Del Papa v Falting

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
PROPERTY LIST

S CI 2016 01810

SANDRA DEL PAPA	Plaintiff
v
ASHLEY FALTING & ORS (according to the schedule attached)	Defendants

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JUDGE:	Lansdowne AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	6, 7 and 8 September 2017
DATE OF JUDGMENT:	12 July 2018
CASE MAY BE CITED AS:	Del Papa v Falting & ors
MEDIUM NEUTRAL CITATION:	[2018] VSC 384

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PROPERTY – Restrictive covenant – Application for modification of single dwelling covenant to allow subdivision – Whether covenant obsolete – Held not obsolete – Whether modification would occasion substantial injury by reason of precedential effect – Whether past subdivisions and modifications mean that modification would not set a precedent – Restriction to single dwelling to remain on subdivided lots so not a precedent for multi dwellings – Does set a precedent for smaller lot size – Plaintiff not proved that there would be no substantial injury to beneficiaries – Application for modification refused – Property Law Act 1958 (Vic) s 84(1)(a) and s 84(1)(c).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N Jones	Subdivision Lawyers
For the First to Thirteenth Defendants	Mr M Townsend	MPW Lawyers
For the Fourteenth Defendant	Ms T Acreman	Maddocks

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Factual background........................................................................................................................... 2

History of the titles and the Covenant....................................................................................... 2
The Subject Land........................................................................................................................... 6
Plaintiff’s proposal........................................................................................................................ 6

Legal principles.................................................................................................................................. 8

Section 84(1)(a): obsolete.............................................................................................................. 8
Section 84(1)(c): no substantial injury and residual discretion.............................................. 9

Submissions in summary............................................................................................................... 13

Obsolescence..................................................................................................................................... 14

Expert evidence........................................................................................................................... 14
Neighbourhood........................................................................................................................... 17
Purpose of the Covenant............................................................................................................ 21
Conclusion as to obsolescence.................................................................................................. 22

Substantial injury............................................................................................................................. 24

Effect on amenity......................................................................................................................... 25
Precedential effect....................................................................................................................... 29
Benefits accruing from the Covenant.............................................................................. 30
Precedent: subdivision to date........................................................................................ 33
Spread of single dwelling covenants.............................................................................. 39
Lot size................................................................................................................................ 40

Conclusion on substantial injury.............................................................................................. 45

Discretion........................................................................................................................................... 45

Summary of conclusions................................................................................................................. 46

HER HONOUR:

Introduction

The plaintiff is the registered proprietor of land known as 29 Frank Street, Balwyn North, more particularly described in Certificate of Title Volume 8511 Folio 877 and Lot 1 TP515311Y (Subject Land). It is a large parcel of land that is directly opposite Greythorn Park. The Subject Land is encumbered by a restrictive covenant contained in Instrument of Transfer 2596731 (Covenant) that prevents the construction on it of more than one single dwelling house.

The plaintiff seeks to modify the Covenant to remove the single dwelling restriction and allow the Subject Land to be subdivided into two lots or alternatively into three lots. The proposal is that the single dwelling restriction remain on each subdivided lot. The plaintiff herself does not give any evidence, but her husband’s evidence is that if the modification is permitted it is their intention to retain the Subject Land, and build either two or three houses on it for members of their family, depending on which modification is permitted.

The application was advertised in accordance with the Court’s usual practice, and has attracted considerable opposition. An application to modify or discharge a restrictive covenant does not entitle landowners in the area to object unless their land is benefitted by the covenant. In that respect, and in others as will be discussed, such an application is different to an application for a planning permit or other planning application to be determined by the local council. What land is benefited is determined by the wording of the original transfer of land that created the covenant. Generally, and in this case, the benefit runs with the land, so that a subsequent proprietor of benefited land may object to a modification or discharge application made many years after the original transfer that created the restriction. In other words, modification or discharge of a restrictive covenant is a matter of private law, having its origin in the original contract of sale but running with the land. It is not a matter of public planning law.

There are fourteen defendants, including the local Council who attains its standing to object by virtue of owning a road created out of the subdivision of a benefited lot. Four individual defendants in respect of four distinct parcels of benefited land filed affidavits, although in the event only three were able to attend to give evidence. The solicitors for the plaintiff also received numerous objections from other landowners in the area who do not have the benefit of the covenant, and so have no standing to object to its modification.[1]
[1]Affidavit of Simon Libbis sworn 14 November 2016 (Mr Libbis’ Second Affidavit) [31].

For the reasons which I now set out, I will refuse the application.

For completeness I note that no formal application was made to me to conduct a site visit, and I did not consider it necessary to do so. I have reached my conclusions on the basis of the evidence submitted orally and in documentary form.

Factual background

Much of the factual matrix is not contested, although the parties seek to draw differing conclusions from it.

History of the titles and the Covenant

The Subject Land is part of a large parcel of 114 acres in Balwyn North of which a Ferdinand Finger became the registered proprietor in February 1920. The parcel, contained within Certificate of Title Volume 4339 Folio 762 (Grandparent Title), extended from Doncaster Road in the north, to Greythorn Road in the east, the north side of Frank St and land either side of Madden St in the south, to McShane St in the west. Not all the land within this broad area was included in the Grandparent Title. In particular, the Grandparent Title excludes a large area in the north east to Greythorn Road, and most of the land now known as Greythorn Park. The Grandparent Title broadly corresponds to Plan of Subdivision LP 7870, which appears to have been first lodged on 25 June 1920.[2] The Subject Land has a lot number on that subdivision, Lot 452, but for reasons which remain obscure was removed from the subdivision at some point prior to its sale.
[2]Exhibit SL-4 to the affidavit of Simon John Libbis sworn 12 May 2016 (Mr Libbis’ First Affidavit).

Mr Finger sold off various lots from the Grandparent Title from August 1920. On each sale the Grandparent Title was cancelled in respect of the sold lot, and a new title created for it. The bulk of the lots were sold in the succeeding three decades. The Subject Land and the lot adjacent to it, Lot 451 (now known as 27 Frank St), were sold together by Mr Finger by transfer 2596731 dated 20 October 1953 to a Mr Frederick Ferguson (Transfer). The land in the Transfer became the subject of Certificate of Title Volume 7988 Volume 041 (Parent Title). In 1964, the Subject Land was sold and became the subject of Certificate of Title Volume 8511 Folio 877, as Lot 1 on Title Plan 515311Y.[3] The plaintiff became the registered proprietor of the Subject Land on 3 June 2015.
[3]Exhibit MPW-4 to the affidavit of Myles Patrick Watson sworn 9 June 2016 (Mr Watson’s First Affidavit).

The Transfer contained the Covenant, allowing only one dwelling house to be built on each of the lots.[4] The burden of the Covenant binds the successors in title to Mr Ferguson, and so continues to bind the Subject Land and the current proprietors of the adjacent lot, Lot 451. The benefit of the Covenant is conferred by the Transfer on the registered proprietors of the land remaining in the Grandparent Title as at the date of the transfer. This flows from the words of the Transfer which describes Lot 451 as ‘being part of the land more particularly described in Certificate of Title Volume 4339 Folio 762’, the Subject Land as ‘being part of the land more particularly described in the said Certificate of Title’ and sets out the Covenant in these words:

AND I the said FREDERICK STEELE MCNEIL FERGUSON DO HEREBY for myself my heirs executors administrators and transferees covenant with the said FERDINAND Finger his heirs executors administrators and transferees the register proprietor or proprietors for the time being of the remainder of the land now comprised in the said Certificate that no building shall be erected on the pieces of land hereby transferred save one dwelling house on either of the pieces of land valued without outbuildings and not less than Five hundred pounds.

[4]There is no dispute that the word ‘either’ in the Covenant means in context ‘each’.

This form of restrictive covenant, which was conventional at the time, has a reducing field of benefit, depending on the point in time at which the land is sold out of the parent, or here grandparent, title. The Subject Land was first transferred out of the Grandparent Title after most of the land in that title had already been transferred out. Hence, the field of benefit conveyed by its transfer is correspondingly limited. The parties agree that at the time of the Transfer, the benefited land consisted of only four whole lots, being Lots 340, 398, 410, and 464 of LP 7870, together with the roads shown on that plan. The hearing proceeded on the basis that parts of those roads have now been incorporated into residential lots, conferring the benefit of the Covenant on those residential lots.[5] As a consequence of that incorporation, the uncontradicted evidence is that at least 22 other residential lots have the benefit of the Covenant.[6]
[5]Plaintiff, ‘Outline of Submissions’, Submission in Del Papa v Falting, S CI 2016 01810, 2 May 2017 (Plaintiff’s Submissions) [2(i)].
[6]I am unable to be more precise as to number. The incorporation of benefited roads into lots is shown by Exhibit SL-5 to Mr Libbis’ First Affidavit by yellow marking, and on plaintiff’s Exhibit A in purple, but it is not entirely clear from either depiction into which lot the road has been incorporated, and the yellow marking is hard to decipher. On preparation of these reasons I also became alive for the first time to another possible issue. That is that, in closing oral submissions, discussion about some marked up portions that are not on the edge of a street proceeded on the basis that they were drainage easements, not roads. No issue was raised about this at the time.

The plaintiff shows the location of the land owned by the plaintiff, and the first to thirteenth defendants on Exhibit A, a marked up version of Appendix IB to the report of her expert, Mr Chapman. With the concurrence of the parties, I further marked up that Exhibit to show the benefited land which the Council asserts is vested in it, being the road created out of the subdivision of former Lots 463 and 464 in 1962. The Council was joined to the proceeding as a defendant,[7] which assumes the ownership of benefited land, well before the trial and the plaintiff did not seek to challenge the standing of the Council until her closing submissions, after the Council had closed its case and made its submissions. In other words, the plaintiff allowed the trial, including cross examination of the plaintiff’s expert by the Council, to proceed on the basis that the Council was a beneficiary.
[7]This occurred by order made by Associate Justice Derham on 22 November 2016.

In my view it was too late for the plaintiff to oppose the standing of the Council in her closing submissions without clear notice to the Council, which had not been given.[8] The plaintiff did not formally concede that the Council is a beneficiary, but I find that it is so, on the basis of the evidence tendered by the Council and its submissions to that effect.[9]
[8]This issue is discussed in the Transcript of Proceedings, Del Papa v Falting (Supreme Court of Victoria, S CI 2016 01810, 6 - 8 September 2018) (Transcript) 296-298.
[9]Exhibit 2; Transcript 190-199.

The Subject Land is in a block formed by Frank St on the south, Robert St on the west, Dempster Avenue on the north and Ellsa St on the east. It faces south onto Frank St and Greythorn Park, which is a large area of open recreational space running along the southern side of Frank St from Robert St in the west, almost to the dog leg extension of Ellsa St in the east. The Subject Land is the most westerly lot facing the Park. It is bounded on the west by lots facing onto Robert St, and on the east by other lots facing south onto Frank St and the Park. At the eastern end of the block the lots face onto Ellsa St.

The most geographically proximate individual defendants to the Subject Land are the eleventh and twelfth defendants, Angela and Darren Jones, who are the registered proprietors of land at the rear of the Subject Land, known as 34 Dempster Avenue, facing north onto Dempster Ave. There is no other benefited land that is adjacent to the Subject Land, and only one other parcel of benefited land in the same block. That is the land owned by the sixth defendant, Ann Balfe, who is the registered proprietor of 50 Dempster Avenue, also facing north onto Dempster Ave and further to the east of the Jones land. The next most geographically proximate defendant is the thirteenth defendant, Dan Chau, who is the registered proprietor of 51 Ellsa St, which is further again to the east on the south eastern corner of Dempster Ave and Ellsa St.

The land owned by the remaining defendants, except the fourteenth, is all in blocks further north of the Subject Land. The ninth and tenth defendants, Anna and Ralph Candiloro, and the second defendant, Ferdinand Geistendor, are proprietors of land in the next block north, bounded by Dempster Ave, Robert St, Ferdinand Ave and Ellsa St. The first and fifth defendants, Ashley Falting and Mel Forbes respectively, are proprietors of land in the second more northerly block, bounded by Ferdinand Ave, Robert St, Harrington Ave and Ellsa St. The third and fourth defendants, Li Wang and Yuan Zhao, are proprietors of land still further north, on the south western corner of Robert St and Agnes Ave. The remaining individual defendants, the seventh and eight defendants, Ken Biggins and Darren Ingram respectively, are the proprietors of benefited lots facing west onto Ellsa St, in the case of Mr Biggins north of Ferdinand Ave, and in the case of Mr Ingram north of Harrington Ave.

As noted, the fourteenth defendant, the local Council, attains its standing by ownership of Grieve St, a portion of which was created out of the benefited lot, being Lot 464.

The Subject Land

A single storey brick dwelling is currently constructed on the Subject Land, oriented diagonally, broadly east-west i.e. diagonal to the frontage, rather than parallel to the side boundary. The front boundary is not fenced. There appear to be a number of established trees in front of the dwelling, with more trees at its rear and on the boundaries.[10] There is currently a large open space between the dwelling and the trees at the rear of the Subject Land.[11] The land slopes away from the frontage to Frank St, so that the rear of the property is lower than the front.
[10]Expert Report exhibited to the affidavit of Matthew John Chapman sworn 22 July 2016 (First Chapman Report) [16]-[17] and Figure 3; Transcript 53; Exhibit I, which is a copy of Figure 2 of the First Chapman Report marked up by Mr Chapman to show the Subject Land.
[11]I infer this by applying Transcript 54 lines 1-4 to Exhibit I.

Plaintiff’s proposal

The plaintiff did not herself give evidence in support of her application, although her husband, Sandy Del Papa did. His evidence is that the funds for the acquisition came from their joint family trust. It is not clear why the land is registered in his wife’s name, in particular whether she is the trustee of the trust. The Subject Land is currently tenanted, and Mr Del Papa has been responsible for managing that tenancy and organising planning for potential building. I infer from this evidence and the fact that the Subject Land was purchased less than a year before this proceeding commenced that it was acquired with a view to subdivision,[12] notwithstanding the current restriction, of which the plaintiff must be taken to be aware. Mr Del Papa’s evidence is that if the application is granted he and his wife propose to keep the Subject Land within the family, ‘maybe’ having his parents and his in-laws living there, or ‘eventually passing it down’ to his children. His evidence is that ‘(m)y wife and I would both like to keep our family in very close proximity. We live very close to the property currently’.[13]
[12]The plaintiff became the registered proprietor on 3 June 2015 and this proceeding was commenced by originating motion filed 5 May 2016.
[13]Transcript 45.

Mr Del Papa’s evidence is that he and his wife would be prepared to build in accordance with schematic design plans dated February 2017 that he attaches to his affidavit. An enlarged version is Exhibit F. These plans show two options. Option A is for two very substantial two storey dwellings, one five bedroom plus rumpus room and study, and one four bedroom plus rumpus room and study. Option B is for three slightly smaller, but still very substantial, two storey dwellings, each five bedroom plus rumpus room.

According to the plaintiff’s expert, the Subject Land has an area of approximately 1,878 square metres. If subdivided equally into two lots the lot size of the subdivided lots would be 939 square metres, while if subdivided equally into three lots the subdivided lot size would be 626 square metres. The Subject Land is not a pure rectangle, and so does not easily permit equal division. The schematic design plans do not show the sizes of the proposed subdivided lots. Nor do they show with any precision the area of each proposed lot covered by building, and the vegetation proposed. In cross-examination, Mr Del Papa agreed that there was no evidence as to which, if any, of the current trees on the Subject Land would be retained if subdivided and built upon as he proposes, and that he has not obtained a landscaping plan.

Legal principles

Section 84(1) of the Property Law Act 1958 (Vic) (PLA) relevantly provides as follows:

84 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—
(a)that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material the restriction ought to be deemed obsolete or that the continued existence thereof would impede the reasonable user of the land without securing practical benefits to other persons or (as the case may be) would unless modified so impede such user; or
(b)(not relied on); or
(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction:

The plaintiff relies on the first limb of s 84(1)(a) and (c) of the PLA. She asserts that by reason of changes in the character of the neighbourhood the covenant is obsolete. In addition, or in the alternative, she asserts that the proposed modification, whether to allow a two or a three lot subdivision, will not substantially injure the person entitled to the benefit of the restriction to a single dwelling on the Subject Land.

Section 84(1)(a): obsolete

The principles that apply to an application under s 84(1) were exhaustively stated by Kyrou J, as he then was, in Vrakas v Registrar of Titles (Vrakas) following his Honour’s exhaustive analysis of previous authority.[14] I extract the relevant portions of his statement of principles, commencing with obsolescence, in relation to the grounds on which the plaintiff relies as follows, including for completeness his footnotes:[15]

In relation to the first limb of s 84(1)(a), what is the “neighbourhood” must be determined as at the date of the hearing, rather than the date of the covenant.[16] What is the “neighbourhood” is a question of fact.[17]
A covenant is “obsolete” if it can no longer achieve or fulfil any of its original objects or purposes or has become “futile or useless”.[18] A covenant is not obsolete if it is still capable of fulfilling any of its original purposes, even if only to a diminished extent.[19] The test is whether, as a result of changes in the character of the property or the neighbourhood, or other material circumstances, the restriction is no longer enforceable or has become of no value.[20] If a covenant continues to have any value for the persons entitled to the benefit of it, then it will rarely, if ever, be obsolete.[21] A covenant could be held to be not obsolete even if the purpose for which it was designed had become wholly obsolete, provided that it conferred a continuing benefit on persons by maintaining a restriction on the user of land.[22]
Strictly speaking, the inquiry is as to whether the restriction of user created by the covenant is obsolete, rather than as to whether the covenant itself is obsolete.[23]
[14][2008] VSC 281.
[15]Ibid [25]-[27].
[16]Re Miscamble’s application [1965] VR 596, 597, 601 (Miscamble); Re Pivotel Pty Ltd (2001) V ConvR ¶54‑635; [2000] VSC 264 [29] (Pivotel).
[17]Miscamble 602; Greenwood v Burrows (1992) V ConvR ¶54-444, 65 196 (Greenwood).
[18]Miscamble 597, 601; Re Markin [1966] VR 494, 496 (Re Markin); Re Robinson [1971] VR 278, 281 (Re Robinson); Greenwood 196-197; Pivotel [31]-[33].
[19]Miscamble [597]; Greenwood 197.
[20]Greenwood 196.See also Miscamble 601.
[21]Re Robinson 282; Greenwood 197.
[22]Greenwood 197-198.
[23]Ibid 194.

Section 84(1)(c): no substantial injury and residual discretion

Kyrou J states the relevant principles in these terms, and again I have retained his footnotes:[24]
[24]Vrakas [35]-[46].

Section 84(1)(c) requires a comparison between the benefits initially intended to be conferred and actually conferred by the covenant, and 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 (that is, the injury, if any) will not be substantial, the ground in s 84(1)(c) is made out.[25]
[25]Re Cook [1964] VR 808, 810-11 (Re Cook); Fraser v Di Paolo [2008] VSC 117, [36] (Fraser).
The injury must not be unsubstantial, and must be real and not a fanciful detriment.[26]
[26]Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 10 (Re Stani); Greenwood 199.
It is not enough for the applicant merely to prove that there will be no appreciable injury or depreciation in value of the property to which the covenant is annexed.[27]
[27]Re Cook 810.
A lack of specific plans makes it more difficult for an applicant to show that there will be no substantial injury to persons entitled to the benefit of a covenant.[28]
The prospect that, if the application for the discharge or modification of a covenant were granted, that might be used to support further applications in a similar vein, may be relevant.[29] Such “precedent value” may, in an appropriate case, of itself be a factor demonstrating that an applicant fails to establish the requirements in s 84(1)(c).[30]
Whether a person entitled to the benefit of the covenant would be substantially injured within the meaning of s 84(1)(c) is a question of fact.[31]
Town planning principles and considerations are not relevant to the Court’s consideration of whether an applicant has established a ground under s 84(1).[32]
The applicant has the onus of establishing the matters set out in a limb of s 84(1)(a), or in s 84(1)(c), upon which he or she relies.[33] In relation to s 84(1)(c), this means that the applicant must effectively prove a negative.[34]
The absence of objectors to the discharge or modification of a covenant will not, in itself, necessarily satisfy the onus of proof.[35]
Each case must be decided on its own facts.[36]
Even if the matters set out in a limb of s 84(1)(a), or in s 84(1)(c), are proved by the applicant, the Court has a discretion to refuse the application.[37]
Town planning principles and considerations may be relevant to the exercise of the Court’s residual discretion.[38] “Precedential” issues similar to those discussed above may also be relevant in the exercise of that discretion.[39]

[28]Stanhill Pty Ltd v Jackson (2005) 12 VR 224, 246 [69] (Stanhill); Bevilacqua [2005] ANZ ConvR 504; [2005] VSC 235, [22] (Bevilacqua).

[29]Re Stani 11; Greenwood 200; Fraser [49]-[57].

[30]Greenwood 200.

[31]Re Alexandra [1979] VR 55, 60.

[32]Re Robinson 285; Re Stani 6; Greenwood 198; Pivotel [50]; Bevilacqua [22].

[33]Re Cook 809, 812 (in relation to s 84(1)(c)); Re Markin 496 (in relation to s 84(1)(a)); Re Robinson 281; Re Stani 7; Greenwood 192; Pivotel [28].

[34]Re Cook 812-13; Greenwood 199; Bevilacqua [24].

[35]Re Cook 812.

[36]Fraser [43], [58].

[37]Re Cook 810; Re Robinson 278, 285-6; Re Stani 7; Greenwood 192, 200; Stanhill 239 [40].

[38]Greenwood 200-201; Bevilacqua [22].

[39]Greenwood 201.

This exhaustive statement of principles has been followed in many subsequent cases, with particular emphasis on some aspects depending on the facts of the case. The parties agree that the principles as stated in Vrakas apply, and have also directed me to particular cases they consider relevant to the facts of this case. The plaintiff relies in particular on Koller v Rice,[40] in which John Dixon J allowed the modification of a single dwelling covenant to permit a second dwelling to be built on the land. In one passage relied upon by the plaintiff, his Honour took the view that the intention of the single dwelling covenant in that case was not to ‘preserve large private open space areas or space around buildings’ because ‘(h)ad that been intended over controls or restrictions would be found in the covenant’.[41]
[40][2011] VSC 346.
[41]Ibid [31].

In my view, that observation needs to be seen in relation to the particular wording of the covenant in question, which in addition to limiting use of the land to a single dwelling required it to be built of certain materials, and to have a very large living room area, of not less than 115 square metres. The land in that case was part of a new development in Hoppers Crossing, and the covenant dated only from 2001. The intention of the covenant would appear particularly directed to a prestigious and large home. In most cases concerning older single dwelling covenants in the Melbourne residential area, the Court has held the intention of the covenant to include a feeling of spaciousness, and reference has often been made to large gardens. The Covenant here is of this type.

John Dixon J also took into account in allowing the modification of the covenant in Koller v Rice that there had been similar two lot subdivisions of land within 400 metres of the plaintiff’s land, and for this reason the modification would not have any significant precedential effect. He held that:

The modification in this instance could only, at the highest, be of precedent value given the extent of its contribution to the existing “precedent” to which reference has been made.[42]

[42]Ibid [30].

The plaintiff here also relies on earlier subdivisions, in some instances with necessary modification of a single dwelling covenant, to assert both that the Covenant is obsolete, and that the proposed modification will not set a precedent.

Earlier modifications can, however, be viewed in a different light. In a recent case, Oostemeyer v Powell,[43] where the application for modification of a single dwelling covenant to allow a second dwelling on the land was based on s 84(1)(c), Riordan J refused the application in part because of what he considered to be its precedential effect, notwithstanding similar recent modifications to covenants over lots in the immediately proximate area. In fact, in the passage I quote below (footnotes included) he adopted a passage from the Full Court decision in Re Stani to the effect that far from showing there will be no precedent value, earlier modifications show that the fear of further change has a basis in reality:

Given the previous relaxations of the restrictions imposed by the covenant, it might be that the covenant over the subject land ‘stands as a soldier guarding the residential character’[44] of Karrala Court and its surrounding area, which is distinguished by its large blocks and low density. I consider that these previous developments demonstrate ‘that any relaxation of the restriction imposed by the covenant would almost certainly lead to further applications of a similar nature, resulting in a detrimental change to the whole subdivision.’[45] As the Full Court said in Re Stani:
The fact that there have already been, in breach of the covenant, the instances of similar subdivisions of allotment … in a very similar situation to that of the subject land, and the fact that the applicant relied upon the existence of these breaches to support his application point to the reality of this fear of the ultimate destruction of the original planner’s design.[46]

[43]Oostemeyer v Powell [2016] VSC 491, [48]-[51], [53] (citations omitted).

[44]Freilich v Wharton [2013] VSC 533 [71] per Bell J (Freilich v Wharton).

[45]Re Stani 9.

[46]Ibid 9–10.

In Oostemeyer v Powell Riordan J held that the proposed modification would have very strong precedent value, because, notwithstanding the earlier subdivisions, Karrala Court had retained its character. He noted the expert evidence to the effect that the reasons supporting the modification or removal of the covenant to the subject land, could generally be applied to the other (unsubdivided) properties in Karrala Court and to the residential area to the north of Karrala Court. For this reason, his Honour distinguished the case before him from cases such as MacLurkin v Searle in which Derham AsJ allowed a very substantial modification, in part because the subject land in that case was in a physically distinct location from the residential area where most of the properties having the benefit of the covenant were located.[47] By reason of this location, and earlier similar development, Derham AsJ concluded that the modification would not set a precedent.
[47][2015] VSC 750.

The individual defendants rely in particular on the discussion in Freilich v Wharton as to the determination of the appropriate ‘neighbourhood’ for the first limb of s 84(1)(a) in their submission that the expert evidence relied upon by the plaintiff is based on an incorrect determination of ‘neighbourhood’.[48] I will return to this issue in my discussion of the ground under s 84(1)(a). They also rely in particular on Greenwood v Burrows,[49] a decision of Eames J, as he then was, in which he refused to find a single dwelling covenant burdening land at Mt Eliza obsolete, notwithstanding that very substantial further subdivision had occurred which was not in accordance with the original vision for the estate. The individual defendants also refer me in particular to Re Cook as to the continuing benefit of large lots remaining within a subdivision that otherwise contains smaller lots.[50] I will return to that case in my discussion of the ground under s 84(1)(c).
[48][2013] VSC 533.
[49]Greenwood.
[50][1964] VR 808.

Submissions in summary

I will refer to the detail of the parties’ submissions in the course of these reasons where that is necessary. In summary, the plaintiff asserts that, in accordance with the first limb of s 84(1)(a) of the PLA, the restriction, in so far as it limits a dwelling to one only, is obsolete.[51] The plaintiff asserts in the alternative that pursuant to s 84(1)(c) of the PLA, there will be no substantial injury to any benefited land by the proposed modification, whether that be to allow subdivision into two, or subdivision into three, parcels. The plaintiff relies on earlier subdivision of original lots within the subdivision, accompanied in some cases by modification of single dwelling covenants, as a basis for asserting that the restriction in the Covenant is obsolete, and that its modification to allow subdivision will not occasion substantial injury to beneficiaries. The other two most significant factual matters on which the plaintiff relies in relation to her case pursuant to s 84(1)(c) are the large size of the Subject Land, and the relative remoteness of all but the eleventh and twelfth defendants’ land to it.
[51]Transcript 40-41. The plaintiff initially also relied on the second limb of s 84(1)(a) but did not press this at trial.

The defendants oppose both grounds for the proposed modification. Their case is that, notwithstanding some limited change, the subdivision is largely in its original form, and the Covenant forms part of a network of single dwelling covenants in the subdivision. As a consequence, they submit that the Covenant still has work to do, and cannot be regarded as obsolete in the relevant sense. In relation to the ground under s 84(1)(c), the defendants assert some direct amenity detriments. Principally, however, they submit that if the Court permits the Covenant to be modified, it will set a precedent that will have the incremental effect over time of eroding the character of the area. For this reason, they submit that the plaintiff has failed to show that modification of the Covenant will not occasion substantial injury to benefited land.

Obsolescence
Expert evidence

The plaintiff retained Mr Matthew Chapman, a town planner of Hellier McFarland, to give expert evidence in support of her application. Mr Chapman prepared two reports, which are not themselves dated but are exhibited respectively to his affidavits of 22 July 2016 and 3 April 2017. Mr Chapman is the only expert retained by the plaintiff. The defendants do not call any expert evidence.

The fundamental difficulty with the plaintiff’s reliance on Mr Chapman’s expert evidence is that he was apparently not directed to the correct principles which should inform his evidence. In cross examination, he said that he was not briefed with any legal authorities to assist him in determining the neighbourhood.[52] He does not attach his letters of instructions to his reports, but in the report exhibited to his affidavit of 22 July 2016 (First Chapman Report) he states that he has been requested by the solicitor for the plaintiff ‘to consider the town planning implications for an application to the Supreme Court for an order to modify a restrictive covenant under Section 84(1) of the Property Law Act 1958’[53] (emphasis added). In response to that request, Mr Chapman states that his first report ‘will consider the planning merits of modifying the covenant’[54] (emphasis added). His conclusion in that report is that ‘modification of the covenant …is justified on planning grounds’[55] (emphasis added).
[52]Transcript 64.
[53]First Chapman Report [1].
[54]Ibid [4].
[55]Ibid [105].

Under cross examination, Mr Chapman testified that he was aware that different restrictions are imposed by the Covenant and pursuant to s 84 of the PLA to the protections afforded other residents by the Planning and Environment Act 1987 (Vic). He claimed to have given consideration to both Acts in his reports.[56] I do not consider this oral evidence to be persuasive. In my view, it is plain both from Mr Chapman’s written reports and his oral evidence that his conclusions are almost entirely based on town planning principles, notwithstanding some limited reference to s 84.
[56]Transcript 82 and following.

This approach is incorrect. As set out earlier, the authorities make it clear that town planning issues are relevant only to the refusal, in the Court’s discretion, of an application for modification or discharge of a restrictive covenant that otherwise satisfies the statutory test. Thus, Mr Chapman’s evidence as to the town planning aspects of the application is relevant only if the statutory tests on which the plaintiff relies are otherwise satisfied. The incorrect basis on which Mr Chapman gives his evidence is not corrected in his second report (Supplementary Chapman Report).[57]
[57]Expert Report exhibited to the affidavit of Matthew John Chapman sworn 3 April 2017 (Supplementary Chapman Report)

Perhaps because of this incorrect premise, Mr Chapman’s reports do not correctly address required elements of the grounds on which the plaintiff relies. First, the identification of an appropriate ‘neighbourhood’ is critical to assessment of an application made, as this application is in part, pursuant to the first limb of s 84(1)(a). This is because the first limb of that paragraph, as applied to the facts of this case, would require proof of changes either in the character of the Subject Land or in the character of the ‘neighbourhood’, or other relevant circumstances by reason of which the Covenant is obsolete. What is the appropriate ‘neighbourhood’ is a question of fact, to be determined at the date of the hearing, rather than at the date of the Covenant. As I will discuss shortly, I accept the submission of the defendants that Mr Chapman has not identified an appropriate neighbourhood.

Secondly, the test by which the ground under the first limb of s 84(1)(a) is to be assessed is whether the Covenant can achieve or fulfil any of its original objects or purposes or has become futile or useless. This requires an assessment of the objects or purposes of the Covenant, not an assessment of how it sits with current town planning. Mr Chapman concedes that he made no assessment of the purpose of the Covenant,[58] and there is no other evidence as to the original purpose of the Covenant adduced in the plaintiff’s case.
[58]He concedes that this is correct at Transcript 80.

Instead of the correct test for the first limb of s 84(1)(a) Mr Chapman asks whether the Covenant is ‘out-moded’ and expresses the view that:[59]

The continuation of the existing single dwelling covenant on this property is considered to be redundant in the context of the suite of planning policy, restrictions and requirements applicable to the area that has generally kept density to a modest level that is respectful of the low key character of the neighbourhood.[60]

[59]This was the interpretation of ‘obsolete’ proposed by Morris J in Stanhill, which is inconsistent with earlier authority and has not been adopted in subsequent cases.

[60]First Chapman Report [104].

The test is not whether the restriction in the Covenant is ‘out-moded’ or ‘redundant’ i.e. no longer necessary. It is whether it retains utility i.e. is still capable of fulfilling any of its original purposes, even if only to a diminished extent.

Neighbourhood

In his first report, Mr Chapman identifies the appropriate ‘primary neighbourhood ‘as being those properties with a direct interface with the open space reserve’.[61] He explains his approach to determination of appropriate neighbourhoods in his oral evidence in chief as follows:

My consideration of the neighbourhood is concentric around Greythorn Reserve. I consider that in this locale, in this area, Greythorn Reserve is a substantial feature and it’s a destinational point for residents in the area. It’s a substantial place of resort and recreation in an area where there’s no other…activity centre or shopping centre or…place where people may seek to find resort and recreation. I find that it’s a place that people would be drawn towards when they leave their private residence unless they are travelling to somewhere farther afield in their care. So my view on the primary and secondary neighbourhoods is effectively surrounding the epicentre of that reserve. And then farther afield I identify the tertiary neighbourhood as being a wider area.[62]

[61]Ibid [18].

[62]Transcript 56, lines 16-30.

Identifying the ‘neighbourhood’ in this way may well make sense from a town planning perspective. It is not, however, in my view necessarily the correct approach when determining the correct ‘neighbourhood’ for the private property law purposes of the Covenant. A significant consideration for those purposes would ordinarily be the extent of the benefit of the Covenant.[63] That benefit is determined in this case by land remaining in the Grandparent Title as at the date of the Covenant. At least in respect of the Subject Land, the Grandparent Title does not correspond to LP 7870, as the Subject Land is in the Grandparent Title but not in the plan of subdivision. Comparison of the plan on the Grandparent Title itself and LP 7870 suggests, however, that they are broadly coextensive. In particular, it is plain that both the Grandparent Title and LP 7870 include only a small portion of what is now Greythorn Park, being a small portion on the western edge abutting Robert St (former Lots 453-60 of LP 7870). Neither the Grandparent Title nor the plan of subdivision include properties to the south or east of Greythorn Park. There is no indication in his reports or his oral evidence, however, that Mr Chapman has taken the extent of the benefit conferred by the Covenant, or the boundaries of the Grandparent Title or plan of subdivision, into account at all as factors in determination of his neighbourhoods. For example, when asked to exhaustively identify possible factors for the determination of a neighbourhood, he did not include these matters.[64]
[63]Freilich v Wharton [51]-[53].
[64]Transcript 72-73.

The benefit conferred by a covenant or boundaries of a parent, or here grandparent title, or subdivision may, of course, not be the end of the enquiry as to the appropriate neighbourhood, or even in some cases not the most significant factors. For example, in some cases the boundaries of the land contained within a parent title or subdivision may to some extent at least be an accident of history – due to prior ownership of surrounding land. There is, however, in this case also a topographical logic to the southern boundary, being that the land falls from the south to the north, and so Greythorn Park is on higher ground than the land to the north of it within the Grandparent Title. This topographical circumstance adds weight to excluding land to the south of the Park not in LP 7870 or in Grandparent Title from the ‘neighbourhood’.

Mr Chapman also conceded in cross examination that from Frank St none of properties on the southern side of the Park are visible.[65] Mr Chapman conceded that his conception of neighbourhood was that the properties surrounding the Park on every side look onto it, not at each other.[66] It follows that while residents from both the south and the north of the Park may perhaps consider it a geographic focus, there is no visual connection between the dwellings on the north and the dwellings on the south.
[65]Ibid 73 lines 15-20.
[66]Ibid 74.

Mr Chapman does not specifically identify the location in his neighbourhoods of properties developed with multiple dwellings. The only such properties that he specifically mentions as being in his ‘primary neighbourhood’, however, are on the south side of Greythorn Park and so not in the Grandparent Title or subdivision. [67] By contrast, as he does observe, each of the properties adjoining the Subject Land (all of which were at least at one time in the Grandparent Title and all but one are in the subdivision) contain only a single dwelling.[68]
[67]First Chapman Report [22].
[68]Ibid [37].

There is no benefited land within Mr Chapman’s primary neighbourhood. Exhibit A shows a number of parcels of benefited land within a block to the north of Greythorn Park, and a block to the west, including land owned by a number of defendants. This area is included in Mr Chapman’s ‘secondary neighbourhood’.

Consistently with Mr Chapman’s approach to the determination of relevant neighbourhoods, his ‘secondary neighbourhood’ also includes properties to the south and east of Greythorn Park that are in neither the Grandparent Title nor the subdivision. He notes that:

A greater level of infill development has occurred throughout the secondary neighbourhood including two storey multi-dwelling and substantial new single dwellings gradually changing the character of the area. The rate of redevelopment tends to be more prevalent on the higher ground of the neighbourhood, to the south in particular.
The majority of the infill development is of two or three townhouses, predominantly double storey, some side by side and others in a battle-axe arrangement with a dwelling at the front and one or two to the rear accessed by a side driveway.[69] (emphasis added)

[69]Ibid [24]-[25].

Mr Chapman does not specifically identify the location of multi-dwelling development in his secondary neighbourhood, and in particular whether those locations are within the Grandparent Title, but the sentence I have italicised in the quote above appears to imply that these multi-dwellings may be south of the Park. Mr Chapman confirmed in cross examination that the area he identifies where the ‘rate of redevelopment tends to be more prevalent’ being the ‘higher ground’ is the area to the south of the Park.[70]
[70]Transcript 77 lines 18-27.

Mr Chapman defines the northern boundary of his ‘secondary neighbourhood’ as the southern side of Ferdinand Ave and Chelmsford St, and the western boundary as McShane St and Hosken St.[71] The determination of the northern boundary of this ‘secondary neighbourhood’ as the southern side of Ferdinand Ave has the consequence of excluding three parcels of benefited land, including land owned by two defendants. No reason is given for placing the boundary of this neighbourhood at the southern side of Ferdinand Ave. This neighbourhood does include some benefited land, including land owned by some defendants, but Mr Chapman does not discuss the character of the current development on that benefited land. This is a significant omission in an expert report, which should identify all relevant matters, not just those that favour the party who commissioned it. The uncontradicted evidence in the defendants’ case is that the land of every defendant except the first and second defendants is burdened with a single dwelling covenant, by reason of which I infer that there are only single dwellings on their land.
[71]Appendix 2A to the First Chapman Report.

Mr Chapman defines his ‘tertiary neighbourhood’ as roughly equating to the area defined as Precinct 1 of the Boroondara Character Study.[72] As in respect of his primary and secondary neighbourhoods, this ‘tertiary neighbourhood’ extends beyond the boundaries of the Grandparent Title and LP 7870. Further, the full text of the description of Precinct 1 in the Precinct Statement gives a different impression to Mr Chapman’s observations as to the character of the tertiary neighbourhood.[73] He quotes a portion of the Precinct Statement in these terms:

The regular subdivision pattern, generous rear gardens, consistent wide streets, lot frontages and front setbacks and the area’s detached single dwelling character creates a spacious suburban feel.[74]

[72]First Chapman Report [28].

[73]Exhibit 1.

[74]First Chapman Report [31]; Exhibit 1, page 1, last paragraph.

He then notes that ‘the original single dwelling character of the tertiary neighbourhood is slowly transforming as the older dwelling stock is replaced with new dwellings and town houses’.[75] This statement is also drawn from the description of the area in the Precinct Statement. The description in the Precinct Statement continues, however, in the immediately following sentence to state ‘A large proportion of the precinct is covered by a single dwelling covenant’. This area is shown in the plan that forms part of the Precinct Statement to extend north of Greythorn Park to Doncaster Road, east to Greythorn Road, west to Balwyn Road, and south west of Greythorn Park to Belmore Road, excluding the south west corner. The area designated ‘single dwelling covenant’ in the Precinct Plan excludes the area to the south east of Greythorn Park. Mr Chapman agreed in cross examination by counsel for the Council that, according to the Precinct Statement, almost the entire south of the Park except for a small part to the west is not covered by single dwelling covenants.[76]
[75]Ibid [32].
[76]Transcript 77 lines 4-12.

Further, the portion quoted by Mr Chapman in the First Chapman Report before his observation as to change is in fact the conclusion, not the start, of the description in the Precinct Statement. In other words, the impression created by the Precinct Statement itself is that, notwithstanding change, the area still has predominantly a ‘detached, single dwelling character’ which ‘creates a spacious, suburban feel’.

Purpose of the Covenant

There is no evidence in the plaintiff’s case as to the purpose or original objects of the Covenant. This is despite the fact that the burden is on the plaintiff to show that none of those original objects can now be achieved.

In a number of previous cases, the purpose of a single dwelling covenant, particularly where the lot size is generous, as here, has been held to be to keep population density low and preserve a tranquil, spacious, and private feel with generous areas of open space around dwellings.[77] This is certainly what the defendants perceive the intent and effect of the Covenant to be.[78] I accept that those are its purposes.
[77]For example, Greenwood 54-444; Re Stani.
[78]Transcript 208; Affidavit of Ashley Falting sworn 26 February 2017 (Mr Falting’s Affidavit) [6]; Affidavit of I. Ann Balfe sworn 27 February 2017 (Ms Balfe’s Affidavit); Affidavit of Anna Candiloro sworn 23 February 2017 (Ms Candiloro’s Affidavit).

The plaintiff’s own proposals demonstrate the continuing utility of a single dwelling covenant. She does not propose to discharge it entirely – rather to preserve it, but on each of the subdivided lots. In cross examination by the Council, Mr Chapman conceded that there is now no maximum number of dwellings that could, as a matter of planning law, be built on the subdivided lots.[79] Plainly, the restriction to a single dwelling retains utility.
[79]Transcript 77 line 30-78 line 12.

Indeed, I accept the submission by the Council that the objective or purpose of constraining population density in the Covenant is now quite different, in fact contrary, to the planning objective of increasing urban density expressed in recent state planning pursuant to the Planning and Environment Act 1987.[80] Far from showing that the Covenant is obsolete, this shows that it has even greater utility for its beneficiaries than perhaps at earlier times. It is important to keep in mind that the question in this application is not whether or not the restriction to a single dwelling is desirable from a planning perspective, or from the perspective of the state as a whole, but whether it retains utility or its modification would cause substantial injury as a matter of private property law.
[80]Ibid 209.

That the purpose of limiting density retains utility is also shown by the extent to which proximate land is still subject to single dwelling covenants. As I will set out in detail in the next section of these reasons, there have been some subsequent subdivisions to original lots, and some accompanying modifications to single dwelling covenants to allow these subdivisions, but there is no evidence that any single dwelling covenant in the proximate area has been discharged, as opposed to remaining on the subdivided lots.

Conclusion as to obsolescence

In my view, the plaintiff has not established the ground for modification on which she relies pursuant to the first limb of s 84(1)(a). The expert evidence in her case is directed to planning considerations, not PLA considerations, and Mr Chapman has not utilised the correct test as to whether the Covenant is obsolete. Indeed, his reliance on state planning considerations demonstrates the continuing utility of the Covenant,[81] rather than the reverse. The removal of a planning restriction on the number of possible dwellings on a lot and the evidence adduced by the defendants as to the extent of single dwelling covenants also show that the restriction in the Covenant to a single dwelling retains utility.
[81]First Chapman Report [44]-[46].

There is also little weight that the Court can place on Mr Chapman’s evidence as to change in the ‘neighbourhood’, the aspect of the first limb of s 84(1)(a) on which the plaintiff relies. This is for two reasons. First, he has failed to consider the benefit of the Covenant in determination of his neighbourhoods. Exhibit A shows that there is benefited land extending almost to Doncaster Rd on the north of the Grandparent Title. By contrast, there is no benefited land within Mr Chapman’s primary neighbourhood; even his secondary neighbourhood excludes multiple parcels of benefited land, including land owned by six defendants; and his neighbourhoods include land that is not within the boundaries of the Grandparent Title and the subdivision. The benefit of a covenant is in my view at least an important factor in the determination of the appropriate neighbourhood. If it was not considered an appropriate determinant, it should nevertheless have been addressed and reasons given for discarding it.

I am also not persuaded that the inclusion of land south of Greythorn Park, which is not included in the Grandparent Title or subdivision, into Mr Chapman’s neighbourhoods is appropriate given the very large size of the Park and so the visual and topographic barrier it represents between land to the south and the land in the Grandparent Title to the north of the Park. I accept the defendants’ submission that that the correct neighbourhood for the determination of the application pursuant to s 84(1)(a) was the Grandparent Title. Where I refer to this area as a neighbourhood, it will be as the ‘Neighbourhood’, to distinguish it from those neighbourhoods identified by Mr Chapman.

The weight that can be afforded to Mr Chapman’s evidence as to change in character is also diminished by its generality, and incompleteness. He refers to development beyond single dwellings, but does not give precise locations, and a fair reading of his Reports is that this is predominantly, if not exclusively, south of Greythorn Park i.e. not within the Grandparent Title. Mr Chapman identifies some further subdivision within LP 7870, which is relevant to lot size and so injury (s 84(1)(c)), but to gain a true picture in relation to the continuing utility of the Covenant (s 84(1)(a)) Mr Chapman should have been briefed with, or asked to consider,[82] the extent of single dwelling covenants that remain, even after these subdivisions. Nor does Mr Chapman discuss the current development of the defendants’ land, and his discussion of the Precinct Statement gives a misleading impression of its contents. These omissions give the impression that his evidence lacks impartiality, as well as being misdirected.
[82]And he was not- First Chapman Report [13].

For these reasons, the plaintiff’s application pursuant to the first limb of s 84(1)(a) fails.

Substantial injury

The plaintiff’s case pursuant to s 84(1)(c) is that the proposed modification, whether to allow two or three dwellings on the Subject Land, will not occasion substantial injury to the persons entitled to the benefit of the restriction, who include, but are not limited to, the defendants.

The first matter advanced in support of this ground is that in all but one instance the defendants’ land is geographically remote from the Subject Land, and so an increase in density on the Subject Land will have no direct effect on the amenity of the defendants’ land. The second advanced reason is that the Subject Land is sufficiently large to accommodate subdivision, and indeed subdivision into two would bring the lot sizes more in line with the usual lot size in the area. Thirdly, the plaintiff contends that there is no likely precedential effect of the proposed modification, again whether to allow two or three subdivided lots, given that other large lots in the area have already been subdivided. Finally, I draw from the plaintiff’s submissions the implicit submission that any precedential effect could not objectively be considered a substantial injury in the case of those defendants whose properties have themselves been subdivided. This is the case in respect of the third and fourth, eighth, and eleventh and twelfth defendants.

The defendants who give evidence express in their evidence in chief some concerns about direct impact of the proposed modification, but the injury on which they principally rely is the potential precedential effect of the proposed modification, whether to allow subdivision into two or to three lots. Of those defendants who gave evidence, Mr Falting and Ms Balfe specifically agree in cross examination that their main concern with the application is its potential precedential effect.[83]
[83]Transcript 131, 161, 171.

The injury claimed by the Council is the administrative burden of processing and determining a potential increase in planning and other permit applications if the modification is granted.

I turn now to assess these contentions, bearing in mind that the mode of assessment is to compare the benefits initially intended to be conferred, and actually conferred, by the Covenant with those that would remain if the Covenant is modified as sought.

Effect on amenity

Mr Chapman’s evidence, which is not in this respect disputed, is that a planning permit would not be required for the construction of a replacement single dwelling on the Subject Land because of its size, and so the plaintiff could, if she chose, construct a ‘very, very substantial dwelling of large proportions’.[84] His evidence in chief is that such a dwelling could be double storey and cover up to 60% of the site without need for a planning permit or any public notice.[85] He identifies in his First Report that there is a ‘proliferation’ of such new dwellings, sometimes referred to as ‘McMansions’ in the area, and notes that often these substantial dwellings have a larger built form than multiple unit developments.[86] Mr Chapman does not identify with precision where these large single dwellings are located, but some at least appear to be in the area covered by the Grandparent Title, to the west of Greythorn Park, along Madden and Robert Streets.[87]
[84]Ibid 64.
[85]Ibid.
[86]First Chapman Report [35]-[36].
[87]Ibid [35]; Transcript 59.

In cross examination, Mr Chapman conceded that the presence of mature trees on the Subject Land could impose a limitation on the size and site coverage of a single dwelling, if permission was required to remove those trees.[88]
[88]Transcript 80-81.

By comparison to a single dwelling, Mr Chapman’s evidence in chief is that if the plaintiff is permitted to seek subdivision for multiple dwellings she will be required to seek a planning permit and so will be subject to consideration of the merits of her proposal by the Council, and, if necessary, the Victorian Civil and Administrative Tribunal. She would be required to give notice of her proposal to proximate landowners and they would have the right to object.[89] In cross examination for the Council Mr Chapman may have qualified this evidence. He agreed that if a planning permit is issued for subdivision then no further planning permit would be required to build a single dwelling on each subdivided lot.[90] Whether this is a qualification in substance is unclear. Mr Chapman testifies that it is likely that the Council would impose requirements as to future built form in a permit for subdivision.[91]
[89]Ibid 64; Supplementary Chapman Report [32]-[33].
[90]Transcript 78 lines 18-24.
[91]Ibid 79 and in re-examination at 87-88.

In relation to the plaintiff’s proposals, as shown in the concept plans, Mr Chapman states in his Supplementary Report that either proposal would ‘sit comfortably in the streetscape and conform with existing and preferred neighbourhood character’.[92] He notes that the concept plans would be ‘further resolved’ prior to lodgement with Council with input from a range of experts and concludes that:

having reviewed these concept plans I am fortified in the view that the plans demonstrate that the site is of sufficient dimensions to adequately provide for either two or three new dwellings that are compliant with the provisions of the planning scheme whilst enabling the retention of existing trees, providing for generous front and rear yards and enabling the reasonable protection of amenity on adjoining properties.[93]

[92]Supplementary Chapman Report [45].

[93]Ibid [46] and [48].

The individual defendants express some amenity concerns, being concerns about increased traffic, loss of privacy, loss of vegetation, increased strain on stormwater and sewerage systems and other aspects of infrastructure such as roads, schools and parks. I accept that these concerns are genuinely held, but do not consider that the evidence supports them on an objective basis. There is no expert evidence to support the concerns expressed by Ms Candiloro about impact on stormwater management, or other infrastructure impacts, and her evidence and that of Ms Balfe in relation to Council oversight of vegetation removal suggest that this is an issue that the Council would manage actively if it was proposed on the Subject Land, whether or not the Covenant is modified. Further, the Covenant does not confer any express protection for trees or vegetation.

In the case of concerns about impact on privacy and peace by means of increased traffic, I take it to be largely conceded by the defendants who gave evidence that this application alone will not cause a significant loss of amenity to them in those respects. Their real concern is that if this modification is allowed, then it may set a precedent and there will be incremental and eventually substantial injurious effect on the benefit of the Covenant that they currently enjoy.[94]
[94]Transcript 250 lines 28-31, oral closing submissions for the first to thirteenth defendants.

The defendants also all agreed that they cannot see the current house on the Subject Land, which would suggest that there may be no visual impact of the proposed development. The current dwelling is single storey and the proposed dwellings are all two storey. The questioning of the defendants does not reveal whether or not they would be able to see a two storey house on the Subject Land, although they cannot see the current single storey one. Ms Candiloro testifies that she can see the tops of the trees on the Subject Land, so she may be able to see development at two storeys. The Covenant does not, however, limit the permitted single dwelling to single storey and so I do not consider possible increase to two storeys to be an injury that would flow from modification of the Covenant.

In submissions for the defendants it is put that the form of development may well change from that shown in the plaintiff’s current proposals. This is of course true. Modification or discharge of a covenant does not of itself bind a plaintiff to retain the land and develop it in accordance with the proposal at trial, and proposals are often subject to change before and in the process of planning application. I accept the submissions of the plaintiff that it is not possible to obtain approved plans until the single dwelling restriction is removed, and, further, the defendants have not raised any objection as to the currently proposed built form, and so the precise built form would not seem to be a concern.[95] Further, a level of uncertainty as to the exact proposal would be of more concern if the injury relied upon was direct amenity impact on adjoining land. It is not in this case, and so I do not consider this uncertainty to really add to the claimed injury.
[95]Transcript 318-319, oral closing submissions for the plaintiff.

It follows that for the same reasons, the comparison made by Mr Chapman in the plaintiff’s case between relative lack of planning control over a potentially very large single dwelling, as opposed to greater scrutiny of plans for subdivided lots, is not as relevant in this case as it may be in a case where the claimed injury is amenity impact on an immediate neighbour.

The Council asserts as a potential injury to it the increased administrative burden of processing and determining planning and other applications if the modification is allowed, particularly if it sets a precedent. I do not consider that this task can properly be described as an injury. I accept the plaintiff’s submission that the ‘injury’ of which s 84(1)(c) speaks is an injury to the benefits conferred by owning property.[96] The Council’s ownership of Grieve St confers no benefit in respect of the assessment of applications for development of other land. Further, it is a statutory function of the Council to assess and determine such applications, and even if that work increases, I do not consider that it can amount in law to an injury.
[96]Transcript 295, based on Wong v McConville [2014] VSC 148, 33(d).

It is important to keep in mind, however, that the burden is not on the defendants to establish injury; rather, it is on the plaintiff to discount it. Mr Chapman concedes that he did not inspect the rear of the Subject Land and so its interface with the only adjacent benefited land, that owned by the eleventh and twelfth defendants. Accordingly, there is no evidence that there will be no substantial direct injury to this portion of benefited land.

This absence of evidence in relation to direct impact on the land of the eleventh and twelfth defendants, does undermine the plaintiff’s case pursuant to s 84(1)(c). The more significant factor in its failure, is, however, that the plaintiff has failed, in my view, to show that there will be no substantially injurious precedential effect of the proposed modification.

Precedential effect

The defendants in their evidence express the fear that if this application is granted, it will set a precedent for further subdivision and gradually erode the character of the Neighbourhood.

In response to these expressed concerns, the plaintiff stresses that she seeks to modify the Covenant, not discharge it. Her proposal is to subdivide the Subject Land into lots of smaller size but retain the restriction to single dwelling on each subdivided lot. In other words, the plaintiff says that the character of the area will not change because the restriction to a single dwelling on each lot will remain. Further, the plaintiff submits that a two lot subdivision would result in lots that, to the naked eye, would appear similar in size to most lots in the subdivision. Her case is that subdivision will not be inconsistent with the general lot size in the neighbourhood, and would in respect of a two lot subdivision, be more consistent. She also stresses that this would not be the first further subdivision of a lot in the Grandparent Title and LP 7870, and that other large lots have been subdivided. The plaintiff submits that as a result of some of this further subdivision, there are now subdivided lots of a similar size to the proposed lots sizes of a three lot subdivision of the Subject Land.

I will first assess the defendants’ evidence as to the benefits they see accruing from the Covenant, and then consider whether the plaintiff has shown that these benefits will not be substantially reduced by any precedential effect of her proposed modification.

Benefits accruing from the Covenant

The thrust of the evidence given by the three individual defendants is that they each consider owning benefited land or being in an area where single dwelling covenants are common as being of significant value. None of the defendants are valuers, or present evidence of comparative value of their land as opposed to land in other areas of Balwyn North, and so I do not ascribe to their opinions on this topic the weight of expert evidence. Nevertheless, they each give evidence to the effect that the presence of single dwelling covenants in the area was a reason for the purchase of their land. This shows in my view subjective value, and, to the limited extent that it was a reason for their purchases, objective value.

Ms Balfe’s evidence is that when she and her late husband purchased their property at 50 Dempster Ave in 1984 they moved from an address in Balwyn North ‘where single dwelling covenants did not exist.’ She continues ‘We paid a high price to move only a few blocks, to this area of single dwelling covenants’.[97] She states in the next paragraph of her affidavit that she and her husband bought in the area because of ‘the single dwelling houses, large blocks, generous sized rear gardens and extensive front gardens with low fencing and mature trees’.[98] Not all these features flow from a single dwelling covenant, but some do, particularly when coupled with large lot size and a well-established subdivision.
[97]Ms Balfe’s Affidavit [2].
[98]Ibid [3].

Ms Candiloro has lived with her husband and children in Balwyn North since 1998 and states that they ‘always placed a high value on the character of the Eastern Gardens Estate because of the single dwelling covenants. We moved into Ferdinand Avenue, in this estate, in 2003’.[99] Ms Candiloro moved with her family to 39 Dempster Avenue in 2013. Her evidence is that at that time ‘I had a very clear understanding that I was buying into a single dwelling covenant estate and believed that we were thereby protected from multi-unit developments’.[100] It is agreed that the description ‘Eastern Gardens Estate’ has no legal significance, but Mr Falting’s evidence, which I take to be accepted by all the defendants, is that it was understood by him and them to refer to the original subdivision.[101]
[99]Ms Candiloro’s Affidavit [3].
[100]Ibid [2].
[101]Transcript 158.

Mr Falting states in his affidavit that the decision made by he and his wife to buy into ‘the Eastern Gardens Estate’ in 2005 ‘was based on the large size of the blocks and the protection against unwanted development and subdivision provided by the single dwelling covenant’.[102] It would appear from the identification of an area covered by single dwelling covenants on the plan in the Precinct Statement that the Council also regards the presence of such covenants to be a noteworthy, and to contribute to the character of the area.
[102]Mr Falting’s Affidavit [4].

The defendants also all express a fear that the value of their properties may decrease if modification of the Covenant were to cause similar other modifications. I consider evidence about the value others may place on the defendants’ land in the future to be in a different category to evidence about the value they themselves placed on it on purchase. There are many factors that may affect value, particularly over time, and the defendants cannot say what others may value. In the absence of expert evidence on this question of value, I place little weight on this evidence.

Title searches conducted for the defendants also show that in addition to being benefited lot-owners, they are also, with the exception of the first defendant Mr Falting, all burdened lot owners.[103] The covenant burdening the land of the second defendant, Mr Geistendor, is not a single dwelling covenant, it is a covenant against quarrying and use of the land for certain industrial uses, but the parcels of land owned by defendants three to thirteen inclusive are all burdened by single dwelling covenants. In other words, there is a reciprocity, although not an exact one, to the value the defendants place on the single dwelling covenant on the Subject Land by virtue of the burden on them of complying with a similar restriction. I say not an exact reciprocity because, as mentioned in the Introduction, the field of benefit conferred by covenants of this type generally depends on the date at which the land was transferred out of the parent title. Except in the case of a building scheme, there is not complete reciprocity of benefit and burden.
[103]Mr Watson’s Affidavit [4].

Much was made in cross examination of Mr Falting of the fact that his affidavit states that he and his wife have respected the limitations placed on the use of their land by ‘the covenant’,[104] when in fact their land is not burdened by a single dwelling covenant, although it has the benefit of the Covenant over the Subject Land. I accept that this was an error, and that at the time Mr Falting swore his affidavit he did not appreciate that his land was not burdened by a covenant, although it could be said that his legal advisors should have checked that assertion and allowed him to correct it in his oral evidence in chief.
[104]Mr Falting’s Affidavit [8]-[14].

I consider that the aspect of reciprocity of benefit and burden in the general sense I have described means that any lessening of the benefit of low density conferred by the single dwelling covenants in the Neighbourhood would amount to an injury. In that regard, I accept the submission of the defendants that they see themselves, and on the limited evidence before me this would appear to be correct, as part of a network of covenants, and any lessening of the integrity of that network would be a substantial injury.[105]
[105]Transcript 288, oral closing submissions for first to thirteenth defendants.

Precedent: subdivision to date

Mr Chapman’s evidence is that ‘almost all the larger lots created in LP 7870 – lots of similar dimension to the subject property – have been re-subdivided to create smaller lots commensurate with the prevailing lot pattern and dwelling density of the area.’[106] He identifies eight lots that have been subsequently subdivided, but states that this list is not exhaustive. The identified subdivided lots are:
[106]Supplementary Chapman Report [10].

· Former Lot 432 (the large lot adjacent to the Subject Land on the north, subdivided in 1962 and now known as 32 and 34 Dempster Ave);

· Former Lot 431 (a large lot on the corner of Robert St and Dempster Ave, subdivided in 1962 and now known as 28 and 30 Dempster Ave);

· Former Lots 440 and 441 (on the south west corner of Dempster Ave and Ellsa St, consolidated and subdivided in 1960 into three lots, now known as 50A and 50 B Dempster Ave and 46 Ellsa St);

· Former Lots 414 and 415 (on the directly opposite north west corner of Dempster Ave and Ellsa St, consolidated and subdivided two years earlier, in 1958, into three lots, now known as 51A Dempster Ave and 40 and 42 Ellsa St);

· Former Lot 400 (a large lot on the bend of Ferdinand Ave, subdivided in 1965 and now known as 25 and 27 Ferdinand Ave);

· Former Lot 382 (a large lot on the corner of Robert St and Harrington Ave, subdivided in 1964 and now known as 16 Harrington St and 33 Robert St);

· Former Lot 340 (on the corner of Agnes Ave and Robert St, subdivided in 2001 and now known as 6 Agnes Ave and 50 Robert St); and

· Former Lot 339 (the adjacent lot, which was the subject of a strata subdivision in 1989, the units now being known as 1 and 2/4 Agnes Ave).[107]

[107]The plans of subdivision are part of Exhibit B.

The documentary evidence for the plaintiff identifies one further subsequent subdivision.[108] This is the consolidation of former Lots 553 and 554 on the north east corner of Harrington Ave and Ellsa St, and subdivision into three lots, including the land owned by the eighth defendant and his wife, known as 27 Ellsa St.[109]
[108]This subdivision is established in the evidence, but counsel for the plaintiff did not refer to it in his closing submissions.
[109]The plan of subdivision LP 74796 and the certificate of title of the eighth defendant’s land are also contained in Exhibit B.

Of these subsequent subdivisions, four are of benefited lots, which I consider now in more detail as follows:

· Lot 432 immediately to the north of the Subject Land was subdivided in 1962 into two.[110] The subdivision required modification of a single dwelling covenant. The burden of the single dwelling covenant remains on each of the subdivided lots.[111] The portion containing the road is now known as 34 Dempster Avenue, and is the land owned by the eleventh and twelfth defendants. It is the only benefited lot that is adjacent to the Subject Land.
[110]By LP 55952, part of plaintiff’s Exhibit B.
[111]Transcript 37.

· Lot 340, which was subdivided in 2001 into two lots. One of the subdivided lots, now known as 50 Robert St, is owned by the third and fourth defendants.[112]

· Lots 553 and 554 were subdivided in 1966 into three lots. The original single dwelling covenants on each of the Lots were modified to permit a single dwelling on each of the subdivided lots. The subdivided lots remain burdened by a single dwelling covenant. The eighth defendant, Mr Ingram, is a joint proprietor of one of these lots, known as 27 Ellsa St.[113]

· Lot 464 and the adjacent lot, Lot 463 were subdivided in 1962 on the creation of a street, Grieve St, running north into Madden St across the western portion of both lots. The remaining eastern portion was subdivided into two lots, now known as 6 Madden St and 16 Grieve St. The registered proprietors of those subdivided lots are beneficiaries, but not defendants. The owner of Grieve St is the fourteenth defendant, the local Council.[114]

[112]PS 405193E, part of plaintiff’s Exhibit B; Exhibits SL-6 and SL-7 to Mr Libbis’ First Affidavit; Cf. Transcript 34.

[113]LP 74796 and Certificate of Title Volume 8895 Folio 079, part of plaintiff’s Exhibit B.

[114]Exhibits SL-8 and SL-9 to Mr Libbis’ First Affidavit.

These subdivisions of benefited lots required modifications of covenants in two instances. Counsel for the plaintiff identifies one further subdivision that required modification of a single dwelling covenant. That is the subdivision of former Lot 382 (not a benefited lot), which as noted was a large lot on the corner of Harrington Ave and Robert St, subdivided and the covenant modified accordingly in 1964.[115]
[115]Part of MPW-3 to Mr Watson’s Affidavit, Transcript 293.

The lots subsequently subdivided, as identified by the plaintiff, were broadly of two types. One type was a lot larger and of irregular shape as compared to the usual rectangular lots in the subdivision, often because it was on the bend of a street, or corner of two streets not meeting at a right angle, which was subdivided into two lots more comparable to the usual lot size. Former Lots 431 and 432 (Lot 431 not being a benefited lot) are of this type, as are former Lots 382 and 400 (neither of which are benefited lots). Other subdivisions have involved the consolidation of a lot on a corner with its neighbouring lot, both being of the usual rectangular size and shape, and subdivision into three. The subdivision of Lots 553 and 554 is of this type, as is the consolidation and subdivision into three of former Lots 414 and 415 and of Lots 440 and 441 (none of which are benefited lots). The proposed subdivision of the Subject Land is not of either of these types.

One exception to these types of subdivision is the subdivision of Lot 340, which although a larger irregular lot on a corner, on subdivision became two lots smaller than the usual lot size for the subdivision. The subdivision of former Lot 464 also resulted in two lots smaller than the usual, as did the subdivision of former Lot 339. Lot 339 appears to have been originally of standard size and the strata subdivision reflects the construction of two dwellings each fronting onto Agnes Ave, one behind the other. This subdivision is the only identified change where two dwellings have been permitted on a lot. The evidence does not disclose whether or not Lot 339 was originally subject to a single dwelling covenant.

There are a number of conclusions I draw from the evidence on subdivision, and how it compares to the copy of LP 7870 in evidence, which is marked up by the Land Registry to show subsequent subdivisions as at the date it was printed, 10 May 2016.[116]
[116]Exhibit SL-4 to Mr Libbis’ First Affidavit.

First, the number of identified subsequent subdivisions is relatively small compared to the total number of original lots in the subdivision, which was 577. Examination of the copy of LP 7870 in evidence shows some other subdivisions, in particular on Sheets 2 and 3 along Doncaster Road, but not many. Importantly, the plaintiff has not shown that every large lot in the subdivision has already been further subdivided. The plaintiff concedes that Lot 406, which is large lot bounded by or including what appear to be two drainage easements to the west and south, and facing north onto Ferdinand Ave, does not appear to have been subdivided.[117] Examination of LP 7870 as at 10 May 2016 shows no indication of subsequent subdivision of other large lots, being at least Lots 309 and 310 (on the bend of Dempster Ave closer to Doncaster Rd); Lot 294 (at the rear of those Lots); Lot 331 (in a similar position on the bend of Ferdinand Ave); and Lot 381 (on the north east corner of Robert St and Harrington Ave).
[117]Transcript 303.

Next, the plaintiff has not identified any recent subdivision. All of the identified subdivisions occurred in the 1950s or 1960s, with the exception of the strata subdivision of Lot 339, which occurred in 1989, and the subdivision of Lot 340 which occurred in 2001. The parties have not directed me to any authority on whether precedential effect can turn on how recently other modifications or subdivisions have occurred. In my view, the absence of any recent subdivision is highly relevant in this case given the changes to planning legislation and increased focus on urban density since these earlier modifications.[118] I consider that further subdivision now would effectively set a new precedent given the lapse of time since the earlier subdivisions.
[118]In particular, the Planning and Environment Act 1987 was amended in December 2000 to insert s 61(4) which now prevents the grant of a planning permit if it would result in breach of a covenant.

Absence of recent subdivision is consistent with the general tenor of the defendants’ evidence. Mr Falting’s evidence is that he is not aware of any subdivision of land near to his since he acquired his land in 2005.[119] Ms Candeloro, who has lived in Balwyn North since 1998, and moved to Ferdinand Ave in 2003, was not aware of any subdivisions in the Eastern Gardens Estate until she heard the evidence to that effect in this proceeding, although she was aware that some lots are smaller than the average lot size.[120] Ms Candeloro identified 32 and 34 Dempster Ave as being smaller than the average lot size.[121] In fact, the evidence obtained by the solicitor for the defendants from the Department of Environment, Land, Water and Planning shows that only 34 Dempster Ave is smaller than 1000 m2, being 929m2 in area.[122]
[119]Ibid 136.
[120]Ibid 174.
[121]Ibid 175.
[122]Exhibit MPW-6 to Mr Watson’s Affidavit.

Third, the plaintiff lays considerable emphasis on this subdivision of former Lot 432, which is immediately adjacent on the north to the Subject Land and created the two parcels now known as 32 and 34 Dempster Ave, to show that the proposed subdivision of the Subject Land would not set a precedent. However, if the current sizes of the subdivided lots 32 and 34 Dempster Ave are added together, the size of former Lot 432 is shown to have been in fact substantially larger than the Subject Land, being 2,032 m2 in size, as compared to what Mr Chapman testifies is the size of the Subject Land, at 1878m2.

In summary, although there have been earlier subdivisions, and earlier modifications of single dwelling covenants to permit them, the number is small compared to the total number of lots in the subdivision; the proposed modification would be the first for some years; and it has the potential to create a precedent if only because there are other large lots remaining in the subdivision which have not been subdivided. For these reasons, I accept the defendants’ submission that the subdivision is largely intact, and the proposed modification, whether to allow a two or a three lot subdivision, would set an effective precedent at least in relation to large lots.

The defendants submit that it can be inferred that the original intention of the subdivider was to retain some lots larger than most lots, and in Re Cook the Court held that the retention of some such larger lots in a subdivision otherwise containing smaller lots can be of enduring benefit.[123] In other words, even if the precedent set by this modification results only in the remaining large lots being subdivided, then that alone would mean that the benefits remaining after the modification are less than those accruing before it. In my view, this argument while supported by authority lacks sufficient evidentiary foundation in this particular case. No defendant has given evidence touching specifically on the benefit of the other large lots remaining in the subdivision.
[123][1964] VR 106.

The defendants’ real concern is that over time the precedent set by this modification will cause the current character of the Neighbourhood overall to change. The Neighbourhood includes the remaining very large lots, but the defendants do not single them out. They identify the current character of the Neighbourhood as having two principal aspects: single dwellings on a lot; and the large size of the lots. Each of the defendants who gave this evidence own standard sized lots, of approximately 1000m2 in size, and so I infer that by their reference to large lots, they principally mean standard sized lots. Their evidence is that from the twin benefits of large lots and single dwelling covenants other benefits flow such as mature trees, spaciousness, privacy and tranquillity. Is it possible that the proposed modification will cause a loss of these benefits over time? The plaintiff submits no, because the single dwelling restriction would remain on the subdivided lots and there are precedents for the size of those subdivided lots.

To assess these matters, I first consider the current spread of single dwelling covenants, and then lot size.

Spread of single dwelling covenants

As discussed earlier, the Precinct Statement identifies a large area to the north, west, and south west of Greythorn Park, and a smaller area to the east as being covered by single dwelling covenants. The defendants do not rely on this as an exhaustive and accurate statement as to the presence of single dwelling covenants on every parcel of land in that area, merely as indicative of a pattern of subdivision that included single dwelling covenants.[124] It is plain, for example that the land of both Mr and Mrs Falting and Mr Geistendor are in this area, yet are not burdened by single dwelling covenants.
[124]Transcript 184-186.

The parties have not obtained searches of the whole of this area, and that would be a burdensome task, but the defendants engaged title searchers to search the titles for the properties immediately adjacent to the Subject Land, being the properties known as 23 to 29 Robert St, 32 to 42 Dempster Ave, and 23 to 27 Frank St. What that reveals is that every one of those properties, with the exception of what appears to be a drainage easement dividing the properties currently known as 34 and 38 Dempster Ave and identified by the number 7 on the Exhibit, is burdened by a single dwelling covenant.[125] None of those parcels is benefited by the Covenant, because each was transferred out of the Grandparent Title at an earlier point in time than the Subject Land. The transfers containing the single dwelling covenants date in time from 1921 to 1953, the last being the covenant burdening the adjacent land known as 27 Frank St, which was transferred out of the Grandparent Title in the same transfer as the Subject Land.
[125]Exhibit MPW-2 to Mr Watson’s Affidavit; Transcript 334.

What this analysis suggests in respect of the whole subdivision, and proves in respect of this smaller area, is that it was the plain intention of the original owner of the subdivision to create a network of single dwelling covenants, irrespective of the size of the lot. The parcel to the north of the Subject Land, former Lot 432, was initially a very large lot, yet was initially burdened with a single dwelling covenant, the burden of which continues to bind the subdivided lots.

However, my analysis of the identified subdivisions shows that, with one exception, there has been no impact on the single dwelling character of the subdivision by the identified further subdivisions. The changes to covenants identified by the plaintiff have been modifications, not discharges, and the subdivided lots have remained burdened by single dwelling covenants. The exception is the strata subdivision of Lot 339, which allowed two dwellings on the one lot. There is no evidence as to the circumstances surrounding this subdivision, and so I do not believe that any conclusions can be drawn from it alone as to the likelihood of such further modification to allow multi dwellings on the one lot. Given the original network of single dwelling covenants, which remains notwithstanding further subdivision, and that the current application is only for modification of the Covenant, not discharge, I do not consider it likely that this application would set a precedent for discharge of single dwelling restrictions.

Lot size

I do, however, consider that an analysis of the evidence on current lot size shows that incremental change to lot size over time could flow from the proposed modification. This could result in a loss of visual Neighbourhood character over time, even if as a matter of title a single dwelling restriction were to remain on each such subdivided lot. In my view, this means that the plaintiff has not established the negative required by s 84(1)(c) – that the proposed modification will not substantially injure the persons entitled to its benefit. I set out my reasons for this conclusion as follows.

The evidence about lot size in the plaintiff’s case is general, and is also inconsistent. In the body of his First Report, Mr Chapman states that the size of the Subject Land is 1878m2 and so is ‘nearly double the average size of most other lots in the subdivision and each of the beneficiary lots’.[126] In Appendix 3 to his First Report, Mr Chapman sets out the two possible subdivisions, giving the area of each subdivided lot. If those areas are added together they do not total 1878m2. They total 1680m2. Regrettably, this inconsistency was not the subject of any oral evidence, whether by way of the further oral evidence that was permitted, or in cross examination. The inconsistency does show, however, at least that there must be some doubt about the reliability of Mr Chapman’s evidence as to lot size.
[126]First Chapman Report [15].

The dimensions shown on LP 7870 appear to be in feet and inches, and so do not provide an immediate clarification of the actual size of the Subject Land. The Subject Land is also an irregular sized lot, and so expert evidence would be required to make an exact comparison to the regular rectangular lots along Frank St. They each have a frontage of 66 ft to Frank St, as opposed to the Subject Land’s 116 ft 3 inches, and a depth of 164 ft, as opposed to 126 ft on the shorter side of the Subject Land. The most I can conclude from visual examination of the lot sizes along Frank St in LP 7870 is that the Subject Land is somewhat less than twice their size.

By contrast, the defendants have obtained some specific evidence about lot size.[127] The solicitor for the defendants exhibits to his affidavit a plan of all lots in the four blocks bounded by Robert St on the west, Ferdinand Ave on the north, Greythorn Road to the east and Frank St to the south. This area includes the Subject Land, but not all the benefited land, and not all the land of the defendants. The plaintiff has not objected to the selection of this area and I consider that it is a relevant selection, being the area most proximate to the Subject Land within the Grandparent Title and subdivision.
[127]Mr Watson’s Affidavit [6]-[7], and Exhibits MPW-5 and MPW-6.

That evidence shows that the lot size of the Subject Land is neither 1878m2 nor 1680m2, the two alternatives that emerge from Mr Chapman’s evidence. According to the defendants’ evidence, to which the plaintiff does not object, the area of the Subject Land is 1864m2. I will proceed with my analysis on the basis that the defendants’ evidence is correct.

The plan reveals 96 parcels of land within those four blocks, including subdivided lots. The table of lot sizes has only 95 entries, however. Comparison of the two shows that the author, presumably Mr Watson, has either not obtained the lot size of the land known as 1 Frank St, or has not included it in the table. From the plan, it appears to be of similar size to the adjoining land known as 3 Frank St, and I will assume that that is the case in the discussion which follows.

The sizes of the parcels has been obtained from the Department of Environment, Land, Water and Planning, and those parcels that would be equal or more in size to the proposed subdivided lots, if the Subject Land was subdivided into two equally sized lots, are coloured on the plan. This designation was done on the basis of Mr Chapman’s evidence that the Subject Land is 1878 m2 in area, and so if evenly divided into two, those subdivided lots would be 939m2 in area. The marking up also reveals, of course, lots smaller in size than 939m2. The plan shows that there are 14 parcels, of the 96 in this area, of land size less than 939m2.

I have also examined the plan and table on the basis of the correct land size of the Subject Land, using as a point of distinction the number of parcels greater in area than half the true area of the Subject Land i.e. greater than 932m2 in area. The table shows that, excluding the Subject Land, 82 of the remaining 94 lots there listed are greater than 932m2 in area, and most of these are 1000m2 in area or more. Assuming that the land omitted from the table, 1 Frank St, is the same size as its neighbours 3, 5 and 7 Frank St, the number of lots greater in area than 932m2 becomes 83 of 95 lots, excluding the Subject Land. In short, the vast majority of lots in the immediate area around the Subject Land are larger than what the plaintiff proposes.

It is implicit in the plaintiff’s case, that the difference in lot size between 939m2 (actually 932m2) and 1000m2 is not material, and the proposed subdivision into two would result in an appearance at this site largely the same as most lots in the subdivision. In the first instance, that may be so. However, I accept the defendants’ submission that if the proposed subdivision into two is permitted, the consequential lot size would become the new measure, against which future applications would be judged. Further, the rear of the Subject Land is not regular in shape, and so it is likely one of the two subdivided lots would be smaller in area to the other, assuming their street frontages were the same width. Thus one of the lots would set an even lower new standard.

Subdivision of the Subject Land (at 1864m2) into three would result in lot sizes of approximately 621m2, if there was equal subdivision. For the same reason of irregular shape at the rear of the Subject Land, one of these lots would likely be smaller still. The table of lot sizes shows that only 6 parcels in these four blocks are less than 700m2 in size, and these all result from subdivisions in the 1950s or 1960s. A three lot subdivision would create a substantial new precedent for smaller lots.

The plaintiff submits that there would be no precedent because a standard 1000m2 lot is not capable of subdivision into lots similar in size to what the plaintiff proposes for the Subject Land. That is correct, as far as it goes. However, it does not take into account subdivision of the remaining large lots, nor the possibility that over time lots may be consolidated (as happened in the corner subdivisions in the 1950s and 1960s) to produce larger areas of land, which could be subdivided into lots similar to what the plaintiff now proposes, or smaller still.

Having regard to the evidence of lot size, I conclude that subdivision of the Subject Land, whether into two or three lots, would result immediately in a lot size smaller than the majority of lots in the immediately proximate area, by a not inconsiderable margin. Further, I do not consider that the plaintiff has shown that subdivision of the Subject Land would not also create a precedent for further subdivision.

Nor do I consider that the plaintiff has shown that the Subject Land can be distinguished from other land in the subdivision by reason of some distinguishing feature, and so what would otherwise be the precedential effect of this application is limited or negated. True it is that the Subject Land is on the edge of the subdivision, but it is not distinct (other than by lot size) in any other way from the residential lots that surround it on three sides. The plaintiff has not shown any feature that distinguishes it (other than perhaps shape) from any other remaining large lots in the subdivision. In two cases on which the plaintiff relies, Wong v McConville and Maclurkin v Searle,[128] a proposed modification was held not to have precedential effect because the land in question was physically distinct by means of position or adjacent infrastructure from other parcels in the relevant subdivision. That is not the case here.
[128][2014] VSC 148; [2015] VSC 750.

In reaching my conclusion as to precedential effect, I do not place reliance on the evidence given by Mr Falting and Ms Balfe that development of this type may occur on the specific vacant blocks they identify in their immediate area, or parcels of land that are currently owned by elderly residents whose land may be purchased by developers in the near future. The defendants fear that the owners or prospective developers of these blocks may be awaiting the result of this application. I accept that this fear is genuinely felt, but there is no direct evidence of the intentions of the owners of the identified land to support it, and cross examination of Ms Balfe showed that some of this vacant land has been vacant from before the commencement of this proceeding, indeed before the plaintiff purchased the Subject Land. Mr Chapman also gives other reasons why land that will only be developed with a single dwelling may be vacant for a considerable period.

I do take into account, however, the defendants’ evidence that this is a highly valued area generally, and Mr Chapman’s evidence that areas proximate to it are undergoing change. Given that, while the particular land that is currently vacant may not be intended for subdivision, it seems to me likely that if this application is approved, subdivision of other land in the subdivision, with covenant modification where required, will be sought. The consequence may be to create more and more lots of smaller size than the current dominant lot size in the Neighbourhood. If this occurs then, over time, even if each such lot retains the burden of a single dwelling covenant, the appearance and lived experience of the Neighbourhood will change from its current spaciousness to a more densely built environment.

In the case of those defendants whose land is already subdivided into lots similar in size to that proposed here, it may be difficult to argue that subdivision of other land to the same effect would be a substantial injury. The third and fourth, eighth, and eleventh and twelfth defendants all own land already subdivided into lots that appear at least from Exhibit A to be no larger than what is here proposed by the plaintiff if a two lot subdivision is permitted.[129]
[129]In the case of the eleventh and twelfth defendants, their land at 34 Dempster Ave is shown by Exhibit MPW-6 to Mr Watson’s Affidavit to be only 929 m2.

Not all defendants own already subdivided land, however, and not all beneficiaries. The injury that the plaintiff must disprove is to beneficiaries generally, not specific defendants. Having regard to the evidence given by Ms Balfe, Ms Candiloro, and Mr Falting as to the value they place on the current appearance and experience of the Neighbourhood, I consider that subdivision of the Subject Lot would be a substantial injury to them. I infer from the presence of other individual defendants whose land does not appear to have been already subdivided that the proposed modification would also be a substantial injury to them, and to beneficiaries in this category generally.

Conclusion on substantial injury

The plaintiff has not shown that the proposed modification will not have a precedential effect, and has not shown that such an effect would not amount to substantial injury. Nor has she adduced any evidence to show that there will be no substantial injury to the one piece of adjoining benefited land. For those reasons, her application under s 84(1)(c) fails.

Discretion

As I do not consider that the plaintiff has established either ground on which she relies, it is not necessary to consider the residual discretion to refuse the application even if a ground is established. Had either ground been established, I would have taken into account in the exercise of my discretion that the plaintiff herself, as registered proprietor, did not give evidence. Whatever the reasons for the Subject Land being registered in the plaintiff’s name, but managed by her husband, the fact that his is the only evidence as to how it would be developed means that there is no evidence from a person bound by the decision as to that proposed development. Mr Del Papa’s evidence does not make it clear what degree of legal control, if any, he has in respect of the Subject Land, save that it appears that he has an interest of some kind in the funds that were used to purchase it and has been factually, even if not legally, in control of development decisions to date. It follows that the absence of evidence from the plaintiff as registered proprietor would have been a significant factor against the grant of the application, because it adds to the uncertainty of the proposed development.

I would also have been troubled by the fact that the proposed development is not even certain as to number of dwellings, as the plaintiff seeks either a two, or a three, lot subdivision. This is a matter that the Court can of course determine, if persuaded to grant the application, but it does raise a question as to the degree of commitment of the plaintiff to pursue her advanced proposals if the application is granted. It also sits somewhat oddly with Mr Del Papa’s evidence that they propose to use the dwellings for family members. One might have thought a commitment to specific family use would determine the number of dwellings, although this was not put to Mr Del Papa in cross examination and there may well have been good explanation.

Summary of conclusions

The plaintiff relies on three principal matters in support of her application: previous subdivisions and modifications of covenants; the large size of the Subject Land; and the fact that the land of only one defendant is adjacent to it. As I have set out in these reasons, I do not consider these factors show either that the Covenant is obsolete or that its modification would not substantially injure beneficiaries of the restriction to single dwelling. In particular, detailed analysis of the evidence shows that despite some earlier change, the subdivision is largely intact, and the plaintiff has not shown that the proposed modification would not set a precedent for development.

The plaintiff’s case on the first limb of s84(1)(a) was problematic from the outset given the very high bar against which obsolescence is judged, and on proper analysis it should have been apparent that it would not succeed. First, the ground of obsolescence can only succeed if the purpose of a restriction can no longer be fulfilled at all. Plainly, the purpose of a single dwelling covenant can still be fulfilled in a neighbourhood, properly defined, where there are many single dwellings and many intact single dwelling covenants. Indeed, in the context of state planning policy encouraging increased density, a single dwelling covenant arguably has even more value than before. The contention that the Covenant is obsolete also sits oddly with the plaintiff’s proposal to retain it on the subdivided lots.

The plaintiff’s expert, Mr Chapman, was not directed to the correct principles to inform his expert evidence. An application for modification or discharge of a restrictive covenant is not determined on town planning principles, and the fact that Mr Chapman has approached his evidence on the basis that they do apply means that his opinions are of very little weight. Further, he has not identified the proper neighbourhood for an application of this type and he has not addressed the purpose of the Covenant.

By contrast, the plaintiff’s case under s 84(1)(c) has force, and I have considered carefully the matters on which she relies. There is only one adjacent portion of benefited land, and no evidence of likely physical injury or injury to amenity to that land; and I am not persuaded that the evidence discloses any such likely injury to other benefited land. This is not to say the burden of proving injury is on the defendants – under s 84(1)(c), the burden is on the plaintiff throughout to show there will be no substantial injury to the defendants, not the other way around. It is a difficulty for the plaintiff in respect of the adjoining land that Mr Chapman did not inspect its interface with the Subject Land.

In relation to the injury claimed by the Council, I do not consider that the claimed potential injury is properly described by that term. It is not, in my view, an injury for a local council to be required to fulfil its statutory duties in respect of planning applications, even if they were to increase in number due to this modification setting a precedent.

The strongest aspect of the plaintiff’s case under s 84(1)(c) is the large size of the Subject Land. At first blush, it appears capable of subdivision into two lots without impact on the uniformity of lot size in the subdivision, and indeed, it could appear that subdivision into two would achieve greater conformity to the standard lot size. The plaintiff has also shown that there have been previous modifications of covenants and further subdivisions of lots in the subdivision. On analysis, however, they are shown to be small in number compared to the total number of lots in the subdivision, and none are recent. Further, the proposed subdivision, even if for two lots, would result in lot sizes appreciably smaller than those within the immediately surrounding two blocks, and, I infer, than most in the subdivision.

In my view, this modification if allowed would set a new, and lower standard, for lot size. The plaintiff proposes that a single dwelling restriction remain on each of the subdivided lots, but even single dwellings, if on smaller lot sizes, have the potential to increase the density of the built environment of the subdivision over time. This would, in my view, reduce the benefits accruing from the Covenant so as to occasion substantial injury to its beneficiaries.

For these reasons, I will refuse the application. I will ask the parties to prepare orders to give effect to these reasons, and will hear them further on those orders, including in relation to costs, if required.

SCHEDULE OF PARTIES

S CI 2016 01810

BETWEEN:

SANDRA DEL PAPA

PLAINTIFF

– and –

ASHLEY FALTING

FIRST DEFENDANT

FERDINAND GEISTENDOR

SECOND DEFENDANT

LI WANG

THIRD DEFENDANT

YUAN ZHAO

FOURTH DEFENDANT

MEL FORBES

FIFTH DEFENDANT

ANN BALFE

SIXTH DEFENDANT

KEN BIGGINS

SEVENTH DEFENDANT

DARREN INGRAM

EIGHTH DEFENDANT

ANNA CANDILORO

NINTH DEFENDANT

RALPH CANDILORO

TENTH DEFENDANT

ANGELA JONES

ELEVENT DEFENDANT

DARREN JONES

TWELFTH DEFENDANT

DAN CHAU

THIRTEENTH DEFENDANT

CITY OF BOROONDARA

FOURTEENTH DEFENDANT

S CI 2016 01810
BETWEEN:
SANDRA DEL PAPA	PLAINTIFF
– and –
ASHLEY FALTING	FIRST DEFENDANT
FERDINAND GEISTENDOR	SECOND DEFENDANT
LI WANG	THIRD DEFENDANT
YUAN ZHAO	FOURTH DEFENDANT
MEL FORBES	FIFTH DEFENDANT
ANN BALFE	SIXTH DEFENDANT
KEN BIGGINS	SEVENTH DEFENDANT
DARREN INGRAM	EIGHTH DEFENDANT
ANNA CANDILORO	NINTH DEFENDANT
RALPH CANDILORO	TENTH DEFENDANT
ANGELA JONES	ELEVENT DEFENDANT
DARREN JONES	TWELFTH DEFENDANT
DAN CHAU	THIRTEENTH DEFENDANT
CITY OF BOROONDARA	FOURTEENTH DEFENDANT

[2018] VSC 384

12 July 2018