210 Hawthorn Road Pty Ltd v Ellinson & Ors
[2024] VSC 61
•28 February 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2022 05081
BETWEEN:
| 210 HAWTHORN ROAD PTY LTD | Plaintiff |
| v | |
| MEGAN ELLINSON & ORS (according to the attached Schedule) | Defendants |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 and 29 November 2023 |
DATE OF JUDGMENT: | 28 February 2024 |
CASE MAY BE CITED AS: | 210 Hawthorn Road Pty Ltd v Ellinson & Ors |
MEDIUM NEUTRAL CITATION: | [2024] VSC 61 |
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REAL PROPERTY — Application to modify a restrictive covenant — Application to modify a restrictive covenant preventing more than one dwelling on the land to permit up to five dwellings on the land — Where applicant seeks to make comparison with construction plans that are yet to commence —Where applicant seeks to make comparison with local council approved construction plans versus proposed construction plans — Where applicant’s plans are contingent on financial circumstances — Where amenity of the covenant relates to density of neighbourhood — Significance of a cul-de-sac off an arterial road with tram route and commercial shopping strip — Plaintiff fails to establish that modification to the restrictive covenant will not cause substantial injury to the beneficiaries of the covenant — Hermez v Karahan [2012] VSC 443 —Prowse v Johnstone [2012] VSC 4 — Vrakas v Registrar of Titles [2008] VSC 281 — Jiang v Monaygon Pty Ltd [2017] VSC 591 — 196 Hawthorn Road Pty Ltd v Duszniak [2020] VSC 235 — Jeshing Property Management Pty Ltd & Bao v Yang & Ors [2023] VSCA 185 —Property Law Act 1958 (Vic) s 84(1)(c).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Townsend of counsel | S & K Planning Lawyers |
| The First Defendant | Mr D Epstein of counsel | |
| The Second Defendant in person | ||
| Third Defendant | No appearance | |
| The Fourth Defendant in person |
TABLE OF CONTENTS
Summary.............................................................................................................................................. 1
Evidence............................................................................................................................................... 1
The covenant and the subject land................................................................................................. 4
Plaintiff’s plans for the subject land........................................................................................... 9
Plaintiff’s submissions................................................................................................................... 11
Defendants’ submissions............................................................................................................... 16
Applicable principles...................................................................................................................... 20
How should the comparative assessment be undertaken?...................................................... 22
Has the plaintiff established there will be no substantial injury if the covenant is modified? 24
Conclusion......................................................................................................................................... 34
HER HONOUR:
The plaintiff, 210 Hawthorn Road Pty Ltd, is the registered proprietor of 1A Walworth Avenue, Caulfield North (the ‘subject land’). The subject land is a large residential block on the corner of Walworth Avenue and Hawthorn Road.
The plaintiff seeks the modification of a restrictive covenant on the subject land. The covenant restricts the number of dwellings to one private dwelling house (the ‘covenant’). There is currently a single dwelling on the subject land. The plaintiff intends to build five dwellings on the land as part of a larger development spanning neighbouring lots of land owned by the plaintiff on Hawthorn Road. The plaintiff’s application is made pursuant to s 84(1)(c) of the Property Law Act 1958 (the ‘Act’).
Initially, eight parties lodged their objection to the proposed modification of the covenant and were joined as defendants to the proceeding. By the time of the final hearing, four objectors remained as defendants: Megan Ellinson, Krystyna Duszniak, David Shafer and Sharon Shafer. The defendants are beneficiaries of the covenant.
Summary
Should the covenant be modified to permit up to five dwellings to be constructed on the subject land? No.
The plaintiff has failed to establish that the proposed modification will not substantially injure persons entitled to the benefit of the covenant. Accordingly, the plaintiff’s application must be dismissed.
Evidence
The plaintiff relies upon the affidavits of:
(a) Jessica Kaczmarek, the plaintiff’s solicitor, affirmed on 14 December 2022 (‘first Kaczmarek affidavit’), 7 February 2023 (‘second Kaczmarek affidavit’), 24 March 2023 (‘third Kaczmarek affidavit’), 7 August 2023 (‘fourth Kaczmarek affidavit’) and 10 October 2023 (‘fifth Kaczmarek affidavit’);
(b) Lance Blumenthal, director of the plaintiff, affirmed 14 December 2022 (‘first Blumenthal affidavit’) and 28 April 2023 (‘second Blumenthal affidavit’);
(c) Victor Gan, visual design consultant, affirmed 4 April 2023 (‘Gan affidavit’);
(d) Robert Milner, planning consultant, affirmed 28 April 2023 (‘first Milner affidavit’) and 4 August 2023 (‘second Milner affidavit’).
Three reports prepared by traffic engineer Emily Young, of urban consulting firm Ratio Consultants, are exhibited to the fourth Kaczmarek affidavit. These reports are dated 29 April 2019 (‘first Ratio report’), 25 October 2019 (‘second Ratio report’) and 11 June 2020 (‘third Ratio report’) respectively. They were prepared for the plaintiff’s local planning permit applications.[1] However, they are relied upon by the plaintiff in this proceeding. The plaintiff’s submissions referenced the Ratio reports, as did Mr Milner, the plaintiff’s expert witness.
[1]Affidavit of Jessica Kaczmarek affirmed 7 August 2023 (‘fourth Kaczmarek affidavit’), [4] (the paragraph refers to ‘two’ traffic reports but then describes three traffic reports): Exhibit “JLK-39”, Traffic impact assessment prepared by Ratio dated 29 April 2019 (‘first Ratio report dated 29 April 2019’); Exhibit “JLK-40”, Memorandum prepared by Ratio dated 25 October 2019 (‘second Ratio report dated 25 October 2019’); Exhibit “JLK-41” to the fourth Kaczmarek affidavit dated 11 June 2020 (‘third Ratio report dated 11 June 2020’).
The plaintiff relies upon reports that do not comply with the requirements for the provision of expert evidence.[2] I refer to the Gan affidavit and the three Ratio reports of traffic engineer Emily Young. There is no material within the affidavits of Mr Gan and Mr Kaczmarek, nor the reports themselves, which confirms that Mr Gan and Ms Young are aware of their obligations to the Court as expert witnesses. Mr Gan’s photomontages do not outline the methodology used for their preparation.[3] Mr Gan acknowledges this shortcoming in his affidavit.[4] The plaintiff relies heavily on Mr Gan’s photomontages in their submissions. Additionally, Mr Gan refers to a project architect named Rohan Appel in his affidavit, who reviewed and settled the photomontages. There is no affidavit in evidence from Mr Appel. There is no evidence that Mr Gan, Ms Young, or even Mr Appel were aware of the Expert Witness Code of Conduct or agreed to it.[5] None of them were called to give evidence. Had the defendants objected to admission of the photomontages and the Ratio reports, I would have ruled them inadmissible.[6] As they did not, the material was tendered by consent.
[2]See Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’) ord 44; and Civil Procedure Act 2010 (Vic) pt 4.6.
[3]In the matter of Austcorp Group Limited v Monash City Council [2006] VCAT 692, Tribunal Members Nicholas Hadjigeorgiou and Mary-Anne Taranto helpfully provided ‘Information to accompany photomontages or other computer generated images’ as an addendum to their decision. This was after considerable debate at the hearing as to the accuracy of the computer generated images and photomontages relied upon by both parties. The Members noted at [14]: ‘While we appreciate that such images are but one tool to assist one’s understanding of proposals, we think that if they are to be relied upon, a clear understanding of the methodology adopted is critical.’
[4]Affidavit of Victor Gan affirmed 4 April 2023 (‘Gan affidavit’), [6].
[5]Rules r 44.03.
[6]Ibid, r 44.05.
The defendants relied on the affidavits of:
(a) Harold Shafer dated 20 June 2023 (‘Shafer affidavit’);[7]
[7]The affidavit is irregular, however, it was tendered by consent.
(b) Daniel Bud dated 5 July 2023 (‘first Bud affidavit’),[8] affirmed 27 September 2023 (‘second Bud affidavit’) and affirmed 30 October 2023 (‘third Bud affidavit’);[9]
(c) Megan Ellinson dated 5 July 2023 (‘Ellinson affidavit’);[10] and
(d) Krystyna Duszniak affirmed on 5 July 2023 (‘Duszniak affidavit’).
[8]The affidavit is irregular, however, it was tendered by consent.
[9]Parts of Daniel Bud’s affidavit were ruled inadmissible at the hearing: see transcript of 28 November 2023, 83.16-83.24.
[10]The affidavit is irregular, however, it was tendered by consent.
The first defendant, Megan Ellinson, is the registered proprietor of 2 Walworth Avenue, Caulfield North.[11] Her property is diagonally across the street from the subject land.
[11]Affidavit of Megan Ellinson dated 5 July 2023 (‘Ellinson affidavit’), [1].
The second defendant, Krystyna Duszniak, is the registered proprietor of 192 Hawthorn Road, Caulfield North.[12] Her property is across Walworth Avenue and three houses down Hawthorn Road from the subject land.
[12]Affidavit of Krystyna Duszniak affirmed on 6 July 2023 (‘Duszniak affidavit’), [1].
The third defendant, David Shafer, is the registered proprietor of 1/6 Walworth Avenue, Caulfield North.[13] His property is diagonally across the street from the subject land.
[13]Exhibit “HS-1” to the affidavit of Harold Shafer dated 20 June 2023 (‘Shafer affidavit’), 4.
The fourth defendant, Sharon Shafer, is the registered proprietor of 2/6 Walworth Avenue, Caulfield North.[14] Her property is also diagonally across the street from the subject land.
[14]Ibid.
Each party filed written submissions. The third and fourth defendants’ submissions were filed jointly.
Mr Shafer acted as a McKenzie friend[15] to the fourth defendant. The fourth defendant appeared in person. The third defendant is her brother.
[15]‘McKenzie friend’ as defined in Vella v Wybecca Pty Ltd [2014] VSC 443.
Mr Blumenthal, Mr Milner, and Mr Harold Shafer gave oral evidence. I accept they gave evidence honestly. Although I do not accept some of Mr Milner’s conclusions, this was not because of any adverse view as to his credibility. His report was of assistance to the Court. However, evaluating the evidence, the Court concluded differently.
I viewed the site of the subject land, 202-212 Hawthorn Road, the Walworth Avenue cul-de-sac and the neighbourhood more broadly, including a section of Crotonhurst Avenue and Mitchell Road. Parties and legal practitioners were in attendance. In addition to the oral and documentary evidence, my findings below are informed by that view.
The covenant and the subject land
The subject land is more particularly described as Lot 1 on Title Plan 365891J, being the land comprising Certificate of Title Volume 4848 Folio 554. [16] It is burdened by the covenant contained in Instrument of Transfer 1134165. The Covenant was signed on 16 October 1923 and registered on 24 October 1923.[17] The current dwelling on the subject land is pictured from Walworth Avenue in Figure 1 (below).[18]
Figure 1 Photograph of 1A Walworth Avenue from Walworth Avenue
[16]Exhibit “JLK-1” to the affidavit of Jessica Kaczmarek affirmed 14 December 2022 (‘first Kaczmarek affidavit’), 11-13.
[17]Exhibit “JLK-2” to the first Kaczmarek affidavit, 14-16.
[18]Exhibit “RM-1” to the affidavit of Robert Milner affirmed 28 April 2023 (‘first Milner affidavit’) ‘Expert report of Robert Milner dated 28 April 2023’, 12.
The subject land may be described as follows:[19]
The Land is located on the southwest corner of Walworth Avenue and Hawthorn Road, approximately 165 metres north of Glen Eira Road.
Except for a splay at the northeast site corner, the Land comprises a rectangular shaped parcel of approximately 582 sqm with a northern frontage of approximately 32.7 metres to Walworth Avenue and an eastern frontage of approximately 12.9 metres to Hawthorn Road.
The Land is developed with an existing single storey detached, rendered brick dwelling with pitched tiled roof that is oriented to Walworth Avenue.
The existing dwelling is setback approximately 2.84 metres from Walworth Avenue (north) and approximately 6.99 metres from Hawthorn Road (east) and includes an area of secluded private open space on its western side.
It also includes a detached carport and shed which extends along most of the western boundary, with access via a single crossover in Walworth Avenue also alongside the western boundary (Figure 10).
The existing dwelling is partially screened by a high front fence in Walworth Avenue and Hawthorn Road including solid rendered brick.
[19]Expert report of Robert Milner dated 28 April 2023, 12 (35)-(40).
Walworth Avenue is a short cul-de-sac. There are seven dwellings fronting the Avenue, including the subject land. It contains a few properties with their rear entry on the Avenue.[20]
[20]See 3-9 Mitchell Road, Caulfield North.
Hawthorn Road is a relatively busy vehicle and pedestrian street. It is a primary arterial road that runs north-south between Dandenong Road and Nepean Highway.[21] There is a shopping strip across from the subject land, including a gym.[22] The land containing the shopping strip and gym is outside the Grandparent Title of the subject land (discussed below).
[21]Exhibit “JLK-39” to the fourth Kaczmarek affidavit, 10.
[22]Expert report of Robert Milner dated 28 April 2023, 17-18.
By way of the plaintiff’s originating motion,[23] the plaintiff seeks the restrictive covenant be modified by deletion of the words struck through in the extract below and insertion of the underlined words and letters, so that the covenant as modified reads (the ‘proposed covenant modification’):
… not to erect on the land hereby transferred any building other than one private dwelling house, or up to five dwellings and basement parking contained in a single building with pedestrian and vehicle access to any building on the land from Hawthorn Road only and otherwise generally in accordance with the plans titled ‘Proposed Multi Residential Development’ prepared by Addarc dated 11 March 2022 (comprising plans TP03 to TP11), nor allow any such dwelling houses to be used for other than residential purposes,
such dwelling not to cost less than One thousand Pounds exclusive of outbuildings and fencing relative thereto…
[23]The originating motion was filed on 12 December 2022, amended on 1 May 2023 and further amended on 24 August 2023.
The subject land is part of a Grandparent Title initially created in February 1915 which comprised the land within Certificate of Title Volume 3840 Folio 767998, more particularly described as part of Crown Allotments Ten and Twelve, Parish of Prahran at Caulfield, County of Bourke (the ‘Grandparent Title’).[24] The Grandparent Title spans parts of Hawthorn Road, Walworth Avenue, Crotonhurst Avenue, Mitchell Road and Langdon Road. Figure 2 below shows the indicative area of the Grandparent Title.[25] I shall define the neighbourhood by reference to the land in the Grandparent Title.
Figure 2 Cadastral plan depicting area of Grandparent Title with subject land highlighted in red
[24]First Kaczmarek affidavit, [7]-[8], [21].
[25]Expert report of Robert Milner dated 28 April 2023, 8.
The Grandparent Title was owned by the Langdon family. Dr Margot Simms, a resident of Craddock Avenue, provided historical context in her initial objection letter to the plaintiff’s solicitors. The land was reportedly divided and parcelled by Sophie Langdon to returning Australian serviceman after World War I to give their families a fresh start.[26]
[26]Exhibit “JLK-20’ to the affidavit of Jessica Kaczmarek affirmed 7 February 2023 (‘second Kaczmarek affidavit’), 43; Transcript of 28 November 2023, 21.19-22.11.
The covenant created in October 1923 is for the benefit of all land remaining within the Grandparent Title.[27]
[27]First Kaczmarek affidavit, [13]-[14].
A beneficiary analysis was undertaken by Feigl & Newell and reviewed by the plaintiff to ascertain the properties which take the benefit of the covenant. Some lots were transferred out of the Grandparent Title before and after the creation of the covenant. Figure 3 (below) depicts the subject land, shaded green, and beneficiaries of the covenant, shaded yellow.[28]
Figure 3 Beneficiary assessment of Grandparent Title nearest to subject land
[28]Exhibit “JLK-6” to the first Kaczmarek affidavit ‘Plan of beneficiaries’, 43.
Other lots on the Grandparent Title are subject to single dwelling covenants, namely 1 Walworth Avenue, 2 Walworth Avenue and 198 Hawthorn Road.[29]
[29]Affidavit of Jessica Kaczmarek affirmed 10 October 2023 (‘fifth Kaczmarek affidavit’), [4].
The plaintiff purchased the subject land on 17 April 2018. The block is approximately 582m². Figure 4 depicts the location, size, and nature of the current single dwelling on the subject land as at 14 September 2022.[30]
Figure 4 Photograph of subject land from above, shaded in blue
[30]Plaintiff’s preliminary submissions filed 14 December 2022, [7].
The plaintiff owns 202, 210 and 212 Hawthorn Road Caulfield North, which adjoin the land to the South (‘202-212 Hawthorn Road’). The lots are together approximately 1892sqm in area and each lot currently has a single dwelling.[31] Mr Blumenthal, the sole director of the plaintiff,[32] also has an interest in 1 Walworth Avenue which adjoins the subject land to the west, and 4 Walworth Avenue. Mr Blumenthal is a director of the entity that owns these properties.[33] Further, Mr Blumenthal is one of the directors of the entity that owns 196 and 198 Hawthorn Road,[34] which are also on the Grandparent Title and are close to the first and second defendants’ properties.[35]
[31]Plaintiff’s preliminary submissions filed 12 December 2022, [11].
[32]Affidavit of Lance Blumenthal sworn 14 December 2022 (‘first Blumenthal affidavit’), [1].
[33]Transcript of 28 November 2023, 99.28-100.1.
[34]Ibid, 100.2-100.5.
[35]Ellinson affidavit, [4]; Duszniak affidavit, [4].
In 196 Hawthorn Road Pty Ltd v Duszniak (‘196 Hawthorn Road’),[36] the plaintiff was unsuccessful in its application to obtain a declaration from the Court that a single dwelling covenant restriction no longer affected the land at 198 Hawthorn Road.
[36][2020] VSC 235.
Plaintiff’s plans for the subject land
On 14 May 2019, the plaintiff lodged its planning permit application for the subject land with Glen Eira Council (the ‘Council’). The plaintiff applied for a permit to build a three-storey residential development across the subject land and 202-212 Hawthorn Road. Due to the covenant, the plaintiff proposed one dwelling be built on the subject land. It was proposed that dwelling be attached to the rest of the residential development. It was proposed that the dwelling would be internally separated from the dwellings on the other lots, however, the basement car park would be shared underneath all dwellings. Eight car parks were proposed to be built on the subject land.[37]
[37]First Kaczmarek affidavit, [17].
On 21 August 2020, the Council issued a planning permit subject to conditions. The council required delineation between car parking for 202-212 Hawthorn Road and the subject land. The Council was concerned construction as proposed would amount to a breach of the covenant, and therefore could not grant a permit under s 61(4) of the Planning and Environment Act 1987 (Vic). The plaintiff applied for review by the Victorian Civil and Administrative Tribunal (the ‘Tribunal’), contesting the car parking conditions of the Council’s planning permit. The Tribunal held a hearing on 18 August 2021. On 14 September 2021, the Tribunal published its reasons which substantially upheld the Council’s position.[38] Tribunal Member Blackburn stated:[39]
I also agree with council and the respondents that the building proposed on 1A Walworth Avenue is not one private dwelling house. It is one private dwelling house and part of a basement which services an apartment building. While the applicant says that the car spaces located on 1A Walworth Avenue are associated with the dwelling on that lot, there is nothing on the plans that indicates this. The plans show eight car parking spaces in the part of the basement located on 1A Walworth Avenue. This is an unusually large number of spaces to be associated with one dwelling. While there is nothing in the scheme that would prevent eight spaces being provided for the dwelling on 1A Walworth Avenue, I find on the facts before me, including number of spaces provided on 1A Walworth Avenue together with the integrated nature of the basement across the site, that the basement is an integrated basement servicing the apartment building as a whole.
It follows from this that I have concluded that the development proposed on 1A Walworth in its current form is not one private dwelling house and for this reason will breach the covenant.
[38]Ibid, [21]-[23].
[39]Exhibit “JLK-8” to the first Kaczmarek affidavit, ‘Tribunal’s decision dated 14 December 2021’, 57.
The plaintiff prepared modified plans in accordance with the Council’s planning permit. On 9 February 2022, the Council approved these plans (the ‘approved plans’) which are dated 2 February 2022.[40] These plans adhered to the conditions sought by the Council in their conditional planning permit issued on 21 August 2020 and re-issued on 14 September 2021 in accordance with the Tribunal’s decision. The plans included a ‘roller door (or similar)’ separating the car spaces in the car park basement on the subject land.[41] On the subject land, there remained one large three-storey dwelling, attached but separated internally from the dwellings of 202-212 Hawthorn Road.
[40]First Kaczmarek affidavit, [27]; Exhibit “JLK-10” to the first Kaczmarek affidavit, ‘Plans endorsed under the Planning Permit’, 72-84.
[41]Exhibit “JLK-10” to the first Kaczmarek affidavit, ‘Plans endorsed under the Planning Permit’, 72.
The plaintiff has since had further plans prepared by Addarc, dated 11 March 2022. They show five dwellings on the land (the ‘proposed plans’). The proposed plans seek construction of 14 car spaces, one double-storey apartment and four single-storey apartments on, or partially on, the subject land; a total of five dwellings on the subject land.[42] The proposed plans form an explicit part of the proposed amendment to the covenant.[43]
[42]First Kaczmarek affidavit, [29]-[30]; Exhibit “JLK-11” to the first Kaczmarek affidavit, ‘Plans prepared by Addarc dated 11 March 2022’, 85-93.
[43]See the plaintiff’s further amended originating motion filed 24 August 2023: “…and otherwise generally in accordance with the plans titled ‘Proposed Multi Residential Development’ prepared by Addarc dated 11 March 2022…”
Plaintiff’s submissions
There will be no substantial injury caused to the beneficiaries of the covenant and therefore the Court should grant the application.
The Court is in a unique position of having advanced building plans at its disposal to understand the implications of the proposed covenant modification. This is of significance as the Court is required to consider and compare what is possible before the covenant modification, and what can be done after the covenant modification. This was the test in Vrakas v Registrar of Titles[44] (‘Vrakas’), applied in Prowse v Johnston[45](‘Prowse’). The Court has the discretion to approve the proposed covenant modification if the difference between the two scenarios does not result in substantial injury to the beneficiaries.
[44][2008] VSC 281 (‘Vrakas’).
[45][2012] VSC 4 (‘Prowse’).
Defendants who have discontinued their participation in this proceeding have expressed satisfaction with a modification to the covenant in the manner proposed.
The Court should compare the two sets of plans: the approved plans dated 2 February 2022 and the proposed plans dated 11 March 2022. Mr Blumenthal, director of the plaintiff, intends to build according to the approved plans if this application is not granted by the Court. There is not a substantial difference between the two sets of plans.
The Council approved plans dated 2 February 2022 provide for one dwelling and eight car spaces on the subject land, connected to a further 16 dwellings and 32 car spaces on 202-212 Hawthorn Road. The Council approved plans dated 2 February 2022 include a pedestrian exit onto Walworth Avenue but not a vehicle exit.
The proposed plans dated 11 March 202 provide for 3 dwellings on the subject land and another two partially on the subject land. They provide for nine parking spaces on and five spaces partly on the subject land. The proposed plans do not include a vehicle or pedestrian exit onto Walworth Avenue.
The size and exterior of the development, despite the difference in the number of dwellings, is essentially the same. Mr Milner made the following comments in his report, which he reiterated in his oral evidence:[46]
The architectural style and form of the Approved [approved plans] and the Proposed Developments [proposed plans] is almost identical and residential in form and character. Both rely on large expanses of glazing and screening, materials, finishes and colours that complement residential development and the use of upper level balconies with planter boxes.
The overall height of development is not controlled by the Covenant but by the planning scheme. A three-storey detached house over a basement car park is not unusual in this inner – middle distance suburban context and is provided for in the Approved Development.
The Proposed Development does not challenge or change that context and therefore no greater injury arises from the modification to the Covenant.
[46]Expert report of Robert Milner dated 28 April 2023, 26; Transcript of 28 November 2023, 39.30-40.2
The photomontages created by Mr Gan provide evidence of the similarities between the approve plans and the proposed plans.[47] Counsel for the plaintiff took the Court through the photomontages in detail, submitting that externally there is an imperceptible difference between the respective facades of the one dwelling in the endorsed plans and the five dwellings in the proposed plans. Mr Milner supported this proposition:[48]
The photomontages are also instructive in so far as they demonstrate a change to the number of dwellings on the Land as part of the Proposed Development will be relatively imperceptible from a built from perspective when compared with the Approved Development scenario.
[47]Exhibit “VG-1” to the Gan affidavit.
[48]Expert report of Robert Milner dated 28 April 2023, 26.
Given the addition of car spaces and the removal of pedestrian access from Walworth Avenue, the likelihood of additional vehicular and pedestrian traffic on Walworth Avenue is in fact reduced by the proposed plans dated 11 March 2022. Mr Milner wrote:[49]
[49]Ibid, 27.
The covenant does not address car parking on the Land; however, the Proposed Development advances a series of benefits over and above the Approved Development or a typical response such as the existing detached dwelling on the Land.
...
–In the Approved Development, car parking is provided in a basement, but it would be open to residents and visitors to rely on the pedestrian access to Walworth Avenue to park in the street for the sake of convenience.
– In the case of the Proposed Development, despite the greater number of dwellings / persons on the Land, the absence of either car park or pedestrian access to or from Walworth Avenue makes the prospect of parking in the street less likely as it would not be as convenient as parking in the basement or in Hawthorn Road.
According [sic], the Proposed Development offers an improved benefit.
The comparative analysis of what can be done within the covenant (as shown by the approved plans), and what can be done within the proposed covenant modification (as shown by the proposed plans), indicates no injury will be caused to the defendants if the application is granted. Indeed, the modification offers additional benefit to the defendants by way of reduced pedestrian and vehicular traffic in Walworth Avenue.[50]
[50]Transcript of 28 November 2023, 36.4-6.
In obtaining its planning permit, the plaintiff was advised by the Department of Transport that it would prefer pedestrian and vehicular access to be available on Walworth Avenue. The Department of Transport ultimately provided in-principle support for the proposed plans on the basis that an interpretation of the restrictive covenant prohibited such access on Walworth Avenue. In this way, the beneficiaries have already obtained a benefit from the covenant.[51]
[51]Ibid, 72.6-72.10.
Walworth Avenue is a quiet cul-de-sac, but the Hawthorn Road boundary of the subject land is part of a busy commercial centre with fairly busy traffic flow.[52] The lots within Walworth Avenue that do not share a boundary with Hawthorn Road are part of a ‘neighbourhood residential zone’.[53] The subject land is part of a ‘general residential zone’. It is land that is suitable for higher density and intensity of development than the other lots in Walworth Avenue.[54] See figure 5 below, which provides a planning zone map obtained from Victorian government planning website:[55]
Figure 5 Planning zone map of subject land area
[52]Ibid, 19.29-30.6; Expert report of Robert Milner dated 28 April 2023, 11.
[53]Transcript of 28 November 2023, 21.1-21.20.
[54]Ibid.
[55]Expert report of Robert Milner dated 28 April 2023, 11.
In Hermez v Karahan[56] (‘Hermez’), the Court deemed that substantial injury is less likely to occur when a multi-dwelling development is proposed on a corner block. The subject land’s corner block location supports the plaintiff’s submission that the proposed application will not cause substantial injury to the defendants.
[56][2012] VSC 443 (‘Hermez’) at [34].
Further, other developments of properties on the Grandparent Title show the neighbourhood no longer solely entails single dwelling homes.[57] There are several multi-dwellings presented within a single built form at 3, 4, and 6 Walworth Avenue.[58] More broadly, there are multi-dwelling buildings on 189, 191, 202 and 212 Hawthorn Road, and 1A-1C, 2, 2A and 11 Crotonhurst Avenue, and 3-9 Mitchell Road.[59] The Grandparent Title is a homogenous area for the purpose of determining the appropriateness of covenant variation.[60] In this way, granting of the application will not result in creation of a precedent, as a precedent has already been established.[61]
[57]Expert report of Robert Milner dated 28 April 2023, 29.
[58]Ibid.
[59]Ibid, 20, 40-44.
[60]Transcript of 28 November 2023, 70.7-70.9.
[61]Expert report of Robert Milner dated 28 April 2023, 29.
Mr Milner’s evidence is that additional vehicular traffic arising from the proposed development will be in the vicinity of nine to 10 additional trips in the morning and afternoon peak hours respectively.[62] This traffic would be on Hawthorn Road only, given the basement parking access is on Hawthorn Road and there is no pedestrian access from Walworth Avenue to incentivise parking on that street. In the context of around 1,000 vehicles a day moving up and down Hawthorn Road, this will be an imperceptible addition to vehicular traffic in the neighbourhood.[63] This opinion is supported by the report of traffic engineer consultant firm Ratio, annexed to the fourth Kaczmarek affidavit.[64]
[62]Transcript of 28 November 2023,40.19-40.27; Exhibit “RM-2” to the affidavit of Robert Milner affirmed 4 August 2024, ‘ Supplementary expert report of Robert Milner dated 4 August 2023’, 3.
[63]Transcript of 28 November 2023, 40.28-41.2.
[64]Exhibit “JLK-40” to the fourth Kaczmarek affidavit affirmed 7 August 2023, 5-41.
Defendants’ submissions
The plaintiff has not established that the proposed covenant modification will not substantially injure the defendants and beneficiaries of the covenant.
Firstly, the proposed modification will cause significant and detrimental change to the character of the neighbourhood.
The local area of the subject land is characterised by low density housing and the benefits that this brings to the neighbourhood's character. While it is accepted that there are several multi-dwelling developments on the Grandparent Title, the quantum of these is not so significant as to mitigate the benefits that the single dwelling covenant has afforded to beneficiaries. Multi-dwellings in the area typically comprise of dual occupancy dwellings that only modestly impact population density. There is nothing like the scale of the multi-dwelling development that the plaintiff proposes elsewhere on the Grandparent Title. The approved plans remain hypothetical.
In conjunction with the low density, a critical aspect of the neighbourhood character is the quiet amenity of the Walworth Avenue cul-de-sac itself. It is a street where people go to get away from the hustle and bustle of Hawthorn Road by simply walking up the avenue.[65] It is unique and distinctive to the neighbourhood. As described by the second defendant, ‘it is a special oasis that is even more special because it is in a busy area being next to an activity centre.’[66]
[65]Transcript of 29 November 2023, 143.8-143.9.
[66]Ibid, 140.25-27.
In cross-examination, counsel for the first defendant asked Mr Milner to clarify whether there was a greater number of single dwelling or multi-dwelling lots on the Grandparent Title. Mr Milner confirmed that single dwellings still have a strong representation in the area. Counsel for the first defendant put to Mr Milner, Mr Bud’s affidavit evidence that 69.5% of lots on the Grandparent Title are single dwelling.[67] Mr Milner agreed this is a majority of the lots.
[67]Transcript of 28 November 2023, 42.24- 44.13. At the hearing, Mr Milner and Mr Epstein referred to 58 lots on the Grandparent Title. This is a slip. It is understood they intended to refer to 59, as outlined in the first Bud affidavit.
The single dwelling covenants on the Grandparent Title are not haphazard or random, as the plaintiff suggests. Rather, the four single dwelling covenants flanking Walworth Avenue indicate an intent to have a network of covenants that protect the character of Walworth Avenue. The defendants bought their respective properties with knowledge of the single covenants protecting the density of the area. The covenants were regarded as a safeguard against the possibility of high density development on Hawthorn Road, and the ensuing impacts on neighbourhood amenity. As the second defendant explained to the Court at hearing:[68]
When we purchased our house at 192 Hawthorn Road in 2006, we were aware, of course, that it was on a main road and in a very busy area. We bought it cheaper than we would’ve bought a house in a quiet side-street because we could afford it at the time. In the years since 2006, the area of the main road where we live, Hawthorn Road, has been declared a high-density area. But despite this, I was always appeased by the fact of many single-dwelling covenants around me, especially in recent years, when I’ve become much more familiar with them.
So these covenants include that of my closest corners to the south, because this - I was appeased because this meant that our block of houses was, from Crotonhurst Avenue to Walworth Avenue, could not all become lots of multiple units, as is occurring in proliferation elsewhere on Hawthorn Road. I always understood that I was still protected by unwanted development, albeit … these covenants that are dispersed or, you know, they’re intermittent, they’re sporadic, they’re not on every house. But they’re, nevertheless, in areas which do protect the character of the neighbourhood, in my opinion. Further, the increased density of residents will generally contribute to increase in noise, pollution and demand for local public services.
[68]Ibid, 113.17-113.8.
This leads to the second broad submission of the defendants: that the proposed modification will cause loss to the beneficiaries of the benefits of low density housing. In particular, that there will be additional pedestrian and vehicular traffic on Walworth Avenue and Hawthorn Road.
While the plaintiff is adamant that the removal of pedestrian and car park access on Walworth Avenue will resolve this concern, the reality is that visitors to the development will likely park their vehicles on Walworth Avenue.
In cross-examination, counsel for the first defendant put to Mr Milner that it is fair to expect less beds and people in a single dwelling than in five dwellings. Mr Milner said that might be the case. He conceded that hypothetically there would be less deliveries and visitors relating to a single dwelling than to five dwellings.[69]
[69]Transcript of 28 November 2023, 51.19-51.23.
Under cross-examination, Mr Milner agreed that delivery drivers would be more likely to park on the street than in the car park basement. Mr Milner somewhat agreed that other visitors of the development may be more inclined to park on the street than chance finding a park in the basement car park. Mr Milner suggested that visitors would be more inclined to park on Hawthorn Road than on Walworth Avenue.[70]
[70]Ibid, 52.24-54.12.
Thirdly, the proposed modification, if granted, will create a precedent.
Directors of the plaintiff have already been involved in another attempt to build multi-dwelling developments on Hawthorn Road, as demonstrated by the matter of 196 Hawthorn Road. Mr Blumenthal is interested in 198 Hawthorn Road and 1 Walworth Avenue. He has indicated that he and his business partners intend to build multi-dwelling apartment developments on these lots. If this application is granted, it will create a precedent which will likely see multi-dwelling apartment developments flanking either side of Walworth Avenue, depriving the beneficiaries of the benefits of low density housing in their neighbourhood cul-de-sac.
Further, if it is accepted that a multi-dwelling build that looks the same externally as a single dwelling has no differential impact on the neighbourhood or beneficiaries, then no single dwelling covenant would be safe from modification, as this argument could easily be replicated for most cases.[71]
[71]Transcript of 29 November 2023, 128.22-128.28.
The plaintiff submits, and Mr Milner opines, that a precedent has already been set permitting the construction of multi-dwelling developments on the Grandparent Title. On the other hand, the first defendant submits that a precedent has been set upholding single dwelling lots on the Grandparent Title, namely by way of the unsuccessful application of 196 Hawthorn Road. Under cross-examination, Mr Milner emphasised that his reference to a precedent being set related to there being multi-dwelling lots on the Grandparent Title rather than there being a precedent concerning modification to single dwelling covenants on the Grandparent Title.[72]
[72]Transcript of 28 November 2023, 63.16-63.25.
The plaintiff’s case rests on the assumption that the approved plans are compliant with the covenant. The defendants submit that the plaintiff cannot rely on this assumption. The defendants do not need to prove that the approved plans are in breach of the covenant. The burden of proof lies with the plaintiff.
The fourth defendant submits that the additional car parking on the land is not a private dwelling and so is not permitted by the covenant. Therefore the plaintiff will not be able to build its approved plans, despite the Council’s endorsement.[73]
[73]Transcript of 28 November 2023, 111.3-111.6.
The first defendant submits that the plaintiff is unlikely to build the development outlined in the approved plans. The oral evidence of Mr Blumenthal indicated that he and his business partners have further financial considerations to assess. The plans are approved for a period of two years, though an application can be made to extend the approval. Therefore it is not definite that the plaintiff will be constructing the approved plans dated 2 February 2022 if this application is unsuccessful.
Accordingly, it is not the case that the comparison of the approved plans and the proposed plans is an appropriate test. It is more likely that the existing dwelling will remain for some time be it because the plaintiff opts not to construct the approved plans or because, in the fourth defendant’s submission, the covenant does not permit the approved plans to be constructed at all.
Applicable principles
The plaintiff’s application is made pursuant to s 84(1)(c) of the Act. It provides:
Power for Court to modify etc. restrictive covenants affecting land
(1)The Court shall have power from time to time on the application of any person interested in any land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon by order wholly or partially to discharge or modify any such restriction (subject or not to the payment by the applicant of compensation to any person suffering loss in consequence of the order) upon being satisfied—
…
(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction:
Provided that no compensation shall be payable in respect of the discharge or modification of a restriction by reason of any advantage thereby accruing to the owner of the land affected by the restriction unless the person entitled to the benefit of the restriction also suffers loss in consequence of the discharge or modification nor shall any compensation by payable in excess of such loss; but this provision shall not affect any right to compensation where the person claiming the compensation proves that by reason of the imposition of the restriction the amount of consideration paid for the acquisition of the land was reduced.
The relevant principles are well established. These principles, among others, were summarised by Derham AsJ in Jiang v Monaygon Pty Ltd (‘Jiang’):[74]
[74][2017] VSC 591, [31]–[36] (‘Jiang’) (citations omitted).
The plaintiff relies on s 84(1)(c) of the PLA, and therefore has the burden of proving as a matter of fact that the proposed discharge or modification will not substantially injure those with the benefit of the covenant. As the person carrying the burden, the plaintiff must prove the negative and the failure by the plaintiff to establish its plans with specificity may result in the Court not being satisfied that the conditions of the section have been fulfilled.
The following guiding principles apply to determine whether those entitled to the benefit of the covenant will not be substantially injured:
(a)a substantial injury must be a detriment that is real and not fanciful. The requirement that the injury must be substantial was intended ‘to preclude vexatious opposition cases where there is no genuineness or sincerity or bona fide opposition on any reasonable grounds’;
(b)the substantial injury relates to practical benefits, being any real benefits to the person entitled to the benefit of the covenant. It is not sufficient for a plaintiff to merely prove that there will be no appreciable decrease in the value of the property that has the benefit of the covenant;
(c)substantial injury may consist of the order for modification of the covenant being ‘used to support further applications resulting in further encroachment and in the long run the object sought when the covenant was imposed [being] completely defeated’. This consideration is referred to as the ‘precedent value’; and
(d) whether there will be substantial injury is to be assessed by comparing:
(i)the benefits initially intended to be conferred and actually conferred by the covenant; and
(ii)the benefits, if any, which would remain after the covenant has been discharged or modified.
If the evidence establishes that the difference between the two will not be substantial, the plaintiff has established a case for the exercise of the Court’s discretion under s 84(1)(c) of the PLA.
In Prowse v Johnstone, Cavanough J considered that in assessing the benefits actually conferred by the covenant, the Court should have regard to ‘the realistic probabilities of the plaintiff actually bringing about the worst that could be done under the existing covenant.’ His Honour was prepared to ‘assume, without deciding’ that in assessing the benefits which would remain, if the covenant is removed or modified, the Court could consider the protections afforded to neighbouring properties by statutory planning provisions. It is relevant to consider evidence of statutory planning provisions to the extent it shows what realistically will be the result of the removal or modification of the covenant because ‘it would be artificial and wrong to pay no heed at all to the reality of the situation’.
In considering whether the plaintiff has satisfied the Court that there will not be substantial injury:
(a) town planning principles and considerations are not relevant;
(b)the absence of objectors to the discharge or modification of a covenant will not necessarily satisfy the onus of proof; and
(c)each case must be decided on its own facts, and each covenant should be construed on its own terms and having regard to the particular context in which it was created.
If the plaintiff satisfies the Court that there will be no substantial injury to the relevant persons, the Court has a residual discretion to refuse the application. The Court in exercising its discretion, may consider town planning principles and the precedent value.
(emphasis added)
How should the comparative assessment be undertaken?
As outlined above in Jiang, to assess whether there will be substantial injury, the Court must compare the intended benefit to be conferred, and actually conferred by the covenant, with the benefits that remain after the proposed modification.
The plaintiff says that the appropriate assessment should be made by reference not to the subject land as currently developed, but rather the subject land as it would be if the plaintiff proceeded to build according to the approved plans. I reject this submission. In Prowse, Cavanough J considered the same type of issue.[75] His Honour held that:
’the injury which must be looked at is injury to the benefit of the restriction. If that is to be established, the comparison must be between the benefit originally enjoyed and the effect that the modification will have upon it.
[75][2012] VSC 4, [103].
After reviewing the authorities, Cavanough J concluded as follows:[76]
…it would be artificial and wrong to pay no heed at all to the reality of the situation. So even though the plaintiff is entitled to ask the Court to take into account the ‘worst’ that could be done under the existing covenant, the defendant is also entitled to invite the Court to consider the realistic probabilities of the plaintiff actually bringing about the ‘worst’ that could be done under the existing covenant.
[76]Ibid, [104].
In Hermez[77], Daly AsJ applied Prowse. Her Honour found in the circumstances of that case, that an undeveloped block was not a suitable comparator.[78]
[77][2012] VSC 443.
[78]Ibid, [33].
Here, the approved plans might be regarded as the plaintiff bringing about the ‘worst’ that could be done under the existing covenant. However, construction on those plans is a possibility rather than a probability. I make that finding for the following reasons.
Mr Blumenthal’s evidence is that if the application to modify the covenant is not approved with the proposed plans, he intends to construct the approved plans.[79] I accept that is the intention. I accept Mr Blumenthal’s evidence as truthful. However, the intention to build is subject to contingencies and timing is uncertain. Mr Blumenthal’s evidence is that he does not know when construction will start. His evidence was that it absolutely could be five years away.[80] He stated the timing of the intended build ‘depends on interest rates, it depends on buildings costs. There’s many factors that come into play.’[81]
[79]Affidavit of Lance Blumenthal affirmed 28 April 2023 (‘second Blumenthal affidavit’), [5]; Transcript of 28 November 2023, 101.5.
[80]Transcript of 28 November 2023, 104.31-105.6.
[81]Ibid, 105.7-105.11.
Intentions can change. Circumstances may change. Planning approval is not given indefinitely. The build needs to commence within two years of the date of planning approval,[82] subject to an extension being granted.[83]
[82]Transcript of 29 November 2023, 130.31-131.6.
[83]A responsible authority may extend the permit if a request is made in writing in accordance with s 69 of the Planning and Environment Act 1987 (Vic).
In the circumstances, the assessment here should not be made on the assumption that there will be construction on the subject land in accordance with the approved plans dated 2 February 2022, but rather the subject land as currently developed.
Alternatively, if I am wrong and the appropriate comparison should be made by reference to the approved plans, it does not change my ultimate conclusion. Nor is my ultimate conclusion changed if I accept the photomontage evidence of Mr Gan showing that visually there does not appear to be a significant difference between the approved plans and the proposed plans.[84] Approving the modification would create a precedent for modification. The plaintiff has failed to establish this would not cause substantial injury. I refer to my reasons below.
[84]Exhibit “VG-1” to the Gan affidavit.
As a matter of completeness, I will refer to a matter that does not require determination here. The third and fourth defendants say that the plaintiff will not be able to build the approved plans as they are not permitted by the covenant. The fourth defendant submitted that a car park building, as proposed by the plaintiff in its council approved plans would be a breach of the covenant. She says that a car park building servicing more than one dwelling on the subject land is a building other than one private dwelling house, and therefore would be a breach of the single dwelling stipulation of the covenant as it stands.[85]
[85]Transcript of 28 November 2023, 110.27-111.22; 113.3-113.7.
Has the plaintiff established there will be no substantial injury if the covenant is modified?
The plaintiffs have failed to establish there will be no substantial injury if the covenant is modified for the following reasons.
Firstly, the covenant conferred the benefit of low-density housing with the restriction of one dwelling house. In respect of a similar covenant, Cavanough J noted:[86]
The plaintiff having failed to obtain the declaration she seeks, she needs in her application under s 84(1) of the Act to get rid of all of the relevant restrictions, including the one house (single dwelling) restriction. She faces a formidable task. The starting point is not what she may have hoped it would be. Rather, she confronts a restrictive covenant, indeed a web of restrictive covenants, with a clear purpose or object indistinguishable from the purpose or object identified by the Full Court in Re Stani in respect of a similar covenant, namely to ensure that “one residence only was to be erected on each block so that there would be a reasonable density of population giving a reasonably quiet residential atmosphere, attractive in that it would provide a tranquil, quiet existence”.
[86]Prowse v Johnstone [2012] VSC 4, [96] (‘Prowse’) (citations omitted).
I reject the plaintiff’s submission that the covenants on the Grandparent Title were established on an ad hoc or piecemeal basis. The covenanted lots of the subject land, 1 Walworth Avenue, 2 Walworth Avenue and 198 Hawthorn Road sit at the front of Walworth Avenue. As a matter of interest, I note this is consistent with the second defendant’s submission that covenantor Ms Langdon intended to protect Walworth Avenue from high density development and that she ‘had the foresight 100 years ago to know that this cul-de-sac is unique and will continue to be so as development paved its way on Hawthorn Road even in the 1920s and 1930s.’[87]
[87]Transcript of 29 November 2023, 183.
I reject the plaintiff’s submission that the neighbourhood should not be characterised as low density.
The overwhelming majority of housing in the neighbourhood is low density and comprised of single dwellings. Mr Bud’s evidence is that there are 59 blocks in the Grandparent Title. His uncontradicted evidence is that 69.5% of the dwellings are single dwellings, and 22% are dual dwellings. Only one block contains a triple dwelling and only three blocks contain multiple apartments.
Under cross-examination, Mr Milner conceded that single dwellings still have a strong representation in the area.[88] The multi-dwelling property at 11 Crotonhurst Avenue and the development at 8, 8A and 10 Crotonhurst Avenue do not reflect the prevailing character of the neighbourhood.[89]
[88]Transcript of 28 November 2023, 43.1-43.3; 43.30-43.31; 44.1-44.13.
[89]See photographs 5 and 9 in Attachment 8, of the expert report of Robert Milner dated 28 April 2023, 42.
I do not accept Mr Milner’s conclusion that the single dwelling restriction or convention has been widely ignored or varied on the Grandparent Title. The duplex style buildings at 3, 5 and 6 Walworth Avenue appear to be low density.[90] Further, Mr Milner’s refers to multi-dwelling buildings at 189, 191, 202-212 Hawthorn Road in his report. They are not part of the Grandfather Title and not part of the neighbourhood. I accept they are in the locality.
[90]Expert report of Robert Milner dated 28 April 2023, 24-25, figures 17-19.
As a consequence of the covenant, and being a short cul-de-sac, Walworth Avenue is quiet and spacious. This is of immense personal value and amenity to the defendants. They gave evidence of their affection for and enjoyment of this ‘oasis’ of ‘peace and quiet’ that acts as ‘a refuge from the loud and busy Hawthorn Road’.[91] The degree of the defendants’ reverence for their neighbourhood character is also evident by their efforts to preserve its character. The first defendant stated in her written evidence:[92]
On a personal level, the ongoing and unrelenting efforts of the plaintiff to remove the covenants in Walworth Avenue have taken a toll. Over many, many years, we have had to put our lives on hold while we discuss issues with neighbours, lawyers, barristers and Glen Eira councillors. We have had to attend many, many meetings, present our case on numerous occasions, write submissions, research cases and read books borrowed from the Supreme Court library. It has at times been very stressful and we have pondered many times about why we have had to endure this. We love our little street and our neighbourhood and we know that when we bought here, the covenants were in place to protect the character and nature of our neighbourhood. We do not wish to move, but neither do we wish to remain living in a street that is swamped by apartments.
[91]Duszniak affidavit, [4].
[92]Ellinson affidavit, [5].
The defendants bought their properties with the awareness and comfort of the existence and benefits of the single dwelling covenant on the subject land. The third and fourth defendant’s McKenzie friend says that a modification of the covenant and ensuing construction would see a ‘tsunami of apartments, people, visitors, cars, traffic and parking’ that would ‘undoubtedly clash with and totally destroy the amenity of this small cul-de-sac.’[93]
[93]Shafar affidavit, 4.
The low density of Walworth Avenue provides an amenity to beneficiaries of the covenant. The plaintiff has failed to establish that the proposed plans would not cause substantial injury by detrimentally impacting on the low density character of the neighbourhood, particularly Walworth Avenue.
Secondly, the subject land is integral to the quiet, spacious, low-density character of the neighbourhood and especially Walworth Avenue. I reject the plaintiff’s submission that as a corner block, relying on Hermez, there is no substantial injury if the covenant is modified. The circumstances there were different and Daly AsJ’s comment about the corner block must be read in context. In the context of considering whether or not the removal of a single dwelling restriction would create a precedent, her Honour commented that: ’this is the last vacant lot within the neighbourhood, and in any event, the land is a corner block where multi-unit development tends to be less intrusive. Further, given the relatively recent development of the neighbourhood, it is unlikely that there will be a spate of applications to redevelop the neighbourhood within the next decade or so.’[94]
[94]Hermez [2012] VSC 443, [34](f).
Each case must be considered on its facts. Here, the subject land is on a corner of busy Hawthorn Road and quiet Walworth Avenue. The subject land and 208 Hawthorn Road are sentinels to Walworth Avenue. They visually signify the character of that avenue. The photo at figure 6 shows the view looking East towards Hawthorn Road with these two sentinel blocks at the entrance.[95] The first defendant submitted that there is an ambience to be felt when standing at the back of the cul-de-sac looking out.[96] I accept that ambience exists based on my view.
Figure 6: View of Walworth Avenue looking east
[95]Exhibit “JLK-40” to the fourth Kaczmarek affidavit, 12.
[96]Transcript of 29 November 2023, 147.3-147.6
The proposed plans would create denser housing at the entrance to Walworth Avenue. This would change the character of the neighbourhood.
In addition, the subject land comprises a significant portion of the overall streetscape because Walworth Avenue is a short cul-de-sac. Mr Bud’s evidence is that it is 92 metres long.[97] I accept his measurement that the frontage of the subject land onto Walworth Avenue is 61 metres.[98] From the benefitted lots in Walworth Avenue, looking towards the front of the Avenue and the subject land at the entrance, the low-density character of Walworth Avenue would be diminished.
[97]Exhibit “JMS-1” to the affidavit of Daniel Bud dated 5 July 2023 (‘first Bud affidavit’), 11; The report by traffic consultant firm Ratio, contained in exhibit bundle “JLK-40” to the fourth Kaczmarek affidavit, corroborates that Walworth Avenue is approximately 100 metres long.
[98]Exhibit “JMS-1” to the first Bud affidavit, 11.
The plaintiff says the proposed plans provide for a building that visually appears to be a single dwelling although it is not. That may be so, however, its multi-dwelling character is inconsistent with the overall low density character of Walworth Avenue and the neighbourhood generally.
Thirdly, the quiet character of Walworth Avenue would be disrupted by increased pedestrian and vehicular traffic, notwithstanding the proposed plans provide for underground parking. Street parking is not an amenity provided by the covenant. The relevant impact here is on the quiet character of the low density neighbourhood and the ambience of the Walworth Avenue cul-de-sac.
In the vicinity of the subject land, Hawthorn Road has an approximate width of 13.2 metres, providing a lane in each direction with kerbside parallel parking on both sides of the road, and tram tracks in the centre. The speed limit is 60 km/h.[99] On the other hand, Walworth Avenue is a short cul-de-sac, with a carriageway of about 7.5 metres accommodating a lane of traffic in each direction. Kerbside parking is permitted on both sides of the road, although it is restricted to two hours on weekdays between 8am and 6pm.[100] The speed limit is 50 km/h.[101]
[99]Exhibit “JLK-39” to the fourth Kaczmarek affidavit, 10.
[100]Ibid, 11.
[101]Ibid, 8.
Mr Milner gave evidence there would be a minimal impact on traffic and parking arising from the development on the proposed plans.[102] Further, that with no pedestrian and vehicle access from Walworth Avenue, there would be a net benefit arising from less traffic movements in the street than historically associated with the existing dwelling on the subject land. He opined that because Walworth Avenue is adjacent to a local activity centre in Hawthorn Road, it is an embedded part of the beneficiaries’ amenity and lived experience that there are non-residents in the street. He opined this accounted for the two hour parking limit in Walworth Avenue.[103] Mr Milner’s addendum report refers to the reports of Ratio Consulting. Under cross-examination he stated he is not a traffic engineer and was mindful of those reports[104].
[102]Expert report of Robert Milner dated 4 August 2023, 2.
[103]Ibid.
[104]Transcript of 28 November 2023, 52.13-52.15.
Emily Young of Ratio Consulting, is a traffic engineer. Her three reports considered various iterations of the plaintiff’s plans for the subject land, prior to the finalisation of the council approved plans dated 2 February 2022. The first Ratio report considered the plaintiff’s plans that entailed a three storey single dwelling on the subject land, 17 further dwellings on 202-212 Hawthorn Road (18 total dwellings) and shared basement car park accessed by road via Hawthorn Road, comprising 38 parking spaces.[105] The second Ratio report considered updated plans that entailed 20 total dwellings and shared basement car park, comprising 38 parking spaces, accessed by road via Walworth Avenue.[106] The third report considered updated plans that entailed 19 total dwellings, and a shared basement car park comprising 40 spaces, accessed by road via Hawthorn Avenue only. [107] The third Ratio report therefore considers plans most closely aligned to the council approved plans dated 2 February 2022 and the proposed plans dated 11 March 2023. It provides the most relevant data.
[105]First Ratio report dated 29 April 2019, 4.
[106]Second Ratio report dated 25 October 2019, 1.
[107]Third Ratio report dated 11 June 2020, 1-2.
The third Ratio report opines that the 19 dwellings across the subject land and 202-212 Hawthorn Road will generate up to five trips per dwelling, so up to 95 vehicle trips per day.[108] The report focuses only on the ten per cent of those trips which occur in the peak hours and says this will equate to about one vehicle movement every six minutes.[109] The peak hours are defined as 7:45am to 8:45am and 4:30pm to 5:30pm (Monday to Friday).[110] The report finds that as Hawthorn Road carries about 1000 vehicles during each of the peak hours, there would be only about a 1% increase in traffic during that time, which would have a negligible impact on Hawthorn Road, Walworth Avenue and the surrounding road network.[111] Even accepting that this report is relevant to the approved plans dated 2 February 2022 and to the proposed plans dated 11 March 2023, it still does not address the impact of the remaining 90% of vehicular traffic occurring outside peak hours. Increased density will result in increased traffic in the neighbourhood including Walworth Avenue, notwithstanding the entry in the proposed plans is via Hawthorn Road. Not all visitors to the proposed development will use the basement parking. For instance, under cross-examination Mr Milner conceded that delivery drivers with smaller less bulky items would look for street parking.[112] He agreed that, hypothetically, a single dwelling would have less deliveries and traffic than five dwellings.[113] Mr Milner suggested delivery drivers were likely to park in Hawthorn Road as it is more convenient than Walworth Avenue.[114] Delivery drivers will park where it is most convenient and where a car park is available.
[108]Ibid, 4.
[109]Ibid, 5.
[110]First Ratio report dated 29 April 2019, 9.
[111]Third Ratio report dated 1 June 2020, 6.
[112]Transcript of 28 November 2023, 53.13-53.15.
[113]Ibid, 51.19-51.23.
[114]Ibid, 53.30-53.31, 54.1-54.12.
There are only 15 parking places on Walworth Avenue.[115] Mr Bud’s evidence is that if a resident of Walworth Avenue is unable to find parking there, the nearest unrestricted parking is in Crotonhurst Street and may be as far as 200 metres away.[116] Increased population density leads to increased demand for parking. Delivery drivers and other visitors will not all access the basement parking per the proposed plans. Some will seek parking in Walworth Avenue, leading to reduced amenity for beneficiaries of the covenant. Whilst street parking is not an amenity provided by the covenant, low density is.
[115]Ibid, 52.20-52.22; Exhibit “JMS-1” to the first Bud affidavit, 9.
[116]Exhibit “JMS-1” to the first Bud affidavit, 10.
Fourthly, the proposed modification would create a precedent for modification of the covenants. This is not a case where the horse has bolted.
None of the restrictive covenants flanking Walworth Avenue have been modified. The submission of the first defendant, which was unchallenged, was that the only covenant modification on the Grandparent Title has been regarding the title of 2A Crotonhurst Avenue, which sits on the street corner abutting Hawthorn Road.[117] The original single dwelling covenant on 2A Crotonhurst was modified to permit a dual dwelling on the land.[118] The plaintiff further submits that 2A Crotonhurst actually houses 6 dwellings, based on the number of letterboxes on the land.[119]
[117]Transcript of 29 November 2023, 129.20-129.24.
[118]Transcript of 29 November 2023, 129.13-129.20.
[119]Plaintiff’s closing submissions filed 29 November 2023, (18).
The second defendant’s submission is that Crotonhurst Avenue is very different to Walworth Avenue. It is a through road that links Hawthorn and Kooyong roads. The covenant on 2A Crotonhurst Avenue had an expiration date of 10 years. The second defendant submits that this indicates that the maker of the covenant foresaw that Crotonhurst Avenue would be used in this manner and that protecting the corners in the long term would make no sense. The covenants on the subject land, 1 Walworth Avenue, 2 Walworth Avenue and 198 Hawthorn Road are not time restricted. I accept this distinction.
Relatedly, the proposed modification is significant. The number of dwellings permitted would increase from one to five. The precedent would be significant. The precedent would not be distinguishable on the basis that the subject property is a corner property. The other sentinel property at the entrance, 198 Hawthorn Road, is also a corner property. If the modification were permitted to proceed, there would be a precedent to make a similar application in respect of 198 Hawthorn Road. The plaintiff has already made an unsuccessful application for a declaration that the restrictive covenant does not apply to that property.
Mr Blumenthal rejected the notion that should his application for covenant modification on the subject land be successful, he would necessarily pursue covenant modifications on his other lots of land on the Grandparent Title.[120] Mr Blumenthal submitted that each site is looked at in its own merit.[121] He referred to differential factors for each of his lots, including the attitude of his business partners, the permits that have been acquired and the nature of the blocks of land themselves.[122] Mr Blumenthal said he would not be moving forward with a modification application for 198 Hawthorn Road.[123] He said this was due to his partner wishing to build a nine bedroom single dwelling rooming house.[124] Mr Blumenthal said he regarded the financial viability of this arrangement differently, and so he and his partner are at a deadlock and were considering selling.[125] I accept that Mr Blumenthal has no concrete plans to pursue further covenant modifications on the Grandparent Title at present, however intentions may change, or another property developer may pursue that course.
[120]Transcript of 28 November 2023, 101.28-102.5.
[121]Ibid, 102.15.
[122]Ibid, 102.5-103.24.
[123]Transcript of 28 November 2023, 101.10-101.20.
[124]Ibid, 102.23-102.28.
[125]Ibid, 102.23-103.2.
The plaintiff says that the defendants’ arguments concerning the precedential value of the proposed covenant modification invite the Court to assume that the four covenants at the entrance to Walworth Avenue have a ‘protectorate’ function.[126] The plaintiff says this would contravene the Court of Appeal’s commentary in Jeshing Property Management Pty Ltd & Bao v Yang & Ors.[127] The Court of Appeal considered what evidence is admissible when construing restrictive covenants. In particular, whether reference can be made to a surrounding network of covenants contained in instruments of transfer out of a great-great-grandparent title. Niall, Osborn and Hargrave JJA held that:[128]
It would in our view offend the principles stated in Deguisa to allow reference to the network of similarly worded covenants contained in the other transfers from the great-great-grandparent title. As the High Court noted in its introductory statements in Deguisa:
the Torrens system is characterised by the guarantee of the State that the title which it produces to a person seeking to take an interest in a parcel of land is an accurate and comprehensive statement of the state of the title to that land, as to both the title of the registered owner and the interests of others in that land. With the benefit of that guarantee, a person dealing with a registered proprietor of land need look no further than the registered title and the interests notified on it in order to ensure that his or her dealing does not miscarry.
The only interests notified on the certificate of title to the Land are the Covenants, by reference to the instruments of transfer which contained them. As discussed, the Covenants referred to the great-great-grandparent title and it is permissible to refer to that title to both complete the Covenants and to construe them. However, the associate judge’s extension of the scope of admissible evidence to include the network of other covenants was in error. The transfers of land containing those other covenants were not ‘incorporated by reference’ in the certificate of title or the Covenants, or even referred to in them.
[126]Transcript of 29 November 2023, 177.1-177.8; 179.15-179.21.
[127][2023] VSCA 185 (‘Jeshing’) (citations omitted).
[128]Ibid, [44]-[45].
Here, the construction of the covenant is not undertaken with reference to the extraneous network of covenants. Indeed, the construction of the covenant was not in dispute. The issue here is whether the plaintiff had established modification would not cause substantial injury including by establishment of a precedent. In considering whether modification would create a precedent, it is relevant to consider the neighbourhood as a whole, including the network of covenants. (It was also necessary to refer to the network of covenants above in response to the plaintiff’s submissions regarding the character of the neighbourhood.)
In his report, Mr Milner opines that modification of the covenant to enable the subject land to be developed with additional dwellings would not create a precedent for further change and stated that the precedent had already been established.[129] His oral evidence is that the precedent had already been set by developments in the Grandparent Title.[130] Mr Milner’s report refers to ‘the restriction’ being widely ignored insofar as there are many examples of multi-dwellings within the Grandparent Title and broader street network and the precedent for multi-dwellings was longstanding.[131] Under cross-examination, Mr Milner conceded that he had not researched each of the titles to work out whether or not there had been a modification, and indeed he could not point to any covenants (in the Grandparent Title) that had been modified.[132] He was not informed by the plaintiff that 2A Crotonhurst Avenue’s covenant had been modified.[133] He agreed that his view concerning an already established precedent was not a reference to the covenant being modified but rather to the fact there is more than one dwelling on some of the lots in the grandparent title.[134] I reject Mr Milner’s conclusions about the precedential value of the proposed modification.
[129]Expert report of Robert Milner dated 28 April 2023, 29 (116)-(117).
[130]Transcript of 28 November 2023, 44.26-44.29.
[131]Expert report of Robert Milner dated 28 April 2023, 30 (118)-(119).
[132]Transcript of 28 November 2023, 61.29; 62.1-62.4.
[133]Transcript of 29 November 2023, 134.25-134.27.
[134]Transcript of 28 November 2023, 63.16-63.25; 62.16-62.18.
I agree with the defendants’ submissions regarding the likely ‘domino effect’ of modification of the covenant.[135] The second defendant submitted:
…whether it be Mr Blumenthal or whoever buys the properties at 196 to 198 Hawthorn Road, the only thing preventing a massive apartment block over the two properties is the covenant on 198 Walworth Avenue. Defending this covenant would be impossible if a covenant on 1A Walworth Avenue is removed.[136]
[135]Transcript of 29 November 2023, 143.28; 144.7; 159.7.
[136]Ibid, 159.7-159.13.
While I do not agree with the absolutism of the submission, I do accept the realistic probability that further applications for covenant modification would eventually follow on 198 Hawthorn Road, 1 Walworth Avenue and 2 Walworth Avenue, and may be successful if this application is allowed.
Conclusion
The plaintiff’s application is disallowed. I will allow the parties to make submissions on costs, if they cannot agree on the appropriate costs order consequential to this judgment.
SCHEDULE OF PARTIES
| S ECI 2022 05081 | |
| BETWEEN: | |
| 210 HAWTHRON ROAD PTY LTD | Plaintiff |
| - v - | |
| MEGAN ELLINSON | First Defendant |
| KRYSTYNA DUSZNIAK | Second Defendant |
| DAVID SHAFER | Third Defendant |
| SHARON SHAFER | Fourth Defendant |
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