Grant v Preece
[2012] VSC 55
•15 March 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2010 01461
IN THE MATTER of Section 84 of the Property Law Act 1958
IN THE MATTER of an application by David Harold Grant and Denise Marie Grant as plaintiffs for the modification of a restrictive covenant contained in instrument of transfer 1416363 in respect of Certificate of Title Volume 6854 Folio 719 being the land situate at 13‑15 King Street, Ivanhoe East 3079.
| DAVID HAROLD GRANT AND ANOR | Plaintiffs |
| v | |
| CARLA LOUISE PREECE | Defendant |
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JUDGE: | DALY AsJ | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 17, 18, 19 October 2011, further written submissions 14 February 2012 | |
DATE OF JUDGMENT: | 15 March 2012 | |
CASE MAY BE CITED AS: | Grant v Preece | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 55 | |
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RESTRICTIVE COVENANTS ― Section 84(1) Property Law Act 1958 – Application to modify single dwelling covenant ― Applicable legal principles ― Construction of “obsolescence” and “substantial injury” ― Estoppel by reason of conduct of previous registered proprietor of the defendant’s land.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P. Fox | Simon Jaques & Co |
| For the Defendant | Mr S. Horgan SC with Mr B.J. Murphy | Kyriakou Lawyers |
HER HONOUR:
Introduction
Mr and Mrs Grant are the registered proprietors of the land at 13-15 King Street, Ivanhoe East, which they purchased in 2009. A single level brick house constructed some time in the 1940’s or 1950’s is situated on the property. Mr Grant is a builder and developer by profession, and wishes to subdivide the property, which has a frontage to King Street of 33.6 metres, into two similarly sized lots in order to build two houses, one for his family to live in, and the other to sell. However, the land is burdened by a restrictive covenant, which, among other things, limits the number of dwellings able to be constructed to one. In order to realise their plans, Mr and Mrs Grant have brought an application under s 84(1) of the Property Law Act (Vic) 1958 (“Act”) to modify the restrictive covenant to allow the construction of two houses on their land, and the subdivision of the property into two lots, each lot having a frontage of not less than 15.5 metres to King Street, and an area of not less than 500 square metres. The covenant is what is commonly known as a single dwelling covenant.
Ivanhoe East is an established residential suburb located approximately 12 kilometres north-east of the Melbourne central business district. The original plan of subdivision for the area in which the property is located was registered in 1921, but the area appears to have been substantially developed between the 1930’s and 1960’s, and, save for some lots fronting Lower Heidelberg Road, is primarily residential in character. Lying immediately south to the suburb of Eaglemont, the area is located on the southern slope of what is locally known as Mount Eagle. The topography of the area is relevant for the purposes of determining the boundary of the relevant neighbourhood, and informs the character of the neighbourhood.
The relevant part of the covenant contained in Instrument of Transfer No. 1416363 dated 30 May 1929,[1] (emphasis added) is as follows:
The said land hereby transferred and to the intent that these covenants shall run with the said land hereby transferred and be binding on the registered proprietor or proprietors thereof for the time being or their heirs – executors administrators and transferees DOTH HEREBY or himself his executors administrators and transferees covenant with the said James Athelstan King his heirs executors administrators and transferees registered proprietor or proprietors for the time being of the land now comprised in the said Certificate of Title that he or they will not erect or cause to be erected more than one dwelling house (with the usual out buildings) on any of the lots hereby transferred any such house to have a roof of slate or tiles or any material approved of by the said James Athelstan King his heirs executors administrators and transferees …
[1]Whereby lots 29, 30, 31, 32 and 35 were transferred out of the parent title. 13-15 King Street is lot 35.
Development history
The property, which is Lot 35 on subdivision LP8311, is one of 60 lots contained in a plan of subdivision registered on 28 May 1921 (“subdivision”). The subdivision is irregularly shaped, and is bounded to the north by Maltravers Road, to the east and south by Lower Heidelberg Road and to the west (in part) by a footway extending from the southern part of the subdivision to Maltravers Road.
In 1930, Plan of Subdivision LP13422 was registered, which provided for the re-subdivision of five lots in the south-western corner of the subdivision (not themselves burdened by single dwelling covenants) to create 16 lots fronting Lower Heidelberg Road. These lots have been developed for commercial purposes, which, together with other properties adjacent to the subdivision, make up the East Ivanhoe Shopping Village, a busy local retail and commercial centre. Two lots immediately behind the commercial lots have been developed as an open-air car park for use by visitors to the shopping village. A lot on the corner of Lower Heidelberg Road and King Street has been developed for municipal purposes, and a small kindergarten is located on the site. Immediately across the road from the kindergarten are a number of lots with frontages to King Street, Lower Heidelberg Road and Maltravers Road, which have been developed by the Uniting Church. A church, church hall, tennis court complex, and a manse have been developed on this site, being the highest point in the subdivision. However, apart from these developments, the remaining lots in the subdivision have been developed for residential purposes. A cadastral map of the subdivision and its environs showing the location of 13-15 King Street and 29 Burton Crescent is set out below.
S = 13 – 15 King Street. 29 Burton Crescent.
(Note: the above map does not show the dual occupancy development at 22-24 Burton Crescent referred to in paragraph 11 of these reasons.)
There are two main streets in the subdivision: King Street and Burton Crescent. King Street bisects the subdivision in an east-west direction, while Burton Crescent descends from the north-east to south-west parallel with Lower Heidelberg Road.
As noted above (by way of the solid black line), part of the western boundary of the subdivision is a narrow right of way leading up Maltravers Road, which originally continued through to Burton Crescent as it descends towards its intersection with Lower Heidelberg Road. However, it now truncates at Oakdene Place, which is a cul‑de‑sac located outside the subdivision. Two lots located within the subdivision have frontages to Oakdene Place. The sloping character of the subdivision means that the lots fronting Maltravers Road overlook the entire subdivision from the rear of the relevant properties. In turn, the lots on the northern side of King Street are higher than those on the southern side, while those lots on the southern side of King Street are higher than those in Burton Crescent (which has a more level topography than the remainder of the subdivision). King Street continues across the boundary of the subdivision into an area of similar character, ultimately ending at Carmichael Street. The property at 13-15 King Street is on the low side of King Street, with the rear of the property adjoining properties on Burton Crescent.
It was common ground between the parties that each of the lots in the subdivision, save for the commercial lots on Lower Heidelberg Road, are similarly burdened by single dwelling covenants, including the lots which are currently developed for municipal and church purposes. However, owing to the timing of how the lots within the subdivision were progressively transferred out of the parent title, only a subset of lots within the subdivision directly benefit from the restriction imposed by the covenant on the title of 13-15 King Street.[2]
[2]Being lots 1-7, 9-10, 13-14, 19-22, 26, 28, 33, 41-43, 50, 56 and 58.
In addition to the re-subdivision of a number of lots in the subdivision for commercial purposes, there have also been some changes in the subdivision which have provided more intensive residential development than provided for in the original plan of subdivision. In 1940, two groups of lots in the subdivision: one group facing Burton Crescent on the western edge of the subdivision and another group facing Lower Heidelberg Road on the south‑eastern boundary of the subdivision, were consolidated and re-subdivided. This subdivision (“AV Jennings subdivision”) was initiated by the builder and developer AV Jennings, and converted eleven lots on the original Plan of Subdivision into fifteen lots, six of which had frontages to Lower Heidelberg Road and the remaining nine with frontages to either Burton Crescent or the new street created in the area adjacent to the western boundary of the subdivision, Oakdene Place. As these lots were similarly burdened by single dwelling covenants, the AV Jennings subdivision was facilitated by an order of his Honour Justice Martin of this Court made on 13 October 1939, which permitted the consolidation and re‑subdivision of the relevant land, save that each of the new lots created as a result of the re-subdivision was also subject to a single dwelling covenant and a restriction on the roofing materials able to be used for houses constructed on the new lots.
The next development was in 1956 when Plan of Subdivision LP32675 was registered (“1956 subdivision”). This involved a consolidation of two lots and re-subdivision into three lots, one of which was immediately adjacent to the plaintiffs’ land at 13-15 King Street, another which became the defendant’s property at 29 Burton Crescent, and the third lot being a triangular block with frontages to both King Street and Burton Crescent. In effect, the boundary between Lots 33 and 34 was shifted eastwards to claim land from Lot 34 (the triangular block) and then the resulting larger Lot 33 was in turn sub‑divided. While each of lots 33 and 34 was burdened by a single dwelling covenant, and dwellings were constructed on each of these lots inconsistently with single dwelling restriction imposed by these covenants, no court order was ever made approving the removal or modification of the single dwelling covenant, and the covenants remain on the respective certificates of title.
In September 1990, Lot 20, situated on the south side of Burton Crescent, was subdivided into two lots and a second dwelling was built at the rear of the property (22-24 Burton Crescent). The single dwelling covenant burdening this lot was removed by the granting of a town planning permit. Further, the single dwelling covenant burdening Lot 21 (26 Burton Crescent) was varied by grant of Planning Permit P698 of 2009 issued on 26 October 2010 (although the additional dwelling at the rear appears to have been constructed some years earlier). The properties at 22‑24 Burton Crescent present as a traditional “dual occupancy” development, while the rear dwelling at 26 Burton Crescent is barely visible from the street, its presence being identifiable only by the presence of an additional mailbox.
13-15 King Street and 29 Burton Crescent
The property at 13-15 King Street was transferred out of the parent title in 1929. It is irregular in shape and has a frontage of 33.6 metres to King Street. The western boundary is 32.260 metres, and the eastern boundary is 26.365 metres. Mr and Mrs Grant propose to demolish the existing dwelling (a single storey brick veneer dwelling house with an area of approximately 40-45 squares, with a garage and swimming pool) and construct what Mr Grant describes as two luxury homes in accordance with plans which were provided to the Court on the first day of hearing.
The current concept plan for the proposed development provides for the construction of two three-level dwellings, each with four bedrooms and multiple living areas, one with a frontage of 16.464 metres to King Street, and one with a frontage of 17.064 metres to King Street. However, as the lot is located on the lower side of King Street and slopes away to the rear, the view from King Street would show two two-storey dwellings of similar appearance, with a ramp leading to an underground car park on the western side of the block and driveway to a garage on the eastern side of the block, utilising what is now a disused crossover. From the rear, both dwellings would present as three-storey dwellings. The two dwellings will be attached at the basement level, although from King Street the dwellings would present as two detached houses, albeit quite close together. While the precise dimensions of the proposed dwellings are unclear, Mr Grant estimates that one will be approximately 50 squares in size, and the other 65 squares. He estimated the height of the buildings at the rear of the property to be approximately 10.6 metres, although that may well be an underestimate. He proposes to retain some tall trees located on the south eastern corner of the property.
Given the irregular size of the property and the absence of any accurate plan of the existing dwelling, it is difficult to identify with precision the increase in the site coverage which would result from the proposed development. However, it is apparent that the combined footprint of the two dwellings will be considerably greater than the footprint of the current dwelling.
The defendant, Ms Carla Preece, is the registered proprietor of property at 29 Burton Crescent. Her property is adjacent to the property at 13-15 King Street, in that the north-western corner of her property intersects with the south-eastern boundary of 13-15 King Street, but the properties do not share a common boundary as such. By reason of the fall of the land in the subdivision, 29 Burton Crescent is substantially lower than 13-15 King Street. 29 Burton Crescent is one of the lots created out of the 1956 subdivision. It appears to be somewhat smaller than the majority of the lots in the subdivision. When Ms Preece purchased the property in 2006, a modest sized 1960s style house was located on the site. At the time of the hearing, the existing residence on that lot had been demolished, and a new double storey, four bedroom home is currently under construction. At the time of my first inspection in October 2011, trenches had been dug for the construction of footings for the new house. At the time of the second view in January 2012, construction had progressed to the stage such that it is apparent that the new home will be of substantial size, with a large footprint comparable with the size of the lot.
Ms Preece is the only defendant to this proceeding. However, she was not the only objector to the application. In his affidavit sworn on 27 May 2010, Mr Simon Jaques (the solicitor for the plaintiffs) deposed that he served notice of the applications upon each of the lots within the subdivision which had the benefit of the covenant over the land at 13-15 King Street. Notice was also given by advertisements published in “The Age” and the “Heidelberg Leader”. He received a number of enquiries regarding the application by telephone, and three letters of objection (including one on behalf of Ms Preece). However, the remaining objectors did not appear at the return date of the application.
Mr and Mrs Grant relied upon a number of affidavits sworn by their solicitor, Mr Simon Jaques, in respect of what might be described as the subdivisional history of the area, and the advertising and notification process undertaken during the course of the application. They also relied upon an affidavit sworn by Mr Grant, and an affidavit sworn by Mr Negri, a town planning consultant engaged by the Grants. Ms Preece relied upon an affidavit sworn by her and the evidence of the town planning consultant engaged by her, Mr Giovanni Gatini. Each of the witnesses were cross-examined.
At the parties’ request I also conducted an inspection of the area on foot and by car after the close of evidence but prior to the hearing of the parties’ final submissions.[3] Both counsel formed the view that I should conduct the view in the absence of the parties and their legal representatives. I also conducted a further view prior to finalising these reasons for judgment.
[3]See T230, 19 to T231, 13 for a description of what I observed during the original view.
Section 54 of the Evidence Act 2008 provides that:
The Court … may draw any reasonable inference from what it sees, hears, or otherwise notices during a demonstration, experiment or inspection.
I inspected the neighbourhood by car and on foot on 19 October 2011 (Wednesday morning between 9.10am and 9.45am), and again on Sunday 22 January 2012, by car alone, at approximately 3.30pm.
It is apparent from both inspections, but particularly the latter, that the neighbourhood is a quiet residential area, with most vehicle and foot traffic concentrated in the south western section of Burton Crescent behind the East Ivanhoe shopping village. The neighbourhood presents as reasonably homogenous in terms of both lot size and housing type, with most development having taken place in the 1940s and 1950s. However, there has been some later residential development, with the newer homes usually being larger than the more established dwellings. However, most of the new homes appear to have setbacks consistent with those of the established dwellings in the area.
The neighbourhood has a leafy character. Significantly, this character appears to predominately arise as a result of the trees and vegetation from established private gardens rather than from street trees or other public plantations (although Burton Crescent is planted with street trees).
I also observed that the fall of the land from Maltravers Road to Lower Heidelberg Road is significant. Accordingly, the properties on the lower side of Maltravers Road have expansive views over the neighbourhood, while the properties on Burton Crescent are overlooked by the properties on King Street.
While my ability to undertake a close inspection of the rear of the property at 13‑15 King Street and its relationship with the property at 29 Burton Crescent was hampered by the construction works underway at 29 Burton Crescent, it is apparent that there may well be some overlooking of 29 Burton Crescent from the rear of 13‑15 King Street, particularly if multi‑storey dwellings are erected close to the rear and eastern boundaries, although the sightlines from 13‑15 King Street would be at least partially obscured by some tall trees located on the south eastern corner of 13-15 King Street. However, the property at 29 Burton Crescent would not be as affected by any overlooking or apparent visual bulk from the proposed development as its neighbour at 27 Burton Crescent. Further, it is apparent that the proposed dwellings at 13-15 King Street buildings will be quite visually imposing when viewed from the properties located in both Burton Crescent and King Street.
The observations above are generally consistent with the evidence given by the lay and expert witnesses called by the parties, which is summarised below.
In his affidavit, Mr Grant deposed as follows:
I am a builder and property developer by profession. In my view, modern practices in the design and construction of dwelling houses are such that substantial well designed dwellings can be constructed on properties with a frontage of 55 feet without any detrimental effect upon the amenity of the neighbourhood in which the subject property is located.
Further:
The dwelling constructed on the subject property is, in my opinion, an unattractive and undistinguished building, and both of the new dwellings which I intend to construct if the Plaintiffs’ application is successful will be substantially better designed and an enhancement to the neighbourhood in which the subject property is located.
Mr Grant’s evidence at trial, particularly under cross‑examination, focussed upon his plans for redevelopment of 13-15 King Street, and in particular, the size, height, and positioning of the two new dwellings. He was also questioned about an exchange of correspondence between his solicitors and Ms Preece’s solicitors, where, as a beneficiary of the single dwelling covenant imposed upon Lot 34, he complained about the new dwelling at 29 Burton Crescent being constructed in breach of the covenant. He conceded in cross‑examination that the single dwelling covenant burdening Lot 34 had some value for him as the beneficiary of the covenant, that the restrictive covenant which burdened 29 Burton Crescent was not obsolete, and that he would suffer substantial detriment if there was a breach of that covenant.[4]
[4]Transcript 37, 21-29.
However, while I mention this evidence for completeness, it is of limited relevance to the determination of the question of whether the covenant over the land at 13‑15 King Street confers practical benefits upon those persons benefiting from it. No doubt Ms Preece’s opposition to this application has created animosity between the parties, as evidenced in this exchange of correspondence.
In her affidavit sworn on 19 October 2010, Ms Preece gave evidence (in summary) as follows:
(a)she spent a large part of her childhood and adolescence in Ivanhoe East, and she is fond of the character of the area with its “large allotments, beautiful gardens, trees, quiet, and strong sense of identity and community”;
(b)she has resided at 29 Burton Crescent since January 2007, until the house on the property was demolished to enable construction of a new home;
(c) she based her decision to purchase 29 Burton Crescent on the following attributes of what she describes as “the estate”, being substantial front and rear gardens, trees, the family character of the estate, the presence of children, a reduced demand for on street parking, and lower traffic congestion;
(d)she goes for regular long walks in the area with her partner and her dog and enjoys the homes and gardens and quiet tree lined streets; and
(e)she does not want to see her neighbourhood lose its special character and become like other places where there are a mixture of dwellings and units, busy streets and few trees.
During her evidence at trial, Ms Preece gave evidence that from the outdoor areas of her property, she had what she described as a “reasonable view” of the rear of 13-15 King Street, albeit somewhat obscured by some tall trees located on the south eastern corner of the lot. She also gave evidence about the redevelopment of 29 Burton Crescent, confirming the size of the footprint of her new home, with two car parking spaces.
Essentially, the thrust of the evidence of the parties is that Mr Grant wants to maximise the financial and lifestyle benefits of the property by replacing a tired and undistinguished dwelling with two substantial houses which he considers will enhance rather than detract from the amenity of the area. Ms Preece considers that any dilution of the restriction imposed by the single dwelling covenants prevailing in the area, including the proposed development at 13-15 King Street, will detract from her enjoyment of her property by representing a departure from the quiet, garden character of the neighbourhood.
The evidence of the town planning experts engaged by the parties diverged along similar lines to the positions adopted by the parties who engaged them.
Mr and Mrs Grant relied upon the evidence of Mr Marco Negri, a town planner with some 25 years’ experience. In his affidavit sworn on 27 May 2010, Mr Negri deposed that:
(a)the subject property has frontage to King Street of approximately 33.6 metres and an overall area of approximately 1130m²;
(b)the neighbourhood (which was clarified under cross examination to be, in his opinion, the area encompassed by the subdivision) is characterised by single detached dwellings in established garden settings;
(c)there is some variety in lot size, property frontage and building spacing within the subdivision, with frontages ranging from 15.3m to 36m. The land at 13-15 King Street has the second widest frontage in the subdivision;
(d)the predominant building material used in the subdivision is face brickwork, with pitched tiled roofs predominating;
(e)there is a degree of consistency in the front boundary setbacks in the subdivision, which are generally well landscaped;
(f)development of the land is governed by the Banyule Planning Scheme, and is affected by the Vegetation Protection Overlay and the residential Neighbourhood Character Policy, which defines the neighbourhood as being a “Garden Suburban Character Area”;
(g)if the land at 13-15 King Street were to be subdivided into two lots, and each lot had an area of at least 500m², no planning permit would be required to construct a dwelling on each lot;
(h)the subdivisional pattern in the neighbourhood has resulted in the subdivision accommodating a larger number of lots and lots with lesser frontage dimensions than envisaged at the time Lot 35 was transferred out of the parent title in 1929;
(i)in Mr Negri’s view, the amenity and neighbourhood character implications of subdividing the land into two lots is reasonable, having regard to the pattern of subdivision in the locality, provided the dwellings were constructed side by side and had pitched tiled roofs; and
(j)the development was capable of advancing the objectives set out in the Banyule Planning Scheme given the width of the land, which can accommodate two dwellings in a manner which is respectful of the character of the neighbourhood.
In his supplementary affidavit sworn on 22 August 2011, Mr Negri, in part in response to the affidavit sworn by the expert called by Ms Preece, Mr Gattini, deposed as follows:
(a)the subdivisions of the land at 22-24 and 26 Burton Crescent (the dual occupancy developments) created lot sizes substantially smaller than the prevailing lot size throughout the subdivision (and smaller than each of the lots which would be created if the subdivision of 13-15 King Street were to proceed);
(b)13-15 King Street was one of only five lots (out of a total of 60) in the original plan of subdivision with frontage dimensions of 100 feet (approximately 30.5 metres) or greater. Two of these lots were subdivided for the purpose of developing the East Ivanhoe Shopping Village. Lot 34 was subdivided by the 1956 subdivision. Apart from 13-15 King Street, only one other lot of the five original lots referred to above remains untouched by later subdivision;
(c)the proposed subdivision of 13-15 King Street is consistent with the evolving subdivision patterns, and of itself will not change the character of the neighbourhood significantly;
(d)the subdivision of 13-15 King Street will not cause any harm to Ms Preece’s property or any other neighbouring benefiting property, noting that the covenant does not address building height, siting, setbacks, overlooking, or overshadowing, as well as the other benefits contended by Mr Gattini to be a direct result of the restriction imposed by the single dwelling covenant; and
(e)provided that the dwellings constructed on 13-15 King Street are arranged side by side, only one dwelling will have a direct interface with benefiting properties, and as a result, the amenity consequences will be no different to that of a single dwelling on the land.
In the course of his evidence‑in‑chief at trial Mr Negri took me through an oral and visual presentation based upon a series of photographs and maps of the area.[5] The presentation included, among other things:
(a)a colour aerial photograph of the area showing the boundary of the subdivision, the street layout, the density of development, the prevalence of red tiled roofs, and what is commonly described as the “garden” character of the area bounded by the original plan of subdivision;
(b)a copy of LP 8311, highlighting the location of the lots with similar frontage dimensions to 13-15 King Street;
(c)copies of the plans of subdivision within the area which post‑dated LP 8311;
(d)a series of cadastral maps showing the lots on LP 8311 which were subsequently affected by the later subdivisional activity; and
(e)aerial photographs highlighting non-residential development in the subdivision.
[5]See Exhibit “MN-6” to the affidavit sworn on 22 August 2011.
Finally, in order to support his contention that the subdivisional activity in the neighbourhood had resulted in a material change in the character of the neighbourhood, Mr Negri produced a cadastral map highlighted to show both non-residential uses of the land in the subdivision, and alterations to residential lots by reason of later subdivision. The apparent purpose of the preparation of this map was to show that by reason of re‑subdivision and the development of land for non‑residential uses that there had been a material change in the character of the neighbourhood.
In particular, the map highlights:
(a)the retail and commercial development on Lower Heidelberg Road, converting five lots on the original plan of subdivision into sixteen lots;
(b)the development of six of the original lots for church purposes;
(c)the use of two of the original lots for car parking behind the East Ivanhoe Shopping Village;
(d)the redevelopment of the eleven lots on Burton Crescent and Lower Heidelberg Road into fifteen residential lots by AV Jennings;
(e)the 1956 re‑subdivision of lots 33 and 34 (that is, the lots adjacent to 13-15 King Street and incorporating what is now 29 Burton Crescent); and
(f)the dual occupancy redevelopment of 22 and 26 Burton Crescent.
Under cross‑examination, Mr Negri was questioned by counsel for Ms Preece as to his view about the original purpose of the covenantor in imposing a single dwelling covenant. He stated that the purpose of the covenant was “to have single dwellings”.[6] He did not accept that the purpose of the covenant was to control population density, but conceded that the covenant may have had the purpose of presenting a particular neighbourhood character of “openness” and a “sense of space”. He accepted the contention that there was a degree of consistency in the setbacks and landscaping of the residential properties in the area, that all of the lots in the subdivision which had been developed for residential purposes were separate, single dwellings, and that there was no recent change in the character of the neighbourhood since the development of the church precinct.
[6]Transcript 88, 2-8.
Later questioning focussed upon the potential of other lots within the neighbourhood to be subdivided (subject to the modification or removal of any restrictive covenants burdening those lots). He pointed out that, unlike the land at 13-15 King Street, most of the lots within the neighbourhood could not be subdivided into lots with an area greater than 500 square metres. Further, he gave evidence that, given most of the lots within the subdivision are long and narrow, there are very few opportunities within the neighbourhood to redevelop a lot in the manner which is proposed for 13-15 King Street: that is, with two substantial houses located side by side with frontages similar in size to those prevailing throughout the subdivision. He pointed out that most of the larger lots in the subdivision had their longest boundaries as “sidages” to the streets within the subdivision, rather than “frontages”, and therefore would not be as attractive prospects for subdivision as 13-15 King Street.
Ms Preece retained Mr Giovanni Gattini, a town planner, to provide expert evidence on her behalf. Mr Gattini deposed that he had practised as a town planner for 24 years, and that he had on a number of occasions given expert evidence in this Court in relation to the removal and variation of restrictive covenants.
In his affidavit, Mr Gattini identified a number of questions to which he gave consideration.
(a)Has there been a change in the character of the subject property between 30 May 1929 and the present which might be said to have rendered obsolete the purpose of the covenant?
(b)Has there been a change in the character of the neighbourhood between 30 May 1929 and the present which might be said to have rendered obsolete the purpose of the covenant?
(c)Are there any other material circumstances which have arisen between 30 May 1929 and the present which might be said to have rendered obsolete the purpose of the covenant?
(d)Can the land be used without any modification to the covenant; how might the land be used or developed with the covenant modified?
(e)Are the practical benefits secured to other persons by the existence of covenant?
(f)Will discharge or modification cause injury to persons with the benefit of the covenant?
Mr Gattini considered the neighbourhood should be the area bounded by Maltravers Road between Lower Heidelberg Road and Carmichael Street to the north, the rear of the retail and commercial properties between Carmichael Street and Burton Crescent to the south, the rear of the properties having frontage to Lower Heidelberg Road to the east, and the properties facing Carmichael Street on the east side of the road between Maltravers Road and the rear right of way to the shops to the south.
Mr Gattini describes the neighbourhood as it is now as comprising predominantly single dwellings on reasonably large lots set within well‑established gardens. He considered that the neighbourhood retains a garden character. Having regard to the questions outlined in paragraph 41 above, Mr Gattini’s opinion can be summarised as follows:
(a)there have been no changes to the character of the subject property between 30 May 1929 and the present that renders obsolete the purpose of the covenant;
(b)while the changes in the subdivisional pattern of the neighbourhood have occurred between 1929 and the current day, it is Mr Gattini’s opinion that those changes have not rendered the purpose of the covenant obsolete in that many of the additional lots are similar in size to the original lots in the subdivision, and the neighbourhood continues to comprise garden‑style lots with single dwellings with generous, well‑established gardens that make a contribution to the character of the area. He considers that the existence of the covenant appears to have ensured that the low density character of the area is maintained and the sharing of available view lines given the sloping nature of the neighbourhood; and
(c)the planning context in which the obsolescence of the covenant ought to be considered is established by the City of Banyule’s residential neighbourhood character policy which includes a relevant statement of desired future character for the neighbourhood as being “the area’s valued garden and treated landscape and its Edwardian and interwar residential character is to be maintained and enhanced”. In particular, the relevant design response “discourages site coverage exceeding 40% in order to provide sufficient site area for planting, growth and retention of vegetation.”
In paragraph 19(e) of his affidavit, Mr Gattini deposes as follows:
“It is my observation that dwellings within the neighbourhood are comfortably nestled within gardens. The re‑subdivision of the land into two lots for two dwellings will mark a substantial departure from the existing character. Despite the absence of a development plan[7] it is not unreasonable to conclude that the construction of two dwellings on the site will far exceed the desired 40% site coverage. It is not my evidence that site coverage should not exceed 40% in LP8331 or the neighbourhood, the covenant does not restrict building site coverage per se. The construction of two dwellings on the lot will however result in a substantial change to the character of the lot. By necessity, due to the properties’ width, there will be two dwellings facing King Street
instead of one, the area set aside for landscaping will be reduced and the number of cross overs will be increased. In addition, the dwellings are likely to extend further south down the slope to accommodate additional built form which may result in loss of mature vegetation. It is noted that the east boundary of the property has a depth of only 26.8m which is relatively shallow. This would mean that subdivided lots, to have similar area, will have irregular frontages to King Street. I note for the Court that the beneficiary in this case will more than likely be impacted by additional shadows and building height.”
[7]At the time of swearing Mr Gattini’s affidavit no concept plan for 13-15 King Street had been prepared.
Mr Gattini considers that the land could be used without any modification of the covenant by reason of the current presence of a single dwelling on the site. He noted that there was no restriction upon the size or the height of any dwelling which could be constructed on the land, and therefore the restriction did not impede the reasonable use of the property given that the balance of the lots within the neighbourhood comprise single dwellings or non-residential uses. He gave evidence that if the covenant were to be removed or modified two large dwellings could be constructed on the property with limited set‑backs from the rear and side boundaries.
Mr Gattini considers that the maintenance of the restriction imposed by the covenant will have a number of practical benefits for those having the benefit of the covenant, including the maintenance of the low density garden character of the neighbourhood as contemplated by the original subdivider, the retention of vegetation and the maintenance of setbacks consistent with the remaining lots in the neighbourhood.
Mr Gattini contended that the modification of the covenant will injure the persons with the benefit of the covenant because it will give rise to a significant change in the character of this part of the neighbourhood. The outlook of surrounding properties and properties on higher ground will be affected. The erection of two dwellings will substantially increase the site coverage of buildings, increasing visual bulk, particularly when viewed from the side or the rear. Finally, allowing the subdivision of the lots will potentially open the gate for continued erosion of the character of the neighbourhood. There are a number of lots in the subdivision that could be subdivided in a similar way, including properties at numbers 9, 27, 29, and 30‑36 Burton Crescent and 9 and 11 King Street.
In summary, Mr Gattini concluded (at paragraph 10 of his affidavit) that:
(a)From my inspection of the property and the neighbourhood there is insufficient change to either that would render the purpose of the covenant obsolete;
(b)the property contains one dwelling consistent with the vast majority of the lots in the neighbourhood as defined by me;
(c)it is evident from my inspections and investigations of its history that the neighbourhood remains largely intact today and that there have been minor changes to the neighbourhood overall. The neighbourhood is characterised by single dwellings on garden lots and retains the garden character intended by the original subdividers as illustrated by the original marketing brochure; and
(d)real detriment would be suffered by the beneficiaries of the covenant if it was to be removed or modified.
The Legal Context
Applications for the variation or removal of restrictive covenants are governed by s 84(1) of the Act. Section 84(1) provides as follows:
(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)that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the restriction whether in respect of estates in fee-simple or any lesser estates or interests in the property to which the benefit of the restriction is annexed have agreed either expressly or by implication by their acts or omissions to the same being discharged or modified; or
(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction: …
Counsel for Mr and Mrs Grant rely upon both s 84(1)(a) and (c) of the Act in support of their application to modify the covenant so as to allow the construction of two dwellings upon the site, each with a frontage of not less than 15 metres. Counsel submitted that, by reason of the changes in the neighbourhood since 1929, the single dwelling covenant ought to be deemed obsolete, insofar as the covenant prevents the development of more than one dwelling on a site with a frontage of 33 metres, given that most of the other lots in the subdivision have substantially lesser frontages. Alternatively, counsel submitted that the proposed modification would not substantially injure the beneficiaries of the covenant. While Mr and Mrs Grant do not rely upon s 84(1)(b) of the Act, it was submitted that the absence of any other defendants apart from Ms Preece supported their contention that the proposed modification would not substantially injure those entitled to the benefit of the covenant.
A preliminary issue
In addition to submitting that Mr and Mrs Grant have established that the grounds for modification of the covenant under s 84(1)(c) were made out, counsel submitted that, in any event, Ms Preece either did not have standing to oppose the application, or alternatively, was estopped from seeking to enforce the covenant by reason of her being the registered proprietor of a lot which was created as a result of the 1956 subdivision, which resulted in the construction of two dwellings on lot 33 in breach of the single dwelling covenant burdening that lot (with the breach being compounded by her construction of a new house encroaching upon what used to be lot 34). As Ms Preece would not be entitled to equitable relief to enforce the covenant over 13‑15 King Street (because of equity’s requirement for clean hands),[8] her evidence and submissions should be disregarded, and the non‑appearance of other beneficiaries of the covenant should be viewed as implicit agreement to the modification of the covenant in the manner proposed by Mr and Mrs Grant.
[8]See, in the context of enforcing restrictive covenants, Miller v Evans [2010] WASC 127.
In my view, the submissions referred to above do not assist Mr and Mrs Grant in this application. First, the enquiry required to be undertaken when determining applications under s 84(1) is to determine the impact or potential impact upon any person entitled to the benefit of the covenant, not simply the party or parties who have chosen to take part in the proceeding. This obligation is imposed upon the court even in applications where there is no opposition to a restriction imposed by a covenant being modified or removed. Given that the submission that Ms Preece had no standing in the proceeding whatsoever was very faintly pressed, I am entitled to take into account all of the evidence and submissions made on her behalf.
In any event, I am not persuaded that the conduct of a predecessor in title restrains Ms Preece in the manner contended for by Mr and Mrs Grant. I accept the submissions of counsel for Ms Preece that no personal equity of Mr and Mrs Grant’s predecessor in title arising out of the conduct of Ms Preece’s predecessor in title by reason of the 1956 subdivision and consequent breach of the covenant burdening lot 33 can detract from Ms Preece’s rights to enforce the covenant, or diminish her standing to object to the proposed modification. In that respect, the current case is analogous with the facts in Bookville Pty Ltd v O’Loghlen[9] where Kaye J rejected a similar argument to the effect that a registered proprietor of a property benefitting from an easement or carriageway could be found to have abandoned that easement by reason of the conduct of his predecessor in title.
[9][2007] VSC 67
Finally, while the question of whether an applicant has “clean hands” is certainly relevant to a court’s determination as to whether a court would grant relief in equity, it is doubtful what relevance the conduct of a defendant or a defendant’s predecessor in title has in the context of an application under s 84(1), except perhaps in an evidentiary sense if that conduct resulted in a relevant material change in the neighbourhood, or would cast doubt on the veracity of that person’s evidence regarding the perceived benefits of the maintenance of the restriction contained in the covenant. If that person was the only beneficiary of the covenant, it may influence the Court’s discretion in favour of an applicant provided that the Court is satisfied that the pre‑conditions contained in s 84(1) are made out. However, it does not relieve an applicant from the burden of establishing the matters required by s 84(1) so as to enliven the court’s jurisdiction to grant relief.
The test in section 84(1)(a) and (c)
Mr and Mrs Grant’s reliance upon s 84(1)(a) of the Act to justify the proposed modification of the covenant was based upon the reasoning of Morris J in Stanhill Pty Ltd v Jackson.[10] In Stanhill, Morris J held that:
[10](2005) 12 VR 224.
(a)the ordinary meaning of the word “obsolete” is not that the thing which is obsolete is no longer of any use, rather, it means “outmoded” or “out of date”;[11]
(b)the ordinary, grammatical meaning of the expression “the reasonable user of the land” is simply a user of the land acting reasonably;
(c)what is reasonable will be gleaned from current attitudes and circumstances in relation to the use of land, including consideration of town planning issues;[12]
(d)the reasonable user of the land will not be confined to just one use of land which might be regarded as reasonable;[13]
(e)the ordinary meaning of the word ‘impede” means to “retard, obstruct, or hinder”, not “prevent”; and
(f)a restriction will impede the reasonable user of the land if the user cannot undertake any reasonable use of the land.
[11]Ibid at [31].
[12]Ibid.
[13]Ibid.
In Stanhill, the applicant sought to discharge a single dwelling covenant burdening a property in Reservoir, in order to construct five townhouses on a lot of some 1133 square metres. Despite adopting what he described as a “more robust” approach to the construction of s 84(1)(a), Morris J found that the covenant was not obsolete. However, while Morris J found that a five unit development would substantially injure the persons entitled to the benefit of the covenant, a two unit development would not, and ordered that the covenant be modified accordingly.
In the context of the current application, it was submitted on behalf of Mr and Mrs Grant that the single dwelling covenant, insofar as it applies to 13-15 King Street (a wider than average lot), is outmoded having regard to changes in the neighbourhood, in particular the changes brought about by the AV Jennings subdivision, the 1956 subdivision, and the dual occupancy developments in Burton Crescent. Furthermore, as the proposed development would be a reasonable use of the property in the context of the current town planning regime and approach to residential development, the continued existence of the covenant in its current form would impede the reasonable use of the land at 13-15 King Street.
Counsel for Mr and Mrs Grant acknowledged that the approach of Morris J in Stanhill in relation to the questions of what amounts to “obsolescence”, whether the term “impede the reasonable user of the land” refers to any reasonable use of the land, and the relevance of town planning considerations to determining what might be a reasonable use of the land represented a divergence from what might be described as the “traditional” approach adopted by this Court and the superior courts of other common law jurisdictions.
The “traditional” approach requires an applicant to show that, in order to be deemed obsolete, that by reason of changes in the relevant neighbourhood
the covenant has so lost all value as to be capable of achieving, to any degree, any purpose or object of the covenantor.[14]
This statement of Eames J is consistent with the approach adopted by the Full Court in Re Stani[15] which quoted, with approval, the following statement of Lord Evershed MR in Re Ghey and Galton’s Application:[16]
But I think it must be shown, in order to satisfy this requirement, that the continuance of the unmodified covenant hinders, to a real and sensible degree, the land being reasonably used, having due regard to the situation it occupies, to the surrounding property, and to the purpose of the covenant.
[14]Greenwood & anor v Burrows & ors (1992) V Conv R 54-444, 65,197.
[15]Unreported, Young CJ, Barber and Nelson JJ, 7 December 1976.
[16](1957) 2 QB 650 at 663.
The traditional approach not only differs from the approach in Stanhill by directing the enquiry towards whether the covenant impedes any reasonable use of the land in question, but also in that it requires an enquiry into whether the covenant is capable of achieving the original purpose of the covenantee in imposing the restriction. Little, if any, consideration should be given to contemporary town planning considerations.[17]
[17]Re Stani, at p.7.
The difficulties in reconciling the approach in Stanhill with the traditional approach have not yet been considered by an appellate court. Significantly, in Vrakas v Registrar of Titles and Ors[18] Kyrou J, while stating that Morris J’s more robust interpretation of s 84(1) “had much to commend it”, adopted the traditional approach to the construction of s 84(1)(a).[19]
[18][2008] VSC 281.
[19]Ibid at [47]-[48].
In a very recent decision of a single judge of this Court, Prowse v Johnstone,[20] the difference in the approach taken by Morris J in Stanhill with the established line of authority then prevailing was confronted. Cavanough J directly addressed the more robust approach to s 84(1)(a) in Stanhill, stating as follows:
In my view, the long standing principles should be followed unless and until the Court of Appeal or the High Court rules otherwise.
[20][2012] VSC 4, [99].
In Prowse, Cavanough J found that the restriction imposed by a single dwelling covenant over a property in an estate in Malvern was not obsolete, as it was still capable of achieving its original purpose of controlling population density, in that there remained many single dwellings on large lots in the relevant neighbourhood, and most of those lots were covered by single dwelling covenants.
In Stanhill, Morris J also adopted what might be described as a more robust approach to the construction of s 84(1)(c), stating as follows:[21]
In my opinion, the language used in para (c) does not require a case to be made that the proposed discharge or modifications of a restriction will not harm the persons entitled to the benefit of the restriction. The hurdle is not this high. Rather it is sufficient to show that the proposed discharge or modification will not cause harm to the persons entitled to the benefit of the restriction which could be regarded as being of real significance or importance. This will require a judgment call in the particular circumstances, being considered; it does not admit some universal answer based upon the attitude of the beneficiary, the original purpose of the covenant or any other similar factor. (emphasis added)
[21]Stanhill, [37].
Again, in Prowse, Cavanough J considered the approach taken in Stanhill, namely that when considering an application for modification or removal of a covenant under s 84(1)(c), it was only necessary for an applicant to show that no harm of “real significance or importance” would be imposed upon the persons entitled to the benefit of the covenant. Cavanough J contrasted this with the traditional approach to determining whether any beneficiary would suffer substantial injury by reason of the removal or modification of a restrictive covenant. In Re Stani, the Full Court stated as follows:[22]
The purpose of para (c) was “to preclude vexatious opposition cases where there is no genuineness or sincerity or bona fide opposition on any reasonable grounds.” Having regard to the purpose of para (c) it may well be that this is the correct view, that in other words any injury sufficient to prevent the Court modifying the restriction must be something more than unsubstantial, must be real and not a fanciful detriment …
In the long run the test to be applied is similar to that to be applied in determining under paragraph (a) whether the continued existence of the restriction would secure practical benefits to other persons.
[22]At p 10.
In Prowse, Cavanough J expressed the view that the test in Stanhill understated the burden imposed upon an applicant by Re Stani and previous authorities. I agree.
Accordingly, in the current case, I also apply the traditional approach to the interpretation of s 84(1)(a) and s 4(1)(c). Whether that approach is necessary or desirable is not for me to determine or comment upon, and in any event, I do not feel at liberty to depart from the approach of the Full Court in Re Stani. While the limitations on development imposed by restrictive covenants may be considered by some to be a crude and inflexible form of land use planning, any substantial change to the existing regime should be a matter for an appellate court or the legislature.
In Vrakas, Kyrou J helpfully summarised the principles that govern an application to discharge or modify a restrictive covenant under s 84(1) of the Act, as follows (omitting citations):
24Section 84(1)(a) has two limbs. In essence, the first limb is that, due to changes in the character of the property or neighbourhood or other circumstances, the covenant is obsolete, and the second limb is that the covenant’s continued existence would impede the reasonable user of the land without practical benefits to other persons. An applicant need only establish one of these limbs in order to have a right to a remedy under s 84(1)(a), subject to the court’s residual discretion (see below).
25In 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. What is the “neighbourhood” is a question of fact.
26A covenant is “obsolete” if it can no longer achieve or fulfil any of its original objects or purposes or has become “futile or useless”. A covenant is not obsolete if it is still capable of fulfilling any of its original purposes, even if only to a diminished extent. 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. 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. 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.
27Strictly 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.
28In relation to the second limb of s 84(1)(a), to establish that a covenant would impede the reasonable user of the land, it must be shown that “the continuance of the unmodified covenants hinders, to a real, sensible degree, the land being reasonably used, having due regard to the situation it occupies, to the surrounding property, and to the purpose of the covenants”. Whether this is so is essentially a question of fact.
29It is not sufficient merely to show that the continued existence of the covenant would impede a particular reasonable use which is proposed by the applicant. The applicant must show that the restriction will impede all reasonable uses.
30“Practical benefits” within the meaning of the second limb of s 84(1)(a) are any real benefits to a person entitled to the benefit of a restrictive covenant and are not limited to the sale value of the land benefited by the covenant.
31It must be established that the covenant is not necessary for any reasonable purpose of the person who is enjoying the benefit of it.
32If a relaxation of the restriction imposed by a covenant would be likely to lead to further applications of a similar nature, resulting in a detrimental change to a whole area, this “precedential” effect may be relevant in determining whether the restriction secures any practical benefits.
33Whether there are any practical benefits to other persons is a question of fact.
34In relation to s 84(1)(c), the test for whether a discharge or modification of a covenant would “substantially injure” a person entitled to the benefit of the covenant is similar to that in relation to “practical benefits” in the second limb of s 84(1)(a).
35Section 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.
36The injury must not be unsubstantial, and must be real and not a fanciful detriment.
37It 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.
38A 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.
39The 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. 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).
40Whether 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.
41Town planning principles and considerations are not relevant to the Court’s consideration of whether an applicant has established a ground under s 84(1).
42The 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. In relation to s 84(1)(c), this means that the applicant must effectively prove a negative.
43The absence of objectors to the discharge or modification of a covenant will not, in itself, necessarily satisfy the onus of proof.
44 Each case must be decided on its own facts.
45Even 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.
46Town planning principles and considerations may be relevant to the exercise of the Court’s residual discretion. “Precedential” issues similar to those discussed above may also be relevant in the exercise of that discretion.
Accordingly, the issues for determination in this application are:
(a)identification of the relevant “neighbourhood” for the purpose of determining whether changes to that neighbourhood have rendered the single dwelling restriction imposed by the covenant obsolete;
(b)having defined the neighbourhood, whether changes in the character of the neighbourhood have resulted in the prohibition of multiple dwelling development unenforceable or otherwise of no value, particularly in the context of the property having a wider than usual frontage;
(c)if the single dwelling covenant could not be held to be obsolete, whether the restriction imposed by the covenant impedes the reasonable use of the land without securing practical benefits to other persons;
(d)alternatively, whether modification of the covenant to allow the construction of two dwellings would substantially injure any person entitled to the benefit of the covenant; and
(e)if Mr and Mrs Grant establish an entitlement to relief under either s.84(1)(a) or 84(1)(c) of the Act, whether there are any matters relevant to the Court’s discretion as to whether to make an order in the form sought.
The Neighbourhood
In my view, based upon the evidence of Mr Gattini and Mr Negri, my own observations of the area, and with the assistance of visual aids such as maps and aerial photographs, the relevant neighbourhood extends beyond the boundaries of the subdivision to include the area immediately to the west of the subdivision, extending to Carmichael Street. This neighbourhood is anchored by a substantial property in the north‑west, the East Ivanhoe Shopping Village to the south‑west, and the church precinct on the north‑eastern corner. Lower Heidelberg Road, Maltravers Road, and Carmichael Street form obvious boundaries of the neighbourhood, and there appears to be no basis for differentiating between the area immediately to the west of the footway and the east.
What changes have there been in the character of the neighbourhood since 1929?
In my view, the only relevant changes to the neighbourhood since 1929 are the intensification of residential density caused by the following developments:
(a)the AV Jennings subdivision in the 1940s;
(b)the 1956 subdivision;
(c)the dual occupancy developments in Burton Crescent in the 1990’s; and
(d)the construction of a block of apartments in Carmichael Street on an unknown date.
I do not consider the development of the East Ivanhoe Shopping Village and attached car park, the church precinct, or the kindergarten to be relevant for the purposes of determining whether the single dwelling restrictions imposed by the covenant is obsolete. The covenant does not require that a lot be developed for housing: it requires that if a lot is developed for housing, only one dwelling can be constructed on that lot. In my view, the shopping village, church precinct and kindergarten service the largely residential neighbourhood: they do not define its character.
Taking each of the residential developments referred to above in turn, and overall, I conclude that these changes have not materially altered the character of the neighbourhood such as to render the restriction of use imposed by the covenant obsolete. While the size of the lots affected by the AV Jennings subdivision and the 1956 subdivision are smaller than those in the original subdivision, they are not markedly different from the lot sizes prevailing in the neighbourhood (with the exception of 11 King Street and 29 Burton Crescent), and most of these lots (save the new house at 29 Burton Crescent) are developed in a manner consistent with the established character of the neighbourhood.
The two dual occupancy developments on Burton Crescent are, at least in the case of 22 Burton Crescent, inconsistent with the character of the area, but do not, of themselves, represent such a departure as to render the covenant obsolete. The same applies for the apartment development on Carmichael Street, which in any event is located on a busier road and on the boundary of the neighbourhood.
My conclusion that the developments referred to above do not represent such a departure from the pattern of development in the neighbourhood as to render the restriction imposed by the covenant obsolete is bolstered by the evidence which shows that those parts of the neighbourhood which are developed for residential purposes (that comprises the bulk of the neighbourhood) are still overwhelmingly dominated by single dwelling lots. Regardless of which definition of obsolescence is preferred, the single dwelling covenant still has a role to play in shaping the development and character of the neighbourhood.
Does the single dwelling restriction impede the reasonable use of the land without securing practical benefits for other persons?
The single dwelling covenant, if not modified or removed, certainly impedes a reasonable use of the land at 13-15 King Street: that is, the redevelopment of the land for the purpose of constructing two dwellings. However, it was not really contended that the single dwelling covenant impedes the reasonable use of the land: it cannot be said that the use of the land for a single dwelling is not a reasonable use of the land: indeed it has been used as such for approximately 70 years.
Adopting the traditional approach, it is clear that the single dwelling covenant does not preclude all reasonable use of the land at 13-15 King Street. The question remains: does the maintenance of the restriction confer practical benefits upon those benefiting from it?
Counsel for Mr and Mrs Grant did not expressly contend that the existence of single dwelling covenants over 13-15 King Street and other lots within the subdivision did not confer practical benefits upon any persons benefiting from the restriction. However, he submitted that the proposed modification of the covenant, given the nature of the property, in particular its peculiarly wide frontage, and the nature of the proposed development, being two detached dwellings side by side on reasonable sized lots, does not undermine the benefits conferred by the covenant. He relied upon the evidence of Mr Negri in relation to the limited amenity impact of the proposed development.
Counsel for Ms Preece submitted that Mr and Mrs Grant have failed to discharge the onus upon them of showing that the continued existence of the restrictive covenant would not secure practical benefits to others. In particular, he submitted that there is no proper evidence that the restriction is not necessary for any reasonable purpose of those who are enjoying the benefit of it. Counsel submitted that the evidence of both Ms Preece and Mr Gattini, and, for that matter, Mr Negri, supported the contention that, despite some departures from the development pattern envisaged by the original plan of subdivision, the covenant still conferred practical benefits of substance by maintaining a low density environment of a consistent “garden” character.
In my view, the existence of the restriction imposed by the single dwelling covenant over the property at 13-15 King Street (and, for that matter, other properties within the neighbourhood) does confer practical benefits upon the beneficiaries. It is apparent from the expert evidence, the maps and photographs tendered at trial, and my own observations that the neighbourhood largely maintains a homogenous, low density character, with generous well vegetated blocks. While each case turns upon its own merits, there have been a number of decisions of this Court which recognise the objectives and benefits conferred by the maintenance and enforcement of single dwelling covenants in a neighbourhood: namely, the preservation of relatively low population density in the interests of promoting a reasonably tranquil environment, with a leafy residential character.[23] Neither the AV Jennings subdivision, the 1956 subdivision, nor the dual occupancy subdivisions detract substantially from the generally consistent character of the neighbourhood.
Would the modification of the single dwelling covenant substantially injure any person entitled to the benefit of the covenant?
[23]Greenwood and anor v Burrows and ors (1993) VConvR 54444 at 65197, Re Pivotel Pty Ltd (2001) VConvR 45-635, at 64270.
In the current case, Mr and Mrs Grant have the difficult task of proving a negative: that is, that the consequences of modification would be immaterial. The most compelling argument in their favour is that the proposed development is on a block which is larger than most of the lots in the neighbourhood, and which involves a “side by side” development rather than any other configuration. Thus, it is argued, any “precedential” impact of the modification of the covenant would be limited, as there are relatively few lots of a size in excess of 500 square metres which could be developed in a similar manner to the current proposal.
Assessing whether the modification would materially injure those entitled to the benefit of the covenant requires a comparison between the benefits initially intended to be conferred, and actually conferred by the restriction, and the benefit which would remain if the restriction was removed or modified.[24] In Prowse, Cavanough J addressed the question of what ought be the relevant comparator: the actual present physical state of the subject land (in this case, being a modest single storey dwelling with a limited footprint), or a hypothetical situation capable of being achieved under the existing restriction (say, a three level home built as close to the boundaries as current planning and building regulations allow). In this case, I would adopt the approach taken by Cavanough J in Prowse,[25] where he stated:
It seems to me that it would be artificial and wrong to pay no heed at all to the reality of the situation. So, even though the plaintiff is entitled to ask the Court to take into account the “worst” that could be done under the existing covenant, the defendant is also entitled to invite the Court to consider the realistic probabilities of the plaintiff actually bringing about the “worst” that could be done under the existing covenant”.
[24]Prowse at [103].
[25]Ibid at [104].
Applying that approach to the current proceeding, it seems to me that having regard to developments within the neighbourhood, while one could envisage a more substantial and visually imposing dwelling being constructed on the site, the practical (and economic) reality of the situation means that it is unlikely that the current dwelling would be replaced by a single home of a size and bulk equivalent to the combined size of the two proposed dwellings.
Accordingly, it is open for me to conclude that there will be a material difference in the manner in which the property is developed or may be developed in the future if the covenant is modified. The question is whether that difference may or will cause injury to those entitled to the benefit of the covenant.
Counsel for Mr and Mrs Grant submitted that the proposed modification of the covenant would not substantially injure any person entitled to the benefit of it. The proposed development would only marginally alter the population density and vehicle traffic in the area, and may possibly reduce the need for on street parking. The proposed dwellings would still present to King Street as two single dwellings, with frontage widths consistent with those prevailing in the neighbourhood. The lack of objection and opposition from other residents in the subdivision is inconsistent with there being a substantial impact upon the amenity of the area. Further, the proposed form of the modification is moulded in such a way as to limit the possibility that the redevelopment would have a “floodgates” effect, because of the limited number of lots within the subdivision that can be developed in such a manner.
Counsel for Ms Preece submitted that Mr and Mrs Grant had not discharged the onus upon them to show that the proposed modification would not substantially injure these persons entitled to the benefit of the restriction. The benefit of the restriction is the maintenance of a low density, open subdivision constituted by single dwellings on relatively large vegetated lots, along with the maintenance of views and sightlines within the subdivision. The removal of the modification, along with the development of two dwellings with a combined bulk of between two and three times that of the current dwelling, with a significant increase in overlooking and shading, would substantially injure Ms Preece and others entitled to the benefit of the covenant.
Further, counsel submitted that the decisions of this Court in Greenwood and anor v Burrows and ors,[26] and Fraser v Di Paolo,[27] make it clear that the fact that Ms Preece is the sole objector in court is irrelevant to the question of whether Mr and Mrs Grant have satisfied the burden imposed upon them by s84(1) of the Act.
[26](1992) VConvR 54-444.
[27](2008) VConvR 54-751.
Finally, counsel submitted that the precedential value of any decision to modify the restriction imposed by the covenant is of itself sufficient injury to constitute substantial injury, noting the reliance by Mr and Mrs Grant upon the orders made in 1939 to facilitate the AV Jennings subdivision.
Conclusion
Mr and Mrs Grant have failed to persuade me that the modification of the single dwelling restriction over 13-15 King Street would not materially injure any person entitled to benefit from it. The proposed development will result in a substantial intensification of development on a site which is centrally located within the neighbourhood. The proposed dwelling is likely to be visually imposing, particularly if viewed from the higher and lower properties in the neighbourhood. The proposed development represents a significant departure from the character of the neighbourhood, and I accept the evidence of both Ms Preece and Mr Gattini in that regard.
The evidence of Mr Negri that the proposed development will have limited amenity impact is not to the point. Having conceded that an observer within the neighbourhood would see a consistent built form in terms of single dwelling lots with established vegetation and consistent landscaping within the neighbourhood, his evidence did not satisfy me that allowing the development of two lots on 13‑15 King Street would be consistent with the character of the neighbourhood. Taking it at its highest, the evidence of Mr Negri was that the amenity impact of the proposed development was “reasonable”, which does not materially assist the Court in assessing whether the modification would cause a real and not fanciful detriment to any beneficiary.
I substantially accept the submissions of counsel for Ms Preece regarding the weight which ought to be accorded the absence of any other defendants to resist the application. While the absence of any other defendants may be relevant to the question of whether the proposed modification would cause substantial injury, or whether the Court should exercise its discretion to grant relief under s 84(1), it is not determinative. There may be a range of reasons why those who might be affected by the modification of a restrictive covenant cannot or will not participate in an application, including the cost of participation and the potential exposure to an adverse costs order and that the cost of a three day trial, including the engagement of expert witnesses, is not insignificant.
I also accept that modification of the covenant may injure those entitled to the benefit of it by creating a precedent for any subsequent applications for modifications of single dwelling covenants burdening other lots within the subdivision. It is noteworthy that in this application, Mr and Mrs Grant relied upon the AV Jennings subdivision (which was authorised by this Court in 1939) as being a material change in the character of the neighbourhood which justified modification of the covenant over 13-15 King Street.
It is also noteworthy that Mr and Mrs Grant relied upon the 1956 subdivision to support their contention that there had been a material change in the neighbourhood warranting a modification to the covenant upon 13-15 King Street. However, the creation of the smaller lots at 11 King Street and 29 Burton Crescent, and in particular, somewhat ironically, the recent construction of a substantial dwelling on 29 Burton Crescent by Ms Preece, highlight the potential implications of continued re‑subdivision of larger lots within the neighbourhood into smaller lots: that is, the increased likelihood that large, bulky dwellings with substantial footprints, shallow setbacks and limited area for landscaping and vegetation will be developed within the neighbourhood, such that it will gradually lose its low density, open, and leafy character.
While I accept Mr Negri’s evidence that the number of lots that are suitable for subdivision in precisely the same manner as proposed for 13-15 King Street is limited, it is not beyond the bounds of possibility that larger blocks within the subdivision could be attractive for further subdivision and development even if not quite as attractive or amenable to subdivision as 13-15 King Street. Should further applications to remove single dwelling covenants occur in the future, no doubt any modification to the covenant over 13-15 King Street and subsequent development will be relied upon in support of an argument that there had been a material change in the character of the neighbourhood.
Finally, while only some of the lots within the subdivision are of similar dimensions to 13-15 King Street, a number of these are currently developed for non-residential purposes. It is certainly not outside the realms of possibility that changes in municipal and church priorities would result in these lots being available for residential development.
Accordingly, I will dismiss the application.
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