Consolidated Pastoral Company Pty Ltd v Bellevue Station Pty Ltd & Anor; Bellevue Station Pty Ltd v Consolidated Pastoral Company Pty Ltd

The question for the court in this case was whether the new owner of a cattle station could enforce an agreement between the previous owner and the owner of an adjoining station. Consolidated Pastoral Company Pty Ltd (“CPC”) and NBT Pty Ltd (NBT) owned adjourning cattle properties. They entered into an agreement which allowed each of them to use a portion of other’s land. NBT sold its land to Bellevue Station Pty Ltd (“Bellevue”) in 2022. NBT later assigned its interest under the agreement to Bellevue. A dispute arose as to whether the agreement ran with the land, either at law, in equity or under statute and whether the assignment was effective in conveying the benefit of the agreement to Bellevue. The Court held that the agreement was personal in nature such that the obligations under it did not run with the land and could not be assigned without consent. On that basis, Bellevue was not entitled to the benefit of the covenants under the agreement.

Brown J

1 September 2023

Consolidated Pastoral Company Pty Ltd (“CPC”) and NBT Pty Ltd (“NBT”) owned adjoining cattle properties. [2]. In 2009, CPC and NBT entered into an agreement known as the “2009 Give and Take Agreement”. [3]. The Give and Take Agreement defined the parties to the agreement as being NBT and CPC. By clauses 1 and 2 of the Give and Take Agreement, the parties each agreed to grant the other the use of specified areas of each other’s land. [5]. Clause 3 of the agreement made clear that there was to be no surrender of title, but that the agreement was:

“simply an arrangement between neighbours under which both parties will benefit from the cost savings associated with the construction and maintenance of a ‘boundary’ fence that follows a less rugged course than that of the legal boundary…”

Clause 6 of the agreement required a party disposing of its land to draw the agreement to the attention of the incoming purchaser “and have them enter into a similar arrangement with the continuing party”. [5]. Clauses 7 and 8 provided broad mutual indemnities for any loss, liability, or expense that either party may incur as a result of the use of the other’s land. [5].

In 2022, NBT sold its land to Bellevue Stations Pty Ltd (“Bellevue”). [2]. Under the sale agreement, Bellevue was notified of the Give and Take Agreement, and was required to enter into an agreement with CPC on similar terms to the Give and Take Agreement. [10]. CPC refused to sign any new give and take agreement with Bellevue. [11]. As a result, Bellevue entered into a Deed of Assignment with NBT by which NBT assigned its interest in the Give and Take Agreement to Bellevue. [13].

A dispute arose as to whether Bellevue was entitled to the benefit of the covenants in the Give and Take Agreement. Three issues arose. First, whether the covenants (particularly clause 2) of the Give and Take Agreement ran with the land at law or in equity. [18(a)]. Second, whether s 55 Property Law Act 1974 (“PLA”) rendered the Give and Take Agreement enforceable by Bellevue against CPC. [18(b)]. Third, whether the Deed of Assignment was effective to assign the benefit of the Give and Take Agreement to Bellevue. [18(c)].

As to the first, the Court held that, on the proper construction of the Give and Take Agreement, the obligations under the agreement were personal in nature and did not run with the land. For a covenant to run with the land it must touch and concern the land, and there must be an intention that the benefit of the covenant should run with the land. [29]. Clause 2 of the Give and Take Agreement did not touch or concern the land for three main reasons. First, the parties to the agreement were defined as CPC and NBT without reference to successors in title. [66(a)]. Second, clause 6 placed an obligation on the outgoing owner but did not require the continuing owner to enter into an agreement with an incoming owner. [66(b)]. Third, clause 3 referred to the agreement as “an arrangement between neighbours”. [66(c)]. Those factors indicated that the covenant was personal in nature. For similar reasons, the court held that the agreement impliedly negatived any intention that the agreement was to run with the land. [82]. For those reasons, the covenants did not run with the land at law, in equity or under s 53 of the PLA.

As to the second, under s 55 of the PLA:

“A promisor who, for a valuable consideration moving from the promisee, promises to do or to refrain from doing an act or acts for the benefit of a beneficiary shall, upon acceptance by the beneficiary, be subject to a duty enforceable by the beneficiary to perform that promise.”

BPL argued that CPC’s promise under the Give and Take Agreement was, in part, a promise for the benefit of a third party beneficiary, being any of NBT’s successors in title. [93]. BPL also contended that it accepted that benefit by entering into the sale agreement. [94]. The court rejected this argument. For the reasons noted above, the covenants under the Give and Take Agreement were personal in nature, and no intention was evinced to extend the operation of the agreement to successors in title. [96].

As to the third, the Court held that the assignment was not effective. Rights under a contract will not be assignable if the rights or obligations under the contract are personal to the particular parties. [107]. For the reasons noted above in respect of the first issue, the obligations under the agreement were held to be personal in nature such that they could not be assigned. [111]. Clause 6 allowed for the continuing owner to decide whether, and on what terms, it was going to enter into a new give and take agreement with the incoming owner. [111]. That indicated that the identity of the parties was sufficiently material to the obligations under the agreement, that they could not be assigned. [111].

For those reasons, Bellevue was not entitled to the benefit of the covenants under the Give and Take Agreement.

L Inglis