Parmurro Nominees Pty Ltd v Doughty
[2013] VSC 156
•9 April 2013
| Send for Reporting | ||
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2011 01419
IN THE MATTER of the restrictive covenants contained in Instrument of Transfer No. 948840 in the Land Titles Office in the Register Book and imposed upon the land more particularly described in Certificate of Title Volume 4366 Folio 184 (“the First Described Land”), and Instrument of Transfer No. 930083 registered in the Land Titles Office in the Register Book and imposed upon the land more particularly described in Certificate of Title Volume 9488 Folio 590 (“the Second Described Land”)
B E T W E E N
| PARMURRO NOMINEES PTY LTD (ACN 005 355 108) and PAUL EDWARD PARADISIO and ROSEMARY PARADISIO | Plaintiffs |
| - and - | |
| BRIAN DOUGHTY and GLENYS KAYE DOUGHTY | Defendants |
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JUDGE: | RANDALL AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 21 and 22 August 2012 | |
DATE OF JUDGMENT: | 9 April 2013 | |
CASE MAY BE CITED AS: | Parmurro Nominees Pty Ltd and ors v Doughty and anor | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 156 | |
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REAL PROPERTY – Covenant – Restrictive covenant – Application to discharge or modify – Section 84, Property Law Act(Vic) 1958.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr G. Moffatt | Sica & Co |
| For the Defendants | Mr T. Sowden | Law 554 |
HIS HONOUR:
Background and the application
The second plaintiff (“Mr Paradisio”) is a director of the first plaintiff (“the company”). The company is the registered proprietor of Lot 2 on Plan of Subdivision No. 007709, being the whole of the land described in Certificate of Title Volume 4366 Folio 184 being the land situate and known as 78 Albion Street, Brunswick East (“No. 78”). Mr Paradisio together with his wife, the third plaintiff (“Mrs Paradisio”) are the registered proprietors of Lot 1 on Title Plan 188490 (formerly known as Lot 1 on Plan of Subdivision No. 007709), being the whole of the land comprised in Certificate of Title Volume 9488 Folio 590 and being the land situate and known as 80 Albion Street, Brunswick East (“No. 80”).
Mr and Mrs Paradisio are also the registered proprietors of the land situate and known as 82 Albion Street, Brunswick East (“No. 82”). No. 82 is not the subject of the application brought before the Court by originating motion filed 29 March 2011. However, No. 82 is relevant in that the plaintiffs proposal will utilise a consolidation with No. 82 and the proposed development will incorporate No. 82.
The originating motion seeks orders pursuant to s 84(1) of the Property Law Act 1958 (“the Act”) that the covenants contained in Instrument of Transfer No. 958840 and in 930083 respectively in the Register Book be modified in so far as it shall be necessary to permit the erection of more than one dwelling on each of No. 78 and No. 80 or such number of dwellings on a consolidation of the two subject lots as the City of Moreland or any other Responsible Authority may allow. The hearing of the application was referred to me by order made Williams J on 10 August 2012.
Nos. 78 and 80 are each the subject of restrictive covenants in the same terms, namely, each prohibits the erection on each lot “more than one house or dwelling”. The respective covenants also deal with how such building or erection on each allotment faces or fronts Albion Street.
Each of Nos. 78 and 80 formed part of the land originally comprised in Certificate of Title Volume 4282 Folio 230. The land contained in Certificate of Title Volume 48282 Folio 230 comprised approximately 14 acres. Albion Street was on the northern boundary and what was the known as Holmes Street (now known as Eddy Street) comprised the western boundary. The subdivision created Glenmorgan Street and Clarence Street. Albion Street runs east‑west and each of Glenmorgan Street and Clarence Street run east‑west to the south of Albion Street. Eddy Street runs north‑south on the western border of the subdivision. Lygon Street runs parallel with Eddy Street save that Lygon Street curves around into Albion Street at the intersection of Lygon Street, Eddy Street and Albion Street.
The benefitted land with respect to each of the covenants, in the main overlaps.[1] In general, the benefitted land in the subdivision runs from No. 80 east to No. 38 in Albion Street with the equivalent allotments on the north and south side of Glenmorgan Street and the equivalent allotments on the north and south side of Clarence Street. The exceptions are as follows:
No. 82 Albion Street being on the south‑eastern intersection of Eddy Street and Albion Street;
No. 80 Glenmorgan Street being on the north-western corner of the intersection of Eddy Street and Glenmorgan Street;
No. 87 Clarence Street being the allotment four to the east of the south‑west corner of the intersection of Eddy Street and Clarence Street.
[1]See Exhibits AGS2 and AGS1 to the affidavit of Anthony Gerald Sica sworn 18 April 2011.
No. 84 and No. 93 Clarence Street do not have the benefit of the covenant referred to in Transfer 958840 but benefit from the covenant in Transfer 930083.
Each of the town planning experts respectively called for the plaintiffs and the defendants, designated the neighbourhood in which Nos. 78 and 80 are located, as forming the area from the east side of Lygon Street (which contains existing commercial development) forming the boundary to the west, the allotments on the north side of Albion Street forming the boundary to the north, the allotments on the south side of Glenmorgan Street forming the boundary to the south, and the allotments in that area to the west of Alsace Street forming the boundary to the east. The neighbourhood, with the exception of the development in Lygon Street and to the north of Albion Street, is relatively uniform. The development in Lygon Street which backs onto Eddy Street is commercial in nature and, in the main, comprises of two storey buildings. The development in Glenmorgan Street comprises substantially of single storey residences which have been included in Heritage Overlay No. 85 of the Moreland Planning Scheme.
There is no uniformity in development on the north side of Albion Street (which is not part of the subdivision). At the north‑east corner of the intersection of Albion Street and Eddy/Lygon Streets there is a relatively new three‑unit, two storey development. There is a derelict factory on the north‑east corner of the intersection of Inverness Street and Albion Street. The factory is opposite Nos. 62, 64 and 66 Albion Street. The south side of Albion Street comprises mainly of single storey weatherboard dwellings save for a two‑unit two storey, brick townhouse development on No. 56 and a two storey dwelling on No. 48. The allotments in Albion Street are each zoned Residential 1 except for No. 82 which is zoned Business Zone 1. Mr and Mrs Paradisio became registered proprietors of No. 82 in June 1981. A two storey commercial building is erected on the corner allotment. The lessee is AldaCare, a retailer of service and equipment for the aged. That business is conducted from what is essentially a double storey office block. Number 80 is also leased to the proprietor of the AldaCare business and, although it is zoned Residential 1, has been used as a car park for No. 82 since the 1980s. The allotment has been sealed, otherwise there is no construction thereon.
A 1945 aerial photographic map of the neighbourhood[2] demonstrates that the general flavour of the neighbourhood is little changed saved for the new unit development on the north‑east corner of the intersection of Albion and Eddy Streets and Nos. 80 and 82 Albion Street.
[2]Exhibit GG-03 to the affidavit of Giovanni Gattini sworn 20 January 2012 (‘Gattini affidavit”).
Various orders were made requiring the plaintiffs to give notice of the application upon the proprietors (and where appropriate, the mortgagees) of allotments enjoying the benefit of each of the covenants.[3] I am satisfied that the appropriate notice was given. Only the defendants (“Mr and Mrs Doughty”) who are the proprietors of No. 76 have objected. Mr and Mrs Doughty became the registered proprietors of the land situate and known as No. 76 Albion Street on 12 May 2004. Both Mr and Mrs Doughty reside in New South Wales and lease No. 76 which abuts No. 78 on the east side.
[3]See the orders dated 9 April 2011, 26 June 2011 and 6 February 2012.
Mr Paradisio has deposed that each of Nos. 78, 80 and 82 have been sold as a parcel to a developer subject to the removal of the covenants. The proposed development is described by Mr Paradisio as “mixed use”. Neither the contract of sale nor any proposed plan is in evidence. The sale will not proceed in the event that the covenants are not removed.
The plaintiffs seek modification of the covenants on the following basis:
(a)No. 78 – pursuant to s 84(1)(c) “that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction”;
(b)No. 80 – pursuant to the first limb of s 84(1)(a) that “by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the court deems material the restriction ought to be deemed obsolete and [pursuant to] s 84(1)(c).”[4]
[4]Plaintiffs’ closing submissions, page 4.
For the reasons set out, I have determined that the relief sought by the plaintiffs ought to be refused and the proceeding be dismissed.
Principles
Section 84 of the Property Law Act(Vic) 1958 relevantly provides:
(1)The Court shall have power from time to time on the application of any person interested in any land affected by any restriction arising under covenant or otherwise as to the use thereof or the building thereon by order to wholly or partially discharge or modify any such restriction (subject to the payment of the applicant of compensation to any person suffering loss in consequence of the order) upon being satisfied –
(a)that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material the restriction ought to be deemed obsolete or that the continued existence thereof would impede the reasonable user of the land without securing practical benefits to other persons or (as the case may be) would unless modified so impede such user; or
(b)…
(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction;
provided that no compensation shall be payable in respect to the discharge or modification of restriction by reason of any advantage thereby accruing to the owner of the land affected by the restriction unless the person entitled to the benefit of the restriction also suffers loss in consequence of the discharge or modification nor shall any compensation be payable in excess of such loss; but this provision shall not affect any right to compensation where the person claiming the compensation proves that by reason of the imposition of the restriction the amount of consideration paid for the acquisition of the land was reduced.
The legal principles concerning application under s 84(1) of the Act were collated by Kyrou J in Vrakas v Registrar of Titles.[5] Those principles were adopted by Cavanough J in Prowse v Johnstone & Ors.[6] I will not set out the principles extracted by Kyrou J in this judgment save as necessary at the appropriate point in this judgment. The parties may take it that I rely upon what has been set out by Kyrou J at paragraphs [23] to [48].
[5][2008] VSC 281 at [23]-[48].
[6][2012] VSC 4 [97]-[98].
Obsolescence
Giovanni Gattini, the town planner called on behalf of the plaintiffs, deposed that there have been changes to the character of the property at No. 80 for in excess of 30 years. No. 80 has been wholly utilised as a car park associated with the commercial development on No. 82. There has not been any residential use since the dwelling on that lot was demolished. Mr Gattini deposed:
In my opinion, No. 80 … has formed part of the commercial strip, which extends from Lygon Street east down to the property since the 1980s. My inspection of the property revealed that the five ways intersection has four of its corners developed for a mix of uses including the Lyndhurst Hotel, McDonalds, a tattoo parlour and the “AldaCare”, a retailer of services and equipment for the aged at No. 82.[7]
[7]Gattini affidavit, paragraph 30.
Mr Gattini also identified that the five-ways intersection is “identified as supporting a potential landmark building”.
… Landmark buildings will typically be in excess of eight storeys high.
As a consequence of the planning scheme direction, there will be substantially higher built form in and around the intersection of Albion Street and Lygon Street. No. 82 Albion Street is identified as having significant development potential.[8]
[8]Gattini affidavit, paragraphs 33.1 and 33.2.
In closing, plaintiff’s counsel, responding to a question about the absence of construction on No. 80, submitted that:
It makes it obsolete because of the fact in my submission it now forms part of the commercial precinct because of its connection with No. 82 … The test as to whether the covenant has become obsolete is whether as a result of changes in the character of the property or the neighbourhood or other material circumstances the restriction is no longer enforceable or has no value. As I said, the position here in regard to No. 80 is that it has been a vacant block of land for a considerable period of time and on that basis there has been a change of character and on that basis the obsolescence is put relevant to No. 80.[9]
[9]Transcript of proceeding, p 108 (“transcript”).
Albeit, that counsel for the plaintiffs correctly identified the test referred to by Kyrou J in paragraph [26], the plaintiffs have not addressed the further principles referred to by Kyrou J in [27] to [33].
That is, the plaintiffs have not demonstrated that “a covenant could not be held to be not obsolete even if the purpose for which it was designed had become wholly obsolete, provided that it conferred a continuing benefit on persons by maintaining restriction on the user of the land.” Further, the plaintiffs have not demonstrated that “the continuance of the unmodified covenants hinders, to a real, sensible degree, the land being reasonably used, having regard to the situation it occupies, to the surrounding property and to the purpose of the covenant.”
In considering whether a covenant is “obsolete”, Kyrou J extracted at paragraphs [26] and [27] the following:
[26]A covenant is “obsolete” if it can no longer achieve or fulfil any of its original objects or purposes or has become “futile or useless”. Miscamble [1965] VR 596, 597, 601; Re Markin [1966] VR 494, 496; Re Robinson [1971] VR 278, 281; Greenwood (1992) V ConvR 54-444, 65,196 – 65,197; Pivotel (2001) V ConvR 54-635; [2000] VSC 264, [31]-[33]. A covenant is not obsolete if it is still capable of fulfilling any of its original purposes, even if only to a diminished extent. Miscamble [1965] VR 596, 597; Greenwood (1992) V ConvR 54-444, 65,197. The test is whether, as a result of changes in the character of the property or the neighbourhood, or other material circumstances, the restriction is no longer enforceable or has become of no value. Greenwood (1992) V ConvR 54-444, 65,196. See also Miscamble [1965] VR 596, 601. If a covenant continues to have any value for the persons entitled to the benefit of it, then it will rarely, if ever, be obsolete. Re Robinson [1971] VR 278, 282; Greenwood (1992) V ConvR 54-444, 65,197. A covenant could be held to be not obsolete even if the purpose for which it was designed had become wholly obsolete, provided that it conferred a continuing benefit on persons by maintaining a restriction on the user of land. Greenwood (1992) V ConvR 54-444, 65,197 – 65,198.
[27]Strictly speaking, the inquiry is as to whether the restriction of user created by the covenant is obsolete, rather than as to whether the covenant itself is obsolete. Greenwood (1992) V ConvR 54-444, 65,194.[10]
[10]Vrakas at [26] & [27].
The evidence relied upon by the plaintiffs is contained in paragraphs 29, 30 and 31 of Mr Gattini’s affidavit.[11] The submissions on behalf of the plaintiffs, in effect, repeat that evidence which is as follows:
There have been changes to the character of the property at No. 80 Albion Street; the property has been used as a car park in excess of 30 years. This property has been wholly utilised for a car park associated with commercial development on the adjoining property No. 82 Albion Street. It has not been in residential use since the dwelling on the lot was demolished. Now produced and shown to me … is a copy of a letter from the old City of Brunswick exploring the lease of a car park at No. 80 Albion Street.
In my opinion No. 80 Albion Street has formed part of the commercial strip, which extends from Lygon Street east down to the property since the 1980s. My inspection of the property revealed that the five-ways intersection has four of its corners developed for a mix of uses including the Lyndhurst Hotel, McDonald’s, a tattoo parlour and the “aldaCare”, a retailer of services and equipment for the aged at No. 82.
As I will outline further in my affidavit, No. 82 Albion Street is included in a Business 1 Zone which extends east into Albion Street. No. 80 fulfils the parking requirements for the “aldaCare” shop at No. 82.
[11]The Gattini affidavit sworn on 20 January 2012.
Mr Gattini did not agree that the purpose behind each restrictive covenant was to regulate population density. He said of the neighbourhood:
It’s generally homogenous, a residential subdivision of lots that are around 500‑odd square metres. They are uniform in size and they’ve basically been planned on a north-south axis. There is really not more you can say about it. It is fairly intact, particularly in the conservation area, it is a fairly intact residential subdivision, with the exception of what happens at the corner of Eddy Street where clearly the land use has never been a residential land use or has not been for a very, very long time.
…
Typically houses in this area would be fairly modest workers’ cottages, typically two, sometimes three bedrooms. That was the norm.[12]
[12]Transcript, p 37-38.
Whilst it might be said that the maintenance of a car park as an adjunct to a commercial usage on No. 82, is contrary to the character of the “neighbourhood” as described by Mr Gattini, “there is no activity than vehicle activity. There is no actual operation or build form on the land.”[13] My own observations on the view were such that the car park was not overly crowded which might have been as a result of the nature of the business being conducted at No. 82. It did not seem to be a high volume traffic business.
[13]Transcript, p 67.
Each of the covenants, insofar as they bear upon a vacant lot, still have work to do or, put another way, still have utility. Each of the covenants exclude any type of construction upon No. 80 which does not comply with the terms of the covenant. For instance, it would exclude a multi-level car park abutting No. 82. In the absence of a built form, it cannot be argued that the usage as a car park of limited size with limited vehicular traffic and without a built form, substantially impacts upon the character of the neighbourhood.
However, even if the town planners would cavil with my last statement, the plaintiffs do not establish in relation to the second limb of s 84(1)(a) that each of the covenants impede the reasonable user of No. 80. Kyrou J referred to Re Stani,[14] another Victorian authority, as follows:
… It must be shown that ‘the continuance of the unmodified covenants hinders, to a real, sensible degree, the land being reasonably used, having due regard to the situation it occupies, to the surrounding property, and to the purpose of the covenant.’[15]
[14]Unreported judgment, delivered 7 December 1976.
[15]Vrakas at [28].
The plaintiffs have not demonstrated that each covenant impedes all reasonable use.[16]
[16]Vrakas at [29]. It is not sufficient merely to show that the continued existence of the covenant would impede a particular reasonable use which is proposed by the applicant: Miscamble [1965] VR 596, 602-3. The applicant must show that the restriction will impede all reasonable uses. See the cases referred to in Stanhill Pty Ltd v Jackson [2005] VSC 169.
The plaintiffs do not submit that it would not be practicable to erect a dwelling on No. 80 which does not offend the limits or restrictions imposed by each of the covenants. The argument merely focuses on the nature of what is there and the change in the usage of No. 80 over a lengthy period of time to align it as a adjunct to the commercial usage at No. 82. That does not demonstrate that the covenant is obsolete. The covenant continues to secure a practical benefit with respect to the size and nature of any build form which may be contemplated.
Substantial injury
Pursuant to s 84 of the Act, the Court may modify or discharge a restrictive covenant upon being satisfied:
(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction: …
Counsel for each of the plaintiffs and the defendants were not apart in identifying what the principles were and how they ought to be applied. Even so, my task in arriving at a determination was not assisted by the plaintiffs’ failure to present any proposal for usage of Nos. 78, 80 and 82 other than in the abstract.
Mr Paradisio deposed that:
The subject land [Nos. 78 and 80] and the third described land [No. 82] have been conditionally sold to a third party for a mixed use development subject to various conditions, one of which that the covenants which affect the subject land be discharged or modified so as to permit a multi-unit residential development.[17]
[17]Affidavit of Paul Edward Paradiso sworn 18 April 2011, paragraph 6.3.
It is of note that two expressions are used in paragraph 6.3. The first is “a mixed use development”. The second is “a multi-unit residential development”. The distinction is relevant having regard to the further evidence which was adduced.
In cross-examination, Mr Paradisio said:
I have not seen the plans, but I do have – when I say that, yes, a basic design, a floor plan, but it’s not specific as far as details are concerned.[18]
[18]Transcript, p 18.
Mr Paradisio said that he did not have the plans but his agent may have the same.
With respect to the number of units in the proposed development, Mr Paradisio responded:
That I can’t answer because at one stage the talk – I don’t know because until an indication is given with regards to the restrictive covenants, the developers weren’t able to tell me how many units they can fit on the site.
…
There are two small buildings and one large building on No. 82.[19]
[19]Transcript, p 19.
Mr Paradisio could not say what height the proposed development might be. He was unable to identify provision for car parking. He could not indicate where balconies or windows might be situated. He did not produce the contract which he had signed. Accordingly, the terms and conditions were not before the Court, nor were any annexures such as proposed plans. I was asked to draw a Jones v Dunkel inference with respect to the absence of material. However, it is not so much that any inference ought to be drawn, there was simply no material before the Court which disclosed what was proposed for each of Nos. 78 and 80 together with 82. One would also assume that there would be a proposal for consolidation of the lots if it was proposed to build one contiguous dwelling on each of Nos. 78 and 80 and perhaps even consolidating the same with No. 82, depending upon what was proposed. There was no evidence presented to the Court regarding that.
When Mr Gantini was retained there was no planning proposal before him to assess.[20] During cross-examination, Mr Gantini anticipated that any construction on No. 82 would include a commercial development. He said:
Being a business zone doesn’t preclude it being used as apartments. The ground floor area is typically mandated by the planning scheme as being of a commercial use, and then above that typically in mixed use developments you have apartments above that. So I fully expect from my experience, Your Honour, that you will get some business development down in the lower areas. It won’t be core retail … because there isn’t a core retail focus behind that part of the intersection. But there will be apartments above it. So there might be a couple of cafes, maybe a medical centre, that sort of genre.
… Core retail is typically a supermarket, for example, an IGA or a bottle shop, those sorts of things.[21]
[20]Gattini affidavit, paragraph 11.
[21]Transcript, p 43-44.
Mr Gattini’s evidence was to the effect that using his setbacks and height restrictions there was potential for a three‑storey development on Nos. 78 and 80 with a maximum height of nine metres and that there was potentially a five‑storey development which could be erected on No. 82. When asked how many dwellings would form part of the whole structure at a maximum, Mr Gattini responded:
I haven’t done an analysis. To do an analysis without having a preliminary plan is just futile because there are a number of factors here. The apartments could be larger rather than smaller. Yield is driven by the size of the apartments themselves. If you have large apartments, you have less of them. If they are over multi-level or one or two levels, they will be of a different genre. They will be of a townhouse form, for example. So it is very difficult to extrapolate a number without formulating a plan.[22]
[22]Transcript, p 44.
One of the assumptions set out in the report prepared by Judy Cheung, the town planning consultant called on behalf of the defendants, was:
To my knowledge, no development design concept nor planning application has been prepared to date for the sites subject to the restrictive covenants.[23]
[23]Exhibit JC1 to the affidavit of Judy Cheung sworn 16 August 2012, p 3 (“the Report”).
The plaintiff’s counsel recognised the difficulty faced by not adducing evidence as to what was proposed. The closing submissions set out: “A lack of specific plans makes it more difficult for an applicant to show that there will be no substantial injury to persons entitled to the benefit of the covenant.”[24] However, I would go one step further and observe that not only is there a lack of specific plans but a complete lack of any proposal whatsoever. Mr Gattini concedes that he is unable to specify what number of dwellings will be incorporated into the built form. However, what is clear is that a number of apartments are proposed not just a slight increase in density by the inclusion of multiple town houses. In Prowse, Cavanough J at least knew that 18 apartments were proposed even if the proposed plans were vague. I do not have any such proposal before me. It seems that the intention of the developer is not to put forward a proposal to be considered during the course of adjudication but to seek the adjudication and then to develop to the maximum which might be permissible depending upon any parameters set. In that regard I concur with what has been set out by the defendants in closing, namely:
The applicants have failed to provide any plans or details of the proposed development as part of its application. While this does not mean that the application is defective, it does make the applicants’ task of showing that there will be no substantial injury more difficult. The applicants have not even provided an indication of what it is they (or the purchaser/developer as the case may be) intend to do if the covenant is discharged, save to say that they intend to build the maximum number of dwellings allowed by the planning scheme on the three parcels of land. This makes the Court’s ability to assess detriment almost impossible, especially when it comes to such matters as height, privacy, light and other amenities, noting that the burden of proof lies with the applicants.[25]
[24]Plaintiffs’ closing submissions, paragraph 8(b)(iv).
[25]Defendants’ closing submissions, paragraph 14.
“Amenities” in the proceeding paragraph would also include or be affected by increased population density, parking, increased noise in the neighbourhood and even loss of the character of the neighbourhood. I make that observation while recognising that in assessing the detriment caused by discharge or modification, the character of the neighbourhood is more a planning issue and the weight which ought to be given to it in exercising the discretion is somewhat limited.
The plaintiffs recognised that there will be injury to those that are entitled to the benefit of each of the covenants. Mr Gattini deposed relevantly that:
10.There will be injury to persons entitled to the benefit if appropriate building setbacks are not provided between future development and existing properties having the benefit.
11.Whilst there is no planning proposal before me to assess, I am satisfied that a strict application of the setbacks recommended by me, will remove any substantial injury to the beneficiaries.[26]
[26]The Gattini affidavit.
In closing submissions, the plaintiff set out:
Mr Gattini in his evidence states that he has taken a conservative approach to the setbacks that ought to apply if injury is not to be caused on the beneficiaries. That the setbacks which he has stated are in excess of the ResCode requirements.
Mr Gattini agrees that the issues of privacy and architecture style can’t be addressed in the absence of plans. He states that those issues will be addressed in the town planning application.[27]
[27]Plaintiffs’ closing submissions, paragraphs 31-32.
Further, as to other issues of injury raised by Ms Cheung, the plaintiffs set out in the closing submissions as follows:
· Overlooking, overshadowing and visual bulk – it is submitted that those issues are dealt with by the setbacks in conjunction with the consideration of those issues in the town planning application.
· Noise – it is submitted that it was Mr Gattini’s evidence that a development of this type would not generate excess noise.
· Traffic and parking – it is submitted that Albion Street is a busy street and the development will add little to the traffic. The parking would be dealt with in the planning process.
· Neighbourhood character – it is submitted that the development which has occurred in the neighbourhood has affected neighbourhood character.[28]
[28]Plaintiffs’ closing submissions, paragraph 34.
During evidence Mr Gattini said:
… What I have addressed myself is to the impact of height, for example.
… The impacts of the height relative to the current view that’s enjoyed by the residents within the land that’s the subject of the benefit. Potential shadow impacts. I have looked at the need to integrate any future development by virtue of creating buffers or backyards similar to what exists there at the moment between the properties, and basically the overall portions of the development, primarily focusing on sculpting a very clear height which is limited to nine metres in all occasions and a built form envelop, if you like.[29]
[29]Transcript, p 33.
… That could be one, but the difficulty with that, sir, is that you can’t assess privacy in this case because there are no plans.[30]
[30]Transcript, p 34
In response to a question about where windows and balconies would be situated, Mr Gattini said:
It depends where they are situated, what height they are at, whether they are obscured or not obscured. It is conjecture.[31]
[31]Transcript, p 34.
In response to a question:
… Even with the setbacks and height restrictions proposed by you, you can’t give the defendant any comfort as to privacy?[32]
The response was that:
Not until a set of plans is developed. You asked me the first question, have I seen plans. No, I have not.
[32]Transcript, p 35.
The three‑storey development mooted by Mr Gattini only had an equivalent in Lygon Street where Mr Gattini said that typically Victorian two-storey shops sit somewhere at the eight metre mark. From my own observations, there were no buildings of the equivalent of three-storeys in Albion Street.
The following exchange took place:
Even with your height restrictions and setbacks, any development is likely to be able to be seen from 76. That’s right, isn’t it?---That’s correct, yes.
I want to suggest to you that because of the trajectory of the sun there still will be overshadowing implications with all the restrictions and setbacks?‑‑‑What I have done on that particular setback is I have applied a more stringent setback required to ResCode to ensure that there is, if anything, minimal overshadowing. The difficulty with assessing shadowing impacts is you need a strike point or a strike point within a structure to establish what the shadow would be.
And as we come back to there being no plans. It is very difficult to do?‑‑‑Correct. It’s circular.
But the point behind that is that again, because of the absence of plans, you can’t provide the defendant with any comfort as to the extent of overshadowing. It may be minimal, you said?---I believe it will be minimal from my experience, but I can’t validate that because I don’t have plans.[33]
[33]Transcript, p 36.
As to setbacks, Mr Gattini set out the following:
27.Recommended setbacks for No. 78 Albion Street:
· Front ground floor setback is to be consistent with No. 76 Albion Street, its eastern neighbour, or five metres, whichever is the lesser.
· Front first and second floor setbacks 6.5 metres.
· Side setbacks to No. 76 Albion Street as follows:
o 2 metres at ground and first floor.
o 4.5 metres at the second floor.
· Rear setback to No. 74-78 Glenmorgan Street as follows:
o 8 metres at ground and first floor.
o 9 metres at second floor.
27.1Building wall height should not exceed three storeys or 9 metres from natural ground level.
28.Recommended setbacks for No. 80 Albion Street:
o Front ground, first and second floor 3 metres.
o Side setback to No. 78 Albion Street and 82 Albion Street of 0 metres.
o Rear setback to No. 76 and 78 Glenmorgan Street as follows:
§6 metres at ground floor.
§7 metres at first floor.
§8 metres at second floor.
28.1Building wall height should not exceed three storeys or 9 metres from natural ground level.
…
28.4… No. 82 does not have the burden of the covenant and is favoured by the Business 1 Zone which will allow substantial building height in excess of four to five storeys. The impact of development on No. 80 will be significant and therefore this lot is unlikely to be used for a single dwelling. The residential amenity of the lot is substantially compromised by the shadows and building bulk exhibited at No. 82. Furthermore, it is likely that future motor vehicle access for the properties will need to be rationalised to one or two entries. In the future, vehicles reversing into Albion Street will be discouraged and even prevented from doing so by the Council.[34]
[34]Gattini affidavit, paragraphs 27-28.
In response, Ms Cheung said:
I consider that the side and rear setbacks for No. 78 Albion Street proposed by Mr Giovanni Gattini are reasonable, meeting the requirements under Clause 55 (ResCode). The 5 metres front setback for No. 78 proposed by Mr Giovanni Gattini is also reasonable, as it is consistent with the existing front setback at No. 76 Albion Street.
Without a development proposal, I am unable to conclude whether or not the setbacks proposed for No. 80 Albion Street would result in adverse amenity impact on No. 76 Albion Street. Specifically, the modifications sought to the restrictive covenant, … could permit a contiguous build form and mixed use development across No. 78, No. 79 and No. 80 Albion Street. Many design and land use factors could influence the degree [of] off-site impacts from a multi-unit and/or multi-use development.[35]
[35]The Report, paragraphs 16-17.
However, Ms Cheung also said this:
Although the side setbacks proposed for No. 78 Albion Street to No. 76 Albion Street are reasonable, no side setback is proposed by Mr Gattini for No. 78 Albion Street to No. 80 Albion Street.
The maximum building height of 3 storeys or 9 metres proposed by Mr Gattini meets the ResCode standard. However, I consider that it does not meet the objectives in ResCode based on my taking into consideration the applicable Neighbourhood Character Guidelines. The relevant ResCode objectives are:
Clause 55.02-1 Neighbourhood character objectives.
“To ensure that the design respects the existing neighbourhood character or contributes to a preferred neighbourhood character.
To ensure that development responds to the features of the site and the surrounding area.”
Clause 55.03-2 Building height objective
“To ensure that the height of buildings respects the existing or preferred neighbourhood character.”[36]
[36]The Report, paragraphs 30-31.
Ms Cheung responded to a request to clarify her conclusions by letter dated 15 August 2012 which is appended to her report. It relevantly sets out as follows:
Even with the limitations recommended by Gattini, the owners of No. 76 Albion Street will, or are likely to, suffer substantial prejudice. This is because the limitations proposed by Mr Gattini do allow a building envelope that can accommodate a contiguous, three storey build form and mixed-use developed across No. 78, No. 79 and No. 80 Albion Street. In the absence of a detailed development proposal to demonstrate otherwise, it is my opinion that the main adverse amenity impact from such a development will be:
· Overlooking (privacy impacts)
· Overshadowing
· Visual bulk
· Noise
· Traffic & parking
· Neighbourhood character
Specifically, assuming that a developer builds according to the height and setbacks recommended by Mr Gattini, there will be:
(a)significant potential for overlooking, noting that the limitations proposed by Mr Gattini do not restrict the location, size and treatment of fenestration and balconies. Any window/balconies above the first floor, south facing will give a view into the back yard of No. 76 Albion Street [and presumably each of the adjacent properties in Glenmorgan Street], and accordingly will have a significant impact in terms of privacy.
(b)the back yard of No. 76 Albion Street is located to the south of any proposed development. The sun travels from north-east of the back yard to the north-west. Back yard will, assuming the developer maximises the building envelope defined by the restrictions suggested by Mr Gattini, very likely be overshadowed by the development for most of the afternoon.
(c)in addition, there will be significant visual bulk seen from No. 76 Albion Street.
(d)while it is hard to assess how many units could be constructed on the applicant’s block, there is no question that there will be increased traffic noise and congestion. Also, the development will significantly increase the number of neighbours abutting No. 76 Albion Street and this will have significant overall noise impacts.
(e)there is a significant potential that the character of the neighbourhood will be eroded. No. 76 Albion Street is located on the south side of Albion Street. The houses are of an Edwardian nature, and the majority of buildings (dwellings) are single-storey and located on blocks of land of the same dimensions. Assuming that a developer builds to three storeys across three lots, any such development will likely impact on the aesthetics of the streetscape.
During cross-examination of Ms Cheung, the following exchange took place:
… I put to you … that the set-back – this in relation to No. 80, so we’re both on the same property – that the set-back for the front ground, first and second floors at three metres was an appropriate level of set-back?---I consider it’s not appropriate.
The position is, I put to you, that as we get closer to the intersection of Lygon Street, that the commercial nature of the properties changes?---In my opinion, the commercial use is confined in No. 82.
The position, however, is that No. 82 and No. 80 are inextricably linked; is that not the position?---In terms of use they are related, but certainly not build form.
At the moment No. 80 has no build form on it at all?---That’s precisely right.
…
…
And therefore I put to you again that No. 82 and No. 80 are inextricably linked in regard to their use?---It is linked as a supporting role, not as an integrated or a development with a build form across the two blocks. From a town planning point of view, that’s different. In terms of impact and intensity, having a car park at the back is generally considered acceptable. Next to a commercial use it would be considered as a full encroachment into residential zone.
I put it to you that the location of No. 80 impacts on the set-back, the applicability of set-back of three metres. What I mean by that is that as No. 80 gets closer to Lygon Street it acquires a commercial flavour?---I would not agree.[37]
[37]Transcript, p 73-74.
Ms Cheung made a distinction between a residential development and a mixed residential commercial development. Albeit, that she agreed that set-backs as proposed by Mr Gattini were appropriate for residential use, she did not agree that they were appropriate if there was a mixed use.[38] She did however, agree that location of outdoor dining areas or tables with respect to any proposed café, vents and overlooking could be dealt with substantially at the planning stage.[39]
[38]Transcript, p 75.
[39]Transcript, p 76.
Ms Cheung was specifically asked to reconcile her agreement that set-backs for at least No. 78 were appropriate with what she had set out in her letter of 15 August 2012. Mr Moffatt asked her: “You have conceded that the set-backs which have been recommended by Mr Gattini between No. 76 and No. 78 were an appropriate level of set-back?” Her response was: “That is correct. However, that is just one measure, one small measure in terms of meeting the standards. When you build the development you have to consider everything together creating – what sort of impact it is creating, not just the set-back, for example. Set-back can be harmless if there are no windows facing No. 76, for example, and it can be harmless if it is just a single dwelling. But when you are considering multiple units and potentially balconies and windows, you don’t know where they are going and the size of it and the treatment of it, then the impact is there.”[40]
[40]Transcript, p 81.
The two town planners gave divergent opinions as to traffic conditions in Albion Street. Mr Gattini deposed: “Since the 1920s, the properties facing Albion Street have experienced substantial increases in traffic volumes. The convergence of north bound traffic from Nicholson Street to Lygon Street has further compounded the number of vehicles entering Albion Street. The lack of direct links to Bell Street due to the existence of former quarries and the Merri Creek has substantially impacted the neighbourhood at Albion Street.”[41] The traffic volume in Albion Street is to be contrasted with that in Glenmorgan Street which enjoys low levels of vehicle movement.
[41]Gattini affidavit, paragraph 34.
In evidence, Mr Gattini said in relation to vehicle movement:
Yes, it is because what happens is that it is kind of a five-way intersection. Those wanting to avoid the trams on Lygon Street will go down Albion Street and then go into Nicholson Street. Yes, there are trams in Nicholson Street, but you can travel a couple of kilometres before you get to the tram tracks on Nicholson Street. Nicholson Street is a completely different dynamic. It is a much wider road.
…
Albion Street, if you cross Lygon Street, continues onto the City and Moonee Valley. In fact it takes you into Essendon, Pascoe Vale Road in fact.[42]
[42]Transcript, p 46.
Ms Cheung did not agree that traffic movements in Albion Street were significant. She said:
It’s a normal residential street in a suburban area. It’s not busy. I could park, even slow down my car and there are no cars behind me awaiting or hurrying me to find a car park, for example… [at] about lunchtime.
…
While I was there the street was very quiet. There is just occasionally cars travelling through, but I could walk around, cross the road easily without having to look too much. So I would not consider it as a busy residential street; it is a normal residential street.[43]
[43]Transcript, p 76-77.
Pursuant to s 54 of the Evidence Act, I may draw any “reasonable inference” from what I saw, heard or otherwise noticed while on the view.
My observations at the view in effect were consistent with those set out in the affidavit of Mr Gattini and the report of Ms Cheung. I made the following observations:
· Glenmorgan Street is relatively homogenous with the heritage overlay maintaining the character of that street.
· The east side of Eddy Street is dominated by the commercial building housing the AldaCare business.
· The commercial and/or retail buildings in Lygon Street back onto the west side of Eddy Street and, if anything, detract from the character of the “neighbourhood”.
· The north side of Albion Street is something of a “mish-mash” with a townhouse/unit development from the corner with Lygon Street extending east to the halfway point of No. 76.
· From the townhouse/unit development to the west side of Inverness Street on the north side of Albion Street, the houses are reasonably consistent with the character of the neighbourhood.
· From the east side of Inverness Street on the north of Albion Street there is then located what appears to be an almost derelict factory before residential construction recommences.
· On the south side of Albion Street from No. 78 through to the east boundary of the neighbourhood the house construction is again fairly homogenous, maintaining the character of the “neighbourhood” save for one two-storey construction and a modern development at No. 56 comprising of two attached dwellings (townhouses).
· There was a contrast between traffic flows in Glenmorgan Street which was a quiet residential street with little vehicular movement and Albion Street which had notable traffic movement. It is inescapable to conclude that Albion Street is used as a thoroughfare from Lygon Street to Nicholson Street as well as servicing the local community. Notwithstanding that, I did not observe at the time of the view, which occurred in the midday, that Albion Street was overly congested.
I refer to the summary of Kyrou J in Vrakas at [34] to [46]. Bearing in mind the matters set out as extracted by Kyrou J it cannot be said that the proposed modification or discharge of the covenant would not substantially injure any person entitled to the benefit of it. Counsel for the plaintiffs recognised that “the absence of objectors to discharge or modification of a covenant will not of itself necessarily satisfy the onus of proof.”[44] I concur with the reasoning set out by Daly AsJ in Grant v Preece[45] at [91], namely, that there might be a raft of reasons why those who might be affected by a proposed modification or cancellation will choose not to participate in an application. In any event, the defendants, as proprietors of No. 76 clearly demonstrate that they are affected by any proposed modification or cancellation. I have chosen not to use the word prejudice because that is for determination by me.
[44]Plaintiffs’ closing submissions, paragraph 8(c)(iii).
[45][2012] VSC 55.
Kyrou J in Vrakas set out at [41]:
Town planning principles and considerations are not relevant to the Court’s discretion of whether an application has established a ground under s 84(1).
However, at [46] Kyrou J recognised that:
Town planning principles and considerations may be relevant to the exercise of the Court’s residual discretion …
I perceive that the plaintiffs’ application is a “tail wagging the dog” application. What is in effect put to me is that:
· An absence of any concrete proposal as to the number of “houses” or “dwellings” or whether such be residential or commercial.
· A submission which can be précised as - provided that set-backs to define the building envelope are specified, the town planners will appropriately resolve to overcome any injury which is occasioned by the proposed modification or discharge by dealing with:
(i)visual bulk;
(ii)overlooking;
(iii)overshadowing;
(iv)noise;
(v)traffic and parking.
I do not find any merit in the way that the plaintiffs have put their argument (even disregarding how I perceived it as referred to in the preceding paragraph) as it is for the Court to determine if the proposed discharge or modification “will not substantially injure the persons entitled to the benefit of the restriction”. It is not an exercise in delegation whereby rough parameters can be arrived, which would permit the town planners to fine tune the final outcome.
The plaintiffs contended that I ought to bear in mind in exercising the discretion what could be erected on Nos. 78 and 80 in the absence of any modification of the covenants.
In Prowse Cavanough J said:
The question is: what situation should be compared with the situation that will result from the discharge or modification of the covenant? The plaintiff submits that the relevant comparator is or maybe a hypothetical one, namely the situation which would attain if full advantage had been taken or were now to be taken of such liberty as is allowed to the proprietor of the burdened property under the existing covenant. For example, if the existing covenant would not have prevented, or would not now prevent, a three-storey single house being built on the site as close as possible to all four boundaries, then, according to the plaintiff, any objection based on bulk, loss of views, overlooking or the like is to be assessed as though such a house were now standing or could now be built on the burdened property. On the other hand, the defendants submit that the Court should look at the actual present physical state of the burdened property (and of the benefit properties) and then take into account the realistic prospects or chances of alterations to the burdened property in the foreseeable future under the existing covenant.
In my view, the true position lies between these two approaches. As Coughlin J said in Fraser v Di Parlo (footnote omitted) the injury which must be looked at is in jury to the benefit of the restriction. If that is to be established, the comparison must be between the benefit originally enjoyed and the effect that the modification will have upon it. In Re Ulman (footnote omitted) McGarvey J observed that:
The proper approach is to compare what the covenant before modification permits to be done on the land which it binds with what it would permit to be done after modification.
Indeed, in a New South Wales case referred to by McGarvey J, Re Mason and the Conveyancing Act, (citation omitted) Jacobs J said, albeit in connection with issues arising under the equivalent of s 84(1)(a) rather than s 84(1)(c), that the applicant:
Is entitled to approach the matter by taking, as it were, the worst that could be done under the restrictions imposed by the covenant and to compare that with the effect that the proposed block of home units would have …
On the other hand, as Jacobs J himself recognised in that very case, the benefit of a restrictive covenant is a right of property and can be very valuable, and there is no general power given to the Court to extinguish such rights. … In that light, it seems to me that it would be artificial and wrong to pay no heed at all to the reality of the situation. So, even though the plaintiff is entitled to ask the Court to take into account the ‘worst’ that could be done under the existing covenant, the defendant is also entitled to invite the Court to consider the realistic probabilities of the plaintiff actually bringing about the ‘worst’ that could be done under the existing covenant.[46]
[46]At [103]-[104].
Although I concur with the analysis set out by Cavanough J in Prowse, my task is easier in that I was not invited to treat each of Nos. 78 and 80 in isolation. The substance of the plaintiff’s submission was that I ought to consider the same as though there was one continuous structure to be erected on a consolidated No. 78, 80 and 82.[47] Further, it was also put that it was envisaged that the existing commercial building on No. 82 would be demolished “and development will occur, and therefore the continuing development into No. 80 is consistent with the connection between those two lots.”[48]
[47]Transcript, p 109.
[48]Transcript, p 109.
An imposing continuous structure to accommodate a mixed use of residential and commercial is something altogether different to individual structures on each of the lots. A single continuous development would constitute a substantial change in the character of the south side of Albion Street near the western corner of the neighbourhood. By increasing the existing site coverage and erecting a building envelope with a vastly contrasting visual bulk, the character of the neighbourhood is eroded. Particularly, such imposing bulk impacts upon No. 76 and will undoubtedly impact upon those allotments to the rear of Nos. 78 and 80 in Glenmorgan Street and perhaps even further to the east in Glenmorgan Street. Further, albeit that each of the town planners agreed that the allotments to the north side of Albion Street down to Alsace Street are part of the neighbourhood, such allotments are not affected by either covenant. The modification or discharge of the existing covenants to allow a continuous building potentially sets a precedent for further applications to be made with respect to the south side of Albion Street in a way which causes more impact than the two townhouses erected on No. 56 could possibly invite. That alone or in conjunction with the issues which ensue by reason of the absence of any firm development proposal, is sufficient to demonstrate that the plaintiffs have not discharged the onus of demonstrating that there will not be substantial injury.[49]
[49]The plaintiffs accepted that the onus of establishing the matters set out in a limb of s 84(1)(a) or in s 84(1)(c) on which he or she relies (paragraph 8(c)(ii) of the plaintiffs’ closing submissions).
Cavanough J said in Prowse:
Finally, in relation to substantial injury, I would add that the Court applies a subjective test and is prepared to take into account intangibles. (Footnotes omitted) Thus in Frasers Lorne Pty Ltd v Burke (footnotes omitted) Brereton J referred with approval to an earlier decision (footnote omitted) in which it was said that the injury might be of an intangible kind, for example impairment of views, intrusion upon privacy, unsightliness, or alteration to the character or ambiance of the neighbourhood; and that the subject taste, preferences or beliefs of particular individuals may, within the limits of reasonableness, give rise to injury in a relevant sense to those individuals. [50]
[50]At [106].
The lack of any specific proposal does not permit an assessment of such intangibles.
Finally, I adopt the words of Cavanough J in Prowse as observations which are equally germane to this application. Cavanough J said:
In any event, even if I were required to assume that at the building of equivalent height, bulk and footprint (including a 36 car basement garage) would be built on the site as a single dwelling if the covenant were not modified or removed, still I would not be satisfied that the modifying or removing the covenant would not substantially injure persons entitled to the benefit of the covenant. One of the objects of the covenant is to constrain population density in the area, including on this particular site. That object would be threatened far more by a development comprising 18 apartments than by a single dwelling, however big. I note in that connection the large number of north and east facing windows in the proposed apartment development. Although some screening may be required for some windows under ResCode, no screening would be required for rooms deemed non‑habitable, such as bathrooms, corridors, storage areas, laundries and the like. Plainly, the risk and prevalence of overlooking is likely to be far greater with an 18 unit development than with a single dwelling. In my view, that alone is sufficient to show that the plaintiff has failed to negative substantial injury.
Accordingly, I dismiss the proceeding. The plaintiffs will pay the defendants’ costs of the proceeding including reserved costs.
SCHEDULE OF PARTIES
| PARMURRO NOMINEES PTY LTD (ACN 005 355 108) | Firstnamed Plaintiff |
| PAUL EDWARDS PARADISO | Secondnamed Plaintiff |
| ROSEMARY PARADISO | Thirdnamed Plaintiff |
| BRIAN DOUGHTY | Firstnamed Defendant |
| GLENYS KAYE DOUGHTY | Secondnamed Defendant |
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