James Allen Cousin and Kathryn Patricia Cousin v Howard Charles Grant; John Whitton Haslem; Cecil John Louttit and Lauris Vant Westende [1991] ACTSC 9; (1991) 103 FLR 236 (22 February 1991)

SUPREME COURT OF THE ACT

JAMES ALLEN COUSIN and KATHRYN PATRICIA COUSIN v. HOWARD CHARLES GRANT; JOHN
WHITTON HASLEM; CECIL JOHN LOUTTIT and LAURIS VANT WESTENDE
S.C. No. 532 of 1990
Real Property - Scheme of Development - Privity of Contract
[1991] ACTSC 9; (1991) 103 FLR 236

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Real Property - obligations of registered proprietors under Units Plan Scheme.

Scheme of Development - whether units plan constitutes scheme of development - nature of scheme giving rise to equitable right independent of contract.

Privity of Contract - whether lessees under units plan entitled to sue for breach of contract where other lessees in breach of covenants contained in units plan.

Words and phrases - "used solely by".

Ryde Municipal Council v. Macquarie University [1978] HCA 58; (1978) 139 CLR 633

Attorney-General for the Australian Capital Territory v. Commonwealth of Australia (Full Court of the Federal Court of Australia, 4 September 1990, unreported)

Trident General Insurance Co. Limited v. McNiece Bros Proprietary Limited [1988] HCA 44; (1987-88) 165 CLR 107

Baxter v. Four Oaks Properties Ltd (1965) Ch 816 at p 825

Elliston v. Reacher (1908) 2 Ch 374 at 384

Bradbrook and Neave, Easements and Restrictive Covenants in Australia (1981) paras. 1367-1396

Re Mack and the Conveyancing Act (1975) 2 NSWLR 623

Preston and Newsom's Restrictive Covenants Affecting Freehold Land 7th ed. p 57

Re Dolphin's Conveyance (1970) Ch 654 at p 663

Re Louis and the Conveyancing Act (1971) 1 NSWLR 164

Spicer v. Martin (1888) 14 App Cas 12

Browne v. Flower (1911) 1 Ch 219

Brunner and Another v. Greenslade (1971) Ch 993

B.A. Helmore, The Common Building Scheme and Statutory Provisions (1963) 37 ALJ 81

Elliston v. Reacher (1908) 2 Ch 374

McLeod v. Proprietors of Strata Plan No. 6544 (1980) 2 NSWLR 691

North Wind Pty. Ltd. v. Proprietors Strata Plan 3143 (1981) 2 NSWLR 809

The Proprietors Surfers International Building Units Plan No. 2889 and Others v. Paradise Projects Pty. Ltd. (1988) CCH 30-078 New South Wales Strata Title Law and Practice

HEARING

CANBERRA
22:2:1991

Counsel for the plaintiffs: Mr J.P. Hamilton, QC

with Mr S. Walmsley

Solicitors for the plaintiffs: Elrington, Boardman and Allport

Counsel for the defendants: Mr M.J. Neal, QC
with Mr G.P. Walker

Solicitors for the defendants: Crossin Power Haslem

ORDER

The defendants pay to the plaintiffs the sum of $1,000.00 by way of damages.

The defendants, their servants and agents be restrained from letting, parting with the exclusive possession of or granting any licence or right of occupation or use of any part of Unit 1 in Units Plan 451 which would permit the occupation of such part by any person other than the Liberal Party of Australia, Australian Capital Territory Division, save that this order does not in any way relieve or excuse the defendants from their obligations to comply with the orders made or affect their obligations as declared by the Honourable Mr Justice Lockhart on 5 February and 26 July 1990 in proceedings brought by the defendants against Estill Holdings Pty. Limited, SC 172 of 1989.

The defendants, their servants and agents be restrained from letting, parting with the exclusive possession of or granting any licence or right of occupation or use of any part of Unit 2 in Units Plan 451 which would permit the occupation of such part by any person other than the Liberal Party of Australia, Australian Capital Territory Division, save that the defendants may permit the continuing occupation until 1 April 1991 of part of Unit 2 by the Australian Institute of Management and until 13 April 1991 or part of Unit 2 by Computer Power Pty Limited in accordance with arrangements already entered into.

DECISION

This is the latest chapter in what has been called a saga concerning the building known as "Deakin House" at the corner of Geils Court and Denison Street, Deakin. The land and building are the subject of Units Plan No. 451, a units plan under the Units Title Act 1970. Units Plan No. 451 was registered on 14 July 1987. Units 1 and 2 are on the ground floor and Units 3 to 7 are upstairs. The defendants are the registered proprietors of the leases of Units 1 and 2 and the plaintiffs are the registered proprietors of the lease of Unit 5. The plaintiffs claim that the defendants are in breach of their obligations under Units Plan No. 451.

2. Among the documents registered as Units Plan No. 451 is a ten page document entitled "Schedule of Provisions, Covenants and Conditions Subject to Which Leases of Units are Held" (the Schedule). The Schedule bears date 6 May 1987. Clause 4 of the Schedule is in the following terms:

"4. It is mutually covenanted and agreed as follows:
(a) Subject to sub-clause (c) of this clause to use
the premises only for any one or more of the following purposes:
i) Units 1-2 to be used solely by the Liberal Party
of Australia Australian Capital Territory Division;
ii) Units 3-7 to be used for offices
BUT not for retail or wholesale trading;
....."

3. The defendants are the trustees of the Liberal Party of Australia, Australian Capital Territory Division (ACT Liberal Party) which is the body referred to in Clause 4(a)(i).

4. There is no dispute that on the ground floor Unit 2 has been partitioned and sub-let. On 1 February 1987 part of Unit 2 was sub-let by the defendants to the Australian Institute of Management (AIM) for a period of two years, with the option of a further two years. In the affidavit of Howard Charles Grant, sworn on 12 September 1990, Mr Grant states that AIM moved to other offices on 31 August 1990 but retains the right to occupy Unit 2 and will continue to do so on an occasional basis for training seminars, hitherto held in the Function Room. The accuracy of this evidence was not questioned. Another part of Unit 2 was sub-let by the defendants to Computer Power Pty. Ltd. (Computer Power) for a "minimum" period of six months from 13 August 1990. It appears, and I find, that both AIM and Computer Power are holding over on a monthly basis.

5. Unit 1 comprises 323 sq. metres. Part of Unit 1 consists of a function room of approximately 125 sq. metres and another part consists of a conference room of 56 sq. metres. There are two full-time employees of the ACT Liberal Party and they have desks somewhere else in Unit 1. From time to time the defendants, or the ACT Liberal Party, permit other lessees in the building or their sub-tenants to hold meetings, conferences and social functions in the function room. In addition, the ACT Liberal Party permits the function room to be used by AIM. To a lesser extent, and to what exact extent is not clear on the evidence, it allows the conference room also to be used by other persons and bodies.

6. The plaintiffs became the registered proprietors of Unit 5 by transfer from the defendants registered on 5 November 1987. Mr Cousin is a physiotherapist. It appears that he may have carried on his physiotherapy practice from Unit 5 but has not done so for sometime. Since 17 October 1988 Unit 5 has been sub-let to Takton Pty. Ltd. through which a psychologist, Mr Tom Sutton, carries on practice at Unit 5. Mr Sutton sometimes uses the function room.

7. On 18 July 1986 the defendants as registered proprietors of the lease of Unit 3 agreed to sell Unit 3 to Estill Holdings Pty. Ltd. (Estill) for $500,000. On 5 February 1990 at the suit of the present defendants Lockhart J. made an order for specific performance of that agreement. On 26 July 1990 his Honour made a further order or declaration that the agreement for sale to Estill included a right by way of an easement for use of the function room by Estill at reasonable times and subject to certain conditions. The terms of the easement were set out in a draft deed which was approved by his Honour and which became Exhibit 1 in the proceedings before me. Enforcement of the order for specific performance has been deferred pending the outcome of the present suit.

8. On 7 August 1990 Lockhart J. dismissed as an abuse of process an application by Mr Dennis Robert Hulm alleging breach by the defendants of Clause 4(a)(i) and seeking an order under s.9A of the City Area Leases Act 1936. Lockhart J. found that Clause 4(a)(i) was not a purposes clause within the meaning of that Act.

9. On 15 August 1990 Higgins J. dismissed an application under s.11A of the City Area Leases Act by the present defendants for variation of Clause 4(a)(i) and also Clause 4(c) (with which latter sub-clause this case is not directly concerned). Higgins J. said that he agreed with Lockhart J. that Clause 4(a)(i) was not "a business purpose" so as to attract the relevant provisions of the City Area Leases Act.

10. Lockhart J. was of the opinion that the facts indicated that Units 1-2 had not been used solely by the Liberal Party. Those findings of fact are of course not binding on me. But from a perusal of the judgments in all the cases, it appears that the evidence in each has been similar on relevant matters. There is really no dispute that the primary facts are as I have already stated them.

11. In the first chapter of the saga Estill sought to resist the suit by the present defendants for specific performance on the ground that the defendants were in breach of their obligations under Clause 4(a)(i). Lockhart J. was of the opinion, however, that such breach by the defendants was no bar to their obtaining a decree of specific performance, because Estill at all relevant times knew that the conference room was occupied by AIM and Computer Power, knew that portions of Unit 2 were occupied by AIM and Computer Power and knew that the function room was occupied from time to time by persons other than the ACT Liberal Party. In considering the subsequent application brought by Mr Hulm, Lockhart J. stated that he was not persuaded that the periodic and probably sporadic use of the function room by someone other than the ACT Liberal Party was a use which would "fall foul" of Clause 4(a)(i) and where there was a use of a lessee's premises by another, being an ordinary incident of occupation by the lessee, it did not follow that the lessee "is not the person solely using or occupying them". His Honour concluded that "the mere grant of the easement in this case does not necessarily result in the creation of a factual matrix which would contravene Clauses 4(a) and (c) of the lease .....".

12. In a later chapter of the saga, Higgins J. agreed with Lockhart J. but added that "so long as the Liberal Party does not part with possession of Units 1 and 2, clause 4(a)(i) will not be offended". I would, with respect, not agree that in order to prove a breach of Clause 4(a)(i) it is necessary to prove a parting with possession by the ACT Liberal Party and I take that part of the decision of Higgins J. to be said obiter dicta. But I add that the primary facts persuade me that in any event there has been a parting with possession in this case.

13. Accordingly, it is not difficult to come to the conclusion that there has been a long-standing use of Units 1 and 2 by persons and bodies other than the ACT Liberal Party. Although this fact has been recognized in previous proceedings, it has not led to any litigant being successful in obtaining relief against the defendants. The defendants themselves have been unsuccessful in obtaining relief through the Court which would lift the restriction that Units 1 and 2 be used solely by the ACT Liberal Party.

14. How then can the present plaintiffs, fellow lessees and unit holders with the defendants, succeed in their attempt to ensure that the defendants comply with the covenant that Units 1 and 2 be "used solely by" the ACT Liberal Party?

15. It is appropriate to set out the amended statement of claim in full, which is as follows:

"Statement of Claim
1. The plaintiffs are residents in the Australian
Capital Territory and registered proprietors of Unit 5 in Units
Plan 451 being part of Block 84 Section 37 Deakin in the
Australian Capital Territory.
2. The defendants are Trustees for the Liberal Party
of Australia Australian Capital Territory Division and as such
Trustees are the lessees from the Commonwealth of property
located at Geils Court, Deakin in the Australian Capital
Territory, being (inter alia) Units 1 and 2 in Units Plan 451.
3. Conditions 4(a) and 4(c) of the lease from the
Commonwealth being Units Plan 451 are as follows:
"4. It is mutually covenanted and agreed as follows:
(a) Subject to sub-clause (c) of this clause to use the
premises only for any one or more (sic) the following purposes:
(i) Units 1-2 to be used solely by the Liberal
Party of the Australian Capital Territory Division;
(ii) Units 3-7 to be used for offices BUT not for
retail or wholesale trading;
....."
"4(c) That not less than fifty per centum of the
gross floor area of the building shall be used and occupied only
by the Liberal Party of Australia, Australian Capital Territory
Division;"
4. There is a building consisting of a ground floor
and a first floor erected on the said property.
5. The said building has been divided into seven (7)
units with separate strata titles, and the areas and occupancy
of the seven (7) units are as follows:
Unit 1 323m2
Unit 2 302m2
Unit 3 191m2
Unit 4 106m2
Unit 5 61m2
Unit 6 117m2
Unit 7 156m2
6. The defendants have contracted to sell Unit 3 and
to grant an easement to the purchaser over an area on the ground
floor of the building and known as "the function room".
7. The defendants are in breach of clauses 4(a) and
4(c) of the said Lease and the defendant threatens and intends
to continue or repeat the breaches as aforesaid.
AND the plaintiff claims:
(a) An order directing the defendants/lessees not to
permit the premises Units 1 and 2 in Units Plan 451 being used
by any person other than the Liberal Party of Australia
Australian Territory Division.
(b) An order directing the defendants/lessees not to
grant an easement or right in the nature of an easement over the
area known as "the function room" on the ground floor of the
premises described in Units Plan No. 451 to any person or body
other than the Liberal Party of Australia, Australian Capital
Territory Division.
(c) Costs.
(d) Damages.
(e) An order restraining the defendants, their
servants and agents from letting, parting with the exclusive
possession of or granting any licence or right of occupation or
use of any part of Units 1 and 2 in Units Plan 451 which would
permit the occupation of such
part by any person other than the Liberal Party of Australia,
Australian Capital Territory Division;
(f) An order restraining the defendants, their
servants and agents from creating any easement over any part of
Units 1 and 2 in Units Plan 451 in favour of any person who is
not the Liberal Party of Australia, Australian Capital Territory
Division or acting on its behalf as trustee or attorney."

16. The statement of defence is in the following terms:

"DEFENCE
1. The Defendants admit the allegations and each of
them in paragraph 1 of the Statement of Claim.
2. The Defendants admit the allegations and each of
them in paragraph 2 of the Statement of Claim.
3. As to paragraph 3 of the Statement of Claim, the
Defendants do not admit that there is a single Lease from the
Commonwealth in respect of Units Plan 451 and say that there are
seven Strata Title Units comprised in Units Plan 451. The
Defendants admit that in respect of each of those seven units
there is a separate Lease between the registered proprietor and
the Commonwealth which contains covenants 4(a) and 4(c) as set
out in paragraph 3 of the Statement of Claim.
4. The Defendants admit the allegations and each of
them in paragraph 4 of the Statement of Claim.
5. The Defendants admit the allegations and each of
them in paragraph 5 of the Statement of Claim.
6. The Defendants admit the allegations and each of
them in paragraph 6 of the Statement of Claim.
7. The Defendants do not admit the allegations or any
of them contained in paragraph 7 of the Statement of Claim.
8. Insofar as the Plaintiff's claim purports to be
brought under s.9A of the CALA 1930 the
Defendants say in full answer to the Plaintiff's claim that
covenants 4(a) and 4(c) in the Leases of Units 1 and 2 in Units
Plan 451 do not set out "purposes" in the sense in which that
term is used in s.9A of the City Area Leases Act and accordingly
that the Defendants are not entitled to the relief sought herein
or any relief under that section.
9. The Defendants deny that the Plaintiffs are
entitled to the relief claimed in paragraphs 7(a) and (b) of the
Statement of Claim or any relief.
10. The Defendants deny that the Plaintiffs are
entitled to the damages claimed in paragraph 7(d) of the
Statement of Claim or any damages."

17. A reading of the pleadings does not immediately and obviously disclose any cause of action or equitable right which would entitle the plaintiffs to any of the relief sought. However, Mr Hamilton QC for the plaintiffs submits that if the facts alleged in the statement of claim are proved, then the plaintiffs have established a breach of contract (although he concedes there is no privity of contract upon which the plaintiffs are entitled to rely) and further an infringement of an equitable right that arises under a so-called scheme of development.

18. Mr Neil QC on the other hand says that the facts do not establish a breach of Clause 4(a)(i), that, if there has been a breach, there has been no damage or insufficient damage to warrant any relief, and that in any event, the plaintiffs have not acquired any right by way of contract or under a scheme of development. He also says that the Court should refuse equitable relief in the exercise of discretion.

19. As to the first point, it is submitted for the defendants that although it is an undisputed fact that bodies other than the ACT Liberal Party are in occupation of Unit 2 and are from time to time permitted to use the function room, that does not stand in the way of the use of Units 1 and 2 solely by the ACT Liberal Party. Reliance is placed upon, inter alia, Ryde Municipal Council v. Macquarie University [1978] HCA 58; (1978) 139 CLR 633 and Attorney-General for the Australian Capital Territory v. Commonwealth of Australia (Full Court of the Federal Court of Australia, 4 September 1990, unreported). I do not think that it is necessary to discuss those cases at length. It is true that they recognize that the word "used" is a word of wide import and that its particular meaning will vary according to the context in which it is used. They also recognize that land which is the subject of a lease does not necessarily by reason thereof cease to be used by the lessor. The determination of the question whether the land the subject of the lease is used by the lessor depends partly upon the context in which the words "used by" occur and partly on the factual circumstances of the case. In the Attorney-General for the ACT case the question was simply whether the Gowrie Hostel, the subject of a lease to a company in which the Commonwealth had ceased to have any beneficial interest, was "used by" the Commonwealth. The answer was in the affirmative because under the contractual arrangements between the Commonwealth and the lessee, the premises continued to provide accommodation for Commonwealth public servants at a preferential tariff. No question arose whether the Gowrie Hostel was "used solely by" the Commonwealth, although it is clear on the facts that it was not.

20. In the Macquarie University case a number of shops, a travel centre and a bank were conducted on land on the University campus leased from the University and the question there was whether the land was "used or occupied by the University solely for the purposes" of the Macquarie University. The question was not whether the land was used solely by the Macquarie University but whether land used by the University was so used solely for the purposes of the University. The word "solely" qualified the phrase "for the purposes of the University" and not the phrase "used by the University". The restriction was imposed not on "use" but on "purposes". The case is therefore of little assistance. It is striking, however, that in the dissenting judgment of Aickin J. (with whom Jacobs J. agreed) at p 659-660, his Honour said:

"A question arises as to the meaning of the phrase
"used" by the University "solely for the purposes thereof". It
may mean first that only the University uses it and such use is
solely for the purposes of the University, or second, that
insofar as the University uses it, such use is solely for
University purposes. If it bears the first meaning, the
University cannot succeed because, even if it is used in the
relevant sense by the University, it is also used by the tenants
for their own purposes. Thus the use of the land is not solely
by the University......"

21. I would respectfully agree with those remarks.

22. It is therefore clear, in my view, that the occupation by AIM and Computer Power of Unit 2 constitutes a breach by the defendants of the obligation under Clause 4(a)(i) that Units 1 and 2 "be used solely" by the ACT Liberal Party. It is also my view that the holding of meetings and social gatherings in the function room by AIM and other bodies and persons (apart from the other lessees in the building and their sub-tenants) constitutes a breach. It is not necessary for me to decide whether other facts either proven or hypothetical constitute a breach. I do not decide whether the use of the function room by other lessees constitutes a breach by the defendants of Clause 4(a)(i). Nor is it necessary for me to decide that bodies that may be closely associated with the ACT Liberal Party who hold meetings or carry out activities in the function room or any other part of Units 1 or 2 may bring about a breach of Clause 4(a)(i). It was suggested, for instance, on behalf of the defendants that the clause allowed the use of the premises by a political party with whom the Liberal Party of Australia happened to form a coalition government, or allowed the premises to be used by a visiting delegation from the British Conservative Party. Mr Hamilton, on the other hand, for the plaintiffs submitted that the defendants could not even allow Units 1 and 2 to be used by "a conservative think-tank" without committing a breach. It is unnecessary for me to decide these interesting but hypothetical questions.

23. I agree with Lockhart J. that the granting of an easement to Estill to use the function room at reasonable times is not itself a breach of the covenant that Units 1 and 2 be used solely by the ACT Liberal Party. Estill may or may not avail itself of its rights under the easement and the extent to which it does avail itself of such rights may or may not bring about a breach by the defendants of their obligations under Clause 4(a)(i). As Lockhart J. observed in the proceedings brought by Mr Hulm "the mere grant of the easement in this case does not necessarily result in the creation of a factual matrix" which would result in a contravention of Clause 4(a)(i). It is not for me to try to predict whether the use by Estill of the conference room will bring about such a contravention.

24. I rule that the continuing use of Unit 2 by AIM and Computer Power is a continuing contravention of Clause 4(a)(i). I rule further that the use of the function room and conference room from time to time by AIM and other bodies (other than other lessees and their sub-tenants) is a contravention likely to be repeated. Reservations have been taken for the use of the function room in the evenings on dates which extend up until October 1991. During February and March, such use may be anticipated two or three times a week.

25. I turn now to the basis upon which it is submitted on behalf of the plaintiffs that they are entitled to relief as a result of the defendants' breach of clause 4(a)(i). In the first place it is submitted that the defendants are in breach of contract. The contract relied on is the Schedule, executed under seal by a delegate of the Minister on the one hand and each of the defendants on the other, on 6 May 1987. As Mr Hamilton freely concedes, the plaintiffs are not party to the Schedule. In short, there is no privity of contract. But, says Mr Hamilton, the High Court has recently allowed a third party, the beneficiary under a policy of liability insurance, to enforce the policy against the insurer as if it were a contract between the beneficiary and the insurer; Trident General Insurance Co. Limited v. McNiece Bros Proprietary Limited [1988] HCA 44; (1987-88) 165 CLR 107. The answer, in my view, to the submission is that all four judgments in that case reinforce the notion of privity as basic to the law of contract. Whatever as a result of the Trident case be the legal categorization of the rights of a beneficiary under a contract of liability insurance, the right of the beneficiary to enforce the policy against the insurer is either an exception to the general requirement of privity of contract or a right conferred by the law independently of contract. In the present case the plaintiffs were not party to the Schedule of Provisions, Covenants and Conditions. They cannot sue upon a breach of any promise contained within it.

26. Mr Hamilton's next argument was that Clause 4(a)(i) is part of a scheme of development constituted by Units Plan No. 451 and enforceable at the suit of any lessee affected by breach on the part of any other lessee of an obligation owed under the scheme. The essential character of a scheme of development was described by Cross J. in Baxter v. Four Oaks Properties Ltd (1965) Ch 816 at p 825 in the following words:

"For well over 100 years past, where the owner of land
deals with it on the footing of imposing restrictive obligations
on the use of the various parts of it, as and when he sells them
off, for the common benefit of himself (insofar as he retains
any land) and of the various purchasers inter se, a court of
equity has been prepared to give effect to
this common intention notwithstanding any technical difficulties
involved."

27. In a passage frequently quoted in this connection, Parker J. in Elliston v. Reacher (1908) 2 Ch 374 at 384 said that to bring the principle into operation the following must be proved:

"1. That both the plaintiffs and the defendants derive
title under a common vendor;
2. That previously to selling the lands to which the
plaintiffs and defendants are respectively entitled, the vendor
laid out his estate, or a defined portion thereof (including the
lands purchased by the plaintiffs and defendants respectively),
for sale in lots subject to restrictions intended to be imposed
on all the lots, and which, though varying in details as to
particular lots, are consistent and consistent only with some
general scheme of development;
3. That these restrictions were intended by the
common vendor to be and were for the benefit of all the lots
intended to be sold, whether or not they were also intended to
be and were for the benefit of other land retained by the
vendor; and
4. that both the plaintiffs and the defendants, or
their predecessors in title, purchased their lots from the
common vendor upon the footing that the restrictions subject to
which the purchases were made were to enure for the benefit of
the other lots included in the general scheme whether or not
they were also to enure for the benefit of other lands retained
by the vendors."

28. Schemes of development have been recognized in Australia, and examples are cited in Bradbrook and Neave, Easements and Restrictive Covenants in Australia (1981) paras. 1367-1396. An example of the application of Parker J's tests is a decision of Wootten J. in Re Mack and the Conveyancing Act (1975) 2 NSWLR 623. Nevertheless, it is necessary to recognize that the tests enunciated by Parker J. do not lay down immutable principles. It has been said that "the real usefulness of Elliston v. Reacher is to test the extrinsic evidence where the conveyencing documents do not themselves prove the scheme, but it is not a definite statement of the whole doctrine of schemes; Preston and Newsom's Restrictive Covenants Affecting Freehold Land 7th ed. p 57. In Re Dolphin's Conveyance (1970) Ch 654 at p 663 Stamp J. said that there was a wider rule relating to common intention and common interest as mentioned in the statement by Cross J. in Baxter v. Four Oakes Properties Limited, from which I have already quoted.

29. In Re Louis and the Conveyancing Act (1971) 1 NSWLR 164 Jacobs J.A. said at p 178:

"It is possible to envisage a case where there was never
one covenant contained in a conveyance and yet there might be a
common building scheme, because purchasers purchased on the
basis that there would be such covenants. If they did so then
the obligations of the proposed covenants would be enforceable
between all the parties concerned, including the common vendor."

30. There appears to be no doubt that a scheme of development may exist over leasehold land; see for instance Spicer v. Martin (1888) 14 App Cas 12, Browne v. Flower (1911) 1 Ch 219.

31. In recent years the foundation of the doctrine has moved away from imputed contract to what Megarry J., as he then was, described in Brunner and Another v. Greenslade (1971) Ch 993 at 1005 as "an equity created by circumstances which is independent of contractual obligations". His Honour also remarked in that case at p 1006 that "this is one of those branches of equity which works best when explained least".

32. Under a Torrens Title system it is immaterial whether or not the existence of the restrictive covenant contained in the building scheme is noted on the certificate of title; see discussion by B.A. Helmore The Common Building Scheme and Statutory Provisions (1963) 37 ALJ 81 as to the practice which varies between States. The relevant certificates of title in the present case, those relating to Units 1 and 2 are not in evidence. The certificate of title relating to Unit 5 does not bear any endorsement relating directly to the covenant under consideration, but it is on the face of it a certificate of title issued pursuant to the Real Property (Unit Titles) Act 1970 and contains the words "Units Plan No. 451 Unit No. 5" as a heading. No argument was put to the effect that a purchaser was not on notice of the provisions of the Units Plan as disclosed in the documents registered as Units Plan No. 451.

33. In the present case Mr Hamilton, in order to establish the necessary common interst and common intent, relies on the terms of the Schedule of Provisions Covenants and Conditions dated 6 May 1987 and the provisions of s.25 of the Unit Titles Act 1970. Those provisions are:

"25.(1) On the registration of the units plan -
(a) .....
(b) the person who was, immediately before the
registration of the units plan, the lessee of the parcel becomes
possessed of an estate of leasehold in each unit for the term
fixed under the next succeeding sub-section and subject to the
provisions, covenants and conditions set out in the units plan in
relation to that unit as if a separate lease of that unit for that
term and subject to those provisions, covenants and conditions had
been granted to him by the Commonwealth under the City Area Leases
Ordinance; and
....."

34. The submission is first that the provisions of Clause 4(a)(i), although contained within a document executed only by the Commonwealth as lessor and the defendants as lessees of an undivided parcel of the land in question, operates pursuant to section 25(1)(b), upon registration of Units Plan No. 451 to confer a leasehold title upon the lessee of each and every unit, each lessee taking that title subject to the covenants set out in the Units Plan in relation to that unit as if a separate lease of that unit containing those covenants had been granted to the lessee of that unit by the Commonwealth. The submission then is that the terms of Clause 4(a)(i) as a whole are to be read as part of a scheme which displays that commonality of interest and intention whereby the lessee for the time being of any one unit is entitled to performance by the lessee for the time being of each and every other unit of the obligations which the Schedule imposes upon each and every other lessee.

35. There is an initial difficulty with the submission which must be faced. It is that on no interpretation of Clause 4 as a whole can it be seen to impose identical obligations on all lessees. As Lockhart J. observed, it could not have been intended that the lessee say of Unit 3 should be burdened with an obligation that Units 1 and 2 be used solely by the ACT Liberal Party. On the other hand, whilst the exact meaning of the term "mutual" in the introductory words of Clause 4 is far from obvious, that very term, in contrast to the more particular identification of the persons bound by Clauses 3, 5 and 6, suggests that the benefits conferred and obligations imposed by Clause 4 were to be cast widely and not narrowly confined. It is, in my view, appropriate to approach the task of interpretation, difficult as it may be, on the basis that the parties intended Clause 4 to work, an approach which echoes the words of Megarry J. quoted above.

36. The benefits and obligations arising from particular provisions of Clause 4 may fall on particular lessees but not on others. For instance the obligation under Clause 4(a)(i) falls on the lessees of Units 1 and 2 only, the obligations under Clause 4(a)(ii) fall on the lessee of Units 3 to 7 only. But as to, say, the lessee of Unit 3, there may be not only an obligation to comply with Clause 4(a)(ii), there will, if there is a scheme of development, be an equitable right to insist on the performance by the lessees of Units 4 to 7 of likewise complying with Clause 4(a)(ii). That right will co-exist with a similar right to insist that the lessees of Units 1 and 2 comply with their obligations under Clause 4(a)(i) and indeed a similar right to insist on all other lessees complying with those covenants which on a proper construction are seen to cast obligations which arise out of interests which are common to all lessees amongst themselves as well as common to the Commonwealth and the defendants when the schedule was entered into.

37. It is not necessary to constitute a scheme of development that the rights and obligations of the participants be identical: Elliston v. Reacher.

38. In my view, the matters that Parker J. said required to be proved have been proved in the present case.

1. The plaintiffs and defendants derive title from the
Commonwealth;
2. The land has been leased out, with the approval of the
Commonwealth, for lease in lots called units subject to
restrictions intended to be imposed on all units which though
ranging in detail as to particular units, are consistent and
consistent only with a general scheme of development. That
scheme of development encompasses the following:
a) all units are initially (that is upon registration
of Units Plan No. 451) the subject of leases in effect to the
ACT Liberal party;
b) The ground floor units will continue to be used by
the ACT Liberal Party and solely by the ACT Liberal Party;
c) The ACT Liberal Party has the power to sublet or
transfer the lease of any particular upstairs unit to another
lessee;
d) The upstairs units will be used, whether by the
ACT Liberal Party or others, as offices;
e) No part of the building will be used for retail or
wholesale trading.
The scheme in short recognizes, as Lockhart J. remarked,
that one office building is provided by the Commonwealth as a
"headquarters" for the ACT Liberal Party, the Liberal Party
continuing to use the ground floor and the upstairs units
continuing to be used, whether by the Liberal Party or some
other person or organization, as offices. The lessees of the
upstairs units are on notice that they cannot use the units
other than for offices and the ACT Liberal Party is on notice
that only it can use the downstairs units. The essential
character of the building is contained and maintained in this
way and the common interests and benefits to the Commonwealth,
the ACT Liberal Party and the lessees, as they must be taken to
be perceived by them, are secured.
3. The restrictions were intended by the Commonwealth to be
for the benefit of all units.
4. The plaintiffs and defendants each accepted their
interests as lessees on the footing that by virtue of s.25(1)(b)
of the Unit Titles Act 1970 the covenants in the Schedule to
Units Plan No. 451 were to enure for the benefit of other
lessees of the units included in Units Plan No. 451.

39. I therefore hold that the breach by the defendants of Clause 4(a)(i) is a breach of an obligation owed to the plaintiffs imposed by a scheme of development.

40. To what relief then are the plaintiffs entitled bearing in mind that the plaintiffs' rights which have been infringed are equitable rights and the discretion of the Court to grant or refuse relief? The plaintiffs complain that they suffer financial loss because of the increased cost of air-conditioning brought about by the use of the building after hours by persons other than the ACT Liberal Party and other than unit holders. They also complain that the use of Units 1 and 2 by persons other than the ACT Liberal Party has brought about a changed amenity, in that there are all sorts of people coming and going from the building, in contrast with the more settled situation if Units 1 and 2 were used solely by the ACT Liberal Party. Mr Cousins complained further in his evidence about the grant of easement to Estill and said that the grant of easement was unfair to other unit holders who did not enjoy legal rights in the nature of an easement, or presumably otherwise, to use the function room. However, insofar as I am of the view that the grant of the easement was not a breach of Clause 4(a)(i), this cannot be taken into account as a basis for granting relief, understandable as Mr Cousins' attitude might be.

41. As to the increased cost of air-conditioning, I conclude that this has been brought about substantially by the use of the function room other than by the ACT Liberal Party. The use and occupation of Unit 2 by AIM and Computer Power does not contribute to it, or at least the evidence does not lead me to be satisfied that it does. However, the increased cost of air-conditioning caused by the use of the function room outside the terms of Clause 4(a)(i) is, I am satisfied, more than negligible. Mr Grant said that at meetings of the body corporate the subject of the high cost of air-conditioning had been discussed and that all unit holders had taken part in the discussion. It is unreal to think that the discussion would not have included reference to the use of the function room by persons other than unit holders or their sub-tenants. Furthermore, as Mr Grant said, an electrician has been engaged to try to devise a system of switches whereby the identity of persons using the electrical power after ordinary business hours can be ascertained, but it is far from clear that a satisfactory system will be devised.

42. The evidence does not permit of any firm conclusions about the quantum of the increase in the cost of electricity caused to the plaintiffs by the contravention of Clause 4(a)(i), but I am satisfied that it sounds in damages. I am also satisfied that insofar as the increased cost of electricity brings about increased levies on unit holders that it has an effect on the capital value of the plaintiffs' interest in Unit 5, but again there is no evidence which permits of a conclusion of any precision as to amount.

43. As to the allegation of detriment in amenity, I am satisfied that the increased use of the function room by persons other than the ACT Liberal Party or unit holders or their tenants, interferes with the enjoyment by the unit holders of their interest in their units, but only to a minor extent. Consequently to a minor extent the value of the units is reduced. How far, it is impossible to say. I am not convinced that the occupation of Unit 2 by AIM and Computer Power interferes with the amenity or reduces the value of the other units.

44. Insofar as I have decided that the grant of the easement to Estill is not a breach of covenant, then the evidence that the easement was valued at $20,000 is of no assistance in the case.

45. Accordingly, therefore, I am satisfied that breach of the plaintiffs' right has been proved, that actual although minor damage has flowed and that the breach is likely to continue into the future.

46. The final matter is the discretion to grant or refuse relief. Mr Neil submitted that instead of bringing proceedings in this Court, the plaintiffs should have complained to the body corporate established under Units Plan No. 451 and that the body corporate would then have been bound pursuant to s.43 of the Unit Titles Act to require the defendants to remedy the breach. If the body corporate does not perform a duty imposed upon it by the Act, s.113 empowers the Court to order it to do so. So, it is submitted, application to the Court is inappropriate until the body corporate has failed to act in accordance with its duty. In my view, the short answer is that the defendants would have taken the same attitude to any demand by the body corporate as they have taken in these proceedings, that is, they would have denied that there was a breach. Furthermore, it is not clear that a body corporate is required to act in a case of a disputed breach. Lastly, it is by no means clear that there is a discretion to refuse to decline to give the remedy to which a party is entitled in law or equity merely because a domestic tribunal exists which can grant similar relief (see McLeod v. Proprietors of Strata Plan No. 6544 (1980) 2 NSWLR 691, North Wind Pty. Ltd. v. Proprietors Strata Plan 3143 (1981) 2 NSWLR 809, The Proprietors Surfers International Building Units Plan No. 2889 and others v. Paradise Projects Pty. Ltd. (1988) 30-078 CCH New South Wales Strata Title Law and Practice. In any event, if there is such a discretion, I would not exercise it.

47. I think that damages would be an inadequate remedy if the breach were allowed to continue. As I have already said, the breach to date has resulted only in minor interference with the amenity of the premises and the value of the plaintiff's interest, yet if the breach were allowed to continue into the future and the defendants were allowed to ignore their obligations to ensure that the premises were used solely by the ACT Liberal Party, then there is a possibility that the damage would be substantial. On the other hand, to grant relief by way of an injunction, is not greatly to interfere with the defendants' right to enjoy possession of the unit in accordance with their obligations under Units Plan No. 451. There is evidence that the plaintiffs have found it uneconomic to restrict use of Units 1 and 2 to the ACT Liberal Party, but it is their obligation under the Units Plan to do just that. However, injunctive relief should not be granted so that it has a harsh effect and I would propose that the existing arrangement with AIM and Computer Power in relation to Unit 2 be allowed to continue until the end of the letting period in respect of each sub-tenant's occupation of the respective part of Unit 2. I propose to award damages to cover the period to the date of the commencement of the injunction and to grant injunctive relief to operate from a future date. I assess damages at $1,000 and in addition I propose to make the following orders:

1. The defendants, their servants and agents are restrained
from letting, parting with the exclusive possession of or
granting any licence or right of occupation or use of any part
of Unit 1 in Units Plan 451 which would permit the occupation of
such part by any person other than the Liberal Party of
Australia, Australian Capital Territory Division, save that this
order does not in any way relieve or excuse the defendants from
their obligations to comply with the orders or affect their
obligations as declared by the Honourable Mr Justice Lockhart
on 5 February and 26 July 1990 in proceedings brought by the
defendants against Estill Holdings Pty. Limited, SC 172 of 1989.
2. The defendants, their servants and agents are restrained
from letting, parting with the exclusive possession of or
granting any licence or right of occupation or use of any part
of Unit 2 in Units Plan 451 which would permit the occupation of
such part by any person other than the Liberal Party of
Australia, Australian Capital Territory Division, save that the
defendants may permit the continuing occupation until 1 April
1991 of part of Unit 2 by the Australian Institute of Management and
until 13 April 1991 of part of Unit 2 by Computer Power Pty. Limited
in accordance with arrangements already entered into.

48. However, in case the parties wish to be heard on details of the orders to give effect to my findings, I allow 7 days to bring in short minutes of order. Again, subject to hearing from the parties, if they wish to be heard, I propose to order that the defendants pay the plaintiffs' costs.