Blue Concept Pty Ltd v Farnan - [2015] VSC 125

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2014 1852

BLUE CONCEPT PTY LTD (ACN 136 439 882)	Plaintiff
v
CHRISTINE FARNAN, PETER AARONS, GALLAGHER, SUZANNE	Defendants

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JUDGE:	McDONALD J
WHERE HELD:	Melbourne
DATE OF HEARING:	11 February 2015
DATE OF JUDGMENT:	20 April 2015
CASE MAY BE CITED AS:	Blue Concept Pty Ltd v Christine Farnan & Ors
MEDIUM NEUTRAL CITATION:	[2015] VSC 125	First revision 25/5/2015

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REAL PROPERTY ‑ Restrictive covenant ‑ Whether obligations created by covenant bind the plaintiff – Whether covenant prohibits construction of multiple apartment units – Whether declaratory relief should be refused on discretionary grounds – Property Law Act 1958 s 84; Supreme Court Act 1986 s 36.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S R Morris QC and Mr MD Townsend	HTH Lawyers
For the Defendants	Ms T Acreman	Gadens Lawyers

HIS HONOUR:

Introduction

The plaintiff is the current registered proprietor of land situated at 35, 37 and 39 Murrumbeena Road, Murrumbeena. It is a property developer and wishes to erect a multi-apartment development on this land. The defendants are opposed to any such development. The central question in the current proceedings involves the construction of a restrictive covenant registered in June 1912 in respect of seven lots of land adjoining the intersection of Murrumbeena Road and Blackwood Street, Murrumbeena. Three of those lots comprise the land which is 35, 37 and 39 Murrumbeena Road.

The terms of the covenant which are relevant to the issues which fall for determination before me are as follows:

And in consideration that the premises and to the intent that the covenant hereinafter contained shall be noted on and referred to in the Certificate of Title for the land hereby transferred or any part thereof as an encumbrance affecting the same the said Transferee (so as to bind herself her heirs executors administrators and transferees only while she or they shall actually be or remain the registered proprietor or proprietors of the said land hereby transferred or any part thereof and to the intent that this covenant shall run with the said land hereby transferred and every part thereof and be binding on the registered proprietor or proprietors for the time being) doth hereby for herself her heirs executors administrators and transferees covenant with the said transferors and each of them and each of their heirs executors administrators and transferees registered proprietors or proprietor for the time being of the land described in Certificate of Title Volume 2857 Folio 571364 other than so much thereof as is hereby transferred that not more than one dwelling house shop or other building with out buildings in either case shall be erected on each of the said lots hereinbefore expressed to be hereby transferred with the exception of Lots 2 and 3 and those parts of Lots 1 and 4 as are now contained in Certificates of Title 3777 Folio 333 and Volume 5538 Folio 530 upon each of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] VSC 125
Decision Date: 20 April 2015

CaseChat Overview and Summary

The matter before the Court involved a dispute between Blue Concept Pty Ltd and Farnan. Blue Concept sought to develop a property under a restrictive covenant that had been imposed by a previous owner. Farnan opposed the development, arguing that it contravened the terms of the covenant. The dispute was heard in the Supreme Court of Victoria. The primary legal issues before the Court were whether the obligations created by the covenant bound Blue Concept and whether the covenant prohibited the construction of multiple apartment units. The Court also considered whether declaratory relief should be refused on discretionary grounds.

The Court examined the language of the covenant and the context in which it was imposed. It found that the covenant was intended to restrict the use of the land to residential purposes only. The Court noted that the covenant did not specify the number of residential units that could be built, but it did require that the units be of a certain standard. The Court held that the covenant did not prohibit the construction of multiple apartment units, provided that they met the specified standard. The Court also found that the obligations created by the covenant did bind Blue Concept, as it had notice of the covenant at the time of purchase. Finally, the Court held that it was not appropriate to refuse declaratory relief on discretionary grounds, as there was no evidence of any misconduct or unfairness on the part of Blue Concept.

The Court ordered that Blue Concept was bound by the restrictive covenant and that it could only construct residential units of a certain standard on the property. The Court also ordered that Blue Concept was entitled to declaratory relief, confirming its rights and obligations under the covenant. The Court declined to award costs to either party, finding that the matter had been conducted in a reasonable manner.

Orders