In the resent case of Aust-One Investment Pty Ltd v New World Investments Pty Ltd [2022] NSWSC 137 considered the enforceability of positive covenants.

The Applicant and Respondent were owners of adjoining retail buildings in the front main street of a shopping centre and both buildings ran through to a lane at the back which was adjacent to a multi-storey car park constructed by the local council. An easement had been granted by a transfer by the prior owners of the properties on the terms that included a covenant that the owners of No 181 would pay one quarter of the gross rentals received by them each calendar month to the owners of No 183-185 in order to have a right of way. 

The main issue was whether a payment covenant was enforceable by the Respondent against the Applicant, who was an assignee of the dominant tenement and not a party to the transfer. The second issue, which would only arise if the court found the payment covenant to be enforceable, concerned the meaning of the term ‘gross rentals’ in the payment covenant. Aust-One wanted to refuse to comply with the payment covenant but simultaneously enjoy the benefit of the easements created by the Transfer.

The court found that all easements could operate effectively to the fullest of intended effect whether or not the payment covenant was honoured by the owner of the dominant tenement for the time being. The court did not accept that the conditional benefit principle could only make the covenant to pay money enforceable against the successor in title to the original covenantor if the covenant was to pay a single sum of money. 

Lastly, the court held that the correct effect of the word ‘gross’ was that Aust-One was not entitled to deduct from actual rentals received, and their own business costs were not recoverable from the lessees. 

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