In the matter of CLC Property Group Pty Ltd
[2019] VSC 492
•17 July 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2019 00727
IN THE MATTER of an application pursuant to section 84 of the Property Law Act 1958 for the modification of a restrictive covenant
- and –
IN THE MATTER of an application for the modification of the restriction arising under the covenant in transfer of land registered no.1377159 dated 6 August 1928 affecting the land at 19 Poole Street, Deer Park, being lot 131 on Plan of Subdivision no. 10758 and being the land in folio of the Register volume 8184 folio 815 by:
| CLC PROPERTY GROUP PTY LTD (ACN 624 164 647) | Plaintiff |
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JUDGE: | Lansdowne AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 17 July 2019 |
DATE OF JUDGMENT: | 17 July 2019 |
DATE OF WRITTEN REASONS: | 23 July 2019 |
CASE MAY BE CITED AS: | In the matter of CLC Property Group Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2019] VSC 492 |
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REAL PROPERTY – Restrictive covenant – Modification of single dwelling restriction sought to allow six dwellings – Five new dwellings will front onto Byrne Street, Deer Park – Objection from benefited landowner in Byrne Street – No objection to taking Objection into account although objector does not wish to be a defendant – Whether similar modifications in other streets constitute a relevant precedent – Concern that existing traffic problem in Byrne Street will be exacerbated – Increase in traffic may be relevant to amenity afforded by single dwelling covenant – No evidence from a traffic engineer to counter objection – Application refused – s 84(1)(c) Property Law Act 1958 (Vic).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr Lloyd | Aughtersons Lawyers Pty Ltd |
HER HONOUR:
Introduction
These reasons concern the refusal of an application to modify a single dwelling covenant. I refused the application giving oral reasons on 17 July 2019. These reasons elaborate the oral reasons, although I have kept the present tense used in the oral reasons and where appropriate retained the more informal tone of oral reasons.
The application
The plaintiff seeks to modify a single dwelling covenant to allow up to six dwellings on the subject land (‘Land’). The Land is located on the corner of Byrne Street and Poole Street Deer Park. Its street address is 19 Poole Street, Deer Park. It currently contains a single storey rendered brick dwelling fronting onto Poole Street, with a swimming pool and outbuildings at the rear of the land. Access to the land is via a crossover from Poole Street at that frontage, with a second access point from Byrne Street to the rear of the land.
The application is supported by an expert report from Mr Robert Easton, and includes a concept plan for the proposed development. According to the evidence before me, the proposal appears at a very early stage. At least, detailed plans are not in evidence. The proposal is for six double-storey dwellings. Each of the dwellings will have a garage for one car, and the largest dwelling will have on-site parking for an additional car. It is proposed that the street frontage and vehicular access for the largest dwelling be to Poole Street, and the frontages and vehicular access for the other five dwellings be to Byrne Street. It follows that on these concept plans it is envisaged that the development will result in increased vehicular traffic from the land onto Byrne Street, as well as a substantial intensification of residential density. The largest dwelling is proposed to be three bedroom and I am informed that the other five are proposed to be two bedroom, but as I say, there are no detailed plans before me.
The application was notified to beneficiaries of the covenant, essentially in the usual way, that is, by direct notification to beneficiaries reasonably geographically proximate, and otherwise by a notice on the Land. That notification to beneficiaries elicited an objection from Ms Paula Panetta, the owner of 15 Byrne Street, Deer Park who appeared on the last occasion with her husband as her spokesperson. Byrne Street runs north/south between Poole Street at the north, and Railway Parade on the south. Ms Panetta’s property is Lot 125 in the relevant subdivision and is the sixth lot to the south of the Land along Byrne Street.
The plaintiff concedes that Ms Panetta is a beneficiary and she was given an opportunity on the last occasion to indicate if she wished to become a defendant. She has confirmed that she does not wish to do so and she is not here today. However, she has requested that her written objection be taken into account. Without objection from the plaintiff, I have done so.
The objection
Ms Panetta’s objection is expressed in a written statement dated 9 July 2019 which she sent to the solicitors for the plaintiff on 10 July 2019.[1] Ms Panetta’s main objection is to the increase in car traffic that this development, and others like it currently before the local council, will generate, particularly on Byrne Street, although she also expresses concern about the flow on effect on the neighbouring streets. She also expresses concern about increased on-street parking, and the absence of development of this type in Byrne Street. In particular she states:
[1]Part of affidavit of Glen Andrew Egerton, sworn 11 July 2019, Exhibit GAE-13.
·‘At peak time, when school pick up commences, and right through to people leaving the carpark at the station, there is a constant and steady flow of traffic [along Byrne Street]’.
·Byrne Street is the only exit from the station carpark and is also used as a ‘rat run’ to exit Station Road and enter Ballarat Road to miss the main intersection.
·The constant flow of traffic makes even getting out of her driveway ‘a logistic nightmare’ [sic]. Pedestrians have tried to stop traffic for her so she can get out of her driveway.
·Car parking for the station overflows onto Byrne Street.
·Crossing Byrne Street as a pedestrian is also like ‘playing Russian roulette, both hazardous and very dangerous’.
·‘There have been cases of road rage, and near fist fights, as drivers get frustrated with the traffic and have driven on the footpaths to get past traffic jams’.
·In the case of the Land, all but one of the driveways will be on Byrne Street, ‘right on a very busy corner, where the traffic already banks up to 6-7 houses up the street’.
·Byrne Street is relatively free of multi-dwelling developments.
·More dwellings will mean more cars parked on the street, traffic and noise. This is detrimental to ‘myself and other beneficiaries of this covenant, who have bought and have stayed in this area because of these restrictions’.
The practice of the Court is to take into account objections even if the objector does not wish to become a defendant. As I have indicated, there was no objection to that course. But I do so, of course, on the basis that the objector has not taken the step of becoming a defendant. The objection is not sworn evidence and it is not subject to cross‑examination, so it does not carry the same weight that evidence given by a beneficiary who has become a party would carry. In this case, for example, Ms Panetta has not been tested on her statements to ascertain if they are from firsthand knowledge, or otherwise as to their accuracy.
Having said that, however, the plaintiff did not seek to call any evidence to the contrary of any of the matters asserted by Ms Panetta. Further, the submissions puts by counsel for the plaintiff are predicated on the core facts Ms Panetta states, as to the amount of traffic on Byrne Street and the current absence of other large scale development on that street, being correct.
I indicate that I have placed no weight on the opening sentence of the objection which reads ‘Most residents that I spoke to were keen to join my objection.’ Relevant beneficiaries were notified and no other beneficiary sought to appear. I determine this application on the basis that there was only the one objection. However, I do have regard otherwise to the matters set out in the objection, although bearing in mind those limitations that I have indicated.
Legal principles
The plaintiff seeks the modification pursuant to s 84(1)(c) of the Property Law Act 1958(Vic). That section relevantly provides:
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—
…
(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction:
By s 84(1)(c), the Court must be satisfied of a negative – that the proposed modification (here to increase the number of permitted dwellings from one to six) will not substantially injure the persons entitled to the benefit of the restriction. Those beneficiaries are, broadly speaking, the owners or those with a legal interest in such lots. The burden of proving this negative is on the plaintiff, and the absence of objectors is not determinative in favour of the application.[2]
[2]Oostemeyer v Powell [2016] VSC 491, [50] (Riordan J) (‘Oostemeyer v Powell’).
The principles governing an application based on s 84(1)(c) have been stated in many cases.[3] It is not here necessary to set them out exhaustively. For the purpose of this application, I note principles of particular relevance as the following:
[3]For example, Vrakas v Registrar of Titles [2008] VSC 281, [34]-[46] contains a detailed summary, adopted in Prowse v Johnstone [2012] VSC 4 (‘Prowse v Johnstone’); Freilich v Wharton [2013] VSC 533, [17]-[29]; Oostemeyer v Powell (n 2), [47]-[51].
(i) As a restriction in a covenant confers a proprietary right, the injury sufficient to prevent its modification or discharge must occur in relation to the enjoyment by a beneficiary of his or her property.[4]
[4]Re Cook [1964] VR 808, 810, cited in Freilich v Wharton (n 3), [25].
(ii) Whether there will be substantial injury is to be assessed by comparing the benefits initially intended to be conferred, and actually conferred, by the restriction, and the benefits, if any, which would remain after the proposed modification or discharge. If the evidence establishes that the difference between the two i.e. the injury, if any, will not be substantial, the ground in s 84(1)(c) is made out.
(iii) Substantial injury may consist of the precedential effect of the modification, because it may be used to support further applications for modification and the long term erosion of the benefits of a single dwelling covenant.
(iv) In assessing the benefits actually conferred, the Court may take into account the most potentially injurious development that would be permitted by the restriction, but should have regard to the realistic probability of this occurring. In assessing the benefits that would remain after the proposed modification or discharge, the Court may take into account the protections afforded benefited properties by statutory planning provisions.[5]
[5]Prowse v Johnstone (n 3), [104]-[105]; Oostemeyer v Powell (n 2), [49].
(v) However, the Court is not permitted to consider whether or not the proposed development would, or would not be, desirable or acceptable under town planning principles in assessing whether or not there will be no substantial injury.[6] That question is to be determined having regard to the proprietary rights conferred by the covenant.[7]
(vi) Even if the plaintiff satisfies the Court that there will not be substantial injury to benefited persons, the Court has a residual discretion to refuse the application. In the exercise of this discretion, the Court may take precedential effect and town planning principles into account.
[6]Prowse v Johnstone (n 3), [105].
[7] Freilich v Wharton (n 3), [18]-[19].
As noted by counsel for the plaintiff in his written submissions, the benefits attached to beneficiaries of a single dwelling covenant derive from lower density living, which ‘entails largely intangible benefits such as a certain ambience or quality of life and a degree of peace and quiet’.[8] This may be contrasted with higher density living, which necessarily brings with it less privacy, more people and traffic, more noise and general ‘hustle and bustle’, more demand on municipal amenities, less open space and so on.[9]
[8]Outline of Submissions dated 17 July 2019 [10].
[9]Re Morihovitis [2016] VSC 684, [20], [38].
In Oostemeyer v Powell,[10] Riordan J identified three particular benefits that are conferred by a single dwelling covenant:
i)The provision of a tranquil and quiet existence for beneficiaries of the covenant;
ii)Preservation of the area as one having spacious homes and gardens; and
iii) The maintenance of reduced population numbers.
[10][2016] VSC 491, [53].
A consistent theme in the authorities in relation to the benefits afforded by single dwelling covenants is that of peace and quiet.
Plaintiff’s submissions
Counsel for the plaintiff submits in his written submissions that the benefits afforded to beneficiaries such as Ms Panetta by this single dwelling covenant have already been eroded to ‘some degree’ by the previous modifications of similar covenants in the immediate area, or development on proximate land not burdened by a single dwelling covenant.
The plaintiff also submits that for the same reason this proposed development would not set a precedent i.e. because it would by no means be the first modification within the immediate area deriving from the parent title.
The plaintiff further submits that there is no benefited property sharing a property with the Land, and so to that extent there is no direct amenity impact on benefited land.
Consideration
I accept that there have been a number of previous modifications to single dwelling covenants, or developments beyond single dwellings where no covenant applied, in the immediate vicinity of the Land. In recent times, there have been three modifications along Poole Street quite close to the Land to permit three or four dwellings, and there are a number of two or three dwelling developments or modifications in the area of the parent title. However, on the evidence before me there are only three such developments in Byrne Street itself, and they are modest modifications or developments – from single dwelling to two dwellings.
As against this, I accept that there are two recent instances of modifications of a single dwelling covenant to go from one to permit up to six. They are on Lots 167, which fronts onto Neimur Avenue, and Lot 180, which fronts onto Vincent Street. Each of Neimur Avenue and Vincent Street are parallel to Byrne Street to the west of Byrne Street, and like Byrne Street run between Railway Parade and Poole Street. Indeed, one of those orders was made by me, and one by Associate Justice Derham. The order made by me in relation to Vincent Street was made on 5 June 2017. The order by Associate Justice Derham was made on 10 May 2018. As at the date of Mr Easton’s report, each of those Lots still only contained the original single dwelling.[11]
[11]Easton Consulting Report October 2018, 34-35, exhibited as Exhibit RWE-1 to affidavit of Robert Walter Easton, sworn 22 February 2019.
In my view, as discussed with counsel in the course of his submissions, those previous applications and subsequent orders are distinguishable from the current application. I accept that they relate to the same sized lots and they allow development to the same level. However, they are not on Byrne Street. The objection focuses particularly on the unique character of Byrne Street. Further, there were no objectors in respect of those applications. The Court makes its determinations on the basis of the material before it in a particular case. The fact that modification has been allowed in another case where no-one objected does not necessarily mean it will be allowed in a case where someone does object and the objection has some substance.
I also accept that there is a previous example of modification from one permitted dwelling to five on Lot 137, again fronting Neimur Avenue and directly opposite the modification allowing six dwellings. That was an order made by Associate Justice Mukhtar on 18 June 2018. Again, apparently without objection. As at the date of Mr Easton’s report, that land still contained the original single dwelling and a planning permit was before the local council for the proposed development.[12]
[12]Ibid 32.
In summary, to the extent that the plaintiff seeks to argue from the previous two six and one five multi‑dwelling examples that the precedent has already been set, I consider those distinguishable.
I think the relevant precedent is what has occurred in Byrne Street itself, given that it is proposed in this development that the additional dwellings will front onto Byrne St and the increase in vehicular traffic will be onto Byrne Street. While the address of the Land is Poole Street, the impact of the development and the precedent it will set will be on Byrne Street. On Byrne Street itself there are three previous examples of development, but they are modest modifications or developments to two dwellings, as opposed to one.
Ms Panetta states in her objection that she bought and has stayed in the area because of the restriction imposed by the single dwelling covenant. Of course she has not been tested on that statement, and so I approach it with some caution. However, it does appear from the title search relating to her property[13] that she has been the registered proprietor since November 2002, and that her own land is burdened by a covenant. That covenant is not in evidence, but if it is a single dwelling covenant it is plausible that on purchase of her land Ms Panetta was influenced by the prospect of single dwelling covenants on land by which she may in turn benefit, just as the beneficiaries of the covenant on her land would benefit.
[13]Part of affidavit of Glen Andrew Egerton, sworn 23 May 2019, Exhibit GAE-8.
In addition to a concern about precedent, the objection particularly relates to the impact of increased traffic and on-street parking on Byrne Street which will be the exit point for vehicles from five of the six proposed units. What is proposed is to increase the number of dwellings from one to six, so an increase of five dwellings. It is not clear from the evidence how many cars may currently be parked on site, but I will assume that it is two, as there are two cross overs currently. If each of the additional five dwellings has two cars, which these days is in no way unusual, then there is a potential increase of ten cars, to a total of twelve. The proposal contemplates on‑site parking, I am informed for seven cars. With seven off‑street parking spaces, it follows that there may be some limited increase in on‑street parking. Ordinarily parking would be considered a matter for planning controls (such as permit-only parking if space is at a premium) and I am not so concerned about the parking aspect in this application.
However, I am concerned about the potential increase in traffic on Byrne Street having regard to the matters set out in the objection. Those matters as I apprehend it, are at least three. The first is that Byrne Street is the only exit from the station car park and that causes an increase in traffic. The second is that it is used as a rat run to exit Station Road and into Ballarat Road, missing the main intersection. The final matter, although the first in the objection, is that there is an overflow of car parking from the station car park onto Byrne Street. So there is an issue about on‑street parking. There will be a potential increase in that arising from this proposal. The thrust of the objection is that these matters combine to make exiting from an existing home on Byrne Street or crossing that street difficult, and potentially dangerous.
Increase in traffic is often regarded as a matter for a planning permit, after any necessary modification of a covenant, rather than a matter going to whether there should be a modification to a single dwelling covenant. Where it is a small increase, I think that is the appropriate way to view it. Current traffic can also be relevant to show that the benefits of a single dwelling covenant have already been eroded. In Re Sanders, the land in question was on a very busy major road and I considered that the benefits of the single dwelling covenant on adjacent benefited land had largely already been eroded by that fact.[14]
[14]Re Sanders [2019] VSC 217, [51].
However, in my view, this case is distinguishable from both those situations. First, this is not a modest modification. It is an ambitious modification from one to six, having regard to what has previously occurred in this street. The objection claims that there are already substantial dangers and inconveniences associated with the existing traffic on Byrne Street, and the increase in vehicular traffic that will arise from this development will add to that. Further, on the material before me Byrne Street appears to be a normal suburban street, and so distinguishable from the four lane highway fronting the subject land in Re Sanders.[15]
[15]Byrne Street is shown in Figure 3 in Mr Easton’s report, 5.
In my view, where there is a potential increase in vehicular traffic in an ambitious modification on a suburban street where there is already a problem, it is a matter that goes to the amenity that is afforded by the single dwelling covenant. As noted earlier, the amenity afforded by a single dwelling covenant flows from the benefits of lower density, and includes peace and tranquillity. Part of peace and tranquillity relates to vehicular traffic. In my view, a likely increase in traffic movements it is a matter that can go, in an appropriate case, to amenity, and this is that case.
That is not to say that an increase in traffic that will deplete the amenity enjoyed by beneficiaries in the subject street will necessarily cause a substantial injury to those beneficiaries. However, the burden is on the plaintiff to show that it will not. In this case, there is only very limited evidence in relation to the impact of increased vehicular traffic. The only expert evidence is that of Mr Easton, and in relation to traffic it is very general. He says at paragraph 6.6 of his report ‘I consider that traffic impacts are not significant in regard to the covenant. The covenant did not contain any restriction on the number of vehicles.’ I interpolate that that is true, but is not in itself a complete answer, given the peace and tranquillity intended to be conferred by a single dwelling covenant. Mr Easton goes on to say in that paragraph: ‘The nature of the road network is also such that it can readily absorb additional traffic.’ He gives no basis for that observation and does not depose to any qualifications as a traffic engineer. His qualifications and expertise are as a town planner.[16] So there may be some doubts as to his relevant expertise in relation to traffic.
[16]Affidavit of Robert Walter Easton, sworn 22 February 2019.
In the following paragraph, Mr Easton quotes an extract from the determination of an application before the Victorian Civil and Administrative Tribunal (‘VCAT’) concerning a development on Railway Parade. Counsel has not put any particular submissions to me in relation to this, but it appears from the extract that that application concerned one additional dwelling on Edward Street. There is no suggestion before me of any existing traffic problem on Edward Street. By contrast, this modification would allow five additional dwellings, fronting onto a street with an existing traffic problem. I do not think the observations by VCAT in that extract are shown to be relevant, or, if relevant, particularly persuasive.
Counsel for the plaintiff has put to me that the traffic problem set out in the objection exists independently of the number of dwellings because it is due to the proximity of Byrne Street to the station and it being the only exit from the station car park. He also submits that any increase in traffic from an additional five dwellings is unlikely to be in relation to the station because of the proximity of the Land to the station. That is a fair submission and I accept that people who were to live in the proposed development and wanted to use the train, if this development were to proceed, would be very unlikely to move their cars from the Land or proximate on-street parking. However, if they are using their cars at all at peak hour, then they will intersect with cars leaving the station car park, and also with cars using Byrne Street as a rat run to exit Station Road. As I say, there is no evidence before me from a traffic engineer in relation to that problem, either to say that in fact it is not a problem, or how it can be managed.
Conclusion
A restrictive covenant confers a property right. For that reason, s 84(1)(c) requires a person who seeks to deprive the beneficiaries of the restriction of that benefit to show that they will not thereby be injured in any substantial way. In other words, a landowner burdened by a restrictive covenant must under s 84(1)(c) prove a negative. That is a difficult task. In this case, I am not satisfied that the plaintiff has discharged the onus on it to show that there will be no substantial injury to beneficiaries.
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