Lahanis v Livesay

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S ECI 2020 01011

IN THE MATTER of an application pursuant to s 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. 2245509 dated 5 August 1949 affecting the land at 22 Derrick Street, Lalor, being lot 192 on plan of subdivision no. 20067 and being the land in folio of the Register volume 7684 folio 183.

BETWEEN:

CON SOFOKLIS LAHANIS

Plaintiff

ROBYN LIVESAY & ORS

(according to the attached Schedule)

Defendants

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JUDGE:	Derham AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	15 September 2020 (Final submissions 2 and 5 October 2020)
DATE OF JUDGMENT:	4 February 2021
CASE MAY BE CITED AS:	Lahanis v Livesay & Ors
MEDIUM NEUTRAL CITATION:	[2021] VSC 29

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PROPERTY LAW – Restrictive covenant preventing more than one dwelling on a suburban land – Application to modify the covenant to permit two dwellings to be constructed on the land – Whether discharge or modification will not substantially injure the persons entitled to the benefit – Whether neighbourhood retains the peaceful and tranquil character due to the network of single dwelling covenants – Whether approval of modification would set a precedent for other modifications – Whether existing multi-dwellings in the neighbourhood had already set such a precedent or had eroded any special character the covenant had previously assisted to maintain – Property Law Act 1958 (Vic) s 84(1)(c) – Re Cook [1964] VR 808; Vrakas v Registrar of Titles [2008] VSC 281; Prowse v Johnstone [2012] VSC 4; MacLurkin v Searle [2015] VSC 750; Jiang v Monaygon Pty Ltd [2017] VSC 591; Randell v Uhl [2019] VSC 668; Hivance Pty Ltd v Moscatiello & Ors [2020] VSC 183.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr W Rimmer	Aughtersons Solicitors
For the Defendants	Mr P Barton	Bevan-Rhys James

TABLE OF CONTENTS

Introduction and summary of conclusions................................................................................... 1

The Covenant...................................................................................................................................... 2

Evidence............................................................................................................................................... 3

Applicable Law................................................................................................................................... 4

Background facts.............................................................................................................................. 10

Location of the Land................................................................................................................... 10
The neighbourhood.................................................................................................................... 11
Changes in the neighbourhood................................................................................................. 13
Multi-unit developments.................................................................................................. 15
Large singe dwelling houses............................................................................................ 18

Planning and building controls................................................................................................ 21
The plaintiff’s proposal.............................................................................................................. 22

Defendant’s lay evidence............................................................................................................... 24

Expert opinions................................................................................................................................. 30

The plaintiff’s submissions........................................................................................................... 32

Birdlife.......................................................................................................................................... 38
Historical character of the area and architectural style......................................................... 39
No indirect injury of substance from the plaintiff’s proposal – no precedential effect.... 39
Modification to the non-excavation covenant........................................................................ 44
Removal of requirement for consent of Peter Lalor Co-operative....................................... 44

Defendants’ submissions............................................................................................................... 46

Consideration.................................................................................................................................... 47

The single dwelling restriction.................................................................................................. 47
Approval of the Co-operative................................................................................................... 57
The quarrying restriction........................................................................................................... 58

Conclusion......................................................................................................................................... 58

HIS HONOUR:

Introduction and summary of conclusions

The plaintiff is the registered proprietor of the land at 22 Derrick Street, Lalor, Victoria (Land).[1] The title to the Land is burdened with a restrictive covenant that, amongst other restrictions, prevents the erection of more than one dwelling house on the Land (Covenant). The plaintiff has applied to the Court pursuant to s 84(1)(c) of the Property Law Act 1958 (Vic) (PLA) to modify the covenant affecting the Land to the allow the erection of two dwellings on the Land, and to modify the Covenant in other respects referred to below.
[1]The land more specifically described in Certificate of Title Volume 7684 Folio 183.

The defendants, all neighbouring land owners whose lands enjoy the benefit of the restrictive covenant, oppose the application so far as concerns the modification of the single dwelling covenant. To succeed the plaintiff must prove a negative, namely that the proposed variation to the covenant will not cause ‘substantial injury’ to the beneficiaries of the covenant.

The first and second defendants, Robin and Steven Livesay, own and live at 35 Derrick Street, Lalor. The third and fourth defendants, Fadi and Selma Nakhoul, own and live at 1 Chowne Street, Lalor, adjacent to the Land. The fifth and sixth defendants, Stephen Schembri and Patricia Boyd, own and live at 31 Derrick Street, Lalor. They are all near neighbours of the plaintiff’s Land.

The central issue in the trial was whether the plaintiff has established that the proposed modifications will not substantially injure the persons entitled to the benefit of the restriction. That 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 in the manner proposed.

In my view, for the reasons set out below, the beneficiaries of the Covenant will not suffer a substantial injury should the covenant be modified in the three respects sought, in particular by permitting the construction on the Land of two dwellings substantially in accordance with the plans that have been exhibited to the plaintiff’s second affidavit.

The Covenant

The Transfer that created the covenant burdening the Land was registered in the Land Titles Office on or about 30 August 1949 and transferred Lot 192 on Plan of Subdivision 20067 from The Peter Lalor Home Building Co-operative Society Limited to James Leslie Deathe. The Covenant is expressed as follows:

......COVENANT with The Peter Lalor Home Building Co-operative Society Limited as aforesaid and its transferees registered proprietor or proprietors for the time being of the land remaining untransferred in Certificate of Title Volume 7360 Folio 853 to 863 both inclusive or any part or parts thereof that he or they will not affix or display any posters bills or advertisements upon any hoarding wall or fences on the said land hereby transferred AND that no hoarding or structure shall be erected on the said land hereby transferred or used as a bill posting or advertising station AND that no building shall be commenced or reconstructed upon the said land hereby transferred without first obtaining the consent and approval in writing of The Peter Lalor Home Building Co-operative Society Limited as aforesaid to the plans sections and specifications thereof AND that no building other than one residential dwelling-house shall be erected on the said land hereby transferred AND that he or they will not at any time hereafter use or permit or allow to be used the land hereby transferred for quarrying or brickmaking operations or dig carry away or remove or permit or allow to be dug carried away or removed any marl stone earth clay gravel or sand from or off the said land hereby transferred.

It can be seen that the covenant has four restrictive elements:

(a) first, restricting advertising from the Land, which is not presently relevant;

(b) second, restricting building on the Land without the consent and approval of ‘The Peter Lalor Home Building Co-operative Society Limited … to the plans sections and specifications thereof’ (the approval of the Co-operative), which is submitted to be otiose as that Co-operative is agreed to have been dissolved;

(c) third, the single dwelling restriction, the main focus of the application before me; and

(d) fourth, what I will call the ‘quarrying restriction’, which is also sought to be modified.

The covenant does not restrict the number of storeys or size of the dwelling house and seeks to preserve no particular style or size of dwelling, save that it requires the consent in writing of The Peter Lalor Home Building Cooperative Society Limited to the plans and specifications. It is common ground that this Society no longer exists.

The beneficiaries of the covenant are the owners for the time being of all the land in eleven parent titles identified in s 5.3 of the expert report of Robert Walter Easton (‘Easton Report’). His Report analyses the order of transfers out of the parent titles at s 5.4. Mr Easton identifies the Land as land in the parent title volume 7360 folio 856. The transfer which created the covenant was dated 5 August 1949. Apart from the Lalor Secondary College, being the land in the first parent title volume 7360 folio 853, all transfers of land out of the other parent titles were registered on the same day - 6 February 1951. On this basis, it is accepted that all lots on these 10 parent titles have the benefit of the Covenant.

The application is to modify the covenant in three respects:

(a) to remove the requirement to obtain the consent and approval of the Co‑operative to building plans;

(b) to modify the existing single dwelling covenant to permit up to two dwelling houses on the subject land; and

(c) to introduce an exception for residential developments in the quarrying restriction.

Evidence

The evidence adduced was primarily by affidavits and experts reports, with some cross-examination:

(a) the affidavit of Robert Walter Easton[2] and the Easton Report,[3] his cross‑examination at trial,[4] and re-examination;[5]
[2]Made on 5 March 2020.
[3]Exhibit RWE-1 to his affidavit, tendered at trial.
[4]Transcript, Lahanis v Livesay, S ECI 2020 01011, 15 September 2020 (Transcript), P 11.4 – 33.2.
[5]Transcript P 33.5 – 42.31.

(b) the second affidavit of Con Sofoklis Lahanis dated 14 July 2020;

(c) the affidavit of Matthew Buckmaster affirmed on 26 June 2020[6] and his expert report,[7] his further examination in chief at trial,[8] and cross-examination;[9]
[6]Tendered at trial.
[7]Exhibit MB-1 to his affidavit, tendered at trial.
[8]Transcript P 45.17 – 57.20
[9]Transcript P 57.26 – 84.8

(d) the affidavit of Robyn Livesay made 25 June 2020;[10]
[10]Tendered at trial.

(e) the affidavit of Selma Nakhoul made 25 June 2020;[11]
[11]Tendered at trial.

(f) the affidavit of Fadi Jean Nakhoul made 25 June 2020;[12]
[12]Tendered at trial.

(g) the affidavit of Steven Livesay made 25 June 2020;[13]
[13]Tendered at trial.

(h) the affidavit of Robyn Livesay made 25 June 2020;[14]

(i) the affidavit of Stephen Schembri made 26 June 2020;[15] and

(j) the affidavit of Patricia Boyd dated 26 June 2020.[16]

[14]Tendered at trial.

[15]Tendered at trial.

[16]Tendered at trial.

Applicable Law

The plaintiff relies solely on s 84(1)(c) of the PLA, and therefore has the burden of proving as a matter of fact that the proposed discharge or modification will not substantially injure those with the benefit of the covenant.[17] The plaintiff must, as I have said, prove the negative[18] and the failure by the plaintiff to establish its plans with specificity may result in the Court not being satisfied that the conditions of the section have been fulfilled.[19].
[17] Vrakas v Registrar of Titles [2008] VSC 281, [40] (Kyrou J) and the cases cited (Vrakas).
[18]Ibid, [42].
[19]Ibid.

In Randell v Uhl,[20] I summarised the relevant principles in applications of this kind as follows:
[20][2019] VSC 668, [85], approved and applied in Hivance Pty Ltd v Moscatiello [2020] VSC 183, [12] (Macaulay J).

(a) a substantial injury must be a detriment to the benefitted land that is real and not fanciful.[21] The requirement that the injury must be substantial is intended ‘to preclude vexatious opposition cases where there is no genuineness or sincerity or bona fide opposition on any reasonable grounds’.[22] That does not mean, however, that s 84(1)(c) of the PLA is restricted to dealing with vexatious or frivolous objections. Although the restriction of s 84(1)(c) of the PLA to ‘substantial’ injury would enable the weeding out of vexatious objections to the modification or removal of a covenant, the dichotomy in the section is not between vexatious and non-vexatious claims but is between cases involving some genuinely felt but insubstantial injury, on the one hand, and cases where the injury may truly be described as substantial, on the other;[23]
[21]Ibid, [36].
[22]Ridley v Taylor (1965) 1 WLR 611, 622 (Russell LJ); referred to with approval in Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 10.
[23]Greenwood v Burrows (1992) V Conv R 54-444, 65, 199 (Eames J) (Greenwood); MacLurkin v Searle [2015] VSC 750, [54]-[56] (MacLurkin); Jiang v Monaygon Pty Ltd [2017] VSC 591, [37].

(b) the substantial injury relates to practical benefits, being any real benefits to the person entitled to the benefit of the covenant.[24] It is not sufficient for a plaintiff to merely prove that there will be no appreciable decrease in the value of the property that has the benefit of the covenant;[25]
[24]Vrakas [2008] VSC 281, [30], [34] and the cases cited.
[25]Re Parimax (SA) Pty Ltd (1956) SR (NSW) 130, 133 (Myers J).

(c) substantial injury may arise from the order for modification of the covenant being ‘used to support further applications resulting in further encroachment and in the long run the object sought when the covenant was imposed [being] completely defeated’.[26] This consideration is referred to as the ‘precedent value’;[27]
[26]Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 11.
[27]Vrakas [2008] VSC 281, [39] and the cases cited.

(d) whether there will be substantial injury is to be assessed by comparing:

(i) the benefits initially intended to be conferred and actually conferred by the covenant; and

(ii) the benefits, if any, which would remain after the covenant has been discharged or modified;[28]
[28]Prowse v Johnstone [2012] VSC 4, [104] (Prowse).

(e) if the evidence establishes that the difference between the two will not be substantial, the plaintiff has established a case for the exercise of the Court’s discretion under s 84(1)(c) of the PLA;[29]
[29]Re Cook [1964] VR 808, 810-11 (Gillard J) (Cook); approved in Freilich v Wharton [2013] VSC 533, [25] (Bell J).

(f) it is relevant to consider evidence of statutory planning provisions to the extent they show what realistically will be the result of the removal or modification of the covenant because ‘it would be artificial and wrong to pay no heed at all to the reality of the situation’;[30]
[30] Prowse [2012] VSC 4, [104].

(g) in considering whether the plaintiff has satisfied the Court that there will not be substantial injury:

(i) town planning principles and considerations are not relevant;[31]
[31]Vrakas [2008] VSC 281, [41] and the cases cited.

(ii) the absence of objectors to the discharge or modification of a covenant will not necessarily satisfy the onus of proof;[32] and
[32]Ibid, [43].

(iii) each case must be decided on its own facts,[33] and each covenant should be construed on its own terms and having regard to the particular context in which it was created;[34]

(h) if the plaintiff satisfies the Court that there will be no substantial injury to the relevant persons, the Court has a residual discretion to refuse the application.[35] The Court in exercising its discretion, may consider town planning principles and the precedent value.[36]

[33]Ibid, [44].

[34]Prowse [2012] VSC 4, [52].

[35]Cook [1964] VR 808, 810; Re Robinson [1972] VR 278, 285-6; Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 7; Greenwood (1992) V ConvR 54-444, 65, 192, 65, 200; Stanhill Pty Ltd v Jackson (2005) 12 VR 224, 239 (Stanhill).

[36]Vrakas [2008] VSC 281, [45]–[46].

This statement of principles should not, however, be taken to be a complete code of the relevant principles. Other principles and factors are brought out by the particular facts and arguments in individual applications. There are further matters of importance, as follows:

(a) whether a person entitled to the benefit of the covenant would be substantially injured within the meaning of s 84(1)(c) is a question of fact.[37] It follows that each case must be decided on its own facts;[38]

(b) 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);[39] and

(c) the emphasis is on the injury suffered by the persons entitled to the benefit. From the nature of the proprietary right arising from the restrictive covenant, the injury must occur in relation to the person’s enjoyment of his or her property.[40]

[37]Re Alexandra [1980] VR 55, 60.

[38]See Fraser & Ors v Di Paolo & Anor [2008] VSC 117, [43], [58] (‘Fraser’).

[39]Re Robinson [1972] VR 278, 283; Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 10; Pivotel [2000] VSC 264, [37]; Bevilacqua [2005] VSC 235, [24] (unreported, Ashley J, 30 June 2005).

[40]Re Cook [1964] VR 808, 810.

It is common in applications for the modification or discharge of a restrictive covenant for the parties to seek to adduce expert evidence. This evidence tends to cover a number of interrelated matters. The first and most important it to expose the title history of the subject land, which is usually a part of a subdivision and, as in this case, sometimes several subdivisions. The covenants in question are usually set out in a Transfer of Land (and for that reason they are generally required under the Contract under which the land is bought and sold), often the first transfer of the land out of the parent title. Understanding the origin of the covenant is important to the identification of the other proprietors of land having the benefit of the covenant. It may also be important to have evidence of the extent to which the covenant is common throughout a particular neighbourhood. Expert evidence of this ‘title history’ of the subject land may be given by expert lawyers or conveyancers, but often it is given by an expert town planner, such as Mr Easton.

When, as is usually the case, copies of all the documents relevant to the title history are produced, the Court is in a position to understand from its own inspection who has the benefit and who the burden of particular covenants, what the proper construction of the covenant may be, whether the covenant is enforceable and so on, without the assistance of any expert evidence.

Another aspect of the role of the expert is to review the changes that have taken place in the area or areas surrounding the subject land, whether the properties on which changes have occurred were burdened with a covenant similar to the one sought to be modified or discharged, and to describe in some detail the ‘built environment’ of the areas both proximate and less proximate to the subject land. This assists the Court in identifying any real benefits, that is practical benefits, to the person entitled to the benefit of the covenant in issue. This is an important aspect of expert evidence in applications of this kind. But the expertise is in the collection and collation of ‘on the ground’ information rather than the interpretation of that information.

The expert evidence is of a different character where the expert gives an opinion, as they mostly attempt to do, on the ultimate issue, in this case whether modification sought will not cause substantial injury to the proprietors of lands having the benefit of the covenant, that is, injury in respect of their enjoyment of their land. In this aspect of the evidence, as Mukhtar AsJ recently observed, an expert:

…may state an opinion about the merits of the application with which the Court may agree, but of course in a lawsuit such as this, it is for the Court to make the judgment according to the applicable legal principles on the ultimate question whether the proposed modification ‘will not substantially injure the persons entitled to the benefit of the covenant’ as is stated in s 84(1)(c) of the Property Law Act.[41]

[41]RE Young [2019] VSC 755, [4]; Approved in Hivance, [2020] VSC 183, [11].

The question of whether a particular covenant should be modified or discharged has a lot to do with changes to the environment in which the burdened land is situated. This is particularly the case in applications to modify single dwelling restrictions, which are the most common form of restriction sought to be modified. It would be entirely unrealistic not to notice that in most of the suburbs of Melbourne in which the single dwelling covenants exist there are also extensive planning schemes that regulate in some detail what may be constructed on the burdened land. Changes to these planning laws which deliberately allow multi-dwelling developments are at the heart of the disputes that arise. The disputes involve a conflict between the policies reflected in the changes to the planning laws, which are designed to achieve denser urbanisation within particular zones within a local authority’s area of responsibility, and the private property law pursuant to which the covenant is created. The increase in the desired density of housing is, in turn, driven by policies of the Victorian Government.

The common single dwelling covenant is imposed for the purpose of ensuring one residence only can be erected on the particular land, so that there would be a reasonable density of population, giving a reasonably quiet residential atmosphere, attractive in that it would provide a tranquil, quiet existence.[42] The general suggestion is that this living environment would be reduced by higher density housing, leading to a reduction of open space, a greater congestion of people and traffic and an increased demand on municipal amenities. The judgment to be made about ‘substantial injury’ turns on the nature and degree of the injury to those benefits.[43]
[42]Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 8; See also Re Miscamble’s Application [1966] VR 596, 601 (Miscamble); MacLurkin [2015] VSC 750, [59]; Re Morihovitis [2016] VSC 684, [38] (Morihovitis).
[43]Morihovitis [2016] VSC 684, [38].

In the recent decision in Hivance Pty Ltd v Moscatiello & Ors,[44] Macaulay J provided a terminological refinement of the residential atmosphere designed to be achieved by the single dwelling covenant by describing it as a ‘single dwelling character’ the features of which were, in that case:

…the large and generous proportions of the blocks of land; the sense of open space and privacy; the predominance of family homes, primarily large single dwelling homes with large open garden spaces front and rear; low density living and the absence of congestion; in short, a special mood which set the area apart from others…[45]
[44][2020] VSC 183 (Hivance).
[45]Ibid, [21].

Background facts
Location of the Land

The Land is on the north side of Derrick Street, Lalor, about 180 metres east of Station Street, Lalor, and approximately 25 metres west of Chowne Street. It has an area of 682.8 sqm. The block is irregular in shape with a frontage of 24.38 m (80 feet) to Derrick Street and tapers to a narrower nib at the back with the depth varying between 42.67 m (140 feet) and 45.84 m (150 feet 5 inches). The location is shown (marked A) in the following Melway map taken from the Easton Report:[46]

[46]The Easton Report, Figure 3.

The existing dwelling on the Land is a small single storey weatherboard house with a tiled roof. A gravel driveway exists on the west side and there is no garage or carport. The rear yard has a small shed and sparse vegetation. The plaintiff’s proposal is to demolish the existing dwelling on the Land and to construct a double storey dwelling at the front facing Derrick Street, and a single storey three bedroom unit behind. A common driveway will run along the western boundary of the Land.

The area of Lalor with which we are concerned was initially established for returned soldiers and their families in the late 1940s and early 1950s. The development was begun by the Peter Lalor Home Building Co-operative Society Limited (Peter Lalor Co-operative) who laid out the area in 11 parent titles. The eleven titles extended from Derrick Street in the south to Curtin Avenue in the north and from Dalton Road in the east to Station Street in the west.[47]
[47]Easton Report, [5.3]

The neighbourhood

Mr Easton identifies the neighbourhood of the Land for the purposes of his analysis as comprising three of those 11 subdivisions amounting to 226 residential lots in the triangle bounded by Vasey Avenue, Station Street and Derrick Street and including the lots on the south side of Derrick Street to its point of intersection with Vasey Avenue. The Land is in the central southern part of that Neighbourhood.

Mr Easton’s evidence under cross-examination established that the exact delineation of the relevant neighbourhood for this application may be somewhat arbitrary, especially in this case where there are 11 parent titles defining the covenanted area. He reached his conclusion on the neighbourhood by site visits and inspecting base maps and the covenant itself,[48] and limited the extent of the neighbourhood to a reasonable radius of the subject Land,[49] taking into account major features, such as major roads such as Vasey Avenue.[50]
[48]Transcript p. 23.23 – 23.28.
[49]Transcript p.11.20- 11.23.
[50]Transcript p.21.22- 21.30.

The defendant’s expert, Mr Buckmaster, did not dissent from Mr Easton’s definition of the neighbourhood, but Counsel for the defendants did. It is thus an issue and I will return to it.

With the consent of the parties I carried out an unaccompanied view of the area of the suburb Lalor in which the Land is located, and particularly the area defined by Mr Easton as the neighbourhood. I will refer from time to time to my observations during this view when describing the area around the Land, as it is evidence in the proceeding from which I may draw any reasonable inference.[51] The time of the view is relevant, at about 3pm to 4pm on Friday 11 December 2020.[52] It was hot at the time - about 34 degrees Celsius – and I drove around the area rather than walking. This gave me a slightly elevated view of the houses, and it must be emphasised that all the buildings are dwelling houses. There are no commercial buildings. The Land is over 30 kilometres by road from the Melbourne Central Business District. It is within easy walking distance to the Lalor Train Station,[53] indeed it is only about 200 metres from the train line which, together with High Street, splits the suburb of Lalor into two discrete parts.
[51]Evidence Act 2008 (Vic), s 58.
[52]The view was delayed by the COVID-19 lockdown in Victoria.
[53]On what is now called the Mernda Line, previously the Epping line.

The 226 lots in Mr Easton’s neighbourhood are mostly regular rectangular blocks with areas in the range of 650 sqm and 700 sqm, with smaller irregular shaped lots at most ends of those blocks. The blocks are bounded by streets 50 feet (15.24 metres) wide. Accordingly, the configuration of the land comprising the neighbourhood is of average sized, not overly large, lots with average, not overly wide, streets.

The housing in the neighbourhood as defined by Mr Easton was apparently built throughout as War Service Homes. There remains a significant number of these small modestly constructed dwellings with room on their lots for front and back yards. Some of these older style houses and gardens have been well maintained. Many others, however, present as tired building stock requiring renewal, of which the existing dwelling on the Land is an example. This feature was particularly noticeable on my view of the area. In addition, the street trees are small and not well maintained. Where there are cars parked at the curbs, it is not safe to pass a vehicle travelling in the opposite directions. There is a bus service that runs along Derrick Street.

Changes in the neighbourhood

After 70 years, the area has undergone some renewal and redevelopment. The redevelopment is for the most part either replacement dwellings, many of them substantial and taking up much more of their site areas than the original housing, or renovations and extensions, which again result in larger sized buildings and smaller garden areas. This redevelopment and renewal is consistent with Mr Easton’s evidence that people building a house will generally want to build the largest house they can on the land available.[54] They are sometimes pejoratively called ‘McMansions’. In the neighbourhood, as defined by Mr Easton, these large houses stood out. From what could be seen from the Street, they seemed to occupy the whole site, with modest setbacks at the front, minimal distance to the side boundaries and some area for a ‘back yard’ or ‘court yard’ at the rear.
[54]Transcript P 29.2- 29.7.

There are also some examples of dual occupancies and three-dwelling developments throughout the Mr Easton’s neighbourhood. The redevelopments were the result of a number of different processes. First, some are the result modifications to the single dwelling covenant ordered by this Court. Second, others are the product of the issue of a planning permit by the local council. Third, in breach of the covenant at a time when the local Council was authorised to issue a planning permit that permitted a development in breach of a covenant. Fourth, where there was no single dwelling covenant by reason of the bulk transfer of lots to the Director of War Service Homes.[55]
[55]Easton Report section 8.3(15), A198

No covenant, let alone a single dwelling covenant, was included in any of the lots transferred to the Director of War Service Homes. There were 570 lots scattered throughout Lalor with no single dwelling covenant, including 50 lots within Mr Easton’s neighbourhood. These are not burdened and never have been burdened by a single dwelling restriction.[56] The following plan shows the War Service Home sites (in yellow) that have no single dwelling covenant. The Land is coloured pink. The outline in black is the border of Mr Easton’s definition of the neighbourhood.[57]

[56]Easton Report, [9.2]

[57]Easton Report, Figure 25.

Multi-unit developments

The multi-dwelling developments in the neighbourhood are mostly dual occupancies. They include developments to the north around Paschke Crescent and Newton Crescent which are physically remote from the Land. The multi-dwelling developments are as follows:

(a) 1 Paschke Crescent and 418 Station Street (formerly lot 1 on LP20068), located on the south east corner of Paschke Crescent and Station Street. It was subdivided in 2012. It contains two older style dwellings. It is likely that the dwellings substantially pre-date the subdivision and were built before 12 December 2000, being the date Councils ceased to be able to modify covenants by the issue of a permit and were required to have regard to covenants;[58]
[58]Easton Report, 8.3(1).

(b) 3 Vasey Avenue has been developed with three side by side town houses. It was subdivided in 2013. The covenant was modified under s 84(1)(c) of the PLA by this Court in February 2012 to allow not more than three dwellings;[59]
[59]Easton Report, 8.3(25) and A250 – A255.

(c) 17 Vasey Avenue has been developed with two single storey dwellings. It was subdivided in 1999. It was a War Service Homes lot and was thus not burdened with any covenant;[60]
[60]Easton Report, 8.3(27).

(d) 59 Vasey Avenue is located on the north west corner of Vasey Avenue and Newton Crescent. It has been developed with two attached villa units behind the existing dwelling. The covenant was removed by a Planning Scheme Amendment in 1992;[61]
[61]Easton Report, 8.3 (2).

(e) 402 Station Street and 2A Newton Crescent is on the north east corner of Station Street and Newton Crescent. It has been developed with a second dwelling behind the original dwelling facing Station Street and subdivided in 1992. The subdivision removed the covenant;[62]
[62]Easton Report, 8.3(4).

(f) 414 Station Street has been developed with two single storey dwellings. It was burdened with a covenant in the same terms as the covenant applicable to the Land. The covenant was modified pursuant to a Planning Permit in July 2009;[63]
[63]Easton Report, 8.3(5) and A138 and A145.

(g) 57 Vasey Avenue is on the south west corner of Vasey Avenue and Newton Crescent. It has been developed with a dual occupancy dwelling and was subdivided in 1994. The original covenant, in the same terms as the covenant in this case, has not been modified;[64]
[64]Easton Report, 8.3(6) and A148 – A151.

(h) 9 Newton Crescent had a covenant in the same terms as the covenant in this case. It was removed in 2004 by Planning Permit of the Council. An application for a three lot subdivision is pending before the Council;[65]
[65]Easton Report, 8.3(7) and A153, A161 and A164.

(i) 390 Station Street was subdivided into 2 lots in 2010. The covenant, in the same terms as the covenant in this case, was modified in 2008 pursuant to a Planning Permit. Behind the existing dwelling a large house has recently been built;[66]
[66]Easton Report, 8.3(9) and A170, A177 and A173.

(j) 9 and 11 Derrick Street (lots 219 and 220) are about 70 metres west of the Land on the south side of Derrick Street. The two lots were consolidated into one parcel in 1974. Then the covenants were, in effect, discharged pursuant to s 84(1)(c) of the PLA by order of Master Brett of this Court made on 15 July 1974. The site was then subdivided to create two lots the same size as the original lots. One of these was subsequently developed with three townhouses and further subdivided in 2014. 11 Derrick Street now contains two large double storey dwellings at the front and a single storey dwelling at the rear. There is a single dwelling on 9 Derrick Street;[67]
[67]Easton Report, [8.3(18)].

(k) 27 Derrick Street is 50 metres east of the Land on the south side of the street. It has been developed with a new single story dwelling behind the original dwelling and was subdivided in 1992. The local council was authorised to issue a Planning Permit that permitted a development in breach of a covenant;[68]
[68]Easton Report, 8.3(19)

(l) 26 Derrick Street is about 100 metres east of the Land on the north side of Derrick Street. It was a Wars Service Homes lot and is not burdened by a single dwelling covenant. The land has been subdivided in preparation for two dwellings, but the original dwelling remains intact as the only dwelling on the site;[69]
[69]Easton Report, 8.3(16).

(m) 43 Derrick Street is about 180 metres east of the Land. It has been recently developed with two newer single storey dwellings. It was a War Service Homes lot and is not burdened by any covenant;[70]
[70]Easton Report, 8.3(28).

(n) 63 Derrick Street has an older dual occupancy with two dwellings behind each other, with a long common driveway on the eastern side of the dwellings. The front dwelling is larger than the one at the back and is set back from the street consistently with surrounding houses, and thus presents as a single dwelling similar to other nearby houses. It was a War Service Homes lot and was not burdened by any covenant;[71]
[71]Easton Report, 8.3(30), plaintiff’s closing submissions 37(e) and unaccompanied view on 11 December 2020.

(o) 42 Derrick Street is about 300 metres east of the Land. It has recently been developed with three single storey units. It was a War Service Homes lot with no covenant burdening it;[72]
[72]Easton Report, 8.3(24).

(p) 20 - 22 Chowne Street (lots 82 and 83) are about 100 metres north of the Land. They were re-subdivided in 2011 to alter the location of the dividing boundary between them. Two new double storey dwellings have been built on 22 Chowne Street and a single story dwelling on 20 Chowne Street. A covenant in the same terms as the covenant in this case was modified pursuant to an order of this Court made on 22 February 2016 to allow two dwelling houses;[73]
[73]Easton Report, 8.3(10) and A180, A183 and A185.

(q) 57 French Street is developed with two dwellings and was subdivided in 2019. It is not burdened by a single dwelling covenant, having been a War Service Homes lot;[74]

(r) 68 French Street has been developed with three single storey dwellings. It is not burdened by a single dwelling covenant, having been a War Service Homes lot;[75] and

(s) 66 French Street has been developed with three single storey dwellings. It is not burdened by a single dwelling covenant, having been a War Service Homes lot.[76]

[74]Easton Report, 8.3(15).

[75]Easton Report, 8.3(22).

[76]Easton Report, 8.3(23).

Large singe dwelling houses

There have also been a number of large single dwellings built which are said to be equivalent to multi-dwelling developments in size and bulk. The expert evidence given by Mr Easton is that under the applicable planning scheme, these large houses would not have required planning approval, and do not now require planning approval. They are as follows:

(a) 2 Newton Crescent has been developed with a large double story dwelling, that has two driveways. It is burdened with a covenant in terms similar to the covenant burdening the Land;[77]
[77]Easton Report, 8.3(3).

(b) 21 Middleton Street is subject to a covenant in the same terms as the covenant in this case. It has been developed with a large two story dwelling;[78]
[78]Easton Report, 8.3(11).

(c) 10 Derrick Street is about 80 metres west of the Land and is subject to a covenant in the substantially the same terms as the covenant in this case. It has been developed with a large two storey dwelling with twin garages;[79]

[79]Easton Report, 8.3(12).

(d) 16 and 18 Derrick Street are about 20 metres west of the Land on the north side of Derrick Street. They have each been developed with large single storey dwellings extending over the bulk of the site. An aerial photo shows how the houses built extend from side boundary to side boundary and from closer to the front boundary and to closer to the rear boundary as is usual in the neighbourhood;[80]
[80]Easton Report, 8.3(13) and Figure 22.

(e) 14 Chowne Street is just around the corner from Derrick Street, about 30 metres away from the Land. It has being very recently developed with a large two storey dwelling. It is burdened by a substantially similar covenant.[81] This is an example of a ‘McMansion’:
[81]Easton Report, 8.3(14) and Figure 23.

(f) 3 Derrick Street is about 130 metres west of the Land on the south side of the street. It is burdened with a covenant in substantially similar terms to the covenant applicable in this case. It has been developed with a large two storey dwelling;[82] and

(g) 36 Derrick Street is 260 metres east of the Land on the north side of the street. It is burdened by a covenant substantially the same as the covenant in this case. It has been redeveloped with a large two storey dwelling.[83]

[82]Easton Report, 8.3(17).

[83]Easton Report, 8.3(33).

In addition, in respect of 33 Derrick Street, there is a pending application in this court to modify a covenant in substantially the same terms as the covenant in this case to allow three double storey dwellings. The defendants in this case are defendants in that case.

A graphic illustration of the various developments is depicted in a map exhibited to the plaintiff’s written opening and prepared by Counsel for the plaintiff, with which Counsel for the defendants did not cavil. It shows the subject Land (in pink), the objectors’ lands (in green), the properties in respect of which this Court has modified a single dwelling restriction in a covenant to allow two or more dwellings (in red), the properties where such a restriction has been modified or overridden by a planning permit, variation or removal (in brown), properties sold to the Director of War Service Homes that have been redeveloped with two or more dwelling houses (in buff yellow), large single dwelling houses (in blue) and pre-12 December 2000 re-developments involving two dwelling houses (in bright pink):

Planning and building controls

In applications for the discharge or modification of restrictive covenants on the ground in s 84(1)(c) of the PLA, it is generally accepted that town planning and building considerations do not in themselves justify any such action. Nonetheless, they can be used to establish a framework to assess how the subject land may be developed consistently with the restriction imposed by the covenant. This enables a realistic 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 as proposed. If the evidence establishes that the difference between the two will not be substantial, the plaintiff has established a case for the exercise of the Court’s discretion under s 84(1)(c) of the PLA.

This often involves a comparison between what might be built on the subject land in compliance with the covenant and comparing it with the proposal advanced by the plaintiff which involves modification of the covenant.

It is not necessary to deal with much of the detail of the current planning provisions applicable to the Land. It is enough to note that it is common ground between the experts (Mr Easton and Mr Buckmaster) that the Land is located in a Neighbourhood Residential Zone, which requires at present a mandatory requirement for a minimum garden area of 35% at ground level for all developments on lots over 650 sq metres (which the Land is in this case), it operates in conjunction with Clauses 54, 55 and 56 of the Planning Scheme (which are generally referred to as Rescode) and it does not limit the number of single or multiple dwellings provided they comply with Rescode, but it does introduce a new mandatory height of nine metres on any dwelling.

The plaintiff’s proposal

As I have said, the plaintiff proposes to demolish the existing dwelling on the Land and to construct a double storey dwelling at the front facing Derrick Street, and a single storey three bedroom unit behind.[84] The double garage associated with the front dwelling will be located towards the eastern boundary adjacent to 1 Chowne Street, but separated from that boundary by an area of open space. The double garage associated with the rear single storey dwelling will be immediately behind the other garage and will be built to the boundary with the adjoining properties to the east. A common driveway will run along the western boundary of the site, as depicted in the following drawing:

[84]Second affidavit of Con Sofoklis Lahanis sworn on 14 July 2020 and exhibit CSL-2.

To enable the development to be carried out, the plaintiff proposes a variation of the covenant to permit two dwellings houses on the land. In assessing the extent of injury that the variation may cause to those having the benefit of the Covenant it is only injury to the extent of permitting a dual occupancy on the subject land that is relevant.

Defendant’s lay evidence

Robyn and Steven Livesay own and live at 35 Derrick Street, Lalor. Their property is about 150 m east of the Land on the other side of Derrick Street, facing approximately north. They became registered as proprietors of their property on 3 December 1975. They purchased their property knowing of the covenant that burdened it, and thinking it would preserve their privacy and give them protection from being ‘built out’.[85] Mrs Livesay states that they paid a premium price for their property compared with similar properties not burdened by a single dwelling covenant (although this evidence was not challenged, it is difficult to accept without proper substantiation and at best is inadmissible opinion evidence). Mrs Livesay says that they ‘wanted to have the space available for privacy, to have gardens and trees and backyards to bring up our children we were to have, where they would be safe’.[86] She exhibits photographs that show ‘quite a bit of space’ between their home and their immediate neighbours’ homes. This is a result of the single storey house built on their land being so sized and positioned as to leave substantial open garden areas at the front, rear and to the east, less to the west as the garage abuts the neighbour’s boundary in that direction.
[85]See the affidavit of Robyn Christine Livesay made 25 June 2020, [4]. In his affidavit, Mr Steven Livesay agrees with the evidence of Mrs Livesay. It is a common misconception that owners of land burdened by a covenant believe it protects them, when of course it does not. Such a belief must proceed on an assumption that similar covenants, of which they have the benefit, burden their neighbours’ properties, which may or may not be the case. In this case, however, the immediate neighbours’ properties are similarly burdened by restrictive covenants, with the exception of the lots developed by War Service Homes.
[86]Affidavit of Robyn Christine Livesay made 25 June 2020, [6].

Mrs Livesay notes that their neighbouring properties are all single storey, some with young children living in them. The house at 33 Derrick Street is the original weatherboard home for its site and the house at 37 Derrick Street is a classical Australian brick veneer of the same time period. Being only about a third of the size of the house block, these homes are distanced from theirs quite well. They really like it that way. It means they don’t have to hear each other’s daily activities.[87] They have many birds such as lorikeets, magpies and wattle birds that come into the garden to feed off native plants that they have in their yard.[88] Parking is an issue in Derrick Street. There is a bus service along Derrick Street every 20 minutes. The bus has difficulty on some days getting through because of cars parked in the street and Mrs Livesay has seen some cars damaged, especially when St Luke’s Primary schoolchildren are let out of school at home time and also when there is a funeral held, which is at the minimum of one day a week at the church in the school grounds. So, to have extra housing on one block of land would create more cars for parking and no space for gardens and areas for children to play.[89]
[87]Ibid, [7].
[88]Ibid, [12].
[89]Ibid, [13].

Mrs Livesay states that she has been informed by her solicitor that similar covenants burdening other properties in the area have been modified to allow more than one dwelling house. However, from memory, she is not aware and was not served with notice of such applications. She is concerned that there will be more or many multiple residences on each block if the plaintiff succeeds in his application to modify the covenant.

Selma and Fadi Nakhoul, who own and live at 1 Chowne Street, Lalor, purchased their land in 2001. One of the prime reasons behind their decision to purchase their home was the existence of the covenant. It is immediately to the right and partly behind the Land, on the corner of Derrick and Chowne Streets. It is burdened with a covenant in similar terms to the covenant burdening the Land and has the benefit of that covenant. Their other neighbour is 3 Chowne Street. On both their neighbours’ properties the original weatherboard houses remain. They take up only about a third of each block of land. This has a benefit to Mr and Mrs Nakhoul, because it limits the audible and visual impact of their neighbours as their property is mostly close to their neighbours’ garden areas. Mrs Nakhoul says that her neighbourhood is a family oriented area, with St Luke’s Primary School around the corner and the Lalor Secondary College within walking distance. There is a bus stop in Derrick Street opposite their house and the bus can barely get through due to the traffic. If the modification of the Covenant is allowed, she believes this would greatly affect the traffic flow, congestion and inconvenience to the residents of this street.

Ms Boyd and Mr Schembri own and live at 31 Derrick Street, Lalor, about 100 m to the east of the Land and on the opposite side of the street. She grew up living at her parents’ house at 14 Ruthven Crescent, Lalor, some distance away to the north-east. Growing up in the area, she was made aware of the founders of the neighbourhood and their ANZAC service during World War Two. She understood that she grew up alongside the children of people who had fought to create a better way of life for their generation, which they did ‘both on the battlefield and in their efforts to create our neighbourhood.’[90] She says it was common knowledge then, as it is now, that the original soldier settlement area had additional protections or rights, which the area of her childhood home did not - namely, the single dwelling-house covenant.[91]
[90]Affidavit of Patricia Anne Boyd made 26 June 2020, [5].
[91]Ibid, [6].

During Ms Boyd’s childhood and adolescence, she would walk through the part of Lalor with which we are concerned and always found it to be highly pleasant with streetscapes of predominantly well-cared for single storey homes and similar sized front yards. In her reading of many articles over the years, the emphasis was that the area was a ‘garden suburb’. The City of Whittlesea has recognized the historical significance of Lalor and there are plaques regarding it displayed in public places and it has commissioned studies into the area. She exhibits extracts from the Peter Lalor Housing Estate Heritage Significance Assessment (Heritage Study), prepared for the City of Whittlesea dated June 2012.[92] The Heritage Study confirms the ‘garden suburb’ idea, stating:
[92]Her partner, Steven Schembri, exhibits more of the document.

The Peter Lalor Housing Estate precinct is a post-war residential area in Lalor, which has a subdivision layout by Saxil Tuxen, and contains houses constructed by or with the assistance of the Peter Lalor Home Building Co-operative Society, as well as a small number of other houses. The features and elements that contribute to the significance of the precinct are:
–The ‘garden suburb’ characteristics of the ‘Broader Estate’ which comprises the area laid out generally in accordance with the 1947 subdivision plan prepared by Saxil Tuxen including the road layout and allotment pattern, open space system, pedestrian network and the clear delineation between residential and commercial uses. In this regard, the traditional use of part of the internal reserve behind Vasey Avenue, French and Derrick streets for a community facility is significant, however, the building itself is not.

…
–The consistent and distinctive post-war ‘garden suburb’ character created by the modest predominantly single-storey scale and detached siting of the houses with similar front and side setbacks, the lack of development within front setbacks, low front fence height (including some original or early brick or brick/render fences) or no front fence to properties, and the discrete form and siting of vehicle accommodation in side setbacks (including original garages) with single driveway/cross over access.

…

The reference to the ‘Broader Estate’ distinguishes the area that in the Study is called the ‘Co-operative Area’, being the area generally bounded by Vasey Avenue, Middleton Street, Station Street and Paschke Crescent, which included houses constructed in accordance with the standard designs created for the Co-operative by Stanley Frew and other non-standard designs. The significance of the ‘Co-operative Area’ is the strong associations with the Peter Lalor Co-operative Society which are demonstrated by the housing built to the standard designs created for the Co‑operative, and Gratwick Street is especially notable as the only street that was fully developed by the Co-operative. The Study notes that the subdivision layout of both the ‘Broader Estate’ and the ‘Cooperative Area’ is important as an example of the work of the influential town planner and surveyor, Saxil Tuxen, and the influence of the prominent Melbourne architect Marcus Barlow, upon the standard designs prepared by Co-operative architect Stanley Frew, is also significant.

When Ms Boyd and her partner Mr Schembri started their family they settled in Lalor ‘[a]fter my experience growing up in the area of Lalor I wished for my children to be able to benefit from a similar experience.’ They first lived at 1 Balmain Court, Lalor, and in 2012 purchased and later renovated and extended 31 Derrick Street. The house is the original building on the site built in 1951. They renovated and extended the house rather than building a new house because of its character, which ‘was part of the period costume of the area’.[93] The single dwelling covenant was a major factor in their decision to invest in the capital improvements their home. Had it not been for the covenant, they may have decided to improve their property in other ways. Ms Boyd believes any modification of the covenant by anyone within the covenant area will severely devalue the capital improvements they have made.[94] She believes that the proposed modification to the Covenant ‘would be a declaration that the covenant is Null and Void and be the beginning so to speak of allowing the removal of the benefit of the covenant throughout the whole area.’[95]
[93]Ibid, [12].
[94]Ibid, [13].
[95]Ibid, [14].

The affidavit of Stephen Schembri confirms the material Ms Boyd advances and additionally refers to the inspection of the Vendors’ Statement under s 32 of the Sale of Land Act 1962 (Vic) at the time of purchase of the property in 2012 and the importance of the covenant burdening the land, which was seen as a positive because they believed it would give them the protection from being crowded in by multiple blocks of units. Mr Schembri states that one of the main reasons they decided to purchase their property and raise our family there was because the covenant existed.[96] Mr Schembri mentions the importance of the garden environment and the native birds that visit their back yard and other back yards in the neighbourhood. He opines that this would not be possible or be severally limited if the properties covered by the subject covenant were all subdivided and over built with fully grown trees removed.[97]
[96]Affidavit of Stephen John Schembri made 26 June 2020, [6]. As I have said, it is a common misconception that owners of land burdened by a covenant believe it protects them, when of course it does not. Such a belief must proceed on an assumption that similar covenants, of which they have the benefit, burden their neighbours’ properties, which may or may not be the case. In this case, however, the immediate neighbours’ properties are similarly burdened by restrictive covenants, with the exception of the lots developed by War Service Homes.
[97]Ibid, [7].

Mr Schembri comments, as did Ms Livesay, on the difficulty that the bus already has in proceeding down Derrick Street when there are cars parked on both sides of the roadway. He believes the reasons the covenant was put in place are still relevant today and that the one dwelling house restriction is the main uniting characteristic of all the neighborhoods’ peoples. He refers to and exhibits the Heritage Study referred to in part by Ms Boyd, noting that it was conducted by the local Council, the City of Whittlesea, which looked at preserving the architecture in the City region, including in the Lalor area, with a view to it being protected in the local town planning scheme by a heritage overlay. However, that Overlay did not eventuate. He considers that the preservation of the original character of the housing is of importance, the façade, shape, design and set back from the street.

Mr Schembri states that he is aware that there are some three sites within the covenant protected area that have had their covenant modified. He submits that these are all examples of why this should no longer be permitted. He was not made aware of and did not receive any notices of the applications to amend the covenants in the area. The application to the Supreme Court to modify the covenant to 3 Vasey Avenue, Lalor, to allow subdivision so that multiple residences could be built on the block was successful in 2012. He notes that in the Orders of this Honourable Court dated 10 February 2012 no objections were received to modifying the covenant. He understands that other applications have been successfully made to modify the covenants affecting land in this area - these are few rather than many and that there were no objections received to the modifications.[98]
[98]Ibid, [17].

Mr Schembri refers to the fact that he currently has three direct next door neighbours, one to the rear and one each side. If the modifications to the covenant sought by the plaintiff are allowed to progressively continue in the subdivision then he could potentially have up to five or more residences bordering his property. He prefers to have less neighbours rather than more.[99] He is aware that replacing current homes with new double storey single dwellings is a possible option that some home builders may choose to construct on their land. While it is his position that this is less than desirable, it is a much preferred option to multiple dwellings on any block, of any level, creating a more crowded neighbourhood.[100]
[99]Ibid, [18].
[100]Ibid, [19].

He maintains that he will be substantially and detrimentally affected in the enjoyment of his property if the benefit of the single residence aspect of the covenant is lost. If this Court allows the covenant to be so modified by the plaintiff this will be the thin‑edge‑of-the-wedge allowing other multiple residence developments to surround his residence following the precedent set by the plaintiff.[101] In this respect it is noteworthy that there is a pending application to allow three dwelling houses at 33 Derrick Street, Lalor, next door to the east of 31 Derrick Street.[102]
[101]Ibid,[20].
[102]Proceeding S ECI 2019 04859.

Expert opinions

In Mr Easton’s opinion, the construction of two dwellings on the land, as proposed, will not substantially injure the persons entitled to the benefit of the restriction, because:

(a) the Covenant does not specify the amount of land which must be left free of development for landscaping, whereas the Planning Scheme would now require a higher total amount of open area for two dwellings than would be required for one dwelling;

(b) there will be no noticeable reduction in the space available for light and air in the locality with the Planning Scheme actually requiring an increased provision of open space;

(c) the curtilage around the two proposed dwellings is likely to be equivalent or greater than the available space around many of the other new dwellings and units in the neighbourhood which have been constructed prior to the introduction of the present more restrictive planning controls;

(d) there will be no reduction in the ‘quality of life’ for beneficiaries of the covenant within the neighbourhood as the present rear yard of the Land does not contribute to their enjoyment;

(e) there will be no significant increase in garbage collection. There is adequate room to place garbage bins which are now subject to automated collection; and

(f) modification of the covenant as proposed would not open the floodgates for further similar development as the proposal is located in a part of the subdivision where the many lots are not subject to covenants. There have also been modifications or removals of multiple covenants in the neighbourhood.

In Mr Buckmaster’s opinion, the construction of two dwellings on the Land, as proposed, will substantially injure the persons entitled to the benefit of the restriction, because:

(a) despite the instances identified by Mr Easton in which similar covenants have been modified, the character present along Derrick Street is substantially intact in a manner that is consistent with the covenant;

(b) the cumulative effect of residential development in an area that is not protected by the covenant can be seen clearly in a comparison of the housing built along the southern side of Derek Street and the houses immediately to the south of those houses along the north side of David Street, as depicted in his report at page 10. The picture shows six standard sized residential lots that have been developed with two and three townhouses;

(c) the character of the area cannot be understated. Local artwork located on public display in the Peter Lalor Walk at the Station Street shopping precinct depicts the historical significance of the area and even incorporates the layout of the subdivision into the artwork;

(d) additional neighbours will increase the probability of conflict with adjoining property owners and occupiers or a general loss of amenity due to additional residential noise;

(e) the modification of the covenant, and the subsequent development of the Land, will result in additional neighbours sharing the side boundary. In turn, this will increase the probability of additional noise that is greater than that which would typically be expected when considering the presence of the covenant and its limitation on dwelling density;

(f) whilst it is clear that the single dwelling covenant does not apply to every property within the broader subdivision, the restriction imposed applies to a significant number of properties across the broad area, providing beneficiaries with certainty as to the extent of additional dwellings that may be accommodated within the neighbourhood;

(g) the proposed modification to the covenant will allow for an increase in dwelling density, erode the open feel of rear yards and reduce clear views to the sky and vegetation;

(h) an increase in the number of houses in the street will increase the traffic. This will affect the general amenity of the area. In contrast, maintaining the restriction provides a level of certainty, in that there will be no additional dwelling and any increase in traffic will be lessened;

(i) additional cars also increase the need for on street car parking, which in turn affects the sense of space within the streetscape;

(j) the restriction to a single dwelling limits the loss of privacy from windows facing adjoining rear yards, and maintains a sense of privacy; and

(k) residents who benefit from the covenant applying to other parcels of land in the neighbourhood enjoy the limitation the covenant imposes. It has enabled beneficiaries to purchase their land with the sound understanding that while change will occur, such change is limited.

The plaintiff’s submissions

The plaintiff made extensive submissions which have several foundational propositions:

(a) the proposed development on the Land will cause no direct injury of substance to the character of the neighbourhood and the beneficiaries of the covenant. It is a modest change, being the addition of one single storey dwelling behind a double storey dwelling at the front that is no more than existing double storey dwellings in the neighbourhood;

(b) the benefits initially conferred by the covenant were substantially impeded from the start by the bulk transfer of lots to the Director of War Services Homes in 1949 with no similar covenant. It is not the existence of single dwelling covenants in the Neighbourhood that has preserved its predominantly single household character. If it were there would have been a disproportionately larger number of dual occupancies developed on the 50 War Service Homes lots in the Neighbourhood over which there is no single dwelling restriction; and

(c) the proposed development will cause no indirect substantial injury by operating as a precedent for other modifications of similar covenants in the neighbourhood. The neighbourhood has undergone and continues to undergo renewal and redevelopment involving the redevelopment of properties, particularly dual occupancies and large two storey houses, without substantial injury to beneficiaries of the Covenant burdening the Land.

Whether the benefits intended by a restrictive covenant are successfully conferred initially, such that a distinctive quiet residential character is in fact established in an area following its development, may depend on factors other than the covenant, including:

(a) how the original developer laid out the subdivision, in terms of the width of streets, the amenities and more remote destinations to which those streets give access (e.g. shops, churches, schools, railway stations; a cul-de-sac off a secondary street will be quieter than a thoroughfare) and the average size of the residential blocks;

(b) the size and quality of the dwellings first built by purchasers on their blocks; and

(c) demographic and socio-economic factors, affecting such things as the age and number of residents making up each household, home leisure and work activities, the number of vehicles required by residents in each household and the number and times of vehicle movements.

Accordingly, the real benefit of a covenant with a single-dwelling restriction, and the test of whether the benefits identified above are indeed the result of the covenant and are indeed supported by the covenant, only becomes apparent when changes in those other factors arise. As Macaulay J stated in Hivance, one benefit of a covenant is its strategic power to resist the tide of change to the character of the area.[103]
[103][2020] VSC 183, [43]

The neighbourhood was originally developed as housing for returned soldiers. It was characterised by small houses with proportionately large garden areas on lots of an average size of 650 sqm to 700 sqm. That aspect of its original character is already being eroded by renewal and redevelopment of large replacement houses and extensions to the existing houses. However, housing having that character is not within the protection of the covenant. There are, as well, some dual occupancies in the area.

Nonetheless, the area largely retains the aspect of its original character of an area of relatively low density population made up of single households in single dwellings on those original lots. That aspect of the distinctive character is supported by the Covenant.

The plaintiff’s proposal will cause no direct injury of substance to that character:

(a) the plaintiff’s proposal is modest, with one additional household only being added to the neighbourhood to be housed in a modest single storey dwelling behind a larger double storey dwelling on the site;

(b) the overall development will be no larger than a large replacement dwelling which the evidence establishes is realistic and probable as the alternative development for the subject land, which is in need of renewal of some kind;

(c) there will therefore be minimal impact on the streetscape;

(d) there will also be minimal impact on adjoining owners. Their privacy will not be compromised by overlooking from second storey windows or recreation areas adjacent to boundaries;

(e) there is no adverse impact from two sets of rubbish bins and two letterboxes, given the large frontage to Derrick Street; and

(f) adequate off-street parking is available and the vehicles from the additional household occupying the modest second dwelling on the subject land will not make any difference one way or other to traffic congestion in Derrick Street, which the evidence shows is caused (to the extent it is a real problem) by the street being too narrow for the bus and the proximity of a school and church.

The plaintiff’s proposal will also cause no indirect injury of substance to beneficiaries by operating as a precedent hastening an existing ‘rising tide’ of dual occupancies in the area:

(a) there is no such ‘rising tide’ of dual occupancies in Derrick Street analogous to the tide of three and more dwelling developments found in Hivance to be underway as a fact in Allenby Avenue, Reservoir;

(b) there is indeed pressure for renewal in the Derrick Street neighbourhood, but this is predominantly by way of large replacement single dwellings and extensions and renovations to existing houses, with only a few dual occupancies having been developed since the early 1990s;

(c) while there have been few dual occupancies in the current spate of redevelopment in the area, the evidence establishes that it is not the existence of single dwelling covenants in the area that has enabled residents to resist change that would otherwise be realistically likely to occur. Were there such a demand, prevented only by covenants, there would have been a disproportionately larger number of dual occupancies developed on the 50 War Service Homes lots in the neighbourhood where there are no single dwelling covenants; and

(d) therefore, it is the plaintiff’s submission that the relaxation of the covenant to permit the plaintiff’s proposed dual occupancy will not realistically result in the neighbourhood losing its predominantly single household character. Rather, the realistic likelihood is that future renewal of the suburb will continue its current trajectory of large replacements or renovations and additions to the tired 1940s housing stock, with perhaps an occasional dual occupancy of the kind proposed by the plaintiff.

The two dwellings proposed for the subject land will be set one behind the other.[104] From the street, the single storey at the rear combined with the double storey dwelling at the front will create a building bulk on the subject land that is no greater than other substantial single dwellings that have replaced the modest homes of the returned soldiers established in the early 1950s. The garden area will be 35% of the site[105] and, again, is no less than other large dwellings in the area that have replaced the returned soldiers’ large garden areas.[106]
[104]Easton Report, [6.3].
[105]Exhibit CSL-2 to the second affidavit of Con Sofoklis Lahanis dated 14 July 2020.
[106]The older homes mostly have large backyards: Buckmaster Report, [19].

The plaintiff recognises that courts have expressed caution in referring to alternative potential developments as a ‘worst case scenario’ comparator to proposed non‑compliant developments. To constitute a valid comparison (which the plaintiff is entitled to ask the Court to take into account), the Court must also take into account the realistic probabilities of the plaintiff actually bringing about a putative ‘worst’ alternative development consistent with the terms of the covenant.[107]
[107]Prowse v Johnstone [2012] VSC 4, [104] (Cavanough J).

The fact that a large double storey dwelling with a reduced area of open space is a realistic possibility for the site is shown by the evidence of the dwellings at 3 Derrick Street,[108] 10 Derrick Street,[109] 16 & 18 Derrick Street respectively,[110] 21 Middleton Street (adjoining the rear of the subject land),[111] 14 Chowne Street,[112] 47 Derrick Street,[113] and 36 Derrick Street.[114] An examination of the aerial photograph at p 3 of the Buckmaster Report also shows this quite starkly with respect to the properties at 16 and 18 Derrick Street and 21 and 25 Middleton Street, which are all in close proximity to the subject site. Indeed, the plaintiff would put the evidence as high as establishing that the large replacement dwelling of equivalent dimensions to the dual occupancy proposed by the plaintiff is not only realistic, but probable, as Mr Easton gave evidence in cross‑examination[115] that:

…people building a house will want to build the biggest house they possibly can on the land available. More and more houses – they will leave exactly 35 per cent garden area. The days of leaving big backyards are gone, you know. That would be undercapitalising.

[108]Easton Report, [8.3](17).

[109]Easton Report, [8.3](12).

[110]Easton Report, [8.3](13).

[111]Easton Report, [8.3](11).

[112]Easton Report, [8.3](14).

[113]Easton Report, [8.3](29).

[114]Easton Report, [8.3](33).

[115]T23.23-T23.28.

The proposed dwelling at the front has the same impact on the third and fourth defendants’ property at 1 Chowne Street as a single dwelling of the same dimensions would have. The impact of the dwelling at the rear has been considerably reduced by limiting its height to a single storey and setting it well back on the site. The garage associated with the rear dwelling will be built to the boundary, as a garage could be under the existing terms of the covenant, and this will further reduce any visual or noise impact from the rear dwelling on the land for occupiers of 1 Chowne Street. That property shares its rear boundary with the plaintiff’s eastern boundary. Mr Easton reports that the open space on that boundary inside the subject Land redeveloped in accordance with the plaintiff’s proposal will provide an opportunity for screening the view from their property.[116] This is evident on the revised concept plan exhibited to the plaintiff’s recent affidavit, which shows landscaping between the eastern walls of the double storey at the front and first double garage and the boundary with 1 Chowne Street. Further, the photographs in exhibit SN-2 of the affidavit of Selma Nakhoul shows that mature vegetation already exists on their side of the fence to further limit any visual impact from their property. It follows that the plaintiff’s proposal will have very little impact on the residential benefits originally conferred on 1 Chowne Street by the covenant over the subject land.
[116]Easton Report, [6.3].

There will be no direct impact on the defendants at 31 and 35 Derrick Street. The neighbourhood will retain the same residential character from their properties as before. There will be no visual impact and the street will retain the same low density residential character that it presently has.

The defendants have expressed concern that an additional dwelling on the subject land will create traffic problems in Derrick Street. The number of additional vehicle movements from one or two additional cars coming and going from the subject land along Derrick Street will not substantially alter (for better or for worse) any existing traffic problems, nor create any new problem that does not already exist. The defendants’ evidence is that the nearby church and school and the narrowness of the street account for many of the current problems in the street. These are not circumstances that will be affected by cars associated with one additional dwelling.

On-street car parking is unlikely to be a problem as there is to be a double garage for each of the new dwellings for off-street parking.

Birdlife

The covenant does not have as one of its intended effects the conservation of native birdlife. It may be that the original houses which covered only one third of their sites left room for trees which attracted birds. However, the covenant does not require that large gardens be retained for the preservation of birds or for any other reason, nor does it ensure that open space be planted out with trees that attract native birds.

An examination of the aerial photograph on p 3 of the Buckmaster Report shows that on some sites with older housing there are trees and on some there are not. The subject land, for example is currently one where there is only sparse vegetation.[117] Further, there are many properties around the subject land where only small areas of open space have been provided, without substantial trees.
[117]Easton Report, [3.3] and Figure 4.

Historical character of the area and architectural style

These are benefits Mr Schembri notes that he enjoys in connection with his land in his affidavit at [9] to [16]. However, the covenant restricts only the number of dwellings on the subject land, and thereby the residential character for a neighbourhood that results from low density living. It does not preserve history, local artwork, the current street layout or the architectural design of buildings on the land.

No indirect injury of substance from the plaintiff’s proposal – no precedential effect

The benefits conferred initially by the single dwelling restriction in covenants in the area were impaired from the start by the bulk transfer of lots to the Director of War Service Homes[118]. That transfer had no single dwelling covenant or any restrictive covenant. It included 50 lots within the neighbourhood which are thus now not burdened and never have been burdened by a single dwelling restriction.[119]
[118]Easton Report section 8.3(15), A198.
[119]Easton Report, [9.2].

The significance of an impaired network of covenants is be determined on the facts of each case. In MacLurkin v Searle,[120] it was found that, to the extent the relevant neighbourhood had a quiet tranquil residential atmosphere from a low population density, the effective cause of that benefit had not been the existence of a single dwelling restriction in the covenant over the subject land. The evidence in that case disclosed that a large ‘super lot’ comprising the entire inner heart of the relevant subdivision had been transferred out of the parent title before the date on which the covenant over the subject land or any other lot remaining in the parent title had been created. The inner part of the subdivision was later further subdivided into lots which all had the benefit of the covenants over the other original lots in the parent title, but were not burdened by similar covenants. The burdened lots remaining in the parent title after the creation of the super lot were along two streets which ‘embraced’ the inner heart. Any benefit conferred by their covenants on lots in the inner part of the subdivision was ineffective, any development at all could be developed by other lot owners within the interior of the subdivision.
[120]MacLurkin v Searle [2015] VSC 750, 65 (Derham AsJ).

In assessing whether the evidence establishes that there will be no substantial injury to those having the benefit of the Covenant it is established that the Court should compare the benefits initially intended to be conferred and actually conferred by the covenant with the benefits, if any, which would remain after the covenant has been discharged or modified. One means of approaching this comparison is to look to see what can presently be built, consistently with the Covenant, and to compare this with the proposed development with the Covenant modified as sought.

The fact that a large double storey dwelling with a reduced area of open space is a realistic possibility for the site is shown by the evidence of the presently applicable planning laws and the dwellings at 3 Derrick Street, 10 Derrick Street, 16 & 18 Derrick Street respectively, 21 Middleton Street (adjoining the rear of the subject land), 14 Chowne Street, 47 Derrick Street, and 36 Derrick Street. An examination of the aerial photograph at p 3 of the Buckmaster Report (set out below) also shows this quite starkly with respect to the properties at 16 and 18 Derrick Street and 21 and 25 Middleton Street, which are all in close proximity to the subject site:

As the plaintiff submitted, this evidence establishes that the large replacement dwelling of equivalent dimensions to the dual occupancy proposed by the plaintiff is not only realistic, but probable, having regard evidence of Mr Easton in cross‑examination referred to by the plaintiff (above at [67]), and to the particular house at 14 Chowne Street depicted above after paragraph [35(e)]. The evidence also establishes that the house on the Land is in need of renewal of some kind.

The plaintiff’s proposal is a small change which will be largely hidden from the streetscape by the two storey house at the front of the allotment. This will create a building bulk on the Land that is no greater than other substantial single dwellings that have replaced the homes of the returned soldiers established in the early 1950s. Only one additional household will be added to the neighbourhood and that will be a modest single storey. The garden area will be 35% of the site and that is no less than other large dwellings in the area that have replaced the returned soldiers’ garden areas.

The preservation of the neighbourhood as an area of War Service Homes is not one of the benefits intended or conferred by the single dwelling restriction in the Covenant. That part of the Covenant also does not preserve history, local artwork, the current street layout or the architectural design of buildings on the land. It may be presumed that the restriction requiring the approval by the Peter Lalor Co-operative of the plans and specifications of the proposed building on the Land was intended to retain the particular character of housing that the evidence advanced by Ms Boyd and Mr Schembri reveals was a part of the overall design of the several subdivisions of which the neighbourhood is a part. The preservation of the original character of the housing may have been of importance, as Mr Schembri believes continues to be the case. This may have included the façade, shape, design and set back from the street as well as the maintenance of large garden areas. But since the dissolution of the Co‑operative, that aspect of the Covenant can have no operation, and housing having that character is not within the protection of the single dwelling restriction of the Covenant.

The Heritage Study referred to by Ms Boyd and Mr Schembri was directed to preserving the architecture in the region, including in the Lalor area, with a view to it being protected in the local town planning scheme by a heritage overlay. That Overlay did not eventuate. The defendants’ expert witness, who had been for about seven years been employed by the City of Whittlesea as a Senior Planner, referred to this matter in his evidence:

Council had undertaken a, a, some research into the – into this area and even prepared a Planning Scheme amendment to the thoughts of seeking a heritage overlay. Um, onto the, this broader Precinct. The process did receive a number of submissions. There are people who were supportive and, I believe, there was people who would’ve been against the idea. For many, the prospect of a Heritage overlay on their property is seen as one of – can be oppressive and makes it a bit more difficult to [do] what they might want to do with their land. Um, as that matter progressed, um, the Council determined, ultimately, to abandon the amendment.[140]

[140]Transcript, p. 52.15 – 52.27.

The covenant does not have as one of its intended effects the conservation of native birdlife. That may be a product of the open space and ‘garden suburb’ character that Ms Boyd finds most attractive, but it is not within its direct protection. The fact is that the original houses approved by the Co-operative, which covered only one third of their sites, left room for trees which attracted birds. But absent the requirement for the approval of the Co-operative, the single dwelling restriction in the Covenant does not require that large gardens be retained for the preservation of birds or for any other reason, nor does it ensure that open space be planted out with trees that attract native birds. It is highly likely that the planting of native trees has been a product of individual and community attitudes and desires, a matter that is unconnected in any way with the existence or non-existence of the Covenant, or any part of it.

The plaintiff’s proposal will have very little impact on the residential benefits originally conferred on 1 Chowne Street by the Covenant. The proposed two storey house at the front has the same impact on the property at 1 Chowne Street owned by Mr and Mrs Nakhoul as a single dwelling of the same dimensions, would have. The impact of the proposed single storey house at the rear, being set back on the site will be very limited. Mr Buckmaster acknowledged that a loss of privacy for the neighbour is ‘most definitely more associated with upper-level buildings’, referring to an earlier proposal for a two storey dwelling house at the rear of the subject Land.[141] He agreed that the proposal for a single dwelling house at the rear of the subject Land, ‘in terms of physical scale,… is a low scale outcome’.[142] The garage associated with the rear house will be built to the boundary, as a garage could be, and generally are, under the existing terms of the covenant, and this will further reduce any visual or noise impact from the rear dwelling on the occupiers of 1 Chowne Street. That property shares its rear boundary with the plaintiff’s eastern boundary. Mr Easton reports that the open space on that boundary inside the Land, redeveloped in accordance with the plaintiff’s proposal, will provide an opportunity for screening the view from their property. This is evident on the revised concept plan set out above after paragraph [41]. There is also mature vegetation on their side of the fence to further limit any visual impact from their property.
[141]Transcript, p. 55.11 – 55.12.
[142]Transcript, p. 59.11 – 59.12.

It is most unlikely that there will be any direct impact on the defendants at 31 and 35 Derrick Street. The neighbourhood will retain substantially the same residential character from their properties. The street will retain the same low density residential character that it presently has. It is also unlikely to materially affect the population density of the neighbourhood. The neighbourhood is and has been going through a renewal period. The housing is old and outdated, and the original returned soldiers and their families are long gone and so too are many of those who replaced them, including many of the large families that once occupied these family homes. As Mr Easton commented in re-examination:

Over time, though, it’s getting that there’s more old people or single families or smaller families and there’s been a need to maintain the population. So when it’s only a dual occupancy, there’s every likelihood that the final outcome will be the same number of people on this site, especially for single-storey dual ocs [occupancies], probably wouldn’t be occupied by a large family, as an original house would. More likely to be occupied by, um, a single person or a couple or a couple with one child…[143]

[143]Transcript, p.41.11 – 41.20. Mr Buckmaster agreed that household sizes are decreasing: Transcript, p.75.15.

The defendants are concerned that an additional dwelling on the Land will give rise to traffic problems in Derrick Street. The number of additional vehicle movements from one or two additional cars coming and going from the Land along Derrick Street is most unlikely to substantially alter (for better or for worse) any existing traffic problems, nor create any new problem that does not already exist. The defendants’ evidence is that the nearby church and school, the bus service along Derrick Street and the narrowness of the street account for many of the current problems. These are not circumstances that will be affected by cars associated with one additional dwelling, especially where there is provision for off street parking for two vehicles for each residence. There is no adverse impact from two sets of rubbish bins and two letterboxes, given the large frontage to Derrick Street.

The neighbourhood was originally developed as housing for returned soldiers. It was characterised by small houses with proportionately large garden areas on lots of an average size of 650 sqm to 700 sqm. It may be, as Mr Easton remarked in cross‑examination, that the size and style of the original houses dictated by the era in which they were built.[144] That aspect of its original character is already being eroded by renewal and redevelopment of large replacement houses and extensions to the existing houses. However, housing having that character is not within the protection of the covenant. There are, as I have pointed out, a number of original allotments that have had their covenants overridden or modified so as to create two residences where previously there was only one.
[144]Transcript, p.31.13- 31.16.

The proposed development will, in my view, cause no indirect substantial injury by operating as a precedent for other modifications of similar covenants in the neighbourhood. The neighbourhood has undergone and continues to undergo renewal and redevelopment involving the redevelopment of properties, particularly dual occupancies and large two storey houses, without substantial injury to beneficiaries of the covenants burdening the particular properties.

The plaintiff’s submitted that the benefits initially conferred by the covenant were substantially impeded from the start by the bulk transfer of lots to the Director of War Services Homes in 1949 with no similar covenant. The plaintiff contended that it is not the existence of single dwelling covenants in the neighbourhood that has preserved its predominantly single household character, because if it were there would have been a disproportionately larger number of dual occupancies developed on the 50 War Service Homes lots. By contrast, the evidence of Mr Buckmaster was to the effect that the covenants in the neighbourhood had preserved its single dwelling character and this was demonstrated by comparing the properties in Derrick Street with those in David Street immediately to the South. He graphically illustrated this comparison with an aerial photograph (on p 10 of his Report) which, he commented, showed the extent of development along David Street (to the south of the dashed yellow line) where the covenant does not apply; compared to the properties along Derrick Street (to the north of the dashed yellow line) where the covenant does apply:

Closer examination, however, does not bear out this proposition. First, even in the photo there is 27 Derrick Street which has two dwelling houses built on it (see above at [34(k)]). Second, it is only a small part of Derrick and David Streets, a ‘snapshot’, and does not given a sufficiently complete picture of the other developments in and around Derrick Street. Third, David Street is outside the applicable subdivisions, or covenant area as Mr Easton called it,[145] and the neighbourhood forming part of the subdivisions. Fourth, the properties that have been developed in David Street are opposite St Luke’s Primary School and close to the Station Street shopping Centre. Fifth, David Street is a major thoroughfare.
[145]Transcript, p.32.15 - 32.21.

Mr Buckmaster nevertheless maintained that the modification of the Covenant in this case would have a ‘snowball’ effect:

[I]f this was to proceed and the covenant varied allowing additional dwellings on this property, certainly based on some of the arguments that I have read in terms of that the area is already – the benefit of the covenant has already eroded with the presence of some multi-dwelling developments. It would be a bit more of a snowball effect, and it is that snowball effect over time where people are starting to say, ‘We can have this covenant removed or varied to allow for the redevelopment of these sites’. Then sites that were previously not looked at as being a redevelopment opportunity certainly would become one. That is probably perhaps my larger concern in relation to this matter, because if we continue to see this erosion, we’re at a point in time where the local community is standing up to this, where they have been lodging a lot more objections to planning applications, and even now, we’re obviously – we’re contesting – seeing the – the application for the variation of the restriction being contested.[146]

[146]Transcript, p. 56.10 – 56.29.

In my view, the existence of single dwelling covenants has not been the only reason for the substantially preserved single household character in the neighbourhood, because, as the plaintiff submitted, if that were the case there would have been a disproportionately larger number of dual occupancies developed on the 50 War Service Homes lots.[147] Nevertheless, there have been a number of dual occupancies developed in the War Service Homes lots, and that indicates the likelihood that the single dwelling covenant has made some contribution to the preservation of the character of the neighbourhood.
[147]The Easton Report identifies 7 War Service Homes allotments, with no single dwelling covenant, developed with two or three houses: 17 Vasey Avenue, 42, 43 and 63 Derrick Street, 57, 66 and 68 French Street. That Report identifies 13 allotments in the neighbourhood that were burdened with a single dwelling covenant that have been developed with two or three houses: 1 Paschke Crescent and 418 Station Street, 3, 57 and 59 Vasey Avenue, 402 Station Street and 2A Newton Crescent, 414 Station Street, 9 Newton Crescent, 390 Station Street, 9, 11 and 27 Derrick Street, 20 - 22 Chowne Street.

But as the plaintiff submitted, the significance of the absence of covenants over the War Service Home lots becomes apparent in the absence of any rising tide of demand for dual occupancy developments on those lots. The absence of any legal impediment to the building of multiple dwellings on those lots, and the limited number that have been so developed, is evidence that it is not realistically likely that relaxing the covenant over the subject land to permit two dwellings would create or heighten any risk that future applications would occur which, if granted, would bring the situation in Derrick Street closer to the ‘floodgate’ scenario or have a ‘snowball’ effect. If there were such a risk, when other modifications were made or allowed in earlier years to allotments burdened by similar covenants, one might have expected there to have been a spate of applications, but there is no evidence of that. The renewal of the part of the suburb with which this application is concerned is notable for the fact that the two dwelling developments that have occurred have not brought the neighbourhood to anywhere near the stage where a further proliferation of dual occupancies would put the special character of the neighbourhood in jeopardy.

There is in my opinion no realistic likelihood of substantial injury occurring through multiple applications to modify similar covenants. There is a pending application ‘waiting in the wings’. That is the application in respect of 33 Derrick Street referred to earlier (see above at [55]). That is an application to modify a similar covenant to allow three dwellings to be built. Whether three dwellings would be appropriate on the Land in this case has not been debated or considered. But I venture to think that I would consider it to be too great a development of the Land in this case, so that I would not be satisfied that the proposal would not substantially injure those having the benefit of the Covenant. The few three dwelling developments that have occurred may have some impact on the distinctive character of the neighbourhood, but in my view the dual occupancies have not had that effect.

The relaxation of the covenant to permit the plaintiff’s proposed dual occupancy will not, in my view, realistically result in the neighbourhood losing its predominantly single household character. As the plaintiff submitted, the likelihood is that future renewal of the suburb will continue its current trajectory of large replacements or renovations and additions to the tired 1940s housing stock, with perhaps an occasional dual occupancy of the kind proposed by the plaintiff.

Overall, I had the impression that another dual occupancy would produce no direct or indirect injury of substance. Certainly, the construction of a ‘McMansion’ on the Land would have much the same impact on the sense of peace and single dwelling character of the neighbourhood.

Approval of the Co-operative

In relation to the modification of the Covenant to remove the requirement for the approval of plans and specifications by the Peter Lalor Co-operative, because that body no longer exists, its consent cannot be obtained. As the plaintiff submitted, and the defendants did not dispute, if the covenant were construed as if the requirement continued to apply, the practical effect would be to prohibit the commencement or reconstruction on the land of any building and thus to sterilise the land. In these circumstances I agree that the restriction should be considered to have been discharged by the winding up of the Co-operative (in effect, severed from the covenant), as was held in the English authorities considered by Lansdowne AsJ in 196 Hawthorn Road Pty Ltd v Duszniak.[148] The Covenant should be modified so as to remove this restriction.
[148][2020] VSC 235.

The quarrying restriction

In relation to the ‘quarrying restriction’, its purpose was primarily to prevent commercial quarrying on the land. It was not part of its intended effect that it prevent residential use or development. There is no dispute between the parties that the proposed modification to this restriction to permit any excavation work in connection with residential use or development will not substantially injure any landholder having the benefit of the restriction.[149]
[149]Jiang v Monaygon Pty Ltd [2017] VSC 591, [68].

Conclusion

For the reasons set out above, the beneficiaries of the Covenant will not suffer a substantial injury should the covenant be modified in the three respects sought, in particular by permitting the construction on the Land of two dwellings substantially in accordance with the plans that have been exhibited to the plaintiff’s second affidavit.

I will ask the plaintiff to submit draft orders which, subject to any further submissions, I would expect to include that the defendants’ costs be paid by the plaintiff.[150]

[150]See Wong v McConville & Ors (No. 2), [2014] VSC 282 [9]-[19].

SCHEDULE OF PARTIES

S ECI 2020 01011
BETWEEN:
CON SOFOKLIS LAHANIS	Plaintiff
- v -
ROBYN LIVESAY	First Defendant
STEVEN LIVESAY	Second Defendant
FADI NAKHOUL	Third Defendant
SELMA NAKHOUL	Fourth Defendant
STEPHEN SCHEMBRI	Fifth Defendant
PATRICIA BOYD	Sixth Defendant

[2021] VSC 29

4 February 2021