Double Bay Bowling Club v Council of the Municipality of Woollahra trading as Woollahra Municipal Council

1. [1]

   The Plaintiff, the Double Bay Bowling Club (“the Club”) (for whom Mr J Lazarus SC and Mr M Sheldon appear) is a company limited by guarantee and owns and operates a bowling club at 18 Kiaora Road, Double Bay in the eastern suburbs of Sydney NSW. The Club owns two parcels of land, one known as “Lot 101” on which the three lawn bowls greens and a clubhouse are located (and the address of which is 18 Kiaora Road, Double Bay) and another parcel “Lot 9” which is known as 42 Glendon Road, Double Bay. The rear of Lot 9 abuts Lot 101. Lot 9 for many years had a cottage on it which was used as a residence for the Club’s greenkeeper. In 2018 the cottage was demolished and there are now two townhouses being constructed on the site which are almost complete.

2. [2]

   The Defendant, Woollahra Municipal Council (“the Council”) (for whom Mr T Lynch SC and Mr D Meyerowitz-Katz appear), is a statutory body created under the Local Government Act 1919-1943 (NSW) (“the LGA”), the municipality of which includes Double Bay.

3. [3]

   Lot 101 and Lot 9 (together with another parcel of land which is known as “Lot 100”) were sold to the Club on 29 January 1948 by the Council and the sale included an agreement by the Club to a restricted covenant, the terms of which are as follows (at CB3 1262):

4. [4]

   It should be noted that the Covenant identifies that the “lands to which the benefit of this covenant is intended to be appurtenant are the lands comprised in and known as Glendon Road and Kiaora Road in the Municipality of Woollahra.” In 1948 a restrictive covenant, even one obtained by a local council, had to benefit specific identified land.

5. [5]

   Between 2015 and 2016 there were discussions between representatives of the Club and the Council concerning the Covenant. This was in the context of the Club’s concerns as to declining membership and an associated decline in revenue. The Club in 2015 thought that it could build townhouses on Lot 9 and rent out these townhouses, thereby obtaining a degree of financial security for itself going into the future. The Club in the discussions with Council in 2015 indicated through two of its directors that it did not intend to sell the townhouses when constructed. The Council indicated a willingness to agree to effective removal of the Covenant, but was keen to ensure that if the townhouses were sold the Council would receive compensation in effect for removal of the Covenant. There is disagreement as to the outcome of those discussions, which I shall explain more fully below.

6. [6]

   The Club seeks an order pursuant to s 89(1) of the Conveyancing Act 1919 (NSW) (“Conveyancing Act”) that the Covenant be extinguished contending that it is “obsolete”, that continued existence of the Covenant would impede the reasonable user of the land subject to the Covenant and extinguishment of the Covenant will not injure the Council, and that Council has by its acts or omissions waived the benefit of the Covenant.

7. [7]

   The Council resists the claim for extinguishment on each of the grounds advanced by the Club. The Council also asserts that by an exchange of correspondence, the Council and the Club reached what the Council asserts was a binding agreement the terms of which were that:

   1. (1)

      the Council would agree to the removal of the existing Covenant;

   2. (2)

      the Club would agree to the imposition of a new “restriction” which would require the Club to pay compensation to the Council in the event that it sold Lot 9 or any of the townhouses to be built (“the Restriction”); and

   3. (3)

      the compensation payable to the Council would be determined by an independent valuer and based on the “Before and After Method” of valuation. This method requires an assessment of the value of the land with the restrictive covenant in place and the value of the land without the restrictive covenant in place and the Club to pay the Council the difference between those two figures.

8. [8]

   Council’s Closing Submissions (“DCS”) at DCS 5 set out a convenient enumeration of the issues that remain for determination (estoppel and misleading and deceptive conduct having been abandoned by the Council) on the parties’ respective cases:

9. [9]

   In respect of [8(h)] and [8(i)] above, many issues are advanced by the Club as to why it asserts that there was no binding agreement between itself and the Council and, alternatively, if there was an agreement why it is not enforceable. One of the matters pleaded by the Club was abandoned, namely the defence of common mistake: see paragraph 43 of the Plaintiff’s Supplementary Submissions (“PSS”).

10. [10]

    In its case the Club led evidence from Mr Barry Lazarus, who was cross examined and who at all relevant times has been a director and chairman of the Club and the principal person acting on behalf of the Club in connection with the development of Lot 9 and negotiations with the Council. He is also a solicitor and his firm, Lazarus Legal, acts for the Club in these proceedings. To avoid confusion with references to Mr J Lazarus SC I shall refer to Mr Barry Lazarus as Mr B Lazarus.

11. [11]

    I received from the Club two sets of written submission: the Plaintiff’s Opening Submissions (“POS”) and the Plaintiff’s Supplementary Submissions (“PSS”). From the Council I received written Opening and Closing Submissions (“DOS” and “DCS”).

12. [12]

    The Club also relied on the evidence of Mr Robert Fetherston, who was for a number of years the greenkeeper of the Club, and Ms Jillian Sneyd, a town planner. Mr Fetherston was not cross examined.

13. [13]

    The Council relies on the evidence of Ms Toni Zeltzer, Mr Tom O’Hanlon, Mr Tony Myers, Mr Zubin Marolia, and Mr Nick Economou all of whom are Council employees or officers. Ms Zeltzer, Mr O’Hanlon and Mr Marolia were cross examined.

14. [14]

    The Council led evidence from Mr David Ryan, a town planner, and Mr Darren Keen, a valuer, both of whom were cross examined, and from a Mr Anthony St Leon who was not cross examined.

Short History of Lots 9, 100 and 101 prior to September 2015

1. [15]

   I set out a short history of the land that is not the subject of any dispute (and which is taken principally from a Report of Council dated 31 August 2015, at CB4 2517):

   1. (1)

      In 1940, Council purchased the parcel of land, which later became Lots 100 and 101 DP 614016, from the Metropolitan Water, Sewerage & Drainage Board (now known as Sydney Water) for £1,599, based on Council’s agreement with the Board that the land would only be used for recreational purposes.

   2. (2)

      In 1941, Council purchased the land of adjoining Lot 101, which became Lot 9 DP 32788, from Winifred Dingle for £1,150.

   3. (3)

      In 1942, Council leased the whole of the above lands to Double Bay Bowling Club Limited.

   4. (4)

      In 1948, Council sold the whole of the above lands to Double Bay Bowling Club Limited, for £8,525 subject to the creation of the Covenant. Council reserved the right to release vary or modify the Covenant.

   5. (5)

      In 1973, the Club requested a zoning change from Residential 2(b) to Open Space to reduce its rate burden. Council supported the rezoning of the land to recreational purposes in connection with a bowling club.

   6. (6)

      In 1975, the whole of the Club was rezoned to Open Space Recreation (Private) 6(b) by Interim Development Order No. 15.

   7. (7)

      In 1976, the Club proposed to build six townhouses on the southern end of the site (being Lot 100 DP 641016) requiring another rezoning and a partial release of the Covenant. The then Metropolitan Water, Sewerage & Drainage Board advised Council that the requested release of the Covenant was a matter for Council to decide. The Board also advised that a monetary contribution should be sought from the Club for the purchase of Open Space land elsewhere in the Municipality.

   8. (8)

      At its meeting on 14 March 1977, Council agreed to partially release the Covenant for Lot 100 DP 614016, subject to the Club paying a monetary contribution for Open Space, a dedication of 300m2 for public garden and recreation space, and a restriction on the number of townhouses to be developed on the site.

   9. (9)

      At its meeting on 11 December 1978, Council resolved to agree to the Club’s request to increase the number of townhouses, subject to the Club making a monetary contribution in lieu of the proposed dedication of 300m2 of land.

   10. (10)

       On 29 August 1980, the Interim Development Order No. 15 was altered to allow part of the then Club site Lot 100 DP 614016, to be developed for the purpose of residential flat building of no more than 12 dwellings. The monetary compensation payable to Council for contribution to open space was $153,461 for 1,040m2 equating to $147.55 per m2. Approval was granted in accordance with BA 1145/80.

   11. (11)

       On 20 August 1981 Council released the Covenant for Lot 100 DP 614016, and Lot 100 was sold to a developer.

   12. (12)

       Lot 100 was an area of approximately 3,254m2. Lot 101 is an area of 8,860m2 and Lot 9 approximately 500m2: see T175-176.

   13. (13)

       In 1988 the remaining Club site comprising Lot 101 DP 614016 and Lot 9 DP 32788 were zoned Residential 2(b) under Local Environment Plan No. 27. The present zoning for the site under Woollahra Local Environmental Plan 2014 (NSW) (“WLEP 2014”) permits residential development.

   14. (14)

       In 2011 the Club requested Council to release the Covenant in relation to the remainder of the site, comprising Lot 101 DP 614016 and Lot 9 DP 32788. Research was undertaken by Council’s Property staff and the information was provided to Council’s consultant HWL Ebsworth (“HWL”) to seek their advice as to the course of action available to Council in this matter.

   15. (15)

       HWL reviewed the information and also undertook further investigations regarding the Club’s request and to identify matters Council should consider when deciding whether to release the Covenant and if so, what monetary compensation should reasonably apply and whether Council should impose (as a condition precedent of release) any limit on development.

   16. (16)

       Some months later, Council received a letter from the Club’s then solicitors Diamond Conway Lawyers, which advised that the Club no longer wished to have the Covenant removed.

   17. (17)

       In March 2015 Council again received a request from the Club to remove the Covenant from Lot 9 DP 32788 only, with an estimated area of 495.4m2 for the possibility of developing the site to accommodate three units or townhouses in compliance with the current zoning of the property. In 2015 Lot 9 had a single storey cottage which as at 2015 was rented out as a residential dwelling to the Club’s greenkeeper.

History of Lot 9 in and after September 2015

1. [16]

   To these facts there need to be added the following further matters occurring from September 2015 onwards:

   1. (1)

      On 7 September 2015 the Council resolved (see CB4 2542):

   2. (2)

      On 29 October 2015 the Council wrote to the Club (at CB4 2583) advising of the resolution and stating:

   3. (3)

      Reference was made on 1 November 2015 at an AGM to the negotiations by the Chairman (Mr B Lazarus), the Secretary and others with the Council “to partially lift the Club’s grounds Covenant to allow residential development of the greenkeeper’s cottage for continuing residential use”: see CB4 2585.

   4. (4)

      On 13 November 2015 Mr B Lazarus wrote (at CB4 2614) to the Council on behalf of the Club stating:

   5. (5)

      On 18 November 2015 the Council wrote to the Club (at CB4 2651) stating:

   6. (6)

      On 2 February 2016 the Club’s directors (at CB4 2655) resolved:

   7. (7)

      At a directors meeting on 1 March 2016 Mr B Lazarus reconfirmed that only two townhouses could be built on Lot 9: CB4 2657. The minutes note Mr B Lazarus “received advice that the current market rental can be achieved at $3000 per week for each townhouse.”

   8. (8)

      Following a follow-up email from Council of 12 May 2016, on 19 May 2016 in an email Ms Caroline Van, a solicitor in the employ of Mr Lazarus’ law firm, wrote to Council (at CB4 2659):

   9. (9)

      On 5 July 2016 Ms Van (as a solicitor and as an assistant to Mr B Lazarus) wrote to the Council (at CB4 2823):

   10. (10)

       On 17 August 2016 Mr Brian Olliver of HWL wrote to Ms Wendy Williams (Property Officer at the Council) stating (at CB4 2715):

   11. (11)

       On 18 August 2016 the Council wrote to the Club seeking its agreement to pay the estimated fee of $1,850. Ms Van, by email of 26 August 2016, said that the Club agreed: CB4 2722. In that email Ms Van asked again as to when the Club could expect to receive the documents.

   12. (12)

       On 26 August 2016 Ms Williams of the Council advised Ms Van (at CB4 2722):

   13. (13)

       On 23 November 2016, Ms Van asked for an update (see CB4 2820) and the response was Ms Williams was waiting for a response from Council’s solicitors and “will get back to you when I can” (CB4 2820).

   14. (14)

       On 18 July 2017 the Club lodged a Development Application Form (“DA”) with the Council for demolition of the cottage on Lot 9 and construction of dual occupancy building with basement parking level and Strata Title subdivision (CB4 2839). The DA contained the following:

   15. (15)

       On 3 January 2018 the Council gave a Development Consent (No. 336/2017/1) to the dual occupancy plan: CB5 3029-3078.

   16. (16)

       After consent was obtained the Club commenced demolition of the cottage and the outdoor toilet.

   17. (17)

       During the course of construction there have been two problems. First there has been litigation brought by the owners of No 31 Glendon Road against the Club. Those proceedings (which are ongoing) relate to piling work conducted by the Club’s building and the alleged consequences of that work and have proven to be very expensive for the Club (which has incurred costs of in excess of $300K). Secondly the costs of construction have proven to be far in excess of what was anticipated.

   18. (18)

       On 16 January 2020, Mr B Lazarus, as solicitor acting on behalf of the Club, wrote to the Council (CB5 3556). That letter advised the Council:

   19. (19)

       On 22 January 2020 the Council’s solicitor HWL wrote to Mr B Lazarus at Lazarus Legal and enclosed a Release of the Covenant and a new version of the restriction sought by the Council (CB5 3559). The proposed restriction included a detailed Annexure A which set out a number of provisions including the following:

   20. (20)

       On 29 January 2020 the Council wrote to Mr B Lazarus as Lazarus Legal pointing out that the Council had resolved to release the Covenant but only subject to the imposition of a new restriction (CB5 3567):

   21. (21)

       On 14 February 2020 HWL wrote to Mr B Lazarus (as Lazarus Legal) (at CB5 3570) stating:

   22. (22)

       On 28 April 2020 Mr B Lazarus, as chairman of the Club, wrote to the Council (CB5 3573) stating:

   23. (23)

       On 28 May 2020 the Club commenced these proceedings having received no reply prior to that date to the letter of 28 April 2020 referred to in (22) above.

Further Factual Matters

1. [17]

   There are some additional factual matters to which reference needs to be made:

   1. (1)

      The cottage on Lot 9 was used as a temporary clubhouse for a short period before 1948 (i.e. even before the Club purchased Lots 9, 100, and 101) and from 1948 until 1954 when the current clubhouse on Lot 101 was completed. The cottage was in or shortly after 1954 turned back into a residential cottage.

   2. (2)

      For many years the cottage was used as a residence by a greenkeeper employed or, in later years, contracted by the Club. Between 1991 and 1993 a Ms Cheryl Hayne occupied Lot 9 under a lease. Ms Hayne was not a member of the Club and not a greenkeeper: see the Affidavit of Mr Fetherston of 28 October 2020. Mr Fetherston was apprentice greenkeeper from 1982 to 1986 and greenkeeper at the Club from 1991 and continuing (on a contract, but not as an employee). He became a member of the Club in 1991. Between 1993 and 2018 Mr Fetherston lived at Lot 9 until the cottage on Lot 9 was demolished as part of the dual occupancy work.

   3. (3)

      Mr Fetherston remains the Club’s greenkeeper. He also is and for some years has been the greenkeeper for another bowling club: see paragraph 1 of his Affidavit of 24 July 2020, CB1 136. The Club’s previous greenkeeper, Mr Colin Groch, was also the greenkeeper for City Bowling Club and Rose Bay Bowling Club.

   4. (4)

      There are now two townhouses on Lot 9 nearing completion. The lot has not yet been subdivided.

   5. (5)

      The Club intends to progress with subdivision and sell at least one of the townhouses, subject to the removal of the Covenant.

   6. (6)

      The Club decided in early 2016 that it would not be able to accommodate a greenkeeper on Lot 9 in the new development and it has no intention of using the townhouses for anything other than sale or rental at a commercial rate.

   7. (7)

      There was at all times up to 2018 an outdoor toilet on Lot 9. The toilet was accessed by Club members from the greens on Lot 101 and was beyond the gate at the rear of Lot 9: see the Affidavit of Mr Fetherston at paragraph 4, CB1 136. It was used by Club Members until it was, along with the cottage, demolished (see paragraph 13 of the Affidavit of Mr Fetherston at CB1 137). There was, in effect, agreement that the outdoor toilet was not of importance in the case: see T258.4.

   8. (8)

      The sport of lawn bowls is in decline and many clubs in or around the Woollahra area have closed: see the Affidavit of B Lazarus of 1 August 2020 (CB1 152).

   9. (9)

      Use of Lot 9 for any purpose in connection with the bowling club (other than rental at a market rate or sale) would not be financially viable and would have a significant impact on the Club: see the Affidavit of B Lazarus of 9 September 2020 at paragraph 3 (CB2 854), and his Affidavit of 1 August 2020 at paragraphs 41 and 43 (CB1 151), and T106.47-107.42 and T101.5-37.

   10. (10)

       Since 2015 it has been the Club’s intention to develop Lot 9 for residential purposes.

   11. (11)

       Since 1954 Lot 9 has been used exclusively as a residence, save for the outdoor toilet on Lot 9.

   12. (12)

       Lot 9 is within the R3 Medium Density Residential Zone (“R3 Zone”) of the WLEP 2014. Lawn bowls is not a permitted use in the R3 Zone.

   13. (13)

       The Club is facing significant financial stress because the costs of construction of the townhouses has exceeded the anticipated costs, not only because of litigation with the owners of No 31 Glendon Road, an adjoining property to Lot 9.

   14. (14)

       The Club has experienced a decline in revenue from its operations during the COVID-19 period and its restrictions and effect on patronage: see paragraph 44 of Mr B Lazarus’ Affidavit of 1 August 2020 (CB1 152).

   15. (15)

       When the Council received and considered the 2017 DA the Council officers who dealt with the DA were not aware of the Covenant or of the discussions between the Council and the Club to which I have earlier referred: see paragraph 8 of Mr Economou’s Affidavit of 28 August 2020 (CB2 904) and paragraph 137 of the Affidavit of Mr Marolia of 28 August 2020 (CB2 922).

Legislative Provisions

1. [18]

   The following legislative provisions are relied on by the parties:

   1. (1)

      Section 54A of the Conveyancing Act:

   2. (2)

      Section 89(1) of the Conveyancing Act:

   3. (3)

      Sections 4.3, 4.65 and 4.66 of the Environmental Planning and Assessment Act 1979 (NSW) (“EPA”):

   4. (4)

      Sections 20(1)(e), 20(2), 57 and 58 of the Land and Environment Court Act 1979 (NSW) (“LEC Act”):

   5. (5)

      Section 50(3) of the Interpretation Act 1987 (NSW):

   6. (6)

      Section 9(1) of the Electronic Transactions Act 2000 (NSW) (“the Electronic Transactions Act”):

   7. (7)

      Sections 1.9A(1),(2) and (3) of the WLEP 2014:

The Town Planners’ Evidence

1. [19]

   Ms Sneyd’s evidence on what appears to be the more significant issues was to the following effect:

   1. (1)

      Use of Lot 9 (and Lot 101) for bowling club purposes has been prohibited since 1995 save and to the extent that the Club has existing use rights: see the Supplementary Report of Jillian Sneyd dated 21 August 2020 (“the Sneyd Supplementary Report”) at CB2 479 and the Report of Jillian Sneyd dated 6 August 2020 (“the Sneyd Report”) at CB1 181-182.

   2. (2)

      WLEP 2014 excludes the use of Lot 9 as a “recreational facility (outdoor)” or a “registered club”: see the Sneyd Report at CB1 183.

   3. (3)

      A bowling club is not a permitted recreational facility as defined in WLEP 2014: see the Sneyd Report at CB1 183.

   4. (4)

      Lot 101 can, however, continue to be used as a bowling club because existing use rights are protected (by reason of s 4.11 and s 4.66 of the EPA), and the Council has acknowledged those rights: see the Sneyd Supplementary Report at CB2 477-478 and T156.27-42.

   5. (5)

      “Existing use rights” can only be relevant where the use being made of the land is not otherwise permitted by the planning instrument.

   6. (6)

      If there were any existing use rights in relation to use of Lot 9 as a use ancillary to a bowling club they were abandoned by reason of the demolition of the cottage and construction of the townhouses: see the Sneyd Supplementary Report at 14.11 at CB2 486, and may have been abandoned in 1954 when the cottage was reconverted back to a residence (T152.41-153.8) although she thought that in a “town planning sense” use of Lot 9 as a residence for a greenkeeper was an ancillary use and therefore “permissible as an existing use rights”: T154.7.

   7. (7)

      The Covenant seeks to enforce a prohibited use of Lot 9: see the Sneyd Supplementary Report at CB2 479.

   8. (8)

      The townhouses are incapable of being used consistent with the Covenant: Sneyd Report at CB1 184-186.

   9. (9)

      In 1948 there was no planning legislation in force which permitted Council to control the use of the land and the Covenant was imposed as a substitute for planning controls: Sneyd Report at CB1 189.

   10. (10)

       The Covenant is obsolete in that its original purpose is no longer served: Sneyd Report at 17.5-17.8 at CB1 189-190. Any useful purpose expired more than 60 years ago.

   11. (11)

       Planning controls that Council might want to put in place can now be achieved through the EPA: Sneyd Report CB1 191.

   12. (12)

       Residential use of Lot 9 will ensure that the scale and type of development is “more consistent with that of the remainder of Glendon Rd than a bowling club use”: Sneyd Report at 19.4 at CB1 191.

   13. (13)

       “Limiting the use of Lot 9 to a bowling club use would not be beneficial from the perspective of amenity and traffic impacts on Glendon Road which is of a purely residential character. Equally, in light of the approved and partially constructed dual occupancy development on Lot 9, there would be no impact upon traffic in Kiaora Rd in limiting the use of Lot 9 to a bowling club use”: Sneyd Report at 19.6 at CB1 192.

   14. (14)

       “The use of Lot 9 to provide for example additional access to the Bowling Club lands would be likely to have a detrimental impact upon the residential amenity of Glendon Road properties by additional traffic making use of Glendon Road”: Sneyd Report at 19.7 at CB1 192.

2. [20]

   The evidence of Mr Ryan, the Council’s expert, was to the following effect:

   1. (1)

      Mr Ryan accepts [19](1), (2), (3), (4), (5) and (9): see the Report of Mr Ryan dated 4 September 2020 (“the Ryan Report”) at CB2 932, and see T205.45, T210.39 and T211.38.

   2. (2)

      Mr Ryan does not agree that the Covenant has become obsolete. He contends that use of Lot 9 for the purpose of housing a greenkeeper employed by the Club is incidental to a recreational purpose of the Club and therefore is a use that can continue to be made of any residential dwelling on Lot 9, i.e. the former cottage or the townhouses.

   3. (3)

      Mr Ryan is of the view that using Lot 9 as a residence for a greenkeeper will not adversely impact on the residential amenity of Glendon Road: see paragraph 93 of the Ryan Report at CB2 942.

   4. (4)

      The Club has not lost existing use rights to continue to use Lot 9 for a recreational purpose of a bowling club.

   5. (5)

      Whether or not the Club’s greenkeeper resides at Lot 9 is just a matter of convenience not an essential part of his employment by the Club: T201.38-46.

   6. (6)

      Mr Ryan did not agree with [19](14) – in his view use of Lot 9 in accordance with the Covenant would not involve any increase in traffic and parking, and I take him to not agree with [19](12) and (13) because he thinks that use as a residence for a greenkeeper is still a residential use, albeit an ancillary purpose of the Club.

   7. (7)

      Whether the greenkeeper is employed solely by the Club or by other bowling clubs makes no difference as to whether his residence at Lot 9 is ancillary to the purpose of the Club (T201.50-202.14), nor would it matter that he lived there with his family (T202.43).

   8. (8)

      Mr Ryan thought that if the greenkeeper did any work for the Club that would make his occupation of Lot 9 an ancillary use for the Club: T203-204.

   9. (9)

      Mr Ryan posited the use of one of the townhouses as accommodation for a greenkeeper and the other for someone who has a connection or a role to play with the Club. He is of the view that the Council’s approval of a dual occupancy to replace the cottage is not of itself evidence of abandonment or extinguishment of the ancillary recreational use: see paragraph 72 of the Ryan Report at CB2 940.

   10. (10)

       Mr Ryan contended that the Covenant imparts “a public benefit in providing recreational facilities to the local community accessible via Council’s nominated roads”: paragraph 74 at CB2 941.

   11. (11)

       Mr Ryan agreed that neither of the townhouses could be used as a clubhouse for the Club: see T208.36.

   12. (12)

       Mr Ryan agreed that:

   13. (13)

       At T209.43 to T210.33 there was the following exchange between Mr Lazarus and Mr Ryan:

   14. (14)

       Mr Ryan accepted that if existing use rights had been abandoned Lot 9 could not be lawfully used for any recreational use associated with a bowling club: T205.45-47, T211.49 and see T209-210.

   15. (15)

       This year Council embarked upon a rezoning of Lot 101 as a recreational zone but that did not, so far as he was aware, include Lot 9: T212.9-15.

3. [21]

   In cross examination Ms Sneyd agreed or stated that:

   1. (1)

      The question of whether a restrictive covenant permitted use was quite distinct from whether a development consent approved a use (T166.19), save that Council could not, based on what the Covenant provided, approve a use that the zoning did not permit: T166.23-24.

   2. (2)

      The question of abandonment of existing use rights involves a consideration of intention (T166.41) and of the extent to which the further use is different to the use in place at the time of abandonment (T166.46).

   3. (3)

      Use of Lot 9 for residential purposes is unaffected as to whether it is used as a residence for a greenkeeper: T142.1-20 (i.e. use as a residence for a greenkeeper is permissible, not because the occupant is a greenkeeper, but because it is a residence).

   4. (4)

      The house on Lot 9 was converted into a Clubhouse from 1941 and converted back to a house in 1954 when the Clubhouse on Lot 100/101 was completed: T143.9-12.

   5. (5)

      “Recreational purpose” is not a term of art in the town planning field: T144.27.

   6. (6)

      In approving a development Council is not required to take into account whether or not the proposed development is permitted by a covenant: T145.

   7. (7)

      There was a change of use because whilst still residential it was for a dual occupancy rather than single: T148.31-33.

   8. (8)

      “Residential use” was a permissible use under the zoning at least from 1995: T149.17.

   9. (9)

      That there is no benefit to Council in respect of Lot 101 by reason of the Covenant remaining on Lot 9: T170.48-171.41.

   10. (10)

       Preservation of a space for use as a private recreational facility is of benefit to Council if it decides that is what it wishes to do as part of the service to its locality: T184.23-30.

4. [22]

   Ms Sneyd was an impressive expert witness whose views I would readily accept, but in fairness to Mr Ryan, whose integrity and expertise were not impugned, the areas of dispute between him and Ms Sneyd identified in the DCS were quite limited and the major area of dispute revolved around the interpretation of the Covenant, which both he and Ms Sneyd agreed was a legal question, the use of Lot 9 and whether or not there was any benefit to the Council and the public in the maintenance of the Covenant, which largely centres around whether the effect of the Covenant on Lot 9 is to be considered separately to its effect on Lot 101, a matter which I will deal with at [70].

5. [23]

   I proceed on the basis that:

   1. (1)

      Use of Lot 9 for the recreational purposes of a bowling club is prohibited under R3 Zoning now applicable to Glendon Road (and has been prohibited since 1995), save to the extent that existing use rights have been retained.

   2. (2)

      The question of whether the use of Lot 9 as a residence is a breach of the Covenant is a legal question, as is whether use of residence for a greenkeeper is ancillary to the use of Lot 9 for a recreational purpose.

   3. (3)

      When Council consented to the development of Lot 9 it imposed no condition restricting its use as a residential lot and use as a dual occupancy is permitted by reason of the Development Consent and the R3 Zoning, but that there is no agreement as to whether the consent of Council amounted to a waiver of the Covenant.

   4. (4)

      The matters in [19](1), (2), (3), (4), (5) and (9) and [20](5) and (11) are not in dispute.

The Valuation Evidence

1. [24]

   Mr Keen of Keen Property was retained on behalf of the Council to value Lot 9 as at 19 May 2016 and 22 July 2020 firstly on the basis of the Covenant in place and secondly without the Covenant. He assessed Lot 9 with the Covenant as at 19 May 2016 as having a value of $1.1M and without the Covenant as having a value of $3.65M, a difference of $2.55M. He assessed the equivalent values at 22 July 2020 as $1.2M and $4.2M, with a difference of $3M (see page 4 of the Keen Property Valuation Report at CB2 961).

2. [25]

   Based on Mr Keen’s assessment and on the Council’s case, the Club would be required to pay the Council $3M “compensation” for selling the property with no covenant in place in accordance with the Before and After Method which the Council proposed and the Club accepted was the appropriate method (on the Council’s case as part of a binding agreement).

3. [26]

   The Club had obtained a report from a valuer (a Mr Field) but withdrew any reliance on Mr Field’s report following cross examination of Mr Keen.

4. [27]

   Mr Keen in cross examination made a number of important concessions and was refreshingly candid in so doing. I summarise the matters of significance:

   1. (1)

      Mr Keen admitted that he had never seen a covenant like that in question here (T215.12-15) and it was challenging to work out a method of valuation which he did by “some lateral thinking” (T215.20), parts of which were highly subjective (T215.27) and were not conventional.

   2. (2)

      There was only one way he could see that Lot 9 could be valued with the Covenant, which was by contemplating an investor purchasing Lot 9 and leasing Lot 9 back to the Club to use Lot 9 for staff accommodation (T216.6-14).

   3. (3)

      Mr Keen could find no sales of land comparable to Lot 9 (T216.49-217.2) because there were no comparable sales with a restrictive covenant similar to the Covenant (T217).

   4. (4)

      In forming his view on the approach he took, Mr Keen made a number of assumptions, namely that:

   5. (5)

      The Spencer test (see Spencer v The Commonwealth of Australia [1907] HCA 82; (1907) 14 ALR 253) requires that the purchaser and vendor are willing but not anxious and are prudent and taken to be aware of all relevant matters affecting value. Zoning would be a critical matter affecting a hypothetical purchaser (T219.30).

   6. (6)

      Because no purchaser would be interested in buying a property for a use that was prohibited he had to find a purpose that would not be prohibited and that is why he came up with a purchaser who buys the land in order to lease it back to the Club. Mr Keen accepted that existing use rights are in fact not relevant (T221.10). He agreed that with the Covenant in place and no existing use rights he could not identify a use for the Property and would agree that there would be no market for Lot 9 as at 2016: T220.12-34.

   7. (7)

      Mr Keen accepted that he could not himself determine whether use of the property as staff residences was consistent with the Covenant and he would need the input of a town planner and possibly legal advice (T222.5-17 and see T222.29-37).

   8. (8)

      Mr Keen accepted that if Lot 9 could not be used for staff accommodation his valuation methodology would be inapplicable (T222.23-T223.49).

   9. (9)

      Mr Keen admitted that although he was aware as at 2020 that the cottage had been demolished and that two townhouses were nearing completion (T228) his valuation could not proceed without the assumption that the cottage was still there.

   10. (10)

       Mr Keen took the view that if the Club was not interested in taking a lease back of Lot 9 as part of selling then it was not a willing vendor of the land because that was the only use of the property that was consistent with the Covenant.

5. [28]

   The relevance of Mr Keen’s evidence is said by the Council to be that a valuer could undertake the task that that the parties agreed was to be undertaken. The Club contends that Mr Keen’s evidence establishes that the task the valuer was required to perform could not realistically be performed because:

   1. (1)

      assumptions had to be made which were incorrect, i.e. that the Covenant permits use of the cottage as staff accommodation, and that there are no townhouses on Lot 9 as at 2020;

   2. (2)

      Lot 9 could not be treated as being a “de facto recreational zoning” as Mr Keen has assumed.

   3. (3)

      the task which a valuer would have to perform would be so far from the task that a valuer would normally perform that the valuer would require input from a town planner and possibly legal advice; and

   4. (4)

      Mr Keen has assumed that the Club would be interested in leasing back Lot 9 at a rental double the market rental.

6. [29]

   There was dispute as to whether the fact that the Club would not be willing to lease back Lot 9 (and hence remove the only viable option for use on Mr Keen’s assumptions) means that the Spencer test could not be applied.

7. [30]

   The Council referred to the decision of the High Court in Northern Territory v Griffiths [2019] HCA 7; (2019) 364 ALR 208. That was a case in which native title holders were entitled to compensation under s 51(1) of the Native Title Act 1993 (Cth) for “on just terms to compensate the native title holders for any loss, diminution, impairment or other effect of the act on their native title rights and interests”. The trial judge and the Full Court had first determined the economic value of the native title rights and interests and estimated the additional, non-economic or cultural loss occasioned by the consequent diminution in the native title holders’ connection to country. The plurality said at [84]-[85]:

8. [31]

   The Council relies on [85] to support the proposition that the Spencer test can be applied even when there is in reality no likelihood that the vendor (i.e. the native holders in Griffiths) would have had any interest in selling their rights.

9. [32]

   What appears at [85] in Griffiths does lend support to the proposition that Spencer can be applied even when there is unwillingness on the part of the vendor to sell but it is to be noted that the context which is described is “by means of the Spencer test of what a willing but not anxious purchaser would have been prepared to pay to a willing but not anxious vendor in order to buy them (or, more accurately, to obtain the latter’s assent to their extinguishment)” (emphasis added). It will be observed that Mr Keen did not attempt to make any assessment of that kind because he was not asked to do so. The question of what a not overly anxious Club would pay for the extinguishment of the Covenant and what a not overly anxious Council require to be paid for extinguishment of the Covenant would involve an assessment of what benefit the Covenant gave to the Council or of some legitimate interest the Council wished to advance.

10. [33]

    Even if the Club’s clear lack of interest in, as part of the sale, leasing back Lot 9 at a rate double the rent payable in the area could be ignored, that lack of interest would presumably be relevant to any purchaser’s interest, as would the Club’s (as the only possible tenant) ability to meet the higher rental payments and the ability of the purchaser to sell the property in the event of default by the Club. No purchaser could realistically expect to sell Lot 9 if there was default by the Club and the two townhouses could only be used as a residence for a greenkeeper or other staff of a bowling club as the Council propounds. If my construction of the Covenant is correct, not even that use was permitted.

11. [34]

    For the reasons I shall explain I do not think it is necessary to reach a conclusion on whether the valuation contemplated by the parties was really possible, but not only do I think that the evidence of Mr Keen throws up real doubt as to whether the task could be performed and certainly points to the fact that it could not be adequately performed by a valuer acting alone, his evidence demonstrates the artificiality of the process and the severe consequences to the Club if his valuation method met the requirements of the asserted agreement. On one view Lot 9 with the Covenant in place has no value. If Mr Keen had taken into account the value of Lot 9 with the townhouses in place the difference in value using the Before and After Method would have presumably been considerably higher than $3M.

Evidence of Mr B Lazarus

1. [35]

   In his evidence Mr Lazarus set out the history of the matter, and the Club’s financial position much of which I have recounted and as to which there was no dispute.

2. [36]

   Mr Lazarus does not dispute that he thought that he had an agreement in principle from the Council that would permit the Club to rent out the cottage originally: see T75.48-76.12 and T81.21-34. Mr Lazarus asserted that when he lodged the DA in 2016 he did not give thought to the Covenant: T81.38-48.

3. [37]

   Mr Lazarus’ evidence was that whilst he was authorised as director to negotiate terms on behalf of the Club he was not authorised to bind the Club to any final agreement concerning the terms for release of the Covenant and that there had never been a formal resolution of the Club authorising him or any other person on the board to agree to any agreement with the Council pertaining to the payment of compensation or a method of compensation if Lot 9 was sold: see paragraph 20 of his Affidavit of 1 August 2020 (CB1 147), and see T99.24-33. Mr Lazarus said that he intended to get advice on the proposed agreement when he received the documents: T102.44-48.

4. [38]

   Mr Lazarus deposed to the total costs of the project at Lot 9 being in excess of $5M (see paragraph 37 of his Affidavit of 1 August 2020 at CB1 150). He deposes to the fact that the Club’s funds have been significantly reduced by reason of the funding of the Lot 9 development and that the Club needs the rental income (at least) from the townhouses (and possibly the sale of one of the townhouses) to offset the reduced income both from the loss of funds due to the development and operating losses.

5. [39]

   Mr Lazarus said that if the Club was required to pay $4M to the Council for the right to sell the townhouses that would put the Club into liquidation: T72.40. Mr Lazarus said that he had not come to the realisation that the Before and After Method of valuation was very unfair to the Club until January 2020: T100.46-102.5.

6. [40]

   In cross examination, Mr Lazarus was taxed on his assertion that he did not consider the Covenant when he lodged the DA and on the question of whether he thought he had a binding agreement but the DCS do not attack his credit.

Evidence of Ms Zeltzer, Mr O’Hanlon and Mr Marolia

1. [41]

   Each of these Council witnesses were cross examined. There is no issue of credit involved.

2. [42]

   Ms Zeltzer, who was in 2015 the Mayor of Woollahra, was of the view that at that time the Council would have been amenable to release of the Covenant “if an appropriate amount of compensation was paid to the Council” (see T114.34-40 and paragraph 8 of her Affidavit of 27 August 2020 at CB1 895). Ms Zeltzer viewed the Covenant as an “asset” of the Council that could not be discharged “without serious consideration to its worth” (T115.4-7).

3. [43]

   Ms Zeltzer was not concerned about the amount which Council might get for release, only that it needed to be the “right” value, something that she could not have any input into. At T116.3-20 during cross examination, Ms Zeltzer said:

4. [44]

   Ms Zeltzer said at T117.20-28:

5. [45]

   Mr O’Hanlon was the director of technical services at the Council who reports directly to the general manager of the Council: T120.37.

6. [46]

   Mr O’Hanlon asserted that Lot 9 “has and continues to serve a role, to support the continuing role of the Club - the other lot, as a site of community recreation”: T124.17-19.

7. [47]

   During cross examination of Mr O’Hanlon there was this exchange at T124.4-T125.28:

8. [48]

   Mr Marolia gave evidence that he was not aware of the Club’s DA in 2017. Mr Marolia in his Affidavit said that, had he seen the DA, he would have wanted to see imposed a condition in the terms set out in paragraph 138 of his Affidavit of 28 August 2020 (CB2 922):

9. [49]

   Mr Marolia agreed that the reason he would have wanted a condition to that effect was because, in his view, the Covenant would have been inconsistent with the development the subject of the DA: see T127.47.

Evidence of Mr Myers and Mr Economou

1. [50]

   Mr Myers gave evidence disputing Mr B Lazarus’ version of a telephone conversation in which the Before and After Method of valuation was discussed and, according to Mr B Lazarus, Mr Myers’ said that this was “the fairest method of valuing the property so far as both parties are concerned”: see paragraph 17 of Mr B Lazarus’ Affidavit of 1 August 2020 (CB1 146). The dispute is of no real significance because the letter from the Council of 29 October 2015 described the method as one Council believed to be in the “best interest” of both the Club and the Council and the letter from the Council of 18 November 2015 spoke of the need for the assessment to be “transparent and fair and equitable”: see [16(2)] and [16(5)] above.

2. [51]

   Mr Economou, Manager of the Council’s Development Control Division, gave evidence as to the process of consideration of a development application, and his lack of knowledge of the Covenant.

Construction of the Covenant

1. [52]

   There was agreement that the proper approach to construction of the Covenant was summarised correctly by Williams J in The Owners – Strata Plan 85044 v Murrell; Murrell v The Owners – Strata Plan 85044 [2020] NSWSC 20 at 82:

2. [53]

   The Club contends that use of Lot 9 as a residence for the Club’s greenkeeper was not a use permitted by the Covenant. The Council contends that it is a permitted use. The assertion by the Club that it ceased long ago to comply with the Covenant is in contrast to the position that it has taken in the past when it suited it (see CB3 1423, 1427, 1444-45). The change of position is not dissimilar to that of the Council which contended earlier this year that the Development Consent was a breach of the Covenant, but now asserts that the townhouses can be used consistently with the Covenant.

3. [54]

   The critical words of the Covenant are “shall not except with the written consent of the Transferror or its successors be used for any purposes other than recreational purposes in connection with a Bowling Club…” (CB3 1262).

4. [55]

   There can be no doubt that use of Lot 9 from 1948 to 1954 as a clubhouse was a use for a recreational purpose in connection with a bowling club, but the question in this case is whether use of the property as a residence occupied by the Club’s greenkeeper is a use for a recreational purpose in connection with a bowling club. The words “for a purpose ancillary to a Bowling Club” are not found in the Covenant. As a matter of ordinary usage I do not think that residential use is for a recreational purpose simply because the person residing there is engaged, as an employee or contractor, outside of the property in which he resides, in a recreational activity, and that is so even if the property in which he resides is located next to the property on which the recreational activity is conducted.

5. [56]

   Lot 9 was not itself being used for a recreational purpose – i.e. no bowling was carried out on Lot 9 and there is no suggestion that the physical condition of Lot 9, even without the cottage upon it, was such that it could be used as a bowling green and it was not after 1954 being used as a clubhouse. It follows that the Club ceased to use Lot 9 in accordance with the Covenant from 1954.

6. [57]

   Although I have concluded that the Covenant did not permit use of Lot 9 for any purpose other than recreational use as a bowling club and that using Lot 9 as a residence for a greenkeeper does not fall within that very specific requirement, I will address the question of whether, assuming that use of Lot 9 as a residence for a greenkeeper is an ancillary purpose, that supports the Council’s case. Mr Ryan referred to the case of Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157 to support his contention that using Lot 9 to house the greenkeeper was an ancillary use to use for recreational purposes of a bowling club.

7. [58]

   Mr Lazarus contended that the question is not whether a prohibited use is ancillary to a permissible use but rather is the prohibited use an independent use of land, and he relied on Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 to establish that using Lot 9 as a residence would not be permissible use of Lot 9 even if it were ancillary to the purposes of the Club. Reference was also made to Capital Club v Commissioner of State Revenue [2007] VSC 108; (2007) 17 VR 357 and Ashfield Municipal Council v Australian College of Physical Education Ltd (1992) 76 LGRA 151.

8. [59]

   In O'Donnell (supra) the owner of the land had been using the land for extraction of soil and sand, then commenced operating the land as a riding school and the extraction of sand and soil continued on, it was claimed, an ancillary use. The trial judge, Holland J, had held that the extraction use was not permitted. Meagher JA (with the concurrence of Samuels AP and Clarke JA) in rejecting the appeal said at 409-410:

9. [60]

   An application of the principle in O’Donnell is found in Ashfield (supra) per Pearlman J. A college owned an educational establishment and on the other side of the road they owned two houses which were used as boarding houses which provided residential accommodation to students at the college. The Court held at 156 that:

10. [61]

    Another case, Capital Club (supra), is relied on by the Club. The Victorian Land Tax Act 1958 exempted land which “exists for the purpose of providing or promoting cultural or sporting recreation or similar facilities or objectives.” An issue arose in the case as to whether the fact that the residence of the greenkeeper and assistant greenkeeper (employed by the Club) were used for the purpose of providing sporting facilities. Mandie J at [58] said:

11. [62]

    In Foodbarn the relevant planning scheme prohibited use for “shops”. The appellants were operating a supermarket style business, particularly directed to the wholesale trade but retail buyers were also able to purchase goods. The Court of Appeal Glass JA (with whom Samuels and Huntley JJA concurred) upheld the trial judge’s decision that the sale of goods by retail was a subsidiary purpose for which the premises were being used and that the appellants were in breach of the planning instrument. The definition of shop was:

12. [63]

    That statement was cited with approval by Gibbs CJ in Lizzio v Ryde Municipal Council (1983) 155 CLR 211 at 216-217.

13. [64]

    It is true that a caretaker’s cottage on the land on which a factory is located can be seen as incidental to the industrial use of land, but the fact that here Lot 9 which was always residential (except for a brief period between 1948 and 1954 when it was used as a temporary clubhouse) was used as a residence of the greenkeeper does not make the use of Lot 9 anything more than residential use of the land – it does not render it a recreational use within the principle of Foodbarn. It needs to be borne in mind that Lot 9, unlike the property in Foodbarn, did not have two parts, one being used for a purpose which inspires the use of another part. The only use of Lot 9 was as a residential cottage for an employee/ contractor retained to look after the Club’s greens on Lot 101.

14. [65]

    The Council, in addition to Foodbarn, drew attention to Essendon Corporation v Cox [1967] VR 545 in which it was held (per Adam J) that even if land is used for a purpose that is not of the character of “outdoor sporting or recreational purposes”, if the immediate and direct purpose served by the use of the land is “fairly to be regarded as merely ancillary and incidental to those purposes” that is sufficient.

15. [66]

    I think that Cox would support the use of Lot 9 as a clubhouse since, whilst that does not see members using the land as a bowling green, a clubhouse is merely ancillary or incidental to the recreational purpose of bowling. The use of a cottage as a residence however is a separate use which, whilst convenient if the person residing is a greenkeeper employed by or contracted to the Club, is not merely incidental or ancillary to its use as a bowling club since it (i.e. Lot 9) is not used as a bowling club at all or for the recreational purposes of a bowling club.

16. [67]

    It follows that even accepting that use of land for a recreational purpose should be accorded a meaning akin to that utilised in planning instruments, renting a cottage to the Club’s greenkeeper is a “matter of convenience” rather than an “essential” matter and it would not meet the requirement of an ancillary or incidental use of Lot 9 as a recreational purpose.

17. [68]

    I will also deal with a further issue of construction, which is whether the Council consented in writing to the Club not using Lot 9 in accordance with the Covenant by its grant of the Development Consent – i.e. whether the consent given pursuant to s 81(1)(a) of the EPA is sufficient consent for the purpose of the Covenant or whether a separate consent is required because the Covenant provides (CB3 1262):

18. [69]

    The only “approval” to which the words “the approval herein mentioned” can be referring is the approval to designs and materials and heights which is to be in additional to and not in substitution for the approval mentioned in Division 4 of Part XI of the LGA. There is in the words of the Covenant in this section (and in contrast to the legislation dealing with modification) no reference to “or similar future legislation” or “legislation of a similar kind”, and so as a matter of construction of a private contractual term imposing a restriction on the use of land, I do not think words such as these can be read into the Covenant: see HDI Global Specialty SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296 at [44] per Meagher JA and Ball J (with whom Bathurst CJ and Bell P agreed) and [120] per Hammerschlag J (with whom Bathurst CJ and Bell P agreed) for a recent example of the rejection of the contention that a reference to an act (there the Quarantine Act 1908 (Cth)) included a reference to similar subsequent legislation. .

The ‘Coalescence’ of Lot 9 and Lot 101

1. [70]

   There is another issue which has assumed some importance in the case and which I should address now and that is Council’s contention that in considering the Covenant in relation to Lot 9 it is necessary to consider Lot 101 as well. The Club firmly resists any such coalescence – it says that its application pursuant to s 89 is solely related to Lot 9 – it does not assert that the Covenant insofar as it concerns Lot 101 has become obsolete or should be extinguished for any other reason. Mr Lynch submits that since Lot 101 and Lot 9 have always been used by the Club in conjunction with each other, Lot 101 needs to be considered together with Lot 9 and hence an advantage or benefit to the Council from the continued existence of the Covenant in respect of Lot 101 is required to be taken into account for determining whether the Covenant should be extinguished under s 89(1).

2. [71]

   In support of this, Mr Lynch draws attention to the fact that the Covenant was by reason of the transfer of the two parcels of land (Lot 9 and what was in 1948 effectively Lot 100 and Lot 101) imposed on both parcels by the same instrument.

3. [72]

   Whilst it is true that the Covenant was applicable to both parcels, I do not accept that the continued applicability of the Covenant to Lot 101 has any relevance to whether or not in relation to a separate parcel of land under a separate title the Covenant has become obsolete or should be extinguished on any other ground. The question for determination is whether viz a viz on Lot 9 the Covenant has become obsolete or should otherwise be extinguished and what needs to be assessed is whether there is any continuing benefit to the Council in the Covenant insofar as it concerns Lot 9. This is a very significant matter because the only real benefit to the Council and the neighbourhood that Mr O’Hanlon identified arose out of the use of Lot 101 as a recreational area, not Lot 9 (and see the Ryan Report at paragraph 52, CB2 938). It is also an important part of Council’s contention that the existence of the Covenant serves a practical benefit to the Council (see DCS at paragraphs 50-53) and that the Council will be substantially injured if the Covenant is removed (see paragraph 80-82 of the DCS), but the assertions are focused on the use of Lot 101 as a bowling club.

4. [73]

   It is not part of the Council’s case that Lot 9 must be used as a clubhouse for the Club. Lot 9, prior to being used as a temporary clubhouse had been used as a residence and from 1954, on the evidence, it returned to being used as a residence. The only aspect of Lot 9’s use for a recreational purpose connected with a bowling club that the Council has identified is to house the greenkeeper and, on Mr Hanlon’s evidence, to provide an income for the Club.

The Section 89 Claim

1. [74]

   In Laris v Lin (No 2) (2016) 18 BPR 35,917 Slattery J set out the approach to s 89(1)(a), (b) and (c) of the Conveyancing Act which both sides accepted as a convenient statement of what is required:

2. [75]

   I have indicated that the question of whether the Covenant is obsolete or impedes the reasonable user of the land and whether its extinguishment would cause any substantial injury to the Council needs to be considered only in relation to Lot 9.

3. [76]

   The Council (at paragraph 9 of DCS) draws attention to the words of Mason P in Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd [2000] NSWCA 28 at [4]-[6]:

4. [77]

   The Council relies on Driscoll v Church Commissioners for England [1957] 1 QB 330. Driscoll was a lessee of a group of substantial size homes that had been built for the well-to-do. By the time Mr Driscoll bought the leases there was a very limited demand for such homes and many of similar homes owned by the Church had been converted with the Church’s consent into flats or guesthouses. Mr Driscoll was using the houses as hostels and residential clubs for overseas students for which the Church Commissioners had not given permission. The covenant was a covenant “not to use the premises for any trade or business or otherwise than as a private dwelling-house save with the previous written consent of the lessor.”

5. [78]

   The Lands Tribunal held that the covenant was not obsolete and did not impede the reasonable user of the premises, and Mr Driscoll appealed. The appeal was unanimously rejected (Denning LJ, Hodson and Morris LJ). Denning LJ said at 341:

6. [79]

   The Council relies on this case in support of the proposition that it will be sufficient to negate obsolescence if a covenant will preserve the residential character of the area. There are three problems, however, with that submission:

   1. (1)

      the Covenant does not promote the residential character of the area since it is directed to a recreational use as a bowling club, a use currently prohibited by the zoning (save and unless existing use rights have kept it alive);

   2. (2)

      the benefit of having a bowling club relates to Lot 101 not Lot 9. The Council’s submissions refer to “the preservation of the character and amenity of the area” being in “an open area”: see T295.14-26. The open area is on Lot 101. Lot 9 has since the 1920s had a residential dwelling erected on it;

   3. (3)

      Denning LJ was of the view that use of the Covenant to “exact a premium as a condition of his consent” demonstrates that the Covenant “would no longer serve a useful purpose” – and that is precisely what the Council seeks to do here.

7. [80]

   As Jacobs J observed in Re Mason and the Conveyancing Act [1962] NSWR 762 at 766 after referring to earlier English cases:

8. [81]

   In Re Robinson [1972] VR 278 Adam J determined that the fact that the land in question there could not be used for shops as the zoning allowed but the Covenant prohibited and could not be used for residential use which the Covenant permitted but the zoning prohibited was a material circumstance enlivening the description of impeding the user, but he held that the applicant had not established that the Covenant did not secure practical benefits to the owners of adjourning properties who had a legitimate interest in blocking the use of the subject property for shops and who would incur a substantial injury: see 282-283. As the Council points out the issue of “practical benefits” and “substantial injury” are quite similar questions: see DCS at paragraph 81, and see Re Mason (supra) at 928.

9. [82]

   In my view, the Covenant has become obsolete because Lot 9 has (except for the period between 1948 to 1954 when it was used as a temporary bowling clubhouse) always been used as a residential dwelling, and not used, for example, as a bowling green or clubhouse or office administration centre. To require Lot 9 to be used to house a greenkeeper even before the cottage was demolished and even more obviously after it has been demolished and replaced with a dual occupancy in accordance with Council’s consent, is to impede a reasonable user of Lot 9 as a residential dwelling. The only reasonable use of the land now because of R3 Zoning is the occupation of the two townhouses as residences. To insist, as the Council seeks to do so, that Lot 9 be used for the recreational purposes of a bowling club is to insist on a use that is prohibited by the applicable zoning. The Covenant does not, I have concluded, permit use of Lot 9 as a residence. It is relevant that the Council was quite willing from 2015 at least to have the Covenant removed (albeit for a price) because it demonstrates that the Council did not see any point in retaining the restrictions contained in the Covenant. It is also not insignificant that the Council in 1980 was willing to see the Covenant removed in respect of Lot 100 (an area of 3,254m2) when it was divided from Lot 101 and permitted by the Council to be used for the construction of up to 12 dwellings (see CB3 1610); what the Council then required was the payment of $153K either by the developer or the Club in respect of loss of a parcel of open land. Lot 9 which had a residential cottage on it and now has two townhouses on it has an area of approximately 500m2.

10. [83]

    To require a greenkeeper to live in the former cottage or now in one of the two townhouses achieves no practical benefit to the Council. That is to say having a greenkeeper and his family in the cottage cannot make any difference to the amenity of the area compared to having another person occupying Lot 9 (whether renting from the Club or as an owner of the Strata Title lot). There is no suggestion that traffic would be increased because the occupant was not a greenkeeper or was an owner occupier rather than a lessee. No benefit or advantage to Kiaora Road or Glendon Road arising out of the Covenant or as a result of a change in identity of the occupiers of Lot 9 has been identified. Neither the public nor the members of the Club had or will have access to Lot 9 if it is used as a residence for a greenkeeper or anyone else connected with the Club. Sale of the townhouses or rental of them both or of one of them will not lead to any other use of Lot 101 save perhaps that if the Club survives financially there is a greater prospect of the Club continuing to operate its bowling club on Lot 101. A continued restriction on the Club’s use of Lot 9 in this form claimed by the Council in the present context would mean, for practical purposes, the stultification of at least one of the townhouses and possibly both and the possible demise of the Club. These comments apply even if, contrary to my earlier conclusion, the Covenant does permit use of the cottage as rental residence for the greenkeeper.

11. [84]

    In relation to the question of substantial injury to the Council I should note that the Council had maintained that its interest in the compensation for the costs of the Covenant was a legitimate interest which should be taken into account in determining whether the Covenant should be extinguished. The Club relied on authority which rejected the availability of such an interest as a reason to maintain a restrictive covenant (see Stockport Metropolitan Borough Council v Alwiyah Developments [1983] 52 P&CR 278, and Butt’s Land Law (B. Edgeworth, Thomson Reuters, 7th ed, 2017) at [10.870]) and the Council in closing submissions abandoned any argument based on that claim: see T249.25. The Council did not in 2015 identify any reason why the Covenant should not be removed except in effect as a means of extracting compensation from the Club or the developer and no amenity or town planning considerations, for example, were advanced as an obstacle to the development of Lot 100 in 1980. In these proceedings the only real benefit to which Council has pointed have been matters relating to Lot 101 and the financial benefit of receiving payment as the price for removal of the Covenant and the latter “benefit” was, as I have noted, abandoned in final oral submissions. The emphasised passage from Driscoll to which I referred earlier is pertinent here. The wide range of matters identified by McLelland CJ in Webster v Bradac (1993) 5 BPR 12,032 as constituting possible benefit do not assist the Council. This is not a case like Driscoll or Re Truman, Hanbury, Buxton & Co Ltd’s Application [1956] 1 QB 261 where, although the neighbourhood has changed there were still those benefitted by the Covenant who would be seriously injured if it were extinguished. I am not persuaded any practical benefit would be lost, or that there is any likelihood of any injury to the Council, by reason of extinguishment of the Covenant, has been established.

12. [85]

    The Club also asserts that the Council has waived the benefit of the Covenant. If I am correct in interpreting the Covenant as precluding Lot 9 for use as a residence then Council’s failure to object from 1954 until 2017 and its consent to the development application in 2017 point to a lack of interest in maintaining the Covenant. On the other hand, the Council did in 2011 and again in 2015 make it clear to the Club that it would not agree to removal of the Covenant without extraction of compensation. There is also a question of whether the Council has been shown to have had knowledge as to the use being made of Lot 9 from 1954 onwards. I do not think it is necessary to determine the issue of waiver, but it is relevant that, even in 2011 and 2015 and again now, the Council is willing to remove the Covenant provided it receives “compensation” for so doing, so that it would not appear to see any significance for town planning purposes that the Covenant will no longer be in force. That is also consistent with the position the Council took in relation to Lot 101 in 1981: see [15(10)] to [15(12)] above.

13. [86]

    The next issue addressed was discretion, it being agreed that even if the Court is persuaded by any of the grounds in s 89 advanced by the Club, the Court retains a discretion not to extinguish the Covenant: see Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke [2008] NSWSC 743; (2008) 14 BPR 26,131, and Laris (supra) at [75].

14. [87]

    The Council relies on three matters which it says should lead the Court not to exercise its discretion in favour of extinguishment:

    1. (1)

       The Covenant is a valuable proprietary right for which it has bargained.

    2. (2)

       The Club’s current problems are of its own making because it knew in 2015 that it needed to obtain the Council’s consent to remove the Covenant and went ahead with the development of Lot 9 without that having occurred.

    3. (3)

       The Club made an agreement with the Council from which it now seeks to resile. The Court should only permit the extinguishment the Covenant on condition that the Club execute the documents which the Council has put to the Club by HWL’s letter of 14 February 2020.

15. [88]

    The Club’s response to these submissions is that:

    1. (1)

       The Club accepts that a Court can refuse relief as a matter of discretion, but submits that there would need to be some powerful discretionary matters to deny the applicant the relief for which the section provides. The Club did not in its submissions (the POS) accept that the Covenant was a proprietary right because it asserts that the Covenant was in reality a town planning measure. The Council contended that that argument went beyond the Club’s pleaded case. I do not need to resolve the issue and proceed on the basis that the Covenant is a proprietary right.

    2. (2)

       Most restrictive covenants would be imposed as part of the bargain arrived at by vendor and purchaser of the land. It cannot be a discretionary factor to refuse relief.

    3. (3)

       The present situation is not at all comparable to Frasers Lorne. That was a case in which the owner of the burdened land applied to Council without any reference to the owner of the benefited land. Here the Club changed its mind between 2016 and 2019 when circumstances changed and when those new circumstances led Mr B Lazarus and the Club to appreciate how onerous the conditions that the Council had sought to impose were – the conditions being, the Club asserts, “unconscionable”, “unworkable”, “inequitable”, “grossly unfair”, and “indeed penal” in circumstances when the Council is not entitled to compensation and the Restriction if imposed would give it a windfall: T270.21-44 and, in contrast to Frasers Lorne, the Development Application here was made to the Council (i.e. the covenantee) and the covenantee consented to that application.

    4. (4)

       Conditions of the type sought by the Council cannot be imposed: see Loclot Pty Ltd v Pullen [2003] NSWSC 67 per Gzell J. The Club contends that it should not be required to pay anything because the Council is not losing anything.

16. [89]

    In [76] and [77] of Laris (supra) Slattery J refers to the question of onus in relation to exercise of discretion once jurisdiction is established and the fact that the onus may differ depending on the circumstances.

17. [90]

    Given that most restrictive covenants and easements are created by agreement the fact that the Covenant arose by agreement between the Council and the Club is not, in my view, a reason of its own to exercise a discretion against extinguishment when the conditions for extinguishment otherwise have been established. In Re Markin; Re Roberts [1966] VR 494 at 498 Gillard J expressed the view that the Court should exercise a “strong bias” against a covenantor seeking to resile from his bargain. Whilst these words may be seen as no more than an expression of the same need for caution which was indicated in Durian (supra) and Re Mason (supra) including the fact that the covenantee will be deprived of a proprietary right, they appear to go further. With respect, I am not inclined to accept that the Court should approach statutory provisions with a strong bias against an applicant when no such bias is mandated by the terms of the legislation but even accepting that such a bias is appropriate, I would regard the complete absence of any demonstrated utility or prejudice to the Council here as sufficient to overcome it.

18. [91]

    So far as the assertion that the predicament in which the Club finds itself is of its own making is concerned, it is true but only up to a point. The Council is not in any way responsible for the Club’s additional expenses due to litigation with its neighbour, nor is it responsible for increased building costs, and the Club’s change of mind from wishing only to rent and moving to a wish to sell at least one of the townhouses and possibly both. It is also true that the Club was made aware that the Council was only willing to release the Covenant if the Club paid it compensation and that, in a context where the Club thought it could improve its position by renting the townhouses, it suited the Club. Mr B Lazarus was focused on the prospect of renting the townhouses not selling them, which might account for his failure to discern the consequences of the Council’s proposed method; he and the Club may have acted most unwisely in indicating willingness to accept that method since it is a method which:

    1. (1)

       would give to the Council a massive pay out ($3M on Mr Keen’s assessment and probably more than that) for the Council giving up a right to insist on Lot 9 being used as a greenkeepers residence on Council’s case with no identifiable benefit to Council, the area, or to Kiaora Road and Glendon Road;

    2. (2)

       would require payment of the $3M (on Mr Keen’s assessment and probably more than that) even if the development of the site actually yielded no profit to the Club at all; and

    3. (3)

       is in effect a back door method of the Council resisting extinguishment for a reason that the authorities say is not to be taken into account: see the cases referred to in [84] above, and which the Council has expressly eschewed in closing submissions.

19. [92]

    It is relevant, in my view, that the Before and After Method was presented by the Council to the Club as being in the interests of both parties and “fair and equitable” to both the Council and the Club (see [16(2)] and [16(5)] above). Ironically in advising the Club by its letter of 18 November 2015 that the Council did not agree that the rate value was not appropriate (see [16] above) the Council advanced as the reason for its position that it would be detrimental to “the financial outcome” of the Club. Council’s adherence to the Before and After Method of valuation and its maintenance of that position in the present proceedings promotes an outcome extremely prejudicial to the Club’s financial position.

20. [93]

    Whilst it is true that the Club is now in a far more awkward position than it was in 2015 because it embarked upon the construction program, the essential problem of the Covenant has not changed – the Council’s position is no different to that which it took in 2015 – and had the ramifications of the approach proposed by the Council been understood, the problem could have been addressed by the Club at that time proceeding to seek to have the Covenant extinguished. I do not see the present situation as in any way comparable to that in Frasers Lorne; here the Club lodged the DA with the Council (and Council approved it) so there was no attempt to hide from the Council what the Club was seeking to do. That the Council did not have a means of ensuring that its officers were aware of restrictive covenants benefiting the Council is not the Club’s fault.

21. [94]

    On the issue of whether conditions can be imposed, although Loclot (supra) seems to reject that possibility, in Fincob Pty Ltd v Campbelltown City Council [2010] NSWSC 349 White J accepted that the Court could require placement of a new easement on another site as a condition of extinguishment of an easement pursuant to s 89(1)(c), and see also Effeney v Millar Investments Pty Ltd [2011] NSWSC 708 per Ward J as her Honour then was. The Council’s argument, however, is based on a conclusion that there is a binding agreement between the Club and the Council, a conclusion which, for reasons I shall articulate, I do not accept. Further, what is proposed is not another restrictive covenant impeding the use of Lot 9, but rather a condition that requires the payment of money to the Council.

22. [95]

    The Club was founded for the recreational activities of bowling and it is an amenity which the Council claims it is interested in supporting and yet the Council sought, and continues to seek, a result that would have grave consequences for the financial wellbeing of the Club, and possibly even its demise. I accept that the Council has always been open with the Club in regard to what it demanded as the price for relinquishment of the Covenant, but the price sought was, and is, in my view out of all proportion to what the Council is giving up and no alternative less exorbitant price has been suggested by the Council. It is a price based not on what the Covenant is worth to the Council or residents of the municipality but what the benefit will be to the Club if the Covenant is removed. In all of the circumstances, I am persuaded that the discretion should be exercised in favour of extinguishment of the Covenant.

Successors in Title

1. [96]

   This issue does not arise, and I do not need to address it.

Consent under the Covenant

1. [97]

   This issue strictly does not need to be resolved either because of my conclusion that the Covenant should be extinguished. I have, however, expressed the view that no second consent was required as a matter of construction of the Covenant. The two remaining questions are whether to consent to a dual occupancy development amounts to a consent for a purpose other than a recreational purposes in connection with a bowling club, and what flows from that if it does.

2. [98]

   The Council contends, however, that mere consent to the replacement of one cottage by two townhouses does not mean that the Council was consenting to use of the new dwellings for purposes other than purposes ancillary to the Club, i.e. two dwellings are not necessarily inconsistent with the Covenant if it is construed as permitting use of the premises for the benefit of the recreational activities of the Club, i.e., on the Council’s approach, renting to a greenkeeper.

3. [99]

   In my view, the Development Consent does constitute consent to a use other than use as a recreational purpose in connection with a bowling club for these reasons:

   1. (1)

      Rental of townhouses or sale of townhouses is not ancillary or incidental to the activity of a bowling club.

   2. (2)

      The Council itself claims that rental to anyone other than a greenkeeper or person employed with the Club is not a recreational purpose in connection with a bowling club.

   3. (3)

      The Development Application contains words which indicate that the dual occupancy was not restricted in any way to the use to which the cottage had previously been put and the Development Consent did not impose any such restriction.

   4. (4)

      The fact that the Club was indicating that it intended to strata Lot 9 for the purpose of dual occupancy was an indication that the Club was not intending to use the premises for Club employees. I note that the Development Consent expressly indicated that the strata proposed was not approved and would require a separate application (CB5 3035), but the application nevertheless indicated what was intended.

   5. (5)

      The Council itself asserted in later correspondence with the Club that the dual occupancy in and of itself involved the Club in a breach of the Covenant: see [16(20)]. It did not say, for example, “if you are intending to use the townhouses for a purpose other than having a greenkeeper you will be in breach of the Covenant”, which I think reflects that Council must have formed the view that use of the land for the purpose of dual occupancy was not a use within the Covenant. Mr Moralia, as I have mentioned, certainly takes that view: see [49] above.

4. [100]

   It follows that in my view the Council has consented to Lot 9 being used in breach of the Covenant. I accept that the officers granting consent were not aware of the Covenant or the discussions that other officers of the Council had held with the Club, but the Council is a single legal entity and it must be presumed to be aware of what “assets” it holds.

5. [101]

   Whether that consent constitutes a waiver of the Covenant for the purposes of s 89(1)(b) is, however, a more difficult question since the Council had made clear its position in 2015 and the Club cannot assert that it was not aware of that position. Because of my conclusions in respect of s 89(1)(a) and (c), as I have indicated previously (see [85]), it is not necessary to express a concluded view on this point.

Clause 1.9A

1. [102]

   The Club put as an alternative that cl 1.9A of the WLEP 2014 which provides that a covenant that restricts the carrying out of a development does not apply to the extent necessary to prevent development. This is not the same as extinguishment and there were additional issues relevant to this, such as whether the exceptions apply. In view of my earlier conclusions it is not necessary to determine this question.

Council’s Cross Claim

1. [103]

   There are many issues raised by the Club. I will not deal with all of them because I am persuaded that (a) there was no enforceable binding agreement, and (b) that if there was a binding agreement it was abandoned by the parties.

2. [104]

   In relation to the first point at [103(a)], it is necessary, as the Club insisted, to focus on the pleading of the agreement by the Council in paragraph 12 of its Cross Claim in which the Council identifies the binding agreement as having been wholly in writing and constituted by two pieces of correspondence, namely: a letter dated 18 November 2015 (see [16(5)] above, CB4 2651) said to be the offer and the email of 19 May 2016 (see [16(8)] above, CB4 2659) said to be the acceptance (see paragraphs 11 to 13 of the First Cross Claim at CB1 92-93). Prior correspondence cannot be relied on to establish the terms of the asserted agreement, unless the prior correspondence is referred to in the documents relied on as forming the contract. Although the letter of 13 November 2015 is not expressly referred to I think it can be inferred that it is identified by the reference in the 18 November 2015 letter to “your advice that [the Club] has agreed to adopt the “Before and After Method” as the valuation methodology to be used.” The letter of 29 October 2015, however, is not referred to expressly or impliedly in the letter of 18 November 2015. The DCS sought to move away from the pleaded basis of “offer” and “acceptance” by reference at paragraph 143 to Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; 53 NSWLR 153 in which it was held that agreements can be formed by a course of conduct or correspondence: see [71]-[81].

3. [105]

   There are a number of problems with the Council’s reliance on an agreement constituted by the letters of 13 and 18 November 2015 and the email of 19 May 2016:

   1. (1)

      The email of 19 May 2016 advises that the Club agrees with the land value to be assessed by an independent valuer at an agreed date of valuation. It does not actually state acceptance of all the terms of the letter of 18 November 2015.

   2. (2)

      The letter of 18 November 2015 spoke of a valuation “at an agreed date of valuation” thus recognising that there would need to be further negotiations as to the precise date of valuation. In January 2020: see [16]-[17] above, the Council sought the Club’s agreement to a valuation at the time the Covenant is lifted and the Restriction is imposed, rather than as at the time Lot 9 is sold.

   3. (3)

      The letters of 13 and 18 November 2015 and the email of 19 May 2016 contained no mechanism for appointment of a valuer or how to resolve any difference as to who should be the valuer (in contrast, for example, to the terms contained in HWL’s draft sent on 22 January 2020: see CB5 3562 and 3564).

   4. (4)

      The email of 19 May 2016 is not signed by the Club. Indeed it is not signed by Ms Van either unless the use of her typed name on the email is a signature. On the issue of signature the Electronic Transactions Act by s 9 does permit the requirement of a signature to have been met by a name or an email provided that method is “reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement”: s 9(1)(b)(i). Section 9 also requires that the person to whom the signature is required to be given consents to that requirement being met by a name on an email rather than by an actual signature. There are a number of cases which have considered this or analogous legislation: see Stellard Pty Ltd v North Queensland Fuel Pty Ltd [2015] QSC 119, Claremont 24-7 Pty Ltd v Invox Pty Ltd [No 2] [2015] WASC 220, Welsh v Gatchell [2009] 1 NZLR 241 and John Hillam v JPSF Pty Ltd [2017] NSWSC 1510, and see also Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd [2012] 1 WLR 3674 which, although not dealing with a similar legislative provision, is relied on by the Council. It is not necessary to reach a concluded view on the point because in my view what Ms Van was doing by the letter was communicating the Club’s instructions, and I do not think objectively she can be taken to have, by means of that email which dealt only with the method of valuation, entered into a binding agreement on behalf of the Club. I do not accept the Council’s assertion that Ms Van was writing as a representative of the Club rather than as a solicitor – her email commences “we are instructed to advise” which is inconsistent with Council’s contention, and I read that as an indication that she was acting as the Club’s solicitor or on behalf of Mr B Lazarus acting as such.

   5. (5)

      There is no evidence of authorisation by the Club for Ms Van to enter into an agreement to bind the Club.

   6. (6)

      In terms of the three categories of agreement identified in Masters v Cameron (1954) 91 CLR 353 at 360 or four categories taking into account Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 625-626, there are a number of factors which lead to the conclusion that the parties objectively did not intend to make a concluded bargain unless and until the formal contract was executed:

   7. (7)

      Section 54A of the Conveyancing Act which I will deal with separately.

   8. (8)

      The correspondence from the Council earlier this year (see [16(19)] to [16(21)] above) not only does not assert a binding agreement, but seeks to introduce new terms, which is inconsistent with the Council’s assertion that there was in May 2016 a binding agreement.

4. [106]

   I should add that the DCS place reliance on earlier “agreements” made between the Council and the Club (for example relating to the payment of legal fees in 2011), but the subject matter of those earlier agreements was not the creation or disposition of an interest in land that required documentation to be lodged at the Land Title Office.

5. [107]

   Section 54A of the Conveyancing Act relevantly requires that proceedings cannot be brought in respect of a disposition of land unless the agreement or some memorandum or note thereof is “signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.” The Council accepted that the removal of the Covenant and the creation of the Restriction amounted to a disposition of an interest in land and that writing and signature was required. There are four issues facing the Council:

   1. (1)

      There is no evidence that Ms Van was lawfully authorised by the Club to enter into a binding agreement on behalf of the Club and the Council in the terms asserted by the Council. As I have indicated she was communicating as a solicitor on her client’s instructions on a narrow question.

   2. (2)

      The incompleteness of the exchange of correspondence.

   3. (3)

      The Club’s constitution provided how contracts and agreements were to be entered into by the Club: see cl 58 at CB4 2294-2297 and cl 98 at CB4 2309.

6. [108]

   In relation to [107(1)], in Pavlovic (supra) at [137]-[139] Beazley P (with whom Bathurst CJ was in general agreement and with whom Meagher JA agreed) said:

7. [109]

   The issue at [107(2)] is a further answer to the Council’s claim. The letter of 19 May 2016 does refer to an earlier letter of 18 November 2015 and I have held that the 13 November 2015 letter is implicitly referred to so it is certainly permissible to look at all three of these communications to ascertain the terms, but the letters of 13 and 18 November 2015 and the email of 19 May 2016 taken together do not contain all of the terms of the agreement for which the Council contends which is a requirement for the purpose of s 54A: see Thomson v McInnes (1911) 12 CLR 562, Harvey v Edwards Dunlop & Co Ltd (1927) 39 CLR 302, Australia & New Zealand Banking Group Ltd v Widin (1990) 102 ALR 289 (Hill J, with whom Wilcox and Foster JJ concurred), Butt’s Land Law (supra) at [4.210], and Heydon on Contract (J. D. Heydon, Thomson Reuters, 2019) at 6.320. The two letters and the email do not refer to the Council’s agreement to release the Covenant or to the Council’s requirement that the Club pay all legal fees.

8. [110]

   In view of the other matters identified, it is not necessary to give consideration to [107(3)] above.

9. [111]

   In relation to the second point at [103(b)] if, contrary to my conclusion, there was a binding agreement, then in my view the parties objectively must be taken to have abandoned the agreement:

   1. (1)

      The Club on four occasions sought the documents to progress the matter (i.e. on 19 May 2016 (CB4 2659), on 26 August 2016 (CB4 2722), on 10 November 2016 (CB4 2821) and on 23 November 2016 (CB4 2820)) and the Council did not provide any documents as requested. The Club had made it clear that it wanted the Covenant removed before it submitted a DA to Council: see CB4 2614 (the letter of 13 November 2015). The Club submitted the first DA in late 2016 and then, having withdrawn that on the suggestion of Council, submitted the second DA on 18 July 2017.

   2. (2)

      In 2017 the Club lodged its application for Development Consent and the Council did not indicate that it required execution of documents constituting removal of the Covenant and imposition of the Restriction before approving the DA and granting consent.

   3. (3)

      In neither the Council’s letter of 14 February 2020 (see [16(21)] above) nor in HWL’s letter to the Club was it asserted that there was a finalised contract all the terms of which had been agreed, rather:

   4. (4)

      The Club’s letter to the Council of 16 January 2020 (see [16(18)] above) was the first letter after more than three years from the Club to the Council. The letter does not, as the DCS asserts, seek implementation of the agreement which the Council says was made on 19 May 2016, but rather is focused on the recommendation in the Council’s committee report that the Covenant be removed and made no reference to the Restriction or to compensation. It seems that by his letter of 16 January 2020 Mr B Lazarus was endeavouring to obtain the benefit of release of the Covenant without the Club having to pay the price that Council had previously indicated it would require.

   5. (5)

      The Club’s letter to the Council of 28 April 2020 (see [16(22)] above) sought agreement to removal of the Covenant without any compensation payable.

   6. (6)

      Neither party, at any time between May 2016 and May 2020, asserted reliance on a binding agreement said to have been created in May 2016 and the Council did nothing to promote or finalise this agreement. November 2016 was the last occasion on which the Club called on the Council to provide the documents necessary to achieve release of the Covenant, at least. The words of Dixon CJ and Fullagar J in Fitzgerald v Masters (1956) 95 CLR 420 at 432 (set out in paragraph 281 of the POS) seem apt here:

Summary

1. [112]

   I conclude therefore that:

   1. (1)

      There was no binding agreement between the Club and the Council.

   2. (2)

      Alternatively, if there was a binding agreement contrary to the finding in (1), that agreement was abandoned by the parties.

   3. (3)

      The Covenant should be extinguished pursuant to s 89(1)(a) and (c) of the Conveyancing Act.

Costs

1. [113]

   It was agreed that the issue of costs should be deferred until after judgment had been given in respect of the substantive issues.

Form of Orders

1. [114]

   The Club should within three days prepare and provide to the Council proposed form of orders reflecting the conclusions at [112] above but also including proposed orders in respect of costs. The Council should within a further three days advise as to whether it consents to or disputes the form of the orders contained in the Club’s draft. If the Council disputes the form of orders it should provide to the Club its proposed orders (by track changes to the Club’s draft). The Club should provide a copy of the agreed orders or disputed orders to my Associate by 10:00am on Wednesday, 16 December 2020.

2. [115]

   I will list the matter (for hearing on the form of orders and directions in respect of the costs issue should there be no agreement on that) on Thursday, 17 December 2020 at 10:00am, but if agreement is reached, that date can be vacated.