme can operate consistently with the scheme of the Act in relation to enforceability of the benefit of a restrictive covenant only if those rights are notified on the certificate of title of the burdened land, or by express reference in a memorial on the certificate of title to other registered instruments that contain that information.[9]
The defendants note that in Jeshing the Court of Appeal was considering a great-great grandparent title (which was referred to in the instrument which created the covenant to define the scope of the benefitting land), that included a notation of other transfers which, when searched, disclosed that similar covenants had been created over other lots in the great-great grandparent title. The Victorian Court of Appeal considered whether the trial judge had correctly admitted those other transfers as evidence of a network of similarly worded covenants which were then used to aid the construction of the meaning of the subject covenant. The Court of Appeal rejected that approach:
We do not accept the contentions of the neighbouring owners on this issue. For the reasons given below, reference to the great-great-grandparent title falls within the principles stated in Westfield and Deguisa. It is an instrument expressly referred to in the Covenants and identifies by number the other transfers of land made as part of the subdivision recorded in the plan forming part of the great-great-grandparent title. It is not, however, necessary to look at those instruments of transfer in order to identify the benefitted land under the Covenants. This is because the new certificates of title created by those transfers from the great-great-grandparent title are recorded under the dealings columns of the great-great-grandparent title. Thus, by reference to the Covenants and the great-great-grandparent title referred to in the Covenants, a purchaser of the Land would know all that is necessary to identify the lands which are benefitted by the Covenants. It is unnecessary to search the dealing numbers of the other transfers of land in order to obtain this information. Thus, unlike in Deguisa, the Covenants were complete and bound the Land, subject to their proper interpretation.
It would in our view offend the principle stated in Deguisa to allow reference to the network of similarly worded covenants contained in the other transfers from the great-great-grandparent title. As the High Court noted in its introductory statements in Deguisa:
the Torrens system is characterised by the guarantee of the State that the title which it produces to a person seeking to take an interest in a parcel of land is an accurate and comprehensive statement of the state of the title to that land, as to both the title of the registered owner and the interests of others in that land. With the benefit of that guarantee, a person dealing with a registered proprietor of land need look no further than the registered title and the interests notified on it in order to ensure that his or her dealing does not miscarry.
The only interests notified on the certificate of title to the Land are the Covenants, by reference to the instruments of transfer which contained them. As discussed, the Covenants referred to the great-great-grandparent title and it is permissible to refer to that title to both complete the Covenants and to construe them. However, the associate judge’s extension of the scope of admissible evidence to include the network of other covenants was in error. The transfers of land containing those other covenants were not ‘incorporated by reference’ in the certificate of title or the Covenants, or even referred to in them. In accordance with Westfield and Deguisa, the fact that the other transfers are referred to in the great-great-grandparent title is an insufficient basis to make them admissible to construe the Covenants.[10]
The defendants submitted that these authorities dictate that the admissible evidence of the scope of land which was to take the benefit of the Covenant is limited to:
(a) information recorded on the folio of the Register for the Pereira land;
(b) information on the face of the Covenant, the dealing number of which is recorded on the folio of the register;
(c) information on the face of PS701111J which is referred to in the land description on the folio of the Register and on the face of the instrument itself; and
(d) information recorded on the parent title volume 10928 folio 783 (the parent title of PS701111J) which is referred to on the folio of the register and on PS701111J.
According to the defendants that evidence discloses the following information relevant to the land comprised in PS701111J as at 30 May 2017, being the date of the Covenant:
(a) the land to take the benefit of the Covenant was ‘all the land comprised in the Plan of Subdivision’, where Plan of Subdivision was defined to mean plan of subdivision PS701111J;
(b) PS701111J was first registered on or about 15 April 2015, at which time it included the 15 lots referred to by number on the parent title, a large ‘superlot’ being the original lot A, Road R1 being Curlew Way vested in Bass Coast Shire Council and Reserve and Reserve No. 1 vested in SPI Electricity Pty Ltd;
(c) on registration of PS701111J, the parent title was cancelled and a new folio of the Register was issued for each of the lots on PS701111J, including the original lot A;
(d) of those 16 original lots, 15 remained ‘live’ but the original lot A was ‘cancelled’.
The defendants submitted that:
Although the original lot A was cancelled on registration of the later plan PS728721D and further subdivided by that plan of subdivision into new residential lots and a new lot A on PS728721D, the registration of that plan and the identity of those new lots cannot be ascertained just from an inspection of the folio of the Register for the Pereira land, the instrument of covenant, PS701111J and the parent title. A further search would have to be made of the cancelled folio of the Register for the original lot A. Even that would not be enough to disclose the identity of the lot which constitutes the Baker land. To identify that lot, one would have to continue with further searches of the succeeding folios of the Register for later subdivisions of the parcel of land that was the original lot A, to discover that eventually, after registration of PS 728721D, PS716652N and PS808680V, a new lot 590 on PS808680V was created for the Baker land.
The defendants argued that ‘all land comprised in’ the Plan of Subdivision, which defined the beneficiaries of the Covenant, included all lots and other kinds of parcels of land created on registration of PS701111J, to the extent they remained as lots or other land in that plan of subdivision as at the date of the Covenant. While ‘all land comprised in’ is more broadly framed than, for example, ‘all lots on the Plan of Subdivision’ the words were still limited in the Covenant to lots and other land currently included in the Plan of Subdivision. As at 30 May 2017, the admissible evidence demonstrates that the reasonable reader of the Covenant would know that the original lot A was cancelled as a lot on PS701111J.
The plaintiffs’ submissions
The plaintiffs submitted that on the facts of this case it was open for the Court to conclude that:
(a) on 13 September 2016, the day PS728721D was registered, lot A on PS701111J included the Baker Land and SSD remained the registered proprietor of lot A;
(b) on 30 May 2017, the day the Covenant was registered:
(i) the covenantee, SSD, continued to be the registered proprietor of the Baker Land and was able to impose the burden of the Covenant on the Pereira Land for the benefit of the land in lot A of PS701111J; and
(ii) the covenantee, SSD, and the covenantors, Caporetto and Maglalang, understood and intended the Covenant to bind the Pereira Land and to enure to the benefit of the land in lot A of PS701111J;
(c) on 30 May 2021, when Covenant AN882546V was registered at the Titles Office, the covenantors, Caporetto and Maglalang, and the defendants understood and intended the Covenant to bind the Pereira Land and enure to the benefit of lot A in PS701111J.
The plaintiffs submitted that the defendants argument relied on the words in the Covenant, ‘the whole of the land comprised in the Plan of Subdivision’ being construed as excluding lot A which was cancelled as at the date of the Covenant. The plaintiffs put forward several reasons to argue that the defendants’ argument was erroneous.
First, the plaintiffs submitted that the defendants relied on the cancellation of lot A on the PS701111J, rather than the cancellation of the PS701111J itself, because PS701111J was not cancelled at the time the Covenant was registered and remains uncancelled.
Second, the plaintiffs submitted the defendants’ submission fails to take into account ss 76(1)(a), 76(6), 78, 79 and Part 1 of the Fourth Schedule of the Property Law Act 1958 (Vic) (PLA).
Third, the plaintiffs submitted the defendants’ submission depended on the Court construing the phrase ‘for the time being’ in the Covenant as applying to the land in PS701111J, which is not supported by the plain meaning of the Covenant. The plaintiffs submitted the phrase, ‘for the time being’ qualifies ‘the registered proprietor or proprietors’ and does not qualify ‘the land comprised in the Plan of Subdivision’.
Fourth, the plaintiffs submitted the defendants conceded SSD was the registered proprietor of the Pereira Land and the Baker Land at the date of the Covenant. Therefore, the plaintiffs submitted, irrespective of whether lot A ceased to be comprised in PS701111J at the date of the Covenant the covenantee, SSD, was able to burden the Pereira Land to the benefit of the Baker Land, subject to the correct construction of the contract.
In relation to the principles relevant to construing the terms of the Covenant, the plaintiffs referred the Court to Gillard J’s statements in Fitt v Luxury Developments Pty Ltd:[11]
Whether or not the benefit of the covenant is annexed to some land is a question depending upon the common intention of the original parties to the covenant. It is necessary to construe the words of the covenant in their natural and ordinary meaning to determine the intention of the parties and whether they intended that the covenant was to be annexed to some land and run with it. In carrying out this exercise the court may take into account the surrounding circumstances objectively known to the parties at the time.
The plaintiffs submitted the defendants knew the terms of the Covenant when they entered into the contract of sale and when the Pereira Land was transferred to them. Their search of the title indicated to them, and they understood, that the benefit of the Covenant enured to all land in lot A, including the Baker Land. SSD also understood the Covenant enured to the benefit of the Baker Land. It was thus the common intention of the parties to the Covenant that lot A on PS701111J, which included the Baker Land, would have the benefit of the Covenant.
Fifth, the plaintiffs submitted that the defendants’ argument that while original lot A on PS701111J was cancelled on the registration of PS728721D which further subdivided that land into new residential lots and a new lot A, the registration of PS728721D and the identity of those new lots could not be ascertained just from an inspection of the folio of the Register for the Pereira Land, the instrument of Covenant, PS701111J and the parent title of PS701111J ignored:
(a) the day the Covenant was registered;
(b) s 79 of the PLA; and
(c) the Pereiras’ choice not to conduct searches of the land referred to in the Covenant.
Sixth, the plaintiffs submitted that lot A did not cease to be land comprised in PS701111J at the time of the Covenant. None of the TLA, Subdivision Act 1988 (Vic) (Subdivision Act) or the PLA provide that upon registration of a plan of subdivision, the land in the plan of subdivision ceases to be part of the parent plan, ie PS701111J.
Section 24(2)(f) of the Subdivision Act provides that upon registration of a fresh plan of subdivision, the fresh registered plan replaces or modifies the previous registered plan. In this case the original registered plan included lot A in PS701111J. As PS728721D related only to lot A of PS701111J it could not have replaced the whole of PS701111J. As a consequence, the plaintiffs submitted PS728721D merely modified PS701111J by cancelling lot A in its pre-PS728721D unsubdivided form and replacing it with lot A in its new subdivided form. The plaintiffs submitted that it does not follow that lot A in its new subdivided form ceased to be part of PS701111J.
The plaintiffs submitted that whether lot A or the parts thereof have the benefit of the Covenant lies in the wording of the Covenant construed in light of the objectively ascertainable intention of the parties to the Covenant. The defendants’ submission, according to the plaintiffs, required the Court to ignore indisputable facts that show that the covenantee and covenantor intended to include lot A in the Covenant and that the defendants purchased the Pereira Land with notice of the Covenant.
The plaintiffs referred the Court to the documents in the defendants’ conveyancing file listed at paragraph 18 above and submitted that none of these documents indicated in any way that lot A on PS701111J did not have the benefit of the Covenant. Rather they manifested the contrary. There is no evidence that the covenantors and covenantee intended to exclude lot A of PS701111J from the benefit of the Covenant. There is no evidence that the covenantors and the defendants intended to exclude lot A on PS701111J from the benefit of the Covenant. There is no evidence before the Court that the covenantors had notice that lot A on PS701111J had been cancelled at the time the Covenant was created. The defendants did not have notice of lot A ceasing to be part of PS701111J at the time they were registered as the proprietors of the Pereira Land.
The plaintiffs submitted that the defendants’ reliance on the principle of indefeasibility overlooks:
(a) the reservation in s 42(1) of the TLA that, ‘the registered proprietor of land shall…hold such land subject to such encumbrances as are recorded on the relevant folio of the Register…’;
(b) the fact that the Covenant is recorded on the Register of the Pereira Land; and
(c) the limited circumstances in which a contract inhibited by a statutory provision will be unenforceable.
The plaintiffs submitted that, by reason of the above analysis, the common intention of the covenantee, covenantors and the defendants at the times the transfers were registered was that the Covenant was to benefit the proprietors of lot A on PS701111J and of any part thereof. Accordingly, the Covenant benefits the Baker Land.
The plaintiffs submitted that the defendants’ conveyancing file established the defendants contracted with Caporetto and Maglalang to purchase the Pereira Land subject to the Covenant, the benefit of which enured to the Baker Land. Irrespective of whether this contractual obligation runs with the land, it is personally binding on the defendants.
Seventh, the plaintiffs submitted that in Randell v Uhl,[12] Derham AsJ did not treat the further subdivision of lots in a parent plan as resulting in those lots ceasing to have the benefit of the covenant over the subject land. It followed, the plaintiffs submitted, that the defendants’ claim that upon cancellation of lot A, it ceased to be part of PS701111J is insufficient to deprive the second plaintiff of the benefit of the Covenant.
The defendants’ submissions in reply
The defendants submitted that the High Court in Deguisa and the Victorian Court of Appeal in Jeshing have definitively laid down the principle that when construing the terms of a restrictive covenant for the purpose of identifying the benefitting land, regard may only be had to the registered title and the instruments expressly referred to in it.[13] The significance of the indefeasibility principle operates as a rule of evidence limiting the contextual material to which a court may have regard when construing the terms of a registered instrument.[14]
The defendants referred the Court to the decision of Daly AsJ in Re 313 Investments & Holdings Pty Ltd,[15] which involved an ex parte application to remove a covenant on the grounds that there was no land with the benefit of the covenant. In that case the covenant defined the land intended to take the benefit of the covenant by reference to a lot on a plan of subdivision that had been cancelled by the time of the creation of the subject covenant, and had been re-subdivided several times to create further lots, including the lot intended to take the burden of the covenant. The issue in 313 Investments arose from a reference in the covenant to an ancestor title as defining the scope of the land to be benefitted by the covenant in circumstances where the ancestor title had been wholly cancelled by the time the subject covenant was granted. Daly AsJ found this rendered the whole covenant a ‘nonsense’ because it conferred no benefit on any ascertainable land.
The defendants in the current proceeding submitted that, by analogy, the Covenant in this case is a partial ‘nonsense’ to the extent of the original lot A on PS701111J. The other lots on PS701111J continued in existence and were ascertainable on the date the Covenant was granted, and the order of their transfers out of SSD’s ownership could be identified solely by reference to the information on the folio of the Register or instruments referred to on the folio of the Register searchable by the defendants as at the date the Covenant was granted.
The defendants referred to the following passage in 313 Investments as explaining the reason why the extent of the land burdened by a covenant is limited to land ascertainable by searches of the registered title to the subject land and the interests notified on it at the time a purchaser or mortgagee becomes the registered proprietor, and does not extend to land that might have been ascertained if more extensive searches of the Register had been undertaken:
I agree that the decision of the High Court in Deguisa stands for the principle that any party interested in particular land, such as a prospective purchaser or mortgagee ‘need look no further than the registered title and the interests notified on it’ to determine the existence and nature of any dealings with the land and any encumbrances upon it. As evidenced by the expert report, determining the identity of the land within the area of the ancestor lot at the time the subject covenant was registered, and the identity of the current registered proprietors of those lots, would require a party in the position of the owner to carry out quite extensive searches of the Register in order to determine the land purportedly benefitting from the restrictions in the subject covenant. Such a requirement is fundamentally inconsistent with Torrens principles, as articulated by the High Court in Deguisa, and reinforced by the Court of Appeal in Jeshing.[16]
The defendants submitted that in order to ascertain the extent of the land intended to be benefitted by reference in the Covenant to ‘land comprised in the Plan of Subdivision’, the defendants as purchasers and their mortgagee would have to search not only the three plans of subdivision which resulted in the creation of the title to the Baker Land, but also all subsequent plans of subdivisions which progressively re-subdivided the diminishing ‘lot A’ as it appeared on each successive plan of subdivision. The defendants were not required to undertake those searches and the information within them cannot affect the issue of construction for this Court.
The defendants submitted that the plaintiffs’ reliance on Fitt as an authority for the principle that in construing the words of a covenant to determine the common intention of the parties as to the extent of the benefitting land, the Court may take into account surrounding circumstances objectively known by the parties at the time the covenant was registered, is misplaced given that Fitt was decided before Westfield. The defendants referred to Lansdowne AsJ’s comments in Re Hunt:[17]
Caution should be taken in applying this latter observation, because the underlying observation by Gillard J that surrounding circumstances can be taken into account in interpreting the words in a covenant is now the subject of High Court authority to the contrary.
In questions of the construction of contracts generally, extrinsic evidence can in certain circumstances be admitted to determine the intention of the parties to the contract. However, at least in the case of Torrens title land, the High Court held in Westfield Management Limited v Perpetual Trustee Co Limited that this general principle does not apply to the determination of interests in land. That case concerned an easement granting a right of way under one commercial building in Sydney to another. The successor in title to the dominant tenement advanced a broader interpretation of the right of way than the words of the easement supported, based on extrinsic evidence as to the intention of the original parties. The High Court held that this was not permissible. The Court expressed the view that to allow extrinsic evidence in the construction of a dealing with Torrens title land would be inconsistent with the operation of the Torrens system…
The defendants submitted that the plaintiffs’ analysis of Randell v Uhl failed to mention that Derham AsJ had found that lots transferred out of the head title after the date of the transfer which created the subject covenant carried the benefit of the covenant, such that the land transferred to the plaintiffs in that case already carried the benefit. The defendants clarified that they did not submit that a later cancelation of a title or a later subdivision or consolidation of a lot already benefitted by a covenant extinguishes that benefit. In Randell v Uhl the four transfers prior to the transfer of the land the subject of the covenant did not cancel, subdivide or consolidate any of the original lots on the head title and the common vendor did not retain any part of the land in these prior transfers. The defendants submitted that it followed that the order of transfers in Randell v Uhl and the subdivisions and consolidations effected by some of them have no bearing on Question 2 in this case.
Finally, the defendants submitted that the question posed by Question 2 is not whether the original covenanting parties had a common intention to confer the benefit of the covenant on the Baker Land, but rather whether the words ‘land comprised in the Plan of Subdivision’ sufficiently identified the lots on plans of subdivision which were not referred to on the face of the folio of the Register or in any instrument notified on it, as at the date the covenant was created. In this regard, the defendants submitted that the indefeasibility principle is an insurmountable obstacle for the plaintiffs in the case on Question 2.
Analysis
The terms of the Covenant state:
The Transferee with the intention that the benefit of this covenant be annexed to and run at law and in equity with the land comprised in the Plan of Subdivision other than the Land and that the burden of this covenant be annexed to and run at law and in equity with the Land and every part or parts hereof, does hereby for itself its successors and transferees COVENANT with the Transferor its successors and assigns the registered proprietor or proprietors for the time being of all the land comprised in the Plan of Subdivision or any part or parts thereof other than the Land that the transferees will not at any time….
The Covenant defines ‘Plan of Subdivision’ as plan of subdivision PS701111J.
The task of the Court is therefore to construe the clause, the land comprised in plan of subdivision PS701111J. That task must be undertaken according to the rules of construction laid down by the High Court in Deguisa and reinforced by the Victorian Court of Appeal in Jeshing. Those rules dictate that in construing the terms of a covenant for the purpose of identifying benefitting land, regard may only be had to the registered title and the instruments expressly referred to in it. This is because, as the Court of Appeal explained, the significance of the indefeasibility principle operates as a rule of evidence limiting the contextual material to which a court may have regard when construing the terms of a registered instrument.
In the face of the High Court authority of Deguisa and the Victorian Court of Appeal authority of Jeshing, I do not accept that Gillard J’s statements in Fitt that in carrying out the task of construction of the instrument the court may take into account the surrounding circumstances objectively known to the parties at the time, reflects the current state of the law. This means that in construing the terms of the Covenant, it is impermissible for the Court to take into account the documents contained in the defendants’ conveyancing file beyond:
(a) information recorded on the folio of the Register for the Pereira land;
(b) information on the face of the Covenant, the dealing number of which is recorded on the folio of the register;
(c) information on the face of PS701111J which is referred to in the land description on the folio of the Register and on the face of the instrument itself; and
(d) information recorded on the parent title volume 10928 folio 783 (the parent title of PS701111J) which is referred to on the folio of the register and on PS701111J.
In my view the term ‘all of the land comprised in the Plan of Subdivision’ means all of the land in PS701111J as at the date of the registration of the transfer containing the Covenant, being 30 May 2017. As lot A on PS701111J had been cancelled on 13 September 2016, the land comprising lot A on PS701111J was not land comprised in the Plan of Subdivision within the meaning of that phrase in the Covenant. It follows that the benefit of the Covenant is not annexed to the Baker Land.
I do not accept the plaintiffs’ submission that this outcome requires the Court to construe the phrase ‘for the time being’ in the Covenant to apply to the land in PS701111J rather than the registered proprietor(s). On a plain reading of the terms of the Covenant, the phrase ‘for the time being’ clearly qualifies the registered proprietor(s) and not the land. Rather, the phrase ‘the land comprised in’ implicitly requires identification of the extent of that land as at the date of the instrument.
Sections 76(1)(a) and 76(6) of the PLA state:
(1)In a conveyance there shall, in the several cases in this section mentioned, be deemed to be included, and there shall in those several cases, by virtue of this Act, be implied, a covenant to the effect in this section stated, by the person or by each person who conveys, as far as regards the subject-matter or share of subject-matter expressed to be conveyed by him, with the person, if one, to whom the conveyance is made, or with the persons jointly, if more than one, to whom the conveyance is made as joint tenants, or with each of the persons, if more than one, to whom the conveyance is made as tenants in common, that is to say—
(a)in a conveyance for valuable consideration, other than a mortgage, a covenant by a person who conveys and is expressed to convey as beneficial owner in the terms set out in Part 1 of the Fourth Schedule to this Act.
…
(6)The benefit of a covenant implied as aforesaid shall be annexed to and incident to, and shall go with, the estate or interest of the implied covenantee, and shall be capable of being enforced by every person in whom that estate or interest is, for the whole or any part thereof, from time to time being vested.
Part 1 of the Fourth Schedule of the PLA states:
Fourth Schedule—Implied covenants
PART I
Covenant implied in a Conveyance for Valuable Consideration, other than a Mortgage, by a Person who Conveys and is expressed to Convey as Beneficial Owner
That, notwithstanding anything by the person who so conveys or any one through whom he derives title otherwise than by purchase for value, made, done, executed or omitted, or knowingly suffered, the person who so conveys, has, with the concurrence of every other person (if any) conveying by his direction, full power to convey the subject-matter expressed to be conveyed, subject as, if so expressed, and in the manner in which, it is expressed to be conveyed, and that, notwithstanding anything as aforesaid, that subject-matter shall remain to and be quietly entered upon, received, and held, occupied, enjoyed, and taken, by the person to whom the conveyance is expressed to be made, and any person deriving title under him, and the benefit thereof shall be received and taken accordingly, without any lawful interruption or disturbance by the person who so conveys or any person conveying by his direction, or rightfully claiming or to claim by, through, under, or in trust for the person who so conveys, or any person conveying by his direction, or by, through, or under any one (not being a person claiming in respect of an estate or interest subject whereto the conveyance is expressly made), through whom the person who so conveys derives title, otherwise than by purchase for value:
And that, freed and discharged from, or otherwise by the person who so conveys sufficiently indemnified against, all such estates, incumbrances, claims and demands, other than those subject to which the conveyance is expressly made, as, either before or after the date of the conveyance, have been or shall be made, occasioned or suffered by that person or by any person conveying by his direction, or by any person rightfully claiming by, through, under or in trust for the person who so conveys, or by, through or under any person conveying by his direction, or by, through, or under any one through whom the person who so conveys derives title, otherwise than by purchase for value:
And further, that the person who so conveys, and any person conveying by his direction, and every other person having or rightfully claiming any estate or interest in the subject-matter of conveyance, other than an estate or interest subject whereto the conveyance is expressly made, by, through, under or in trust for the person who so conveys, or by, through, or under any person conveying by his direction, or by, through or under any one through whom the person who so conveys derives title, otherwise than by purchase for value, will, from time to time and at all times after the date of the conveyance, on the request and at the cost of any person to whom the conveyance is expressed to be made, or of any person deriving title under him, execute and do all such lawful assurances and things for further or more perfectly assuring the subject-matter of the conveyance to the person to whom the conveyance is made, and to those deriving title under him, subject as, if so expressed, and in the manner in which the conveyance is expressed to be made, as by him or them or any of them shall be reasonably required.
In the above covenant a purchase for value shall not be deemed to include a conveyance in consideration of marriage.
In my view these provisions do not affect the construction of the Covenant in this case because when construed in accordance with the rules of construction of instruments laid down by the High Court in Deguisa the terms of the Covenant are clear and do not imply the broader meaning contended for by the plaintiffs.
The fact that SSD remained the owner of the land in cancelled lot A on PS701111J at the time the Covenant was entered into does not change the meaning of the Covenant properly construed.
Similarly, the fact that the Pereiras may have chosen not to conduct searches of the successive plans of subdivision which followed the registration of PS728721D (which cancelled lot A on PS701111J) does not change the meaning of the Covenant, which falls to be construed according to the rules in Deguisa.
I do not accept the plaintiffs’ argument that lot A had not ceased to be land comprised in PS701111J at the time of the Covenant because PS728721D merely modified PS701111J by cancelling lot A in its unsubdivided form and replacing it with lot A in its new subdivided form. To accept this argument would be to undermine the Torrens principles by requiring a purchaser to conduct searches of the registered title and the instruments notified on it to determine the existence and nature of any dealings with the land and any encumbrances upon it.
Finally, I accept the defendants’ submissions that in Randell v Uhl Derham AsJ was dealing with the issue of that lots transferred out of the head title after the date of the transfer which created the subject covenant. Accordingly, that case is not apposite to the purpose the plaintiffs seek to rely upon it.
The ownership of further subdivided lots being parts of cancelled lot A was not ascertainable on the date of the transfer
The defendants’ submissions
The defendants submitted that even if the Court were to construe ‘all lands comprised in the Plan of Subdivision’ as including all of the original lots on PS701111J whether noted on the parent title as ‘cancelled’ or not, there was still insufficient admissible evidence to enable the Court to determine the extent the transferor retained ownership of the original lot A as at 30 May 2017.
For the benefit of the Covenant to be annexed to land, it must have been land identified in the Covenant as having the benefit and owned by the covenantee/transferor at the date of the Covenant. The defendants submitted that there is no way for the Court to determine which parts of the original lot A (assuming cancelled original lot A was ‘land comprised in the Plan of Subdivision’ on 30 May 2017) remained owned by the covenantee/transferor on that date. Original lot A was cancelled on 4 October 2016. On that date twenty-six residential lots and a new smaller lot A were created on registration of PS728721D. In order to determine which of the residential lots or lot A remained owned by the transferor on 30 May 2017 the Court would have to admit evidence of the history of the subdivision of original lot A and the transfers of each part of it, contrary to principles laid down in Westfield, Deguisa and Jeshing.
The plaintiffs’ submissions
The plaintiffs submitted that the defendants’ argument that ownership of further subdivided lots that were part of the cancelled lot A was not ascertainable on the date of the transfer, is an inversion of the proofs required in this case.
The plaintiffs argued that if lot A ‘in the Plan of Subdivision’ has the benefit of the Covenant, the Mr Baker, as owner of lot 590 on PS808680V has the benefit of the covenant if the covenantee owned lot 590 when the covenant was created. The evidence before the Court proves that SSD, the covenantee, owned lot 590 when the Covenant was created.
The plaintiffs said the following facts supported the conclusion that the common intention of the covenantee and the covenantor was to annex the benefit of the Covenant to lot A in PS701111J, irrespective of whether lot A was cancelled at the time the Covenant was executed:
(a) the Covenant defines ‘Plan of Subdivision’ as plan of subdivision PS701111J;
(b) the diagram of PS701111J in the s 32 Vendor’s Statement for the sale of the Pereira Land by SSD to Caporetto and Maglalang included lot A as part of PS701111J;
(c) the diagram of PS701111J in the record of the Register for the Pereira Land included lot A;
(d) the Covenant did not in terms limit the meaning of ‘PS701111J’ to ‘PS701111J as at the date of the covenant’ or the date of its registration or as at any other specified date;
(e) the covenantee, SSD, intended the Covenant to benefit, ‘all of the land within the Plan of Subdivision’, as is evident from:
(iii) the Covenant referred to PS701111J;
(iv) the covenants for all other lots in PS701111J were identical to the Covenant to the Pereira Land; and
(v) the contents of the email correspondence between the director of the covenantee and the Pereiras’ agents;
(f) there is no evidence the covenantors intended the Covenant not to benefit all the land owners within PS701111J or that the covenantors regarded PS701111J as having ceased to include lot A.
The plaintiffs submitted in the alternative that the covenantors and the defendants acquiesced to the covenantee’s intention that the term ‘Plan of Subdivision’ in the Covenant included lot A.
The plaintiffs argued that the defendants admit that:
(a) by a Transfer of Land dated 30 May 2017 and registered on the folio of the Register to the Pereira Land as dealing AN882546V (the Covenant), the transferees Caparetto and Maglalang, created the Covenant, stating that it:
(vi) was intended to burden the Pereira Land and bind future registered proprietors for the time being of the Pereria Land; and
(vii) was for the benefit of the transferor, SSD, and the registered proprietors for the time being of all land comprised in PS701111J;
(b) on or about 21 August 2019 the second plaintiff and his wife became the joint registered proprietors of the Baker Land.
Lot A included the Baker Land. The covenantee owned the Baker Land at the time the Covenant was registered. Accordingly the Covenant, the plaintiffs submitted:
(a) was validly made between the covenantee, SSD, and the covenantors, Caporetto and Maglalang;
(b) burdened the Pereira Land and every part of that land at law and in equity;
(c) bound the covenantors, their successors and transferees, including the defendants;
(d) enured, and continues to enure, to the benefit of SSD and the registered proprietors for the time being of lot A on PS701111J or any part thereof, including Mr Baker.
Analysis
As I have found that lot A on PS701111J was not land comprised in PS701111J at the time of the Covenant, it is not strictly necessary for me to consider this aspect of the defendants’ argument.
However, I accept that for the benefit of the Covenant to be annexed to land, it must have been land identified in the Covenant as having the benefit and owned by the transferor at the date of the Covenant. In accordance with the rules in Deguisa, the admissible evidence to enable the Court to determine the extent the transferor retained ownership of the original lot A as at 30 May 2017 is limited to:
(a) information recorded on the folio of the Register for the Pereira Land;
(b) information on the face of the Covenant, the dealing number of which is recorded on the folio of the Register;
(c) information on the face of PS701111J which is referred to in the land description on the folio of the Register and on the face of the transfer instrument itself; and
(d) information recorded on folio 783 of volume 10928, the parent title of PS701111J.
Examination of those documents would not identify which, if any parts of the land making up lot A on PS701111J remained owned by SSD as at the date of the transfer. In order to ascertain that information a prospective purchaser would need to examine PS782721D. To require a prospective purchaser to do this is fundamentally inconsistent with Torrens principles, as articulated by the High Court in Deguisa, and reinforced by the Court of Appeal in Jeshing.
The legislative scheme supports the defendants’ submissions that the cancelled lot A was not land comprised in PS701111J as at 30 May 2017
The defendants’ submissions
The third submission the defendants made was that, as a matter of construction of the TLA and the Subdivision Act, a lot in a plan of subdivision ceases to be a lot in that plan when it is cancelled by a later plan of subdivision. The defendants argued that the former cancelled lot is replaced with lots on the later plan but the lots on the later plan are not the same land as the former. These divided parcels have different legal characteristics to those they had as inchoate parts of the former undivided parcel.
The defendants submitted that when the Covenant is construed having regard to solely the admissible evidence, the parties’ intention was that the cancelled lot A was not land comprised in the subdivision as at the date of the Covenant, or alternatively, that the transferor could not have succeeded in annexing the benefit of the Covenant to any parts of cancelled lot A because there is no means of determining (on the basis of the admissible evidence) the order of transfers of parts of that lot A out of the transferor’s ownership. The defendants argued that this construction of the statutory scheme under the TLA as it applies to land comprised in registered plans of subdivision referred to in registered instruments is consistent with the defendant’s proposed construction of the intended meaning of the particular reference in the Covenant.
Section 97(1) of the TLA requires the TLA and the Subdivision Act to be read as one. A plan of subdivision is registered under the Subdivision Act. A subdivision is defined as ‘the division of land into two or more parts which can be disposed of separately’[18] A subdivision must be done in accordance with the Subdivision Act.[19] The registration of a plan of subdivision takes effect when the plan has been registered and the registered plan replaces or modifies any previous registered plan.[20] The Registrar is required to create a folio of the Register under the TLA for each lot and each reserve.[21] The Registrar must make any amendments to any registered plan or to the Register under the TLA as are necessary because of the operation of the Subdivision Act.[22]
Section 27(1) of the TLA requires the Registrar to keep a Register of land which is under the operation of the TLA. The Register consists of folios[23] which, under s 27(6) of the TLA:
(a)must contain the recordings that are required or authorised to be made in the Register by or under the TLA or any other Act and that affect the land for which the folio is created; and
(b) must include a distinctive identifying reference for the folio; and
(c)may contain recordings of any other information that the Registrar thinks appropriate to record on the folio; and
(d)may describe any land by reference to a separate map of plan in the Office of Titles—
and so much of a separate map or plan as relates to the land in the folio is deemed to form part of the folio in which it is described.
Section 27(7) of the TLA provides that the Registrar creates a folio of the Register by making a recording of:
(a) a description of the land for which it is created; and
(b) except in the case of an identified folio, a description of—
(i) the proprietor; and
(ii) the nature of the interest held by the proprietor; and
(c) such other particulars as the Registrar thinks fit of—
(i) other estates or interests, if any, affecting the land; and
(ii)other information, if any, that relates to the land and is required to be recorded on the folio by or under [the TLA] or any other Act—
and by allocating a distinctive identifying reference for those recordings.
Section 27(8)(c) of the TLA requires the Registrar, subject to s 24(2) of the Subdivision Act, on the approval of a plan of subdivision, to create any folios of the Register that are necessary.
Section 27(9) of the TLA gives the Registrar power to create, amend or cancel a folio of the Register where the Registrar thinks it appropriate to do so.
The defendant submitted that the effect of these provisions is to create a scheme whereby a single Register of Lands is kept that uniquely identifies all land under the operation of the TLA and records all details of ownership, encumbrance and other matters required or authorised to be recorded by the TLA or any other Act in the Register. To the extent that involves land which is a lot on a registered plan of subdivision, where that lot has subsequently been further subdivided by a later plan of subdivision, the intent of the Act, reflected in these statutory provisions is that:
(a) the later plan of subdivision, when registered, modifies the earlier plan by cancelling the earlier lot and replacing it entirely with the new plan of subdivision;
(b) the land described by reference to the earlier lot as a lot on the earlier plan ceases to be a distinct and separate parcel of land as described on the earlier plan and becomes instead the distinct and separate parcels of land described on the later plan;
(c) the lot on the earlier plan had, while it remained a live lot within that plan, its own characteristics, its own folio of the Register, with all the particulars recorded on it as contemplated by ss 27(6) and (7) of the TLA. It was an undivided parcel that could only be sold as a whole with one owner or co-owners;
(d) following subdivision, that parcel of land ceased to exist in that form and instead was replaced with a number of distinct and separate parcels, each with their own incidents, which each part now divided from the other, with its own unique land description by reference to the applicable lot on the new plan of subdivision and separately saleable.
From this analysis, the defendant submitted that in relation to lot A on PS701111J:
(a) on 4 October 2016 the Registrar cancelled the folio of the Register for lot A on PS701111J under s 27(9) of the TLA on registration of PS728721D under s 24 of the Subdivision Act;
(b) on the same date, the Registrar created a new folio for each of the twenty six residential lots and the new lot A on PS728721D;
(c) the effect of this was that lot A on PS701111J ceased to be land comprised in PS701111J or land to which any folio of the Register related and the description ‘lot A on PS701111J’ could only accurately describe a former description of a certain parcel of land that formerly but not currently existed.
According to the defendants it followed that the term, ‘all land comprised in the Plan of Subdivision’ as used in the Covenant encompassed the lots on PS701111J for which there were live folios of the Register on 30 May 2017 and did not include the cancelled original lot A.
The plaintiffs’ submissions
The plaintiffs’ submitted that this aspect of the defendants’ submissions is novel, complex and of general importance. Accordingly, the plaintiffs submitted it is not suitable for determination in an interlocutory hearing. Nevertheless, the plaintiff’s relied upon their submissions made in response to the defendants’ first argument under Question 2.
Analysis
Given my earlier findings it is unnecessary for me to determine this aspect of the defendants’ argument.
Question 3: Assuming for the purpose only of this preliminary question that a building scheme was created over plan of subdivision PS701111J at the time each of the plaintiffs’ and the defendants’ predecessors in title took transfers of their respective lots in that plan from the common vendor: Are the plaintiffs now entitled in equity by reason of that building scheme to enforce the covenant entered into by the defendants’ predecessors in title with the common vendor, against the defendants as current registered proprietors of the land described in folio of the Register volume 11564 folio 395?
The defendants’ submissions
The defendants submitted that the answer to this question is no. They submitted that the authorities now make clear that, unless the existence of a building scheme, the nature of the restrictions it creates, and the scope of the benefit and burden of any lots affected by the building scheme are noted on the face of the folio of the Register or any registered instrument or other document forming part of the Register which is noted on the folio of the Register for the burdened land, then the current registered proprietor of the burdened land will not be bound by the building scheme.[24]
The defendants submitted that while a cancelled parent title is admissible if it is referred to in the instrument creating the Covenant or in the folio of the Register for the burdened land, in this case, the parent title is not referred to in the Covenant. It is referred to in the folio of the Register for the Pereira Land. The defendant said that there is no reference to a building scheme on:
(a) the folio of the Register for the Pereira Land;
(b) in the registered instrument which contains the Covenant;
(c) on PS701111J; or
(d) on the parent title of PS701111J.
The defendants submitted that Vrakas v Mills is authority for the proposition that it is necessary for notice of the existence of the building scheme, the nature of the restrictive covenant and the identity of the lands affected by the scheme to be given in the certificate of title, either directly or by reference to some instrument or other document to which a person searching the Register has access.
The plaintiffs’ submissions
The plaintiffs submitted that if the Covenant enures to the Baker Land, it is unnecessary to rely on the existence of a building scheme. I interpose here to note that I have found that the benefit of the Covenant is not annexed to the Baker Land.
The plaintiffs submitted that in order for a building scheme to exist it is not necessary for the relevant entry on the Register to expressly state that the land is subject to a building scheme. The plaintiffs relied on the following statements of Gillard J in Fitt:
…. In my opinion it is strongly arguable that it is not necessary to assert anywhere in the Register that the land is subject to a building scheme although it would be wise to do so.
…
In my view there is a very strong argument that the recording must make it clear that there is a restrictive covenant, identify the land to be benefitted and set out the restrictions and other questions concerning the basis upon which it is said to be valid and enforceable are matters for the court and not required to be part of the information in the Register of Land.
It follows that if there had not been a reference to a building scheme on the Plan of Subdivision in the present matter, I would have nevertheless been strongly inclined to hold that there was sufficient notice to Luxury Developments on the Register of the existence of a restrictive covenant burdening its land and the nature of same.[25]
The plaintiff submitted that each of the four elements, identified by Hargrave J in Vrakas v Mills,[26] necessary to establish a building scheme are satisfied:
(a) that all the present owners of the relevant land derive their title from a common vendor;
(b) that the vendor laid out the estate in lots subject to restrictions ‘which he intended to impose on all of the lots, consistent only with some general scheme of development’;
(c) proof that the common vendor and later executors, intended the restrictions in the restrictive covenant to be for the benefit of all of the lots in the subdivision which were sold; and
(d) proof that ‘the parties to the proceeding to enforce the covenant, or the predecessors in title, purchases their lots from the common vendor on the footing that the restrictions were to enure for the benefit of the other lots included in the general scheme’.
The plaintiffs submitted that the issue in this case was whether the defendants had notice of the building scheme. The plaintiffs relied on the following matters evidenced in the defendants’ conveyancing file said to establish that the defendants had notice of the existence of a building scheme which applied to the Pereira Land:
(a) the Pereira Land was part of the Seagrove Estate;
(b) the Pereira Land was encumbered by Covenant 882546V;
(c) the Covenant was expressed to be for the benefit of all other lots in the subdivision; and
(d) the Covenant enured for the benefit of lots 517, 518, 519, 553, 554, 555, 556, 557, 558, 559, 560, 561, 562 and R1, Reserve no. 1 and lot A comprised in PS701111J.
The plaintiffs submitted the following matters demonstrated that the terms of the Covenant sufficiently identified the land under the building scheme with the benefit of the restrictions:
(a) the parent title creating PS701111J was registered on 15 April 2015;
(b) there were only thirteen residential lots plus lot A in the subdivision;
(c) all of the residential lots, save for the Pereira Land and lot A, were transferred out and registered between 8 May 2015 and 6 January 2017; and
(d) the diagram of the subdivision comprised in the register for the Pereira Land Covenant clearly shows each of the thirteen residential lots plus lot A in the subdivision.
The plaintiffs submitted that the small number of residential lots in the subdivision and the short period during which they were transferred distinguished this case from cases like Re Dennerstein, Vrakas v Mills and Randell v Uhl, where the party seeking to be relieved of the burden of the restrictive covenant did not have notice of a building scheme over the land and faced a difficult task of having to search the title back to its source.
The plaintiffs submitted that the evidence before the Court supported a finding that the Pereira Land was part of a building scheme and that the defendants had actual notice of the scheme. The plaintiff’s said, however, that if the defendants denied notice of the building scheme, the issue should be referred for trial where the defendants and their agents can be cross-examined.
The defendants’ submissions in reply
The defendants submitted that the plaintiffs impermissibly seek to rely on extraneous evidence that the defendants had actual knowledge of the building scheme at the time they purchased the Pereira Land. Such reliance is contrary to the principles laid down by the High Court in Deguisa, where the Court said:
The present case is not concerned with whether a covenantor is bound by his or her promise to the covenantee, but with whether the title to land in ownership of a successor in title to the covenantor is affected by the interest of the owner of another parcel of land in the enforcement of the covenant, the benefit of which attaches to that other person’s land…. The cases do not suggest, and the appellants did not argue, that restrictive covenants enforceable under the general law as part of a common building scheme are in some way so alien to the scheme of the Act that the equitable rights and obligations so created cannot be accommodated to the provisions of the Act. But if the benefit and burden of mutual restrictive covenants are to affect the registered title of a purchaser of a parcel of land subsequent to the original covenantors, steps must be taken to ensure the notification on the certificate of title of each parcel of land burdened by a restrictive covenant and the other lots intended to be benefitted by that covenant as part of the common building scheme.
The title documents referred to by the plaintiffs, being the parent title creating the subdivision registered on 15 April 2015 and the diagram of the subdivision in the Register for the Pereira Land Covenant, do not contain a notification that there is a building scheme in place that affects the land, or that the other lots on PS701111J are subject to covenants for the reciprocal benefit of the Pereira Land.
Analysis
I have found that the benefit of the Covenant is not annexed to the Baker Land. It is therefore necessary to consider whether the Baker Land has the benefit of the Covenant by virtue of a building scheme.
I accept that on the authority of Vrakas v Mills, in order to bind a transferee of land registered under the TLA with a restrictive covenant arising under a building scheme it is necessary for the notification in the Register to give notice of the existence of the scheme; the nature of the restrictive covenant; the identity of the lands affected by the scheme, both as to the benefit and the burden of the restriction; and that this notice is given in the certificate of title directly or by reference to some instrument or document to which a person searching the Register has access.[27]
The plaintiffs reliance on Gillard J’s statements in Fitt to the effect that it is not necessary to assert anywhere in the Register that the land is subject to a building scheme is misplaced because those statements no longer represent the law in Victoria. Following Deguisa and Jeshing, it is no longer permissible to rely on evidence extraneous to the certificate of title and the instruments and documents referred to in it, to show that the defendants had actual knowledge of the building scheme at the time they took the transfer of the Pereira Land. As previously explained, this is because to do so would undermine the Torrens principles that any party interested in particular land need look no further than the registered title and the interests notified on it to determine the existence and nature of any dealings with the land and encumbrances on it. Accordingly, this question must be answered in the negative.
Question 4: Is the land described in folio of the Register volume 11564 folio 395 subject to the covenant?
Question 5: Is the covenant enforceable?
The defendants’ submissions
The defendants submitted that Questions 4 and 5 were directed to their counterclaim. By that counterclaim the defendants seek declarations to the effect that the Pereira Land is not subject to the Covenant and that the Covenant is unenforceable.
The defendants submitted that the answer to each of questions 4 and 5 is no. They argued that if each of questions 1, 2 and 3 is answered no, the defendants will have also established that:
(a) no person owning land comprised in PS701111J has the benefit of the Covenant, as the Pereira land was the last lot transferred out of the land that remained comprised on that plan as at the date on which the Covenant was created;
(b) the Covenant was only ever a personal covenant between the covenantee/transferor and the first purchasers of the Pereira Land; and
(c) no person can now enforce the Covenant as the covenantee/transferor who was privy to the original Covenant is a deregistered company and so has ceased to exist.
The declarations sought by the defendants are in the form contemplated by s 84(2) of the Property Law Act 1958. The defendants submitted that the Court could proceed to make the declarations sought without exercising the discretion is s 84(3) to require notification to others. The plaintiffs’ active participation in this proceeding was said to mean that the Court had the benefit of a proper contradictor to the defendants’ application by counterclaim for the proposed declarations.
The defendants relied upon the decision of Lansdowne AsJ in Re Hunt,[28] as authority for the proposition that in a clear case where it would be difficult to identify any person with the standing to object to the declarations it may be appropriate for the Court to proceed ex parte.[29]
The plaintiffs’ submissions
In relation to Questions 4 and 5 the plaintiffs submitted that, by reason of their submissions in relation to Questions 1 to 3, the answers to Questions 4 and 5 are both yes.
Analysis
I have found that the answers to each of questions 1 to 3 is ‘no’. I accept that the defendants have established that:
(a) no person owning land comprised in PS701111J has the benefit of the Covenant, as the Pereira land was the last lot transferred out of the land that remained comprised on that plan as at the date on which the Covenant was created;
(b) the Covenant was only ever a personal covenant between the covenantee/transferor and the first purchasers of the Pereira Land; and
(c) no person can now enforce the Covenant as the covenantee/transferor who was privy to the original Covenant is a deregistered company and so has ceased to exist.
In these circumstances it is unnecessary to require further notification of the defendants’ application for the declarations.
Accordingly it is appropriate to make the declarations sought by the defendants’ counterclaim.
The plaintiffs’ standing to otherwise seek declarations
The plaintiffs submitted that irrespective of the answers to the questions posed, they were entitled to press their claims for a declaration that the defendants have breached the Covenant.
The plaintiffs’ submission relied upon the following passage from Ainsworth v Criminal Justice Commission,[30]
It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which “[i]t is neither possible nor desirable to fetter…by laying down rules as to the manner of its exercise.” [Forster v. Jododex Aust. Pty. Ltd. (1972), 127 C.L.R. 421, at p. 437, per Gibbs J.] However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. [See In re Judiciary and Navigations Acts (1921), 29 C.L.R. 257.] The person seeking relief must have a ‘real interest’ [Forster (1972), 127 CLR, at p. 437, per Gibbs J; Russian Commercial and Industrial Bank v. British Bank for Foreign Trade, Ltd., [1921] 2 A.C. 438, at p. 448, per Lord Dunedin] and relief will not be granted if the question “is purely hypothetical”, if relief is “claimed in relation to circumstances that [have] not occurred and might never happen”, [University of New South Wales v. Moorehouse (1975), 133 C.L.R. 1, at p. 10, per Gibbs J] or if “the Court’s declaration will produce no foreseeable consequences for the parties” [Gardner v. Dairy Industry Authority (N.S.W.) (1977), 52 A.L.J.R. 180, at p. 188 per Mason J; see also p. 189, per Aickin J; 18 A.L.R. 55, at pp. 69, 71 respectively].
The plaintiffs submitted that both plaintiffs, whether or not they have the benefit of the Covenant, are directly negatively affected by any failure to comply with it because their amenity will be affected. The plaintiffs were said to therefore have a ‘real interest’ in the defendants’ observance of the Covenant, which is not hypothetical or theoretical. In this way the plaintiffs were said to be more than mere members of the public.
The defendants submitted that Ainsworth can be distinguished on its facts and is of no assistance to the plaintiffs. Ainsworth is an administrative law case involving a dispute about alleged procedural fairness by a Commission appointed by the Queensland legislative assembly to provide a report on whether gaming machines should be allowed into Queensland. The report made adverse comments about the appellant, a gaming machine manufacturer and supplier. The report recommended the appellant not be permitted to participate in the industry in Queensland. In Ainsworth the High Court held that the appellant had a real interest in that dispute, notwithstanding that certiorari and mandamus were unavailable, because the Commission had a duty of fairness and the report had practical consequences for the appellants’ reputations.
The defendants submitted that Ainsworth was factually far removed from the present case which involves an alleged breach of covenant. The dispute in the present case is whether the first plaintiff has a proprietary interest in the land sufficient to pursue a claim for damages for breach of the Covenant. The Covenant is not enforceable as a mere contract because neither the first plaintiff nor the defendants were privy to the contract as covenantee or covenantor. If the first plaintiff has no proprietary interest in the Covenant, then the first plaintiff has no real interest in the question whether the written terms of the Covenant have been breached. A declaration to that effect would be genuinely hypothetical and of no utility because the first plaintiff could not obtain an award of damages for the hypothetical breach.
I accept the defendants’ submission that if the plaintiffs cannot establish a proprietary interest in the Covenant, they have no standing to seek damages for its alleged breach or to seek an injunction requiring the Pereiras to bring the Pereira Land into compliance with the Covenant. I have found that neither the first nor second plaintiff’s land carries the benefit of the Covenant and that the Covenant is unenforceable. This means that the plaintiffs would be seeking declaration in relation to an unenforceable covenant to which neither was a party and which does not benefit either plaintiff’s land. This is a matter in which the plaintiffs have no real interest.
Conclusion
I have found that each of the five questions posed by the parties should be answered in the negative. It is therefore appropriate that I dismiss the plaintiffs’ proceeding and make the declarations sought in the defendants’ counterclaim.
My preliminary view, subject to any submission the parties wish to make, is that costs should follow the event so that the plaintiffs should pay the defendants’ costs of the proceeding on a standard basis. I request the parties confer on the question of costs. If the parties are unable to reach agreement on the terms of any costs order within seven days of the date of this judgment, the proceeding will be relisted for oral submissions on costs.
SCHEDULE OF PARTIES
| S ECI 2024 03026 | |
| BETWEEN: | |
| GRAHAM WEGNER | First Plaintiff/First Defendant by Counterclaim |
| GRAHAM FREDERICK BAKER | Second Plaintiff/Second Defendant by Counterclaim |
| - v - | |
| JOSEPH JUSTINO PEREIRA | First Defendant/First Plaintiff by Counterclaim |
| ROWENA JUDELINE PEREIRA | Second Defendant/Second Plaintiff by Counterclaim |
[1][2017] VSC 779, [21] (citations omitted).
[2]Randell v Uhl [2019] VSC 668, [57]; Xu v Natarelli [2018] VSC 759, [105].
[3](2023) 73 VR 275.
[4](2007) 233 CLR 528.
[5](2020) 268 CLR 638.
[6]Jeshing (n 3) [31].
[7][2010] NSWCA 64, [158] (citations omitted).
[8]Deguisa (n 5) [71].
[9]Ibid [88].
[10]Jeshing (n 3) [43]-[45] (citations omitted).
[11][2000] VSC 258, [93].
[12]Randell v Uhl (n 2) [10], [14], [15], [18], [21(a)], [21(e)], [21(k)], [41(j)] and [41(k)].
[13]Deguisa (n 5) 664 [2]; Jeshing (n 3) [44].
[14]Jeshing (n 3) [31].
[15][2025] VSC 9 (313 Investments).
[16]Ibid [47] (citations omitted).
[17]Re Hunt (n 1) [25]-[26].
[18]Section 3(1) of the Subdivision Act.
[19]Ibid s 5(1).
[20]Ibid s 24(1) and 24(2)(f).
[21]Ibid s24(3).
[22]Ibid s 24(5).
[23]Section 27(4) of the TLA.
[24]Deguisa (n 5) [53]-[89]; Re Dennerstein [1963] VR 688, 694-697 (Hudson J); Vrakas v Mills [2006] VSC 463, [40]-[50] (Hargrave J); Re Hunt (n 1) [29]-[42] (Lansdowne AsJ); Xu v Natarelli [2018] VSC 759, [34]-[67] (Ierodiaconou AsJ); Randell v Uhl (n 2) [61], [79]-[83] (Derham AsJ); Re Pomroy [2021] VSC 739, [74]-[78] (Matthews AsJ); Martin v Lindeman [2024] VSC 452, [67]-[75] (Irving AsJ).
[25]Fitt (n 11) [328] and [330]-[331].
[26][2006] VSC 463, [31]-[33].
[27]Vrakis v Mills (n 26) [45].
[28]Re Hunt (n 1) [14].
[29]Counsel also referred to the cases of Re Ferraro [2021] VSC 166, [41]-[45] (Matthews AsJ) and Re Pomroy [2021] VSC 739, [64]-[68] (Matthews AsJ) as further examples where the Court had proceeded in an application for declarations ex parte.
[30](1992) 175 CLR 564, 581-582 (per Mason CJ, Dawson, Toohey and Gaudron JJ) (Ainsworth).
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