Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd

BATHURST CJ and BEAZLEY P: This is an appeal by the Registrar-General from a decision of Windeyer AJ, in which his Honour declared that the first respondent, Jea Holdings (Aust) Pty Ltd (Jea Holdings), holds its registered interest in land at Miller free of any easement or restrictive covenant purportedly created in 1963 by Memorandum of Transfer registered number J493622 (MT J493622) and ordered that the Registrar-General be restrained from registering any easement or covenant purportedly created by the said Memorandum of Transfer.

The Registrar-General, by its notice of appeal, challenges his Honour’s conclusion that MT J493622 did not create an “omitted” easement within the meaning of s 42(1)(a1). He contended that his Honour should have found that:

The second respondent, Awar Pty Ltd (Awar), is the owner of the purported dominant tenement. By notice of cross-appeal, Awar supports the Registrar-General’s appeal.

Jea Holdings filed an amended notice of contention in which it seeks to uphold the decision of Windeyer AJ on grounds other than those upon which his Honour’s decision is based.

The essential questions on the appeal, including those raised in the amended notice of contention and in the cross-appeal, are:

The primary judge answered “yes” to question (1) and “no” to each of the remaining questions: see at [45] and [64] respectively.

During the course of the hearing of the appeal, a question arose as to whether the easement created by MT J493622 was in conflict with the covenant contained in the earlier dealing MT J490511 and, if so, what effect that has on the issues raised on the appeal. The parties were invited to provide further submissions on that question.

Jea Holdings is the registered proprietor of three blocks of land, being the land identified in Folio Identifiers 2/545358, 2/219028 and 4/219028. There is a shopping centre on the first of these parcels of land and car parks on the other two. The land in Folio Identifier 4/219028 (Lot 4) is vacant land comprising 198 car spaces except for a telecommunications tower on the lot. Lot 4 is the land said to be burdened by the covenant contained in MT J493622 (the Covenant).

Awar is the registered proprietor of land identified in Folio Identifier 5/219028 (Lot 5). This land adjoins Jea Holdings’ land in Lot 4. Awar conducts a hotel business on its land. It claims to be entitled to an easement over Lot 4. The history of the transfer and registration of the land, together with the history of the covenants relating to the land, is central to the dispute and requires careful analysis.

In March 1963, a Certificate of Title, Vol 9392 Folio 1, was issued in respect of land at Miller, being Lot 1 in Deposited Plan 214541. The Housing Commission of New South Wales was the registered proprietor of the land. On 4 October 1963, by Memorandum of Transfer registered number J490511, the Housing Commission transferred the land to Green Valley Shopping Centre Pty Ltd. The transfer contained the following covenant (the initial covenant):

The terms of the initial covenant do not give rise to any controversy but are relevant to the matters in issue between the parties. The initial covenant is also relevant to the question whether there is any conflict between the two covenants.

The subdivision of Lots 1 to 5, being the lots referred to in the initial covenant, was effected by the registration of Deposited Plan 219028 on 17 February 1964. Prior to registration of the Deposited Plan, Lot 5 was transferred to Tooth & Co Ltd (Tooth & Co) by MT J493622, dated 10 October 1963. This transfer contained the Covenant, which benefited Lot 5 and burdened Lot 4. The terms of the Covenant are central to the issue on the appeal and are set out at [22] below.

On registration of Deposited Plan 219028, new certificates of title were issued in respect of each lot. Certificate of Title Vol 9671 Folio 61 was issued for Lot 4. Certificate of Title Vol 9671 Folio 62 was issued for Lot 5. Schedule 2 in each certificate of title contained the notation “covenant created by Transfer No J490511”. This was a reference to the initial covenant, pursuant to which Lot 4 was designated as a car parking area for free use by the public and Lot 5 was designated for an hotel. The Covenant was recorded in Sch 2 of the certificate of title for Lot 5, but not recorded on the certificate of title for Lot 4.

In 1970, Lot 3, which was designated in the initial covenant as a retail shopping and commercial area, was subdivided, creating Lots 1 and 2 in Deposited Plan 545348. Subsequently, Green Valley Shopping Centre transferred its land to Gold Valley Investment Pty Ltd, which became the registered proprietor of the land now owned by Jea Holdings.

In 1988, a system of computerised certificates of title (Folio Identifiers) was introduced and new certificates of title for the land were issued. Relevantly, the Folio Identifier issued for Lot 4 was Folio Identifier 4/219028. The Covenant was not registered on the new certificate of title. The result is that the Covenant has never been registered on the title of Lot 4.

On 4 January 2001, the second respondent Awar became the registered proprietor of Lot 5. The Folio Identifier for that lot is Folio Identifier 5/219028.

On 17 December 2010, Jea Holdings purchased Lot 2 in Deposited Plan 545358 and Lots 2 and 4 in Deposited Plan 219028, being the land in Folio Identifiers 2/545358, 2/219028 and 4/219028, referred to above at [12] and [14]-[15], for a purchase price of $11.9 million. A shopping centre is on the first of these parcels of land, with the latter two being car parks. Completion took place on 7 March 2011.

The present position may, therefore, be summarised as follows. The uses specified in the initial covenant have essentially been retained, but ownership of the lots has changed. Relevantly, Jea Holdings is the registered proprietor of Lots 3 and 4, which are used as a shopping centre and public car park respectively. The Covenant, which would otherwise burden Lot 4, is not, and never has been, recorded in Sch 2 of the certificate of title or the Folio Identifier for Lot 4. Awar is the registered proprietor of Lot 5, which abuts Lot 4 and upon which an hotel is operated. The Covenant, which benefits Lot 5, is and always has been recorded in Sch 2 of the certificates of title or Folio Identifier for Lot 5.

On 10 January 2012, the Registrar-General served a notice on Jea Holdings pursuant to the Real Property Act, s 12A, advising Jea Holdings that he was proposing to record the burden of the Covenant on the Folio Identifier of Lot 4 unless restrained by Court order from doing so. The only basis upon which the Covenant could now be recorded on the title of Lot 4 is if it was an ‘omitted’ easement within the meaning of the Real Property Act, s 42(1)(a1).

On 3 February 2012, Jea Holdings commenced proceedings seeking an order that the Registrar-General be restrained from recording the Covenant on the title to Lot 4.

The controversy between the parties arises because of the absence of registration of the Covenant on Lot 4. The resolution of the controversy depends upon the answers to the questions raised on the appeal. Although the answers to those questions potentially have significant commercial and financial consequences for the parties, the Court is not concerned with those consequences. The Court did not have regard to the concept plans for Jea Holdings to develop its properties, including above and below the ground level of Lot 4, which were before the Court by way of background only.

The terms of the Covenant were as follows:

The primary judge, at [12], observed that in order for Awar to have the benefit of s 42(1)(a1) so as to enable the Registrar-General, acting under s 12, to record an omitted easement on the title of Lot 4, the servient tenement, it was necessary for it to establish, first, that MT J493622, containing the Covenant, gave rise to an easement and, secondly, that the absence of a recording of the easement on the register of the land in Folio Identifier 4/219028 was an omission of a validly created easement within the terms of s 42(1)(a1).

His Honour, at [14], identified the four characteristics of a valid easement: there must be both a dominant and servient tenement; the easement must accommodate the dominant tenements; the dominant and servient tenements must be in different ownership; and a right over land cannot amount to an easement unless it is capable of forming the subject matter of a grant: see In re Ellenborough Park [1956] 1 Ch 131. It was only the last of these characteristics that was in contention in the present case.

His Honour concluded, at [45], that having regard to the decision of this Court in Clos Farming Estates Pty Ltd v Easton [2002] NSWCA 389; 11 BPR 20,605 (Clos Farming Estates) the purported easement was capable of being validly granted. In reaching this conclusion, his Honour reviewed other Australian and English authorities and in particular, the decision of the UK Court of Appeal in Moncrieff v Jamieson [2007] UKHL 42; 1 WLR 2620. His Honour considered that the law as expounded in that case was substantively different from Australian law and that he was bound to follow the decision of this Court in Clos Farming Estates. That gave rise, in his Honour’s view, to two questions. First, whether it was relevant to consider the impact of the purported easement on the servient owner’s proprietorship of only that part of the servient tenement that is actually affected by the easement, or the effect of the purported easement on the entirety of the servient tenement. Secondly, whether, for there to be a valid easement, it was enough that the owner of the servient tenement maintains possession and control, or whether the servient owner must retain some substantive or reasonable use of the land.

His Honour reasoned as follows:

His Honour, at [41], rejected Jea Holding’s submission that the Covenant in effect amounted to a claim for joint ownership, as the Covenant was confined to use of the servient tenement for car parking. His Honour considered that the Covenant here was different from the purported easement by prescription in Copeland v Greenhalf [1952] Ch 488 upon which Jea Holdings had relied.

His Honour, at [43], considered that even if the correct approach was that taken in Moncrieff v Jamieson, the Covenant was capable of being a valid easement, as Jea Holdings remained in possession and control of the land and could both use the land and limit Awar’s use of the land to car parking. In his Honour’s opinion:

His Honour, at [44], also considered it relevant, if the approach in Moncrieff v Jamieson was correct, that Jea Holdings was entitled to use the airspace and subterranean space for its own unconstrained purposes, subject only to non-interference with the rights conferred by the Covenant.

His Honour concluded, at [45], that the wording in the transfer was capable of giving rise to an easement.

However, his Honour concluded that the easement was not an omitted easement within the meaning of s 42(1)(a1) because, due to an absence of registration on the servient tenement, there was neither an “omission” of the easement, nor was the easement validly created. In his Honour’s view, at [61]:

His Honour added that for an easement to be “omitted” from the Register, it “must satisfy the presupposition of existence”: see Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11; 247 CLR 149 at [24]. In this regard, his Honour rejected the submission of the Registrar-General and Awar that s 47 provided the necessary pre-condition for the existence of the easement. In his Honour’s view, satisfaction of s 35 was necessary. His Honour observed that as s 41 provided that the instrument purportedly creating the estate or interest in land was of no effect to pass any such estate or interest until it was registered in accordance with the act, then unless the requirements of registration under s 35 were fulfilled, the easement could not exist. His Honour relied upon the view expressed by Professor Butt in his book Land Law (6th ed 2009, Lawbook Co), that to be validly created, the easement had to be registered. His Honour considered, at [63], that this led to:

In coming to this conclusion, his Honour, at [62], rejected the construction of ss 35 and 47 advanced by the Registrar-General and Awar, who had contended before his Honour that, even if an easement was not recorded on the title of the servient tenement, it was nonetheless validly created provided that it was recorded on the title of the dominant tenement. In his Honour’s view, that argument was contrary to the decision of the High Court in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd [1971] HCA 9; 124 CLR 73 at 88.

Accordingly, his Honour made the following declaration and order:

Jea Holdings in its amended notice of contention submitted that the primary judge erred in finding, at [45], that MT J493622 was capable of giving rise to an easement for car parking. Its contention was based upon the following propositions, all of which are interrelated:

It was accepted by the parties, as the primary judge recognised at [13], that although the wording in MT J493622 was of a covenant, it was necessary to have regard to the effect of the document: see Bursill Enterprises. Jea Holdings, for its part, also accepted that a right to park a car was capable of forming the subject matter of the grant of an easement: see The Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd [2008] WASCA 180; 37 WAR 498; Moncrieff v Jamieson; Weigall v Toman [2006] QSC 349; [2008] 1 Qd R 192; Brydall Pty Ltd v Owners of Strata Plan 66794 [2009] NSWSC 819; 14 BPR 26,831.

However, Jea Holdings contended that the grant of use as a car park deprived the owner of Lot 4 of the effective use of the land and thus could not constitute the grant of an easement. This is its central proposition on the first issue. In other words, questions of degree and proportionality were essential to the determination of whether there had been the grant of an easement: see Clos Farming Estates. Jea Holdings submitted that this was an aspect of the fourth requirement for a valid easement identified in In re Ellenborough Park. Jea Holdings contended that the cases where an easement for car parking had been recognised were distinguishable from the position here, having regard to questions of degree and proportionality.

In In re Ellenborough Park, the question in issue was whether a covenant granting “the full enjoyment” of a park “in common with the other persons to whom such easements may be granted” to purchasers of lots surrounding the park constituted an easement. The question in issue was whether the second and fourth characteristics of an easement had been satisfied. In determining whether the fourth characteristic had been satisfied, Evershed MR, at 164, 175-176, considered that there were three cognate questions: whether the rights purported to be given by the covenant were expressed in terms that were “of too wide and vague a character”; whether such rights would amount to rights of joint occupation or would substantially deprive the park owners of proprietorship or legal possession; or whether the rights granted mere rights of recreation without utility or benefit. Jea Holdings submitted that the Covenant in this case failed as an easement because of the second of these factors, that is, having regard to the degree or extent of the use conferred by the Covenant, there was a substantial deprivation of the owner of Lot 4’s proprietorship or legal ownership.

The approach taken in In re Ellenborough Park to the fourth characteristic of an easement was applied by this Court in Clos Farming Estates. Jea Holdings submitted that Clos Farming Estates was authority for the proposition that it was a matter of degree whether the grant had exceeded the boundaries of an easement. It contended that the Covenant affected the whole of the surface area of Lot 4 so that its effect was to permit the patrons of the hotel located on Lot 5 to park anywhere on Lot 4. What the Covenant permitted, according to the submission, was the joint use of the entirety of the Lot. Jea Holdings submitted that this constituted such an interference with the rights of the owner of the servient tenement that it could not constitute an easement contrary to the fourth element in In Re Ellenborough Park.

Clos Farming Estates involved a development of 80 residential lots and eight other lots. The residential lots were divided into two parts. Part A comprised some 1,500 m2 and was, in effect, the residential component of the lot. Part B comprised approximately 1.5 ha and was the part of the lot upon which it was intended that grapevines would be grown. The developer retained Lot 86, Clos Farming being the registered proprietor of that lot.

The deposited plan covering the estate was registered pursuant to the Conveyancing Act 1919 (NSW), s 88B. Included in the s 88B instrument was a restriction, labelled “Easement for Vineyard”, which was designed to allow the registered proprietor of Lot 86, Clos Farming, to have the benefit or a right to enter or pass through the residential lots and to remain on it to carry out vineyard work or to harvest and market the crop. There were other restrictions in the s 88B instrument, including in relation to matters such as tree preservation, building materials and fences.

The estate was marketed as a version of the French Clos Farming system whereby the owners of the lots in the estate combined to present a contiguous arc for agricultural purposes, with Clos Farming having the right to control and manage the operation and to sell the product pursuant to a “Grape Sale and Purchase Agreement”. Clos Farming remitted to the owners of the lots the net proceeds after deduction of the costs of the operation. In addition, lot owners entered into a Farm Development Agreement and a Farm Maintenance Agreement. The combined effect of those agreements, the Grape Sale and Purchase Agreement and the Easement for Vineyard was to enable Clos Farming to conduct a single farm operation on the estate.

In his judgment, Santow JA described the effect of the Easement for Vineyard as being:

One of the arguments advanced by Clos Farming in support of its contention that there was an easement over the lots was that the rights in the covenants in the Easement for Vineyard touched only part of the lot, leaving the owner to have uninterrupted use of the residential portion. This argument was rejected. Santow JA (Mason P and Beazley JA agreeing) held, at [46], that the fact that:

In Clos Farming Estates the relevant covenant affected five-sixths, or almost 85 per cent, of the supposed servient tenement. Whilst the Court considered that to be relevant, it was the extent to which the right of the owner to use the servient tenement which was essentially determinant. As Santow JA pointed out, at [38], the covenant “effectively precluded [the servient owners] from engaging in any real farming or agricultural type activities attendant on its possession”. Such residual rights as the servient owners had were “totally subordinated to the over-arching rights of Clos Farming”: at [46]. His Honour concluded that when:

The primary judge also had regard to the subsequent decisions of this Court in White v Betalli [2007] NSWCA 243; 71 NSWLR 381. By majority (Santow JA, Campbell JA agreeing) the Court held that a by-law in a strata plan allowing the dominant owners to store small watercraft within a specified area of the servient tenement was valid. His Honour concluded that because of the different approach of the majority as compared to that taken by McColl JA in dissent, the case was not of assistance on the question as to what portion of the servient tenement ought to be considered when evaluating the validity of an easement.

In Moncrieff v Jamieson, the question for determination whether there was an ancillary right to park motor vehicles on a right of way over a particular servient tenement. This required a consideration of whether a right to park could itself be the subject of the grant of an easement. Their Lordships accepted that a servitude for parking could exist. As indicated, there is no dispute on this appeal that a right to park could be the subject of an easement. Although each of their Lordships wrote separate judgments, there was substantial agreement in the judgments with the reasons of Lord Scott and Lord Neuberger.

Lord Scott, at [47], stated that he:

His Lordship observed that an essential qualification to that principle was that:

His Lordship, at [54] ff, examined the “ouster” principle which purports to prevent the creation of a servitude if it would prevent any reasonable use being made of the servient land.

His Lordship noted that in Wright v Macadam [1949] 2KB 744, the Court of Appeal held that the right to use a coal shed could exist as an easement. Lord Scott noted that there had been suggestions that the case may have turned on whether or not the owner of the dominant tenement had sole use of the coal shed. His Lordship dismissed that as being a relevant consideration. As his Lordship remarked, at [55], “[s]ole user, as a concept, is quite different from, and fundamentally inferior to, exclusive possession”.

Lord Scott also considered the decision in Copeland v Greenhalf where Upjohn J rejected a claimed prescriptive easement to use land by the side of a private roadway to deposit vehicles and for other purposes connected with a particular business on the basis that it virtually involved a claim for possession of the whole servient tenement, if necessary, to the exclusion of the owner. His Lordship observed that Wright v Macadam had not been cited to Upjohn J and that there had been a subsequent but unsatisfactory attempt to reconcile the two decisions in London & Blenheim Estates v Ladbroke Retail Parks Ltd [1992] 1 WLR 1278. His Lordship further remarked that the test formulated in the latter case, whereby a claim to an easement would be rejected if its exercise left the owner of the servient tenement without any reasonable use to which he could put the servient land, required qualification. In his Lordship’s opinion, at [59]:

Lord Neuberger, who otherwise substantially agreed with the reasons of Lord Scott, stated his own view on this at [140]:

His Lordship also observed that Wright v Macadam was not cited to Lord Upjohn in Copeland v Greenhalf nor was the Privy Council decision in Attorney General of Southern Nigeria v John Holt & Co (Liverpool) Ltd [1915] AC 599 at 617 which also supported the conclusion to which his Lordship had come. His Lordship also noted that there were Australian cases which supported the notion that a right could be an easement even if the servient owner was thereby excluded from the land concerned. He cited Mercantile General Life Reinsurance Co v Permanent Trustee Ltd (1988) 4 BPR 9534 and Wilcox v Richardson (1997) 8 BPR 15,491 per Handley JA.

Mercantile General Life Reassurance Co v Permanent Trustee Ltd concerned the legal effect of a memorandum purporting to grant a number of easements to the dominant owner to use a portion of the servient tenement as a secure yard into which it could receive, unload, load or despatch its clients’ goods, and garage its vehicles. The purported easements also granted a right to maintain the wall of an existing building on the dominant tenement which bordered and encroached over the servient tenement.

A dispute arose when the owners of the dominant tenement sought to use the yard for storing building materials and vehicles while adding an extension to the building on their land. The owner of the servient tenement disputed that such activities were within the grant, and sought an order restraining the use of the servient tenement for that purpose.

The owners of the dominant tenement submitted that the memorandum operated not as a grant of easements but as a transfer of rights of ownership to the surface of the yard space, and to at least some of the airspace above it. Powell J noted that there were authorities that held that a right to the exclusive or unrestricted use of a piece of land, or a right to share the proprietary rights with the so-called servient owner, could not be an easement. His Honour cautioned that “such statements must be scrutinised with care because of the varying contexts in which they have originated”. His Honour also noted that there were authorities in which the grant of a right to use of a portion of the servient tenement to the exclusion of the servient owner, or to use of the whole of the servient tenement in common with the servient owner or another person deriving their interest from the servient owner, had been held to be valid easements.

His Honour concluded that, despite the apparent width of the rights intended to be conferred by the memorandum, those rights fell short of the transfer, to the total exclusion of the servient owner, of any portion of the surface or airspace of the servient tenement and constituted the grant of an easement. However, his Honour held that the purpose of the grant was to permit the dominant owners to have a secure yard, so that the construction activities were not authorised by the easements.

Wilcox v Richards concerned the rights attached to a sublease over part of a lot. In the course of determining that the subleases had rights of the kind described in Wheeldon v Burrows (1879) 12 Ch D 31, Handley JA (Meagher JA substantially agreeing) found that the primary judge erred by holding that because the appellants had no right to exclusive possession of some areas, they could have no rights at all. His Honour noted that in cases relating to the rights of tenants to access common areas, the rights had been variously found to be licenses coupled with a grant or as easements.

It should be noted that neither of these Australian authorities was cited by the Court in Clos Farming Estates.

Windeyer AJ considered that there is a difference between Clos Farming Estates and Moncrieff v Jamieson as to the test to be applied for the fourth element in In re Ellenborough Park to be satisfied. The difference his Honour discerned would appear to come from [46] of the judgment in Clos Farming Estates (set out above at [44]) where the Court concluded that the rights of the owners of the servient tenement were so attenuated as not to meet the description of “exclusive possession”. However, that statement has to be understood in the context of Santow JA’s earlier statement, at [35]:

The Court accepted that Bryson J, at first instance, had been correct in his assessment that the Easement for Vineyard did not constitute an easement. His Honour’s reasons for that conclusion was summarised by Santow JA, at [36], in the following terms:

Santow JA’s conclusion, at [46], is clearly an abbreviated or summary form of what his Honour had stated at [36]. Having said that, it is apparent from his Honour’s reference, at [45], to Copeland v Greenhalf and its application in Australia in Harada v Registrar of Titles [1981] VR 743 that the extent of a restriction on use of the servient tenement may mean that no easement is created. Harada v Registrar of Titles concerned a claim for easement by an electricity company in favour of an overhead power line transmitting electricity over the plaintiff’s land. King J, at 753, had emphasised that the restriction on the owner of the servient tenement not to build on the easement went further than a prohibition of interference with the enjoyment of the claimed rights of the electricity company. King J stated that, if the rights the subject of an alleged easement meant the owner of the servient tenement would be left with very few rights over that property, the rights claimed would not constitute a common law easement but rather were really rights of joint user.

Notwithstanding the reference to Copeland v Greenhalf in Santow JA’s judgment, we do not consider that Clos Farming Estates stands only for the proposition that the owner of the servient tenement must have reasonable use of the servient tenement in its entirety. That is a relevant consideration and, in a given case may be decisive, but it is also relevant to consider the extent of the interference with the rights of ownership on that part of the servient tenement actually affected by the easement. That is apparent from the bolded portion of the summary from Bryson J’s judgment to which reference is made above. It is also consistent, in our view, with the approach taken in Harada v Registrar of Titles. It may be that if the interference with possession amounts to an effective interference with ownership rights, that may be sufficient to deny the validity of an easement. However, that is not this case. In our opinion, Windeyer AJ was correct in his conclusion, at [39] and [40], that Jea Holdings “enjoyed a very substantial use of the land”. It not only has the right to use the servient tenement for parking for itself, its servants, agents and invitees, it could be added for matters such as advertising on fencing and the like, and it has the valuable right to use both the airspace above and the subterranean land below. It also follows that, as his Honour also indicated and for the reasons he gave, the Covenant would be a valid easement if the correct approach was that taken in Moncrieff v Jamieson.

Having found that the Covenant was capable of constituting a grant, the next question is whether the Registrar-General has power to amend the Register so as to record its existence on Jea Holdings’ title. The power of the Registrar-General to amend the register so as to include an omitted easement is conferred by the Real Property Act, s 12. Notice requirements are specified in s 12A. There was no issue as to the power to amend, nor that the appropriate notice was given in accordance with s 12A. What was in issue was whether the power to amend was available in the present case. That in turn raised the question whether the easement created by the Covenant, was “omitted” from the Register. The determination of those questions involves a consideration of the operation of the Real Property Act as at 1964 when the Covenant was entered into as well as whether amendments to the Act, and in particular, amendments introduced in 1995 by the Property Legislation Amendment (Easements) Act 1995 (the 1995 amendments), affect the position.

Before setting out the relevant provisions of the Act as at 1964 and 1995, it is convenient to set out the relevant provisions of ss 12 and 12A:

As mentioned, Jea Holdings sought to restrain the Registrar-General from amending the Register after being served with a notice under s 12A(1).

The parties accepted, correctly, that the question of whether the easement was validly created depended on the provisions of the Act as it existed at the time of the transfer by which it was said to have been created. The relevant provisions were in the following terms:

There have been significant amendments to these provisions since that time. To understand some of the cases dealing with the issues the subject of the appeal it is necessary to have regard to a number of those amendments.

Section 35 has been repealed and been replaced by s 36(6A) which is in the following terms:

Section 38 has been subject to significant amendments. However, it is not necessary to set them out in this judgment.

There have been certain minor amendments to s 41(1) but it is not necessary to set them out.

Section 42(b) has been repealed and now provides as follows:

Section 46 so far as relevant now provides as follows:

There have been significant amendments to s 47. The relevant portion of that section is now in the following terms:

The primary judge, at [47], stated that the exception to indefeasibility provided for by s 42(1)(a1) has two requirements. First, there must be an omission of the easement from the register. Secondly, the easement must have been validly created under the Real Property Act, his Honour considering that no other Act was relevant to the creation of the easement in this case. His Honour stated that the relevant question in addressing both these requirements was whether the easement had been registered. This, in turn, raised the question as to what it meant for “an easement to be registered”. His Honour also observed, at [48], that there was no requirement in the former s 42(1)(b) that the easement be “validly created”, being the language of s 42(a1). Rather, in the language of s 42(1)(b), what was required was that the easement be “created in” any land.

His Honour next observed that “omission” in s 42(1)(b) had been construed to mean merely “absent from the Register”: Dobbie v Davidson (1991) 23 NSWLR 625, overruling the earlier decision of Australian Hi-Fi Publications Pry Ltd v Gehl [1979] 2 NSWLR 618, in which it had been held, at 622, that for an easement to be omitted for the purposes of s 42(1)(b), it must be absent from the Register as a result of fault or neglect on the part of the Registrar-General. His Honour noted that Jea Holdings accepted the meaning of “omitted” within s 42(1)(a1) to be as held in Dobbie v Davidson.

His Honour, at [50]-[51], accepted Jea Holdings’ argument that the requirement in s 42(1)(a1) that the easement be “validly created” meant that the easement must have been registered, as registration was the manner in which easements are created under the Real Property Act: see P Butt, Land Law (6th ed 2009, Law Book Co), [20-86]. On this argument, an easement did not exist at law before registration, except where it was created whilst the land was under Old System title or under some other Act of Parliament. Neither of those was relevant to the present case. His Honour rejected the argument advanced by Awar that an easement was validly created if it complied with the Conveyancing Act, s 88. In his Honour’s opinion, s 88(1) related to the enforceability of easements and not their creation.

His Honour, at [52] ff, next considered the recent decision of the High Court in Castle Constructions v Sahab Holdings. That decision is considered below. It is sufficient to note at this point that his Honour accepted that the decision was authority for the proposition that “omitted” meant “not there” as held in Dobbie v Davidson, but drew attention to the observation of the plurality that “omission” from the Register pre-supposed the existence of the easement. His Honour accepted that that had been established in Dobbie v Davidson as the easement there had been created when the land was under Old System title. It therefore “existed” when the land was brought under the Real Property Act.

His Honour then quoted from [24] of the plurality’s judgment in Castle Constructions v Sahab Holdings (see below at [136]) and stated that it was apparent from the reasons of the plurality that an easement could be created by registration without it being recorded on the servient tenement: see judgment at [55]. His Honour considered that two points thus emerged. The first was that registration was identified as the requirement for the creation of an easement. Secondly, s 36(6A) specified the requirement for registration to have occurred.

His Honour, at [56], considered, therefore, that registration was necessary for both requirements of s 42(1)(a1), namely, that there had been an omission and that the easement had been validly created. His Honour then observed that s 36(6A) was not in force at the time that the easement was created. The relevant provisions at that time were ss 35 and 37 of the Act in their form prior to the 1995 amendments.

His Honour, at [57], considered that the effect of s 35 was that a memorandum that affected land was deemed to be registered when a memorial was entered on the certificate of title of “such land”. That is, s 35 provided for a necessary pre-condition for an easement to be registered, namely, its recording on the servient tenement. Without such recording, the easement was not registered and thus could not be said to have been created. As the easement was not created, it could not be “omitted” for the purposes of s 42(1)(a1). His Honour observed that the memorial noted on the certificate of title would normally be in terms “created by transfer no”, but that in accordance with Bursill Enterprises v Berger Bros it would be sufficient if the easement were stated to be a covenant.

His Honour rejected the submission advanced by the Registrar-General and Awar that s 35 must be read in the context of the former s 47. In brief, that argument was that for there to be an omission for the purposes of founding an exception to indefeasibility, it was sufficient that there was compliance with s 47. Section 47 only required that the easement be recorded on the dominant tenement. The failure to record the easement on the servient tenement was an omission of the easement. In other words, the existence of an easement did not depend upon whether it was recorded on the servient tenement so long as it was recorded on the dominant tenement.

His Honour considered that Papadopoulos v Goodwin [1983] 2 NSWLR 113 and Christopoulos v Kells (1988) 13 NSWLR 541, upon which the Registrar-General and Awar relied, did not support this argument. His Honour, at [62], considered that the submission so advanced was contrary to the decision in Bursill Enterprises v Berger Bros Trading at 88. In his Honour’s view, registration of the easement by recording it on the servient tenement pursuant to s 35 was a requirement for the existence of the easement.

His Honour considered, at [61], that the effect of the submission advanced by the Registrar-General and Awar reversed the roles of ss 35 and 47. His Honour stated that registration of the easement by recording it on the servient tenement was the requirement for the existence of the easement. This followed, in his Honour’s view, from Castle Constructions v Sahab Holdings. In that case, the Court had referred to s 36(6A). His Honour considered that the content of the requirements of that provision in this case were to be found in s 35, not in s 47. His Honour considered that this view of the operation of s 35 was supported by s 41, which provided that there was no interest in land until the instrument creating it was registered in accordance with the provisions of the Act.

His Honour, at [63], stated that if his conclusion as to the interaction of ss 37 and 47 was wrong, he nonetheless considered that as s 42(1)(a1) required that the easement be “validly created … this meant that the easement must have been registered”. His Honour referred to Professor Butt’s point to this effect. His Honour continued:

It followed that as there was neither an “omission of the easement” on the register, nor was it “validly created”, the exception in s 42(1)(a1) was not enlivened. His Honour observed, at [65], that in determining whether a dealing was registered, it was necessary to look at the provisions in force at the time when registration took place: see Papadopoulos v Goodwin at 121. His Honour considered, however, that in determining whether there was an exception to indefeasibility, it was necessary to look at the provisions in the current form. It followed that the relevant provision to which regard was necessary was s 42(1)(a1) and not the predecessor provision, s 42(1)(b). The Registrar-General accepted that this was correct.

His Honour, at [66], referred briefly to s 46, set above at [74]. At [67], his Honour referred to the observation in Crowley v Templeton [1914] HCA 6; 17 CLR 457 that “an instrument in the form of a covenant will not be registered under the RP Act as an easement”. See Baalman and Wells, The Practice of the Land Titles Office (New South Wales) (3rd ed 1952, Lawbook Co) at 110-111.

His Honour drew attention to the fact that easements lie in grant, not in contract, and that a transfer was equivalent to a grant. Thus, where land is transferred and an easement granted in favour of the land transferred over land held by the transferor, the appropriate course was to adopt the form in Sch 5. His Honour noted that after the transfer of land, the easement was created by the words commencing “together with” or “and the transferor hereby grants”. His Honour concluded, at [68], that the covenant-type wording in the present case did not conform to the requirements of s 46. It therefore could not be registered as an easement and would not have been validly created. His Honour stated that it was not necessary to consider that matter further, as the Covenant had not been registered.

The submissions of the Registrar-General on this aspect of the case were relatively straightforward. First, as indicated above, the Registrar-General accepted that the question whether an easement was omitted fell to be determined by reference to s 42(1)(a1). This required that the burdened land at all relevant times be Torrens Title land and that the easement be “validly created”.

The Registrar-General submitted that at the time that the Covenant in this case was entered into, it was registered in accordance with ss 46 and 47 as at that time. On the Registrar-General’s argument, those sections did not require that the easement be recorded on the servient tenement. It was sufficient for the purposes of s 47 that the easement be registered on the dominant tenement.

The Registrar-General submitted that on its proper construction, s 35 was a means, but not the exclusive means, by which registration of an interest in land could be proved. The Registrar-General submitted that this was consistent with s 41, which refers to an “instrument” being effectual to pass an interest in land upon registration as hereinbefore prescribed. The language of s 41 is in substance to the same effect: namely, that “no dealing until registered in the manner provided by [the] Act” shall become effectual to pass any interest in land. Thus, it was registration of the instrument that was all-important. The only requirement for registration in the Act at that time was that the easement be recorded on the dominant tenement: s 47. It followed that if there was no record of the easement on the dominant tenement, it was “omitted” for the purposes of s 42(1)(a1) within the meaning given to that concept in Dobbie v Davidson.

The Registrar-General submitted that s 35 should be read coherently with s 47. Thus, s 35 provided that an instrument purporting to affect land was to be registered as soon as a memorial thereof as hereinafter described had been entered in the register book upon the folium constituted by the grant or existing certificate of title of the land. Section 47 provided that the Registrar-General was required to enter a memorial of the instrument creating an easement upon the folium of the register book constituted by the existing certificate of title of such other land. It is clear that s 47 related to notation of the easement on the dominant tenement: see James v The Registrar General (1967) 69 SR (NSW) 361 at 366 per Wallace P; Walsh JA at 370, where Walsh JA further observed that the Act contained no similar express provision as to the requirement for the notation of an easement on the servient land, but considered that such an entry was authorised.

On this approach, according to the Registrar-General, the deeming provision in s 35 was facultative: see for example, Macquarie Bank Ltd v Fociri Pty Ltd (1992) 27 NSWLR 203 at 227 per Kirby P. In other words, notation on the folium of the register was not the sole means by which an easement was created. Rather, registration was a means whereby it could be proved that an easement had been created. The Registrar-General relied not only on s 47 to support this approach, but also referred to s 41, which he contended placed emphasis upon an instrument being registered so as to be effectual to pass any estate of interest in land.

According to the Registrar-General, the effect of the 1995 amendments was as follows. Section 36(6A) provides that a dealing is registered when the Registrar-General has made such recording in the register with respect to the dealing as the Registrar-General thinks fit. An easement is created by transfer in accordance with s 46. Pursuant to s 46A(2), an easement may only be created by registration of a transfer in the approved form. The transfer must be registered before any interest in the land passed: s 41. This was also the position prior to the amendments, the provisions of s 41 being effectively in the same terms before and after the amendments.

Section 47(1) in its present form requires that an interest that burdens land is created when particulars of the dealing creating that interest is entered on the burdened land. The Registrar-General submitted that there was no such requirement prior to the amendments. The predecessor provision only required that the easement be noted on the title of the dominant tenement. The Registrar-General also submitted that it was apparent from the Explanatory Memorandum and the Second Reading Speech relating to the 1995 amendments that it was not intended to affect the existence of an easement created prior to the amendments which had only been registered on the dominant tenement. The Registrar-General submitted that this position was supported by this Court’s decision in Christopoulos v Kells.

The Registrar-General submitted that the effect of the primary judge’s determination that “validly created” for the purposes of s 42(1)(a1) required compliance with s 47 in its present form, so that the easement was required to be recorded on the dominant and servient tenements, meant that a person in the position of Awar, whose land had the benefit of an easement which was not recorded on the servient tenement, would be deprived of an interest in property which it had immediately prior to the 1995 amendment. It was submitted that this construction of the legislation offended the following principles of statutory construction:

The Registrar-General submitted that if the statement of Jacobs JA in James v the Registrar General that what was required for the creation of an easement was compliance with s 46 was correct, it may be that ss 35 and 47 have no bearing on that question. In other words, if there was compliance with s 46 the easement would have been validly created and, therefore, may be “omitted” for the purposes of s 42(1)(a1).

It was submitted that there were no clear words in the text of the amending provisions to indicate that the legislature intended to interfere with property interests created under the pre-1995 legislation. The Registrar-General also submitted that there was nothing in the Explanatory Memorandum that suggested that the legislature intended to interfere with existing rights of those who were entitled to have an omitted easement recorded on the Register. He contended that the phrase “validly created” was not intended to add anything of consequence and in particular did not invalidate easements created before the amendments.

Awar supported the submissions of the Registrar-General. It emphasised that it was apparent from the Explanatory Memorandum that s 42(1)(a1) was intended to be an exception to the paramountcy of the Register. Awar submitted that the construction given to s 42(1)(a1) by the primary judge narrowed the operation of the section in a way that was not supported by the text, context or purpose of the legislation. Awar pointed out that there was nothing in the Explanatory Memorandum that suggested that the new provision was intended to overcome the result in Christopoulos v Kells, which it contended was authority for the proposition that an easement does not have to be have recorded on the servient tenement for the exception to indefeasibility in s 42 to apply. Awar reiterated that s 42(1)(a1) is clearly an exception to the paramountcy of the Register as was demonstrated in the analysis of s 42(b) by Jacobs JA in James v Registrar General at 379.

Jea Holdings submitted that a recording of the easement on the servient tenement was a necessary prerequisite to its validity at the time the Covenant was entered into. Jea Holdings contended that this followed from ss 35, 41 and 46. It followed that, as found by the primary judge, registration was the prerequisite to creation and if an easement was not created under the provisions of the Act, it could not be omitted. Jea Holdings submitted that it was unhelpful to consider cases such as Dobbie v Davidson, which related to Old System land brought under Torrens Title.

Jea Holdings submitted that the reference in s 35 to “as hereinafter described” was a reference to either s 41 or s 46, but was not a reference to s 47. It submitted that s 47 presupposed that the easement had already been created. Accordingly, an easement was created pursuant to s 35. Section 47 operated as an additional requirement to note the easement on the dominant tenement.

Jea Holdings also submitted that s 35 was not replaced by s 36(6A). Rather, that section was introduced as part of the system of computer registration. It was not so as to permit registration on the dominant tenement to amount to registration of an easement. Jea Holdings submitted that the decision of this Court in Christopoulos v Kells was not relevant, but in any event was distinguishable because it related to a time when s 35 was not in place. It also submitted that the court in Christopoulos v Kells failed to understand that s 36(6A) related to computerisation and had nothing to do with the registration of easements; see also Bursill Enterprises v Berger Bros at 93.

Jea Holdings also submitted that the Covenant did not comply with the formalities of s 46. It contended that the direction in Sch 5 to the Real Property Act was not followed because in terms, the dealing purported to be a restrictive covenant and had always been understood as such until the dispute between the present parties arose.

There was a question whether the primary judge determined this point, having regard to his observations at [68], set out above at [89]. The matter was allowed to be argued, as it could be determinative of the appeal should the Registrar-General and Awar succeed on the question that the easement did not need to be registered on the servient tenement for the purposes of s 41(1)(a1).

As was pointed out in Breskvar v Wall [1971] HCA 70; 126 CLR 376 at 385-386 the Torrens system of registration of title of which the Act is a form is not a system of registration of title but a system of title by registration. The title certified by the certificate is a title that registration itself has vested in the proprietor: see also Breskvar v Wall at 389; Parramore v Duggan [1995] HCA 21; 183 CLR 633 at 635; Castle Constructions v Sahab Holdings at [20].

The requirement of registration is embodied in s 41 of the Act. As it existed at the time of the events in question it required registration of an instrument before it was effectual to pass any estate or interest in land but provided that upon registration “in the manner hereinbefore provided” the estate or interest specified in such instrument shall pass.

Section 46 provided that if an easement was intended to be created the registered proprietor may execute a memorandum of transfer in the form of the fifth, sixth or seventh schedules to the Act containing an accurate statement of the easement intended to be created.

However, the mere execution of the instrument is not sufficient to create the easement. The easement is not created until the instrument is registered. So much is made clear by s 41.

Although s 41 as it stood at the relevant time required registration “in the manner hereinbefore provided”, none of the preceding provisions of the Act specifically provided for a mode of registration. Section 35 provided, however, that the instrument of transfer purporting to transfer or in any way to affect land under the Act, shall be deemed to be registered as soon as a memorial thereof has been entered in the register-book upon the folium constituted by the existing certificate of title of such land. The reference to the entry of a memorial in the register-book on the folium of the certificate of title of the land is a memorial in the form prescribed by s 37 of the Act.

In the present case the grant of the easement was contained in MT J493622 from Green Valley Shopping Centre Pty Ltd to Tooth & Co Ltd of part of the land contained in Certificate of Title Volume 9392 Folio 1 being Lot 5 in Deposited Plan 218028. The transfer and grant of easement was in accordance with the provisions of the fifth schedule. Although the instrument was not noted on Certificate of Title Volume 9392 Folio 1, it was noted on the certificate of title which immediately issued for the dominant tenement, Lot 5 being Certificate of Title Volume 9671 Folio 62. That certificate of title indicated Green Valley Shopping Centre Pty Ltd as the original registered proprietor and recorded the transfer of the land to Tooth & Co Ltd by instrument J493622.

Thus, a memorial stating the nature of the instrument (a transfer) was entered in compliance with s 37 of the Act and thus the transfer containing the easement was deemed to be registered in accordance with s 35.

In addition to entering the memorial required by s 37, the Registrar-General was obliged under s 47 of the Act to enter the covenant created by the registration of the transfer on the certificate of title of the dominant tenement: Castle Constructions at [21]. The Registrar-General complied with this obligation by recording the easement in the second schedule to Certificate of Title Volume 9671 Folio 62.

There remains the question whether in addition to registering the transfer it was a necessary prerequisite to the creation of a valid easement that it be noted on the certificate of title of the servient tenement.

In our view, this was not required by the Act. Section 35 refers to the entry of the instrument in the register-book upon the folium constituted by the certificate of title of the land affected. Such registration has in fact occurred as the land transferred was the dominant tenement. The effect of such registration as stated in the concluding words of s 35 was that the person named in the instrument as seised of or taking any interest shall be deemed to be the registered proprietor thereof. Thus, registration of the transfer was effective to pass the interest in the land to the transferee and was, in our opinion, effective to create the easement for the benefit of that land. Once the transfer was registered and the easement so created an obligation was imposed on the Registrar-General under s 47 to enter a notation thereof upon the folium of the dominant tenement.

The effect of the easement not being recorded on the folium of the certificate of title to the servient tenement was explained by Brennan J in Parramore v Duggan in the following terms (dealing with the equivalent Tasmanian legislation):

It follows that the easement was validly created. It was not necessary for its creation that it be recorded on the servient tenement.

The easement was omitted from the title to the servient tenement in the sense it was not there: Dobbie v Davidson; Castle Constructions at [24]-[25]. It follows that the exception to indefeasibility in s 42(1)(a1) of the Act applied.

It remains to be considered whether this conclusion is contrary to any of the cases which have dealt with the application of s 42(1)(a1).

In Jobson v Nankervis (1943) 44 SR 277 Nicholas CJ in Eq concluded that the exception to indefeasibility in s 42(b) only applied to easements created prior to the relevant land being brought under the Act where the easement was not recorded on the certificate of title.

That conclusion was held to be incorrect by this Court in James v The Registrar-General. That case involved an easement created on transfer of the servient tenement. The easement was noted on the certificate of title to the land but omitted from a subsequent certificate of title.

The majority, Wallace P and Jacobs JA, held that the exception applied and the Registrar-General was entitled to exercise his powers under s 12(d) of the Act as it then stood to amend the certificate of title of the servient tenement to record the easement. Wallace P at 364 stated he was unable to agree that an easement which had been duly created under s 46 and s 47 of the Act but which on the subsequent issue of a new certificate of title is omitted by error should not fall within s 42(b).

His Honour did not deal with a situation where there had never been a recording on the certificate of title to the servient tenement but his reasoning is not inconsistent with the conclusion which we have reached.

Walsh JA who dissented on the applicability of s 12(d) of the Act expressly left open the question. His Honour, at 370, made the following remarks:

Berger Bros Trading Co Pty Ltd v Bursill Enterprises Pty Ltd (1969) 91 WN(NSW) 521 concerned what was described as an easement conferring building rights in favour of the plaintiff over land owned by the defendant over which the plaintiff had a right of way. The right of way was recorded on the title to the dominant tenement but not on that of the servient tenement.

McLelland CJ in Eq stated that the right to conduct the building works was an easement but noted it was not recorded on the title of the servient tenement. He concluded without elaboration that s 42(b) applied and the exception to indefeasibility was established.

The High Court varied the decision on the grounds that the building rights did not constitute the grant of an easement but rather there had been in fact a transfer of part of the stratum above the land. In those circumstances it was not necessary for the Court to consider the operation of s 42(b):

Papadopoulos v Goodman concerned a grant of a right of way which was misdescribed on the title deed to the servient tenement. It should be noted that although s 42(1)(b) and s 46 and s 47 at the time of this judgment remained in the same form as in 1964, s 35 had been repealed and replaced by the present s 36(6A). However, the legislation which existed at the time the right of way was said to have been created was in the same terms as the legislation the subject of consideration in the present case.

Wootten J considered that the misdescription of the right of way constituted an omission within the meaning of s 42(1)(b). He took the view that the fact that it had not been recorded on the servient tenement did not prevent the exception to indefeasibility in s 42(1)(b) applying. His Honour, at 120, made the following remarks:

His Honour, at 121, made the following additional remarks:

It would appear from these paragraphs of his Honour’s reasoning that his Honour took the view that s 35 of the Act required notation of an easement on the folium of the servient tenement and the Registrar-General’s failure to do this constituted an omission. His Honour however appeared to take the view that the easement was properly created. Although for the reasons we have given we are unable to agree that s 35 required notification of the easement on the certificate of title to the servient tenement, his Honour’s reasoning does support the proposition that such notification is not a prerequisite to creation of the easement

It should be noted that Papadopoulos v Goodwin was reversed by this Court on other grounds: Goodwin v Papadopoulos (1985) NSW ConVR 55-256.

In Christopoulos v Kells a right of way was created by transfer dated 17 August 1976. The transfer which reserved the right of way was noted on the certificate of title to the servient tenement but no entry of the right of way was made on the certificate of title to the servient tenement, its absence described by Hope JA, at 543, as an omission by the Registrar-General.

Hope JA, with whom the other members of the Court agreed, stated that s 35 and s 37 of the Act (as they existed in 1964) had been repealed and that s 36(6A) dealt with registration of dealings. However he expressed the view, at 546, that it was difficult to see how the relevant provisions were different in substance. His Honour cited a passage from Papadopoulos v Goodwin to which we have referred at [129] above and made the following comments, at 547-548:

This decision, if not binding on the Court, provides powerful support for the conclusion which we have reached.

Castle Constructions v Sahab Holdings involved a question of whether an easement, notification of which on the title to the servient tenement was removed deliberately by the Registrar-General could constitute an omission for the purpose of s 42(1)(a1) of the Act, the successor to s 42(b). The plurality allowing an appeal from this Court held it was not. As indicated earlier, the Court noted, at [21], that the effect of s 47 as it stood at the time the events giving rise to these provisions required the Registrar-General to enter a memorial of the instrument creating the easement on the folium of the land benefited. In dealing with the question of omission the plurality after referring to Dobbie v Davidson made the following remarks, at [24]:

The reasoning in Castle Constructions is consistent with the view we take in the present case and is consistent with the cases which dealt with the operation of s 42(b) and its successor.

As Hope JA stated in Christopoulos the result may seem to be anomalous in respect of a system of title the lynchpin of which is title by registration and indefeasibility. This was sought to be corrected to some extent by the amendment to s 47 to oblige the Registrar-General to enter particulars of an easement on the title of the servient tenement. However, anomalous or not, s 42(b) (and its successor) must be given effect according to its terms.

It has been suggested that s 38 of the Act, as it stood at the relevant time, imposed an obligation on the Registrar-General to register the easement on the folium of the servient tenement.

In E A Francis The Law and Practice Relating to Torrens Title in Australia (1972, Butterworths) vol 1 pp 504-505, the learned author notes that it is clear from the words of s 47 of the Act (referring to the version in existence in 1964) that “the recording is required by this provision to be made only on the folio of the register evidencing title to the dominant tenement”. In relation to s 38 the author notes:

This commentary appears to support the conclusion that, while the Registrar-General has a duty to record the easement on the servient tenement, such recording is not necessarily a requirement for the creation of the easement.

It follows from the construction we have given to the legislation that the appeal should be allowed.

A question arose in the course of the hearing as to the effect of the covenant created by MT J490511 on the issues raised in the proceedings. In particular, the question arose as to whether MT J490511 and the Covenant were in conflict and if so, what flowed from that conflict. We agree with the observations of Basten JA on this question and have nothing further to add. We also agree that, although the issue raised in Awar’s notice of cross-appeal has effectively been determined in its favour, given that the appeal is to be allowed, the appropriate order is that the cross-appeal be dismissed, for the reasons given by Basten JA.

The orders we propose are as follows:

BASTEN JA: The circumstances giving rise to the present appeal were set out with clarity by the primary judge (Windeyer AJ) in Jea Holdings (Aust) Pty Ltd v Registrar-General of NSW [2013] NSWSC 587. They have also now been set out in the joint reasons of the Chief Justice and the President. For present purposes they can be dealt with quite succinctly.

The Registrar-General sought to register an easement over land owned by the respondent (“Jea Holdings”), as the registered proprietor of lot 4. The easement would confer parking rights for patrons of the hotel run by the registered proprietor of lot 5, Awar Pty Ltd (“Awar”). Unsurprisingly, Awar supported the step proposed by the Registrar-General.

The issues which arise for determination may conveniently be identified in the following terms:

The trial judge accepted that the rights dealt with in the covenant were of a kind which could constitute an easement burdening lot 4. As I agree with that conclusion, this point can be dealt with briefly.

Parties on both sides of the record agreed that car parking was a right capable of constituting an easement. As a leading property law text has noted, “[m]uch of the recent controversy surrounding the non-possessory character of easements has centred on the proper classification of that most valuable asset of the modern citizen – the right to park a car”: K Gray and SF Gray, Elements of Land Law (5th ed, 2009, Oxford UP) at [5.1.66]. The only remaining question was whether the right conferred under the 1963 transfer would effectively exclude the owner of lot 4 from possession and use of that land if the right to park cars were exercised to its full extent.

Such questions inevitably involve matters of degree and evaluation which will depend on the circumstances of each case. Jea Holdings devoted much of its submissions to challenging the finding of the primary judge as apparently inconsistent with the decision of this Court in Clos Farming Estates Pty Ltd v Easton [2002] NSWCA 389; 11 BPR 20,605. The circumstances which arose in that case are sufficiently described in the joint reasons: they are dissimilar in significant respects from the present case.

The Registrar-General (and Awar) placed reliance on the decision of the House of Lords in Moncrieff v Jamieson [2007] 1 WLR 2620; [2007] UKHL 42. The effect of Moncrieff, as Gray and Gray have noted, was to “rationalise the case law in a manner notably more sympathetic to easements which involve substantial exclusion of the servient owner from his land”: at [5.1.64]. Statements in more extreme cases of exclusion, such as Clos Farming, are not inconsistent with that approach.

The limitation on use of lot 4 by the owner of that lot, while capable of extending from time to time to much or even all of the surface area of the parking lot, was a shared right, with the registered owner, to the use of the lot for car parking. Further, it expressly subsisted with the rights of the owner to use any part of the stratum at a height greater than 12 feet above the surface of the land and to use the underground area to such depth as might be valuable to it. So much is apparent from the terms of par (a) of the covenant set out at [22] above.

Disregarding the car parking rights, the rights reserved to the owner of lot 4 (the transferor) would by necessary implication include such use of the surface of lot 4 as would be necessary to erect a building above it, and to obtain egress to the land below it. It is not uncommon for buildings to be erected above ground level, so as to permit parking beneath them. It is also to be expected that not insignificant inroads would be made on the number of parking spaces available if such a building were erected over (or under) lot 4. That would not be inconsistent with the terms of the covenant, which must accommodate reasonable user by the owner of the servient tenement in accordance with its reserved rights. Further, the fact that the use of land by the transferee and its customers and patrons was to be exercised “together with” the transferor and the respective tenants and lessees, invitees and customers of the owners of lots 1-4, was entirely inconsistent with the kind of exclusivity which would prevent the interest being classified as an easement.

The answer to the second question depends on matters of statutory construction, rather than the general law. The ultimate question, using the current form of the Real Property Act, concerns the application of the powers of the Registrar-General under s 12, which relevantly provides:

If par (c) is engaged, it will give the corrected register effect, in this case, as a burden on the title of lot 4. However, par (b) will remove that effect if it would affect a pre-existing right. The pre-existing right will be the right of the owner of lot 4 to hold that land free of any unrecorded interest. That right will be found in s 42. Accordingly, the party claiming the benefit of the easement must identify a provision which would allow the correction of an omission to take effect with respect to a successor in title to the transferor (being the owner of the servient tenement). That, relevantly for present purposes, will now be found in s 42(1)(a1):

The easement created in 1963 post-dated the recording of the land in the register. Accordingly, to engage the exception in s 42(1)(a1) it was necessary to demonstrate that the easement was “validly created … under this or any other Act”. There are provisions in the Conveyancing Act 1919 (NSW), Pt 6, Div 4 dealing with easements and other restrictions arising under covenants as to the user of land. Thus s 88(1) provides that an easement which does not comply with the requirements of that provision “shall not be enforceable” against the owner of the land burdened by the easement: however, it does not otherwise determine whether an easement has been validly created. For present purposes it may be accepted that the easement over registered land, to be validly created, must conform to the requirements of the Real Property Act. Further, that question must be answered, at least initially, by reference to the Act as in force at the date of the intended creation of the easement.

In 1963, an exception to s 42 arose “in the case of the omission or misdescription of any right-of-way or other easement created in or existing upon any land”: s 42(b).

This provision was considered in Jobson v Nankervis (1943) 44 SR(NSW) 277; 61 WN(NSW) 76. Nicholas CJ in Eq held that the exception only applied to “easements in existence before the land was brought under the Act”: 44 SR at 279. The reasoning in support of that submission appears to have been that a later easement could only be created in accordance with the provisions of the Real Property Act requiring registration of the instrument, in which case there would be no omission. That was thought to follow from the terms of s 47 which then provided:

That statement in Jobson is no longer good law: it has since been accepted that an easement created under the Real Property Act may be omitted from a certificate of title so as to engage the power of correction in s 12. In James v The Registrar-General (1967) 69 SR(NSW) 361 at 368-369, Wallace P said:

Section 47 dealt with an easement which “is created”: the requirements for the creation of an easement were to be found elsewhere, namely in s 46. So far as relevant, s 46 provided:

The reference in s 47 was to an “easement … over any land” which was “created for the purpose of being … enjoyed together with other land”, the recording being required on the title of “such other land.” This provision is satisfied, therefore, where there is a recording on the title of the dominant tenement. The authorities discussed below held that there was also an implied authority (and obligation) to record the easement on the title of the servient tenement; such authority was not necessary to create the easement, but was sufficient to render the failure to do so an “omission” capable of correction.

Section 35, as then in force, stated:

The effect of s 35 was thus that the registered proprietor of lot 5 became the registered proprietor of the easement which was deemed to be registered. If that were not sufficient, s 41 provided, relevantly for present purposes:

The transfer of lot 5 in DP219028 (the hotel site) from Green Valley Shopping Centre Pty Ltd to Tooth & Co Ltd, dated 10 October 1963 was duly registered on the certificate of title for that lot, Vol 9671, Folio 62, disclosing the benefit of the covenant. (The certificate has since been cancelled upon the creation of a computer folio in June 1988.) The registered owner is now Awar, and the transfer J493622 and covenant are noted on its title.

In any event, the covenant contained within memorandum of transfer J493622 was registered on 23 April 1964. Accordingly the transfer was entered in the register in conformity with s 47 of the Real Property Act as then in force.

The next question is whether, on the basis that immediately after the registration of transfer J493622 containing the easement the title of the servient tenement could have been corrected by recording the instrument upon the relevant folio, changes to the Real Property Act resulted in the loss to the registered proprietor of lot 5 of the benefit of that easement. Whilst there are circumstances in which absence of notice of an easement to a bona fide purchaser for value of a purported servient tenement will appear to work unfairness to that proprietor, that consideration is mitigated by the availability of compensation in circumstances falling within the terms of ss 120 or 129(1) (subject to other limitations appearing in Pts 13 and 14). Nevertheless, it is a well-established principle of statutory interpretation that a provision will not be treated as diminishing the rights of property owners, without just terms compensation, unless such a construction is apparent in the express terms of the provision, or by necessary implication: see eg R & R Fazzolari Pty Ltd v Parramatta City Council [2009] HCA 12; 237 CLR 603 at [42] (French CJ). As will appear, there is neither an express indication to that effect, nor does it appear by necessary implication from the subsequent amendments.

The first significant amendments resulted from the Real Property (Amendment) Act 1970 (NSW). Those amendments replaced s 12(d), repealed (and did not replace) s 35, inserted a new s 36 and replaced ss 46 and 47. The amendments to ss 46 and 47, dealing with the creation and recording of easements cannot have affected the present case, because there is no reason to suppose that they had retrospective effect upon easements already created. However, with respect to s 46, the result was a simplification, merely requiring that where it is intended to create an easement, the proprietor “shall execute a memorandum of transfer in the approved form.”

The present version of s 35, as in force in 1964, is s 36(6A) inserted by the Real Property (Computer Register) Amendment Act 1979 (NSW), Sch 10 cl (5)(g). Again the simplified version of the provision as to when a dealing is registered does not affect the creation of the easement in the present case.

Changes, however, to provisions which permit the correction of an omission will be relevant. In particular, s 12 was amended, first to introduce a number of new subsections so that the power to correct omissions is that now set out at [154] above. Section 42 has also been amended, in particular by the Property Legislation Amendment (Easements) Act 1995 (NSW), so that par (b) now deals only with a profit à prendre and a new par (a1) deals with omissions or misdescriptions of easements, in the terms set out at [155] above.

There are two changes which have been wrought to that provision. First, it is now made express that the exception applies to easements subsisting immediately before the land was brought under the Real Property Act and those created at or after that time. Secondly, in relation to the second category (which includes the present case), “created” has been qualified by the adverb “validly”.

The first alternation is immaterial; the second is not a change of substance. In other words, as is clear from the foregoing discussion, an easement created under the Real Property Act could not have been invalidly created or it would not have been an easement for the purposes of the exception. It follows that, the Real Property Act not having been amended in a way which could possibly change any right that the proprietor of lot 5 had with respect to the easement over lot 4 at the time of its creation, the power of the Registrar-General to treat that easement as an omission from the title of the servient lot which may be corrected by an appropriate recording on that title, has not varied. In other words, it being accepted that such a power existed in the Registrar-General in 1964, no statutory change has varied that situation.

It remains to consider whether these conclusions are consistent with authority binding on this Court.

James v The Registrar-General has further significance in this context. The case concerned an easement entered on the titles of both the dominant and servient tenements, but later omitted from a reissued title. Walsh JA stated at 370:

In James, the Court (Walsh JA dissenting) held that s 12(d) authorised the Registrar-General to correct the register to record the easement on the title of the servient tenement, despite the prejudice to a purchaser of the servient tenement without notice of the easement. In upholding that power, Jacobs JA noted that there was no doubt that a right of way had been created in a proper manner pursuant to the terms of s 46 of the Real Property Act: at 379. Jacobs JA further stated, with respect to Jobson v Nankervis that, in his view, the case “rather supports the view that an easement created in accordance with the requirement of s 46 would be within the terms of s 42(b), although there are statements therein which would limit s 42(b) to easements in existence before land is brought under the Act.” The reference to an easement “created in accordance with the requirement of s 46” was accepted as appropriate by Priestley JA in Dobbie v Davidson (1991) 23 NSWLR 625 at 646C.

Next it is convenient to refer to the judgment of the High Court in Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11; 247 CLR 149. The case involved a statute barred attempt to review the decision of the Registrar-General, some years earlier, to remove an easement from the register. The joint reasons of Hayne, Crennan, Kiefel and Bell JJ accepted the reasoning of Priestley JA in Dobbie to the effect that “omission” of an unregistered easement meant no more than that the dealing had been “left out” or was “not there”: at [23]. However, as the reasons stated at [25] where a dealing was no longer recorded because it had been deliberately removed by the Registrar-General, that could not be treated as a “case of the omission … of an easement” for the purposes of s 42(1)(a1). That was because, “[t]he presupposition for the operation of s 42(1)(a1), that the easement continues to exist, is not valid.” The approach of Gageler J differed from that of the joint reasons, but came to the same conclusion.

None of that reasoning has relevance for the present case. However, what was said at [24] is directly apposite. That paragraph reads:

The footnote to the reference to “an easement created by registration” read as follows:

That reasoning is entirely consistent with the reasoning set out above, so long as it was, at the relevant time, sufficient to record the dealing on the title of the dominant tenement. Subject to reference to the cases noted below, it should be accepted that that was sufficient. Castle Constructions did not in terms consider how an easement might be created by registration at some earlier point in time, but it did confirm that an easement could be created by registration. There is certainly nothing in the reasoning in Castle Constructions which is inconsistent with the analysis set out above.

It is then necessary to refer to two cases considered by the primary judge, Papadopoulos v Goodwin [1983] 2 NSWLR 113 (Wootten J) and Christopoulos v Kells (1988) 13 NSWLR 541. The latter case in this Court (the principal judgment being given by Hope JA, Mahoney and Priestley JJA agreeing) confirmed the reasoning of Wootten J in Papadopoulos and, as will be explained, is consistent with the reasoning set out above.

Christopoulos was directly analogous to the present case in that it involved the subdivision of a property containing four lots with the vendor reserving a right-of-way by way of a back lane across the rear of two lots which were being sold. The transfer took place in 1976. The appellants were the purchasers of the servient tenement (in 1979) the title for which contained no notation of the transfer with the reservation of the right-of-way. Hope JA noted at 545:

Because reliance had been placed on the reasoning in James v Registrar-General, Hope JA then proceeded to consider the provisions of the Real Property Act, as they existed before 1970. He extracted or paraphrased ss 35, 37, 46 and 47. Of the last provision he stated at 545F:

In referring to s 42, Hope JA stated that, given its purpose, “it is apparent that the Act contemplates and indeed requires the creation of rights-of-way to be noted on the certificate of title of the servient tenement.” He concluded that failure to make such a notation meant that the easements were thus “omitted” for the purposes of s 42.

Noting that ss 35 and 37 were omitted when new s 32 containing subs (4) was introduced in 1970, he nevertheless concluded that the provisions in force in 1976 did not differ in substance from those in force when James was decided. The reasoning continued at 546F:

The difference between James and Christopoulos was that in James the easement was originally noted on the title of the servient tenement, but omitted from a later certificate of title. In Christopoulos the easement was never noted on the certificate for the servient tenement: nevertheless, the Court of Appeal held that the easement had been validly created.

The conclusion reached in Christopoulos was consistent with both Papadopoulos v Goodwin and Berger Bros Trading Co Pty Ltd v Bursill Enterprises Pty Ltd (1969) 91 WN(NSW) 521 (McLelland CJ in Eq). (Berger Bros involved an easement and a building over the easement: the reasoning of the primary judge with respect to the building was not upheld on appeal, but the reasoning with respect to the easement was not disputed: Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd [1971] HCA 9; 124 CLR 73.) Noting that “[t]he relevant easements had thus never been noted on any certificate of title of the servient tenement”, Hope JA concluded at 547C:

Hope JA then described Papadopoulos as “[a] like case” and, referring to both it and Berger, stated at 548A:

At trial, McLelland J had upheld the power of the Registrar-General to endorse a notification of the right-of-way on the certificate for the servient land. The question as to whether the right-of-way had been validly created for the purposes of the Real Property Act was not litigated by McLelland J: nevertheless for the reasons noted above, the appeal was dismissed.

Jea Holdings submitted that Christopoulos was both distinguishable and not correct. The primary basis on which it was sought to be distinguished was apparently the change created by the introduction of s 36(6A), a point of distinction not accepted by Hope JA. Further, it was said to be wrong because former s 35 required an easement to be recorded on the folio for the servient tenement. For the reasons given in construing the statutory provisions as in force in 1964, I do not think that Christopoulos was wrong. Even if there were a contrary argument, it could not be said that there were compelling reasons to depart from it and accordingly it should be followed: Gett v Tabet [2009] NSWCA 76; [2009] Aust Torts Reports 82-005; (2009) 254 ALR 504 at [301].

Subject to one further consideration, it follows that the appeal should be upheld, the orders made by Windeyer AJ on 21 May 2013 set aside and the orders sought by the Registrar-General as set out at [144] should be made. Awar filed a notice of cross-appeal, but the additional issue it sought to raise was ultimately addressed in an amended notice of appeal filed by the Registrar-General. Both the Registrar-General and Awar have been successful and should have their costs, but the cross-appeal should be dismissed as otiose.

The additional issue, which was not raised in the Court below nor in the written submissions in this Court, concerned the operation of an entirely separate covenant created by a transfer (J490511) from the Housing Commission of New South Wales to Green Valley Shopping Centre Pty Ltd. That transfer was registered on 4 October 1963, prior to the subdivision which created lots 1-5. Although the transfer of lot 5 by Green Valley to Tooth & Co was executed on 10 October 1963, it was not then registered. The subdivision was effected by the registration, on 17 February 1964, of DP 219028, creating lots 1-5. The transfer to Tooth & Co (by J493622) containing the covenant discussed above was registered, with the transfer of lot 4, on 2 April 1964. The certificates of title for both lots 4 and 5 noted the earlier covenant created by J490511.

That covenant stated that the transferee (Green Valley)

The question raised was the possible effect of this covenant, being registered before the covenant in favour of lot 5, on the latter covenant.

It was common ground that the effect of the covenant for free use of a lot by members of the public constituted a restrictive covenant which might be enforceable against subsequent purchasers of the land, pursuant to s 88(3) of the Conveyancing Act. Jea Holdings accepted that position, contending that it supported its contention that the covenant in favour of lot 5 (created by J493622) was also a restrictive covenant and not an easement, being “part of a scheme of restrictive covenants”. For the reasons accepted at (1) above, that submission is not accepted.

The Registrar-General submitted that there was “an evident conflict” between the covenants, with the consequence that that registered earlier in time (in favour of the public) must prevail. To that extent, the parking area could not be for the “exclusive use” of the owners and customers of lots 1-5. Recording of the later easement could not affect the operation of the earlier covenant.

Awar accepted that the earlier covenant was a restrictive covenant and noted it could be released or modified by the Housing Commission. It also submitted that there was no inconsistency between the rights created by the covenant and those created by the easement. Each provided that lot 4 was to be used as a car park. However, the lack of inconsistency was explained by reference to the rights of the owner of lot 4 with respect to its use of the land otherwise than as a car park (by building over or under the surface area). That does not contradict the element of inconsistency noted by the Registrar-General.

The Registrar-General’s submissions should be accepted on this point; however, once the covenant contained in J493622 is found to be an omitted easement, the existence of the restrictive covenant is not said by any party to form a ground for not granting the relief sought by the Registrar-General and supported by Awar. Accordingly, those orders should be made.