Pearson v Richardson
[2012] TASSC 71
•24 October 2012
[2012] TASSC 71
COURT: SUPREME COURT OF TASMANIA
CITATION: Pearson v Richardson [2012] TASSC 71
PARTIES: PEARSON, Andrew Martin
PEARSON, Louise Jane
v
RICHARDSON, Tony Leigh
LUTWYCHE, Leanne Maree
THE RECORDER of TITLES
FILE NO: 799/2011
DELIVERED ON: 24 October 2012
DELIVERED AT: Hobart
HEARING DATE: 21 March 2012
JUDGMENT OF: Porter J
CATCHWORDS:
Real Property – Restrictive covenants – Proceedings to discharge, extinguish or modify restriction or easement – Statutory removal and interpretation – Tasmania – Extinguishment or modification where restrictive covenant would impede a user of land in accordance with a planning scheme – Whether "in accordance with a planning scheme" means with the bare terms of a scheme or extends to approvals and permits given or granted under it – Provision not confined to general types of user but extends to specific characteristics of the particular user.
Conveyancing and Law of Property Act 1884 (Tas), s84C(1)(b).
Aust Dig Real Property [1521]
Real Property – Restrictive covenants – Proceedings to discharge, extinguish or modify restriction or easement – Restriction obsolete or reasonable user of land impeded – Covenant restricting subdivision or development of servient land into more than four lots and restricting buildings to one single dwelling or stratum flat per lot – Approval for 10 lot subdivision – Changes in character of neighbourhood by way of other dense subdivisional development – Restrictive covenant capable of fulfilling its original objects at least in part – Restrictive covenant not obsolete.
Conveyancing and Law of Property Act 1884 (Tas), s84C(1)(a).
Ashoil Holdings Pty Ltd v Fassoulas [2005] NSWCA 80; Vrakas v Registrar of Titles [2008] VSC 281, applied.
Aust Dig Real Property [1521]
Real Property – Restrictive covenants – Proceedings to discharge, extinguish or modify restriction or easement – Extinguishment or modification permitted where it would not injure the persons entitled to the benefit of the restrictive covenant – Covenant restricting subdivision or development of servient land into more than four lots and restricting buildings to one single dwelling or stratum flat per lot – Approval for 10 lot subdivision – Changes in character of neighbourhood by way of other dense subdivisional development – Dominant lands provide a buffer of undeveloped land between servient lands and existing subdivision – Not established that the extinguishment will not injure the persons entitled to the benefit of it.
Conveyancing and Law of Property Act 1884 (Tas), s84C(1)(e)
Vrakas v Registrar of Titles [2008] VSC 281; Frasers Lorne Pty Ltd v Burke [2008] NSWSC 743, applied.
Aust Dig Real Property [1521]
REPRESENTATION:
Counsel:
Appellants: P L Jackson
Respondents: D J Barclay
Recorder of Titles No appearance
Solicitors:
Appellants: Darrell Grey
Respondents: Page Seager
Recorder of Titles Director of Public Prosecutions
Judgment Number: [2012] TASSC 71
Number of paragraphs: 109
Serial No 71/2012
File No 799/2011
ANDREW MARTIN PEARSON and LOUISE JANE PEARSON
v TONY LEIGH RICHARDSON, LEANNE MAREE LUTWYCHE
and THE RECORDER of TITLES
REASONS FOR JUDGMENT PORTER J
24 October 2012
Introduction
This is an appeal from a decision of the Recorder of Titles by which the Recorder extinguished a restrictive covenant which burdened the land of the respondents, T L Richardson and L M Lutwyche. That land is at 228-230 Opossum Road, Norwood in Launceston. The covenantors are the respondents. The appellants, A M and L J Pearson, own the property at 238 Opossum Road, Norwood. That property has the benefit of the covenant which was created by an instrument made on 3 June 2004 and registered on 13 July 2004.
The appeal principally concerns the construction of a provision of the Conveyancing and Law of Property Act 1884 (the Act) by virtue of which the Recorder purported to extinguish the restrictive covenant. The particular provision is s84C(1)(b), but I will set out the subsection, and a further relevant subsection, in full. I note that by virtue of s84A, a restrictive covenant is "an overriding interest" as referred to in s84C(1).
"84C Discharge or modification of overriding interests
(1) On the application of a person having an interest in land subject to an overriding interest (not being an overriding interest having effect by virtue of a plan of subdivision) the appropriate tribunal may, by order, extinguish or modify the interest if it is satisfied —
(a) that, by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which it may deem material, the interest has become obsolete;
(b) that the continued existence of the interest would impede a user of the land in accordance with an interim order or planning scheme, or, as the case may be, would, unless modified, so impede such a user;
(c) that the continued existence of the interest would impede some reasonable user of the land for public or private purposes, not being a user referred to in paragraph(b), or, as the case may be, would, unless modified, so impede such a user;
(d) that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the interest have agreed, either expressly or by implication, to the extinguishment or modification of the interest; or
(e) that the proposed extinguishment or modification will not injure the persons entitled to the benefit of the interest
…
(6) An overriding interest shall not be extinguished or modified under this section on the grounds referred to in subsection (1)(c) unless the tribunal is satisfied that the interest, in impeding the user of land, either —
(a) does not secure to persons entitled to the benefit of the interest any practical benefits of substantial value or advantage to them; or
(b) is contrary to the public interest —
and that money will be an adequate compensation for the loss or disadvantage (if any) that any such person will suffer from the extinguishment or modification."
Background
In February 2003 the respondents entered into an agreement for the purchase by them of about 6.5 acres of land which was then comprised in folio of the Register volume 139006 folio 1. The vendors were I N Mackie and K E Mackie. The Mackies were also the owners of adjacent land comprised in folio of the Register volume 139006 folio 2 which was some 14 acres in area. A condition of the sale agreement was that the respondents would enter into a restrictive covenant which burdened the land they were to purchase and benefited the land retained by the Mackies. The transfer of the land comprised in folio 1 of volume 139006 was registered on 13 July 2004, the same date as the registration of the instrument creating the restrictive covenant.
The terms of the covenant were that the respondents covenanted with the Mackies:
"to the intent that the burden of the covenant may run with and bind each and every part of the servient land and that the benefit thereof may be created in favour of the land comprised in Folio of the Register Volume 139006 Folio 2 and each and every part thereof and the proprietor or proprietors thereof their personal representatives heirs and assigns for the time being to observe the following stipulations:-
1Not to subdivide or develop the servient land into a greater number of allotments than Four (4) or erect more than one stratum flat on each allotment with the intent that no more than Four (4) dwellings or stratum flats shall be constructed on the entire servient land."
Subsequently, in April 2005, the Mackies divided up the land comprised in folio 2 of volume 139006. The folios for those four lots were 1, 2, 3 and 4 of volume 143441. The appellants' land is comprised in folio 4 of volume 143441. The land comprised in folio 3 was in turn divided into two lots and is now represented in folios 1 and 2 of volume 152362, respectively owned by M and V Scott, and B and R Littlejohn. J Upston and K Andrew are the registered proprietors of folio 1 of volume 143441, whilst C and L Chugg own the land comprised in folio 2 of that volume. It follows that all of the lands comprised in folios 1, 2 and 4 of volume 143441, and folios 1 and 2 of volume 152362, have the benefit of the restrictive covenant.
In October 2005, the respondents subdivided into three lots the land they purchased from the Mackies. Those lots are comprised in folios 5, 6 and 7 of volume 145016. Later, in December 2007, the lot represented in folio 5 was sold to the Littlejohns. In July 2008 the respondents obtained approval from the Launceston City Council for a 10 lot subdivision of their remaining land as comprised in folios 6 and 7 of volume 145016. All of that land remains servient land under the restrictive covenant.
The relevant planning scheme is the Launceston Planning Scheme 1996 (the Scheme). I will return to its provisions but presently note that in the zone applicable to the respondents' land, subdivision is a discretionary use. In any event, because of s81(2) of the Local Government (Building and Miscellaneous Provisions) Act 1993, the application for approval of the subdivision plan had to be made as though it were an application for a discretionary permit under s57 of the Land Use Planning and Approvals Act 1993. The Council took the view that the existence of the restrictive covenant did not affect its ability to determine the application for the permit. However, it seems to have later determined, in accordance with what the respondents were told in a letter of 27 September 2010, that the removal of the covenant was "not contrary to the intent and requirements of any relevant provisions of Launceston Planning Scheme." [sic]
Because the number of lots contained in the approved subdivision exceeded four, on 22 April 2010 the respondents applied to the Recorder for the restrictive covenant to be extinguished. The respondents relied on s84C(1)(a), (b) and (e) of the Act. The appellants became parties to the proceedings[1]. The application took a long time to resolve but the respondents ultimately succeeded on the basis of subs(l)(b). The Recorder of Titles took the view that the respondents' application must succeed as the subdivision was a development in accordance with the planning scheme. The Recorder also took the view that the provision did not give any discretion to do anything other than to extinguish the covenant. In a letter to the parties of 18 August 2011 notifying them of the decision, the Recorder did not refer to the other bases on which the application had been made, and from the material which I have, she does not appear to have considered them.
The grounds of appeal and the course of these proceedings
[1] C P and L K Chugg also applied to become parties to the proceedings as the owners of the land comprised in folio 2 of volume 143441. They opposed the application. They were not served with the notice of appeal in these proceedings, nor were they mentioned during the course of the hearing. In the period during which this judgment was reserved, I had the Registrar write to them giving them an opportunity to be heard if they wished, preferably by way of written submissions. The Registrar was told that they were content to rely on the Pearsons' submissions, and did not want to be heard.
The notice of appeal contains 11 grounds. Grounds 1 and 2 raise an issue as to whether the Recorder was required to exercise the jurisdiction under s84C(1)(b) personally, and to the extent that there was a delegation of the function, the Recorder had no power to do so. Grounds 3 and 4 complain of a failure to make any or any adequate findings of fact, and to give any or any adequate reasons for the particular finding that the covenant would impede a user of the land and in relation to the ultimate decision. Grounds 5 and 6 raise a construction point as to the nature of "a user of land in accordance with … a planning scheme", whilst ground 7 primarily alleges error in ruling that s84C(1)(b) did not confer a discretion. Ground 8 alleges a failure to afford procedural fairness to the appellants by failing to convene a hearing. Grounds 9 to 11 raise complaints about the failure to make a consequential order for compensation under s84(7) and procedural fairness issues associated with the making of such an order.
At the hearing of the appeal, the respondents relied on an affidavit sworn by the Recorder, Ms Maria Kawa, and filed by the solicitor acting on her behalf. She was cross-examined on that affidavit.[2] The principal issue raised was the question of the delegation issue, but counsel for the respondents asked the Recorder what her attitude would be if the appeal were to succeed, and the matter were remitted to her for reconsideration. Ms Kawa replied that she would not consider the application further but would apply under s84G[3] of the Act, to have the proceedings removed into this Court. Additionally, the respondents conceded grounds 9 to 11 as to the compensation order.
[2] The Recorder did not appear in her own right at the hearing of the appeal, and took no other part in the proceedings.
[3] "84G Determination of applications by Supreme Court
After some discussion, counsel agreed that in light of Ms Kawa's evidence, and for the sake of convenience, I should take a particular approach to this appeal. Counsel agreed that I should begin with the "core issue" and resolve grounds 5 and 6, and then determine ground 7 if necessary. Counsel further agreed that if the appeal failed on grounds 5 and 6, but were I to hold as to ground 7 that a discretion existed, I should exercise the discretion on the basis of the materials before the Recorder. They also agreed that I should determine the other bases of the respondents' application were the core issue to be resolved against the respondents or any discretion not exercised in their favour, and that if necessary I should determine the compensation issue. I am to ignore grounds 1 to 4, and ground 8. Part of the reasoning was that if the appellants succeeded only on grounds 1 to 4 or 8, (and grounds 9 to 11 in any event having been conceded), the matter would be remitted to the Recorder, but would then almost inevitably find its way back to this Court.
Of course, this Court would have no jurisdiction unless and until an order under s85G was made. However, s85F(4) relevantly provides that on an appeal, this Court may quash or vary any order of the Recorder, "or … exercise any jurisdiction exercisable by [the Recorder] in the proceedings to which the appeal relates". The same position is reached as a result of Supreme Court Rules 2000, r693 (applicable because of r704), with the additional aspect that r693(8) enables the Court to give or make any judgment the Court or judge considers should have been given or made. For those reasons, I will proceed as outlined.
Grounds 5 and 6
In the letter of 18 August 2011 to the parties, the Recorder said that the covenant was extinguished "because its continued existence will impede the use of [the respondents'] lands, ie as unqualified [sic] subdivision of those lands as per the approval … from the … Council as specified by the Launceston planning Scheme 1996". In her affidavit filed in these proceedings, the Recorder outlined her decision-making process. Ms Kawa deposed that:
· she looked at the Parliamentary clause notes for the Conveyancing Law and Property Bill 1997, as something which might provide assistance in interpreting s84C(1);
· in her view it was clear that Parliament's intention by the insertion of s84C "was that a private restrictive covenant should not hold up development, if such development is in accordance with an interim order or planning scheme";
· after considering the Parliamentary clause by clause commentary, she formed the view that the "application must succeed, and the restrictive covenant had to be removed" because she did not believe she had a discretion under s84C(1)(b) to do anything other than to remove it;
· she formed the view that the correct interpretation of s84C(1)(b) was that if a restrictive covenant impeded a user of land acting in accordance with an interim order or planning scheme or if the restrictive covenant unless modified will impede such use and once she had made such a finding, she was required to order removal of the restrictive covenant.
Grounds 5 and 6 are in the following terms:
"5The Recorder erred in fact and in law in determining that the continued existence of the covenant will impede the use of the burdened land.
6The Recorder misdirected herself as to the test to be applied in determining whether she was satisfied the matters referred to in s84C(1)(b) of the Act."
The parties' arguments
As argued, there is really one point raised by these grounds. It is the meaning of the clause in s84C(1)(b) "the interest would impede a user of the land in accordance with an interim order or planning scheme". The meaning of individual words may need to be examined in order to decide the meaning of the clause as a whole, but particular focus falls on the phrase "user of the land in accordance with … [a] planning scheme". (I have left out "interim order" for the sake of convenience. For present purposes the two can be taken as operating in the same way.) Essentially, there are two competing propositions. The appellants say that the clause is only concerned with user of land, in a general sense, as may be regulated by a planning scheme. The respondents argue that the provision goes further, and say that it is specific instances of the operation of a scheme to which interests such as restrictive covenants are to give way when they create an impediment.
The appellants say that it is possible to read "a user" as "any user", so that the relevant clause in the provision, "impede … [etc]", means to prevent any use at all in accordance with a planning scheme. The appellants contend that the provision, "is concerned in general terms with uses that may be made of the servient land and in accordance with [a] scheme, not with the particular manner in which the owner wishes to develop the land pursuant to an approval given by the local authority. … In other words it is generic uses permitted by the Scheme with which the provision is concerned, not a particular use for which approval is given." This was explained as meaning that the provision is concerned with impediment to a permitted use in a generic sense, and not impediment in the sense that it might impose some restriction on the extent of such a use.
The appellants say that the use the respondents wish to make of the land is subdivision for residential development, whilst a user of the land in accordance with the Scheme includes subdivision for residential development. Accordingly, they submit that as the covenant in this case does not impede residential development in accordance with the planning scheme as a kind or type of use, but merely restricts the extent of such development, it is not liable to be extinguished. In that respect, they suggest that it is not necessary for the purposes of their argument that "impede" be read as being synonymous with "prevent".
The respondents argue that if the user is permitted by the planning scheme, then a covenant which impedes any particular instance of that user is impeding a user in accordance with a planning scheme, and is liable to be extinguished. They submit that the relevant phrase "impede a user of land … [etc]" is specific in its scope and includes any permitted or approved use or development under a scheme. The use of "a" user is significant in that it suggests the need to focus on particular uses or developments and not such things in the abstract. They say that in this case the 10 lot subdivision is a user of land. They have approval for that subdivision and it is thus a user in accordance with the planning scheme. The covenant impedes that user and is liable to be extinguished. They rely on the Parliamentary "Points for Second Reading Speech" together with the Clause notes as referred to by the Recorder. I will consider those documents in due course.
Observations
It might be observed that, in effect, each party asserted a conclusion as to the operation of the provision by reference to a few of its words and without offering underlying reasons as to why the particular construction advanced should prevail, although I exclude from this remark the references to the Parliamentary papers. I also observe at this point that neither party referred to the operation of planning schemes in general, or to the actual provisions of the particular scheme in this case.
Some general comments about planning schemes, and some observations about the relevant parts of the Scheme in this case might be of assistance. Dealing firstly with general matters, it is well known that in most planning schemes the area of its operation is divided into zones. Objectives are set out for each zone. The method adopted to implement the objectives for a zone is to be a regulatory system of classification of uses into various classes. Uses, or classes of use, may be permitted as of right, they may be permitted but still require an approval or a permit, or they may be discretionary or prohibited. In some instances use is distinguished from development so that there are use classes and development types, the latter governing the physical form of the use. Some things are permitted directly and some things require approval or consent. Further regulation of uses and development is effected by way of conditions attached to a permit.
Turning to the Scheme itself, Part 3 sets out the various zones and separately deals with the use of land and the development of land for each zone. The respondents' application reveals that under the Scheme the servient land is zoned "Future Urban". The stated intent of this zone is that it:
"applies to land designated for development beyond 10 years, some of which can't be adequately serviced by water, sewerage or has poor access; and the zone seeks to reduce the amount of undeveloped pre-zoned vacant residential land in some areas, where infrastructure constraints and lack of demand make co-ordinated development unlikely in the foreseeable future".
For the Future Urban zone, both "home occupation" and "single dwelling" are discretionary uses requiring a permit[4], whilst "subdivision of land" and "construction of a building" are discretionary developments requiring a permit. The respondents have approval by the grant of a permit for a 10 lot subdivision, but the extent of any further permits is unclear. The application which was lodged with the Recorder shows that they are in the process of building a house on the area which is lot 1 on the approved plan, and that it is proposed, or at least contemplated, that houses will be built on the remaining nine lots.
[4] By way of comparison, other zones relevant to this application are "Reserved Residential" and "Closed Residential". In their application the respondents say that most of the internal blocks of land adjacent to their property are zoned Reserved Residential, but the property is also bordered by some lands which are zoned "Future Urban" and Closed Residential. In terms of uses, in the Reserved Residential zone, "single dwelling" is permitted but with a permit required, "home occupation" and "multiple dwelling" are discretionary. In terms of development, "construction of a building" (if a single dwelling which meets relevant compliance measures) is permitted with no permit required. That type of development is otherwise discretionary. "Subdivision of land" is discretionary. In the Closed Residential zone "single dwelling" is permitted with no permit required. In terms of development, "construction of a building" is similarly dealt with, but with "subdivision of land" being prohibited.
The debate is framed in terms of whether "user of land" is meant in a generic underlying sense, or whether it is intended to refer to specific characteristics of the user which would include such things as its extent. It is implicit in the respondents' argument that "in accordance with a planning scheme" means in accordance with the terms of a scheme and with any approval or permit given or granted under it. That is, the user is in accordance with things which are contemplated by a scheme. It is possible that a user might obtain authority for its specificity from the bare terms of a scheme itself, but ordinarily it would be from an approval or permit.
The same point is implicit in the appellants' approach. They did not argue that "in accordance with a planning scheme" should be restricted to the bare terms of the actual scheme. Counsel for the appellants said that subdivisional and residential developments were "permitted" under the Scheme. I mean no criticism, but the use of the word "permitted" may be confusing, given the operation of planning schemes and in this case, the actual terms of the Scheme. It seems clear that when used in the context referred to, the appellants mean "allowable". Although the appellants argue that "user of land" is used in a generic sense, as I understand it when they speak of "permitted use", they do not intend to suggest that the user must be one which is allowed or permitted as of right under a planning scheme. They seem to accept that a user of land may also be one which is in the discretion of the planning authority, and in that sense is permitted.
It is the general nature of the user which is said to be the critical aspect. It follows, at least in practical terms, that when the appellants refer to permitted use in a generic sense, it is a reference to a permitted use "class", as distinct from the manner, characteristics or extent of a particular use within the use class. Of course, the respondents say that the provision makes vulnerable a covenant or other interest which impedes user in the latter sense.
That gives rise to a related point. In this case, there was no discussion of any significance as to precisely what "a user" of land means as it appears in the provision. Counsel for the appellants said that in its context it had to mean both use and development. As I have noted, it is unclear whether any permits have been sought for houses on the remaining lots. The appellants did not argue that the only relevant activity was the approval for a subdivision and that this was not a "user" for the purposes of the provision.
There is authority for the proposition that the mere subdivision of land of itself is not a use of that land, but is the re-arrangement of boundaries or allotments which does not approve any particular use: Young v Gosford City Council (2001) 120 LGERA 243 at 255 [30]. Ordinarily the use of subdivided lots needs to be the subject of separate applications where the proposed use is not permitted as of right: North Sydney Council v Ligon 302 Pty Ltd (1996) 185 CLR 470 at 477.[5]
[5] In some States there is legislation which enables a planning scheme itself to override covenants or similar interests. A reference in a planning scheme to the prohibition of "land use" under a scheme was held to include the subdivision of land for the purpose of use permitted by the Scheme and extended to the erection of buildings to enable the use to be carried out: Lennard v Jessica Estates Pty Ltd (2008) 71 NSWLR 306.
The effect of the restrictive covenant in this case of course is to restrict subdivision or development with the ultimate aim that no more than four dwellings or stratum flats shall be constructed on the entire land. Given the terms of the covenant, and what may be discerned of the respondents' intentions for the land, and given that it was not argued, it is appropriate to proceed on the basis that the user of the land is subdivision for the building of residences.
Discussion
The United Kingdom and almost all Australian jurisdictions have provisions generally similar to s84C(1). However, s84C(1)(b) is of a type unique to Tasmania and there is no authority on its interpretation or application. When discussing the modification and extinguishment of covenants and interests, the authors of Bradbrook and Neave, Easements and Restrictive Covenants in Australia, 3rd ed, (2011) deal with s84C(1)(b) separately: see 591 – 592 [19.83]. The authors' consideration of the Tasmanian provision was made in the context of a discussion about the relevance of town planning considerations. They note that of the other jurisdictions, only Queensland and the Northern Territory require the relevant authority to take account of the relationship between restrictive covenants and planning controls when determining an application to modify or extinguish. For instance, the Law of Property Act (NT), s177(3), provides that in deciding whether to make an order the court (in that case) must take into account the operation of the planning Act and in particular the provisions of the planning scheme applying to the land.
It is after that discussion that the authors turn to the Tasmanian position. After setting out s84C(1)(b) the authors say that the Tasmanian legislature "has made a policy decision that the private rights created by restrictive covenants and easements should give way to restrictions on land use operating by virtue of town planning legislation". It might be right to say that the evident policy is that in certain circumstances restrictive covenants and easements are to give way to regulation operating by way of planning schemes, but the precise form of those circumstances is not clear on the face of the provision.
In statutory interpretation, the starting point is the ordinary grammatical sense of the text, with assistance to be gained from context and purpose; context includes any mischief which the statute was intended to remedy to be discerned from legitimate extraneous materials: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 per French CJ at 31 [4]; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408. Some remarks about divining Parliamentary intention may be appropriate in this case. In Harrison v Melhem (2008) 72 NSWLR 380, it was noted that the task of the court was to interpret the words used by Parliament, not to divine Parliament's intent; that is the courts must determine what Parliament meant by the words it used, and not determine what Parliament intended to say. The duty of the courts is to give effect to Parliamentary intention, but only as it is expressed in the legislation. See Spigelman CJ at 384 – 385 [16], and Mason P at 398 – 399 [159] – [161].
In this case, as earlier noted, what really needs to be considered is what is meant by the words "impede a user of the land in accordance with … [a] planning scheme". An examination of the specific constituent words or phrases might help in that exercise.
Statutory interpretation - text
As to the meaning of "impede", counsel for the appellants acknowledged that there are authorities for the proposition that in this general context, the word means to "hinder", "retard" or "obstruct", and that the word does not mean, and is not synonymous with "prevent". He referred to Eucalypt Group Pty Ltd v Robin [2003] 2 Qd R 488 at 507, Stanhill Pty Ltd v Jackson (2005) 12 VR 224 at 238 [34], and Oldfield v Gold Coast City Council [2010] 1 Qd R 158 at 169 [31]. In each of those cases, the word appeared in a setting which is not duplicated in the Tasmanian legislation. The Queensland and Victorian provisions were not identical with each other but in general, deal with the situation in which the covenant is said to impede reasonable user of the land without securing practical benefits. Those provisions were more in accordance with the Tasmanian s84C(1)(c) and 84C(6).
In the Eucalypt Group case which was relied on in Oldfield, and which involved an easement in the form of a right-of-way, Ambrose J at 507 said that "'impede' while connoting permanent obstruction to passing and re-passing will extend also to hindering or partially obstructing from time to time". It is true that as said in Oldfield at 169 [31], the meaning of the word "impede" is not synonymous with "prevent", but as Ambrose J indicated, it does not follow that"impede" does not include the meaning of "prevent". At least in the context of s84C(1)(b) I think that the meaning of "impede" must include "prevent", but extends to those meanings of "hinder", "retard" or "obstruct".
The particular meaning of "user" does not appear to have any real significance. Counsel for the appellants submitted that the word would include "use" as well as "development". That may be a safe assumption for present purposes. Ordinarily the word "user" means the use, enjoyment or benefit of property arising out of a legal or equitable interest. Of course s84C(1) deals with "overriding interests" which include easements and profits a prendre, and user is a word often associated with easements in particular. The word "user" also appears in the UK and other Australian equivalents of s84C.
Next, the phrase "in accordance with" should be given its ordinary meaning. The Oxford English Dictionary, gives to "accordance" the principal meaning of "the action or state of agreeing; agreement; harmony; conformity". In Walker v Wilson (1991) 172 CLR 195, the High Court was dealing with a journey claim provision in workers compensation legislation, which required for a particular type of journey, that it be "undertaken in accordance with the terms and conditions of … employment". Brennan J said that the qualification, in order to better conform with the policy of the legislation and to adopt a construction more favourable for the worker, should be construed as meaning simply consistent with the terms and conditions of employment. Deane, Dawson, Toohey and McHugh JJ, said that in the context of the provision, the words "in accordance with" should be construed as meaning "in conformity with" or "consistently with".
In Re LA (1993) 41 FCR 151, Gray J had to consider a provision which required that an application be "in accordance with" a particular form. At 158 his Honour distinguished between the meanings of "harmony" and "conformity" which could be attributed to the word "accordance". His Honour said that the notion of a document being in conformity with a form was easier to grasp than the notion of the document and the form being in harmony.
In this case though, the phrase "in accordance with" can properly bear any of the meanings of "in harmony with", "in conformity with", or even "consistently with". As to the balance of the phrase, I would simply note that for extinguishment or modification, the continued existence of the interest needs to impede a user of the land in accordance with an interim order or planning scheme as such. The words "with an interim order or planning scheme" are of general import; they do not suggest anything more particular or specific than the interim order or planning scheme in the broad.
Statutory interpretation - context
I turn to the Parliamentary papers referred to by the Recorder in reaching her decision, and relied on by the respondents. The Recorder appears to have referred only to the "Clause by Clause Commentary" for the Conveyancing and Law of Property Bill 1977 (No 2) ("the Clause notes"). That Bill was enacted as the Conveyancing and Law of Property Act (No 2) 1978. At page 3 of the Clause notes it is said as follows:
"The new sections resolve a conflict which has arisen between restrictive covenants and planning law. It is felt to be wrong, as is the case at present, that a private restrictive covenant should be able to hold up development to which the statutory planning of an area does not object. For example:- a private restrictive covenant might prevent erection of any building except a single private dwelling house, whereas zoning under a town plan might allow the erection of flats. The Act adds by Section 84(1)(c) a ground upon which an order modifying a restriction can be made –
'That the continued existence of the interest would impede a user of the land in accordance with an interim order or planning scheme - - - '."
It would appear that the reference to s84(1)(c) is a mistaken reference to s84(1)(b). The quotation which is set out is plainly from subs(1)(b), and later reference to s84(1)(c) speaks of the amendments in terms that they are the same as at present except for the addition of par(b), "and the addition of 'public purposes' in S84(1)(c)".
The respondents also rely on the paper entitled "Points for Second Reading Speech". (Hansard is not available for this period). At pages 3 – 4, under the heading "The other reforms", the following is a matter for which it is said the Bill makes provision:
"1…
2Enabling the same persons to discharge or modify easements and restrictions on land (section 84C). These two provisions are wider than the powers at present provided by section 90D of the Act, … the main differences are as follows:
(a) …
(b) …
(c) the provisions resolve a conflict which has arisen between restrictive covenants and Town Planning by enabling a restrictive covenant to be modified or extinguished it prevents a use which is allowed by an interim order or planning scheme;".
The references in these documents to the suggested difficulties which subs(1)(b) was intended to obviate are material to the provision's construction. It may assist to look at what the situation was or was perceived to have been. As to the relevance of planning schemes in the absence of a provision such as s84C(1)(b), the authors of Bradbrook and Neave (above) at 591 – 592 [19.79] note the "traditional view" as being first that the court must satisfy itself that applicants must bring themselves within one of the heads set out in the legislation. They observe that in the event of a failure to do so, the application will not be granted simply because it would be in the public interest, or because it would be more compatible with the planning scheme which affects the land.
In Stanhill Pty Ltd v Jackson (above) Morris J is said to have taken "a very different approach" and the authors say that "at present, the law is unsettled." In that respect, they refer to Vrakas v Registrar of Titles [2008] VSC 281 at [41] – [48]. In that case Kyrou J at [41] said that, "Town planning principles and considerations are not relevant to the Court's consideration of whether an applicant has established a ground under s 84(1)." More recently, in Prowse v Johnstone [2012] VSC 4 Cavanough J expressly followed the judgment of Kyrou J in Vrakas. See also Koller v Rice [2011] VSC 346 at [26].
One of the cases highlighting difficulties with the so-called traditional view is Re Robinson [1972] VR 278. It may well have been the type of outcome from this sort of case which gave rise to the comment in the Clause notes set out above. The facts of Re Robinson were that the applicant was the registered proprietor of four lots which were subject to a restrictive covenant to the effect that no building other than a private dwelling house of a stated minimum cost was to be erected on any one lot. Under the planning scheme, the use of the lots for shops was permitted, but the use for residential buildings was prohibited. Adam J refused the application, holding that the applicant had not made out that the restriction ought to be deemed obsolete, nor that its continued existence would impede the reasonable user of the allotments without securing practical benefits to those entitled to the benefit of it, they being the two limbs of s84(1)(a) of the Victorian provision. And nor had the applicant made out a case under the Victorian equivalent of s84C(1)(e).
At 282 – 283 Adam J said that the fact that the covenant could not be observed in the sense that the land could not be used except in accordance with the covenant for a private dwelling, and in conformity with the planning legislation could not be used for the purpose of a private dwelling, did seem to be a material circumstance. However, this was not determinative in that the existence of a circumstance which the court deemed material, was only a first step in the process. At 285, having held that the applicant had not made out the conditions necessary for the exercise of the jurisdiction, his Honour said that the court was not a planning authority and whether or not it would be advantageous as a matter of planning to permit this development seemed quite beside the point.
In Bradbrook and Neave (above) at 591 [19.83] the authors say that the decision in Re Robinson would probably have been different if the case had arisen under the Tasmanian legislation. Whilst that seems undoubtedly true, it does not shed any real light on the problem at hand. Under s84C(1)(b) the applicant in Re Robinson would most likely have succeeded on the basis of the construction advanced by the appellants in this case, without more. That is because the restrictive covenant impeded, in the sense of prevented, a use which as a class was apparently permitted by the terms of the planning scheme itself.
One further thing which may arise in considering the proper construction of the provision is the presumption that legislation should not be interpreted in such a way as to interfere with a propriety right. In the case of ambiguity, a construction should be chosen which interferes the least with private property rights: see the discussion in Pearce and Geddes, Statutory Interpretation in Australia, 7th ed (2011), at 184 – 185 [5.22] and the cases cited. It is well-established that the Court should approach an application for extinguishment of an easement on the footing that it is a serious inroad upon the proprietary right which is vested in the owner of the dominant tenement: Averono v Mbuzi [2005] QCA 295 per Keane JA at [19] (Williams and Jerrard JJA agreeing), citing Re Parimax (SA) Pty Ltd (1954) 72 WN (NSW) 386 at 387, and Pieper v Edwards [1982] 1 NSWLR 336 at 341. See also Prowse v Johnstone (above) at [104].
In Re Henderson's Conveyance [1940] Ch 835 at 846, Farwell J said in a much quoted passage:
"… I do not view [the provision] as designed to enable a person to expropriate the private rights of another purely for his own profit. I am not suggesting that there may not be cases where it would be right to remove or modify a restriction against the will of the person who has the benefit of that restriction, either with or without compensation, in a case where it seems necessary to do so because it prevents in some way the proper development of the neighbouring property, or for some such reason of that kind; but in my judgment this section of the Act was not designed, at any rate prima facie, to enable one owner to get a benefit by being freed from the restrictions imposed upon his property in favour of a neighbouring owner, merely because, in the view of the person who desires the restriction to go, it would make his property more enjoyable or more convenient for his own private purposes. I do not think the section was designed with a view to benefiting one private individual at the expense of another private individual."
That the extinguishment of a restrictive covenant or easement is a deprivation of a proprietary right has led to a generally conservative approach to applications under the s84C(1) equivalents. It would also fashion an approach to the provisions' interpretation where there is ambiguity, and one construction advanced would have the consequence of rendering more proprietary rights of the relevant kinds vulnerable to extinguishment or modification. At the same time, regard needs to be had to the Acts Interpretation Act 1931, s8A, which provides that in the interpretation of a provision of an Act, an interpretation that promotes the purpose or object of the Act is to be preferred to an interpretation that does not promote the purpose or object.
The last thing that needs to be said in this discussion is that care needs to be exercised not to let the facts of this case influence the proper interpretation of the provision. Subsection (1)(b) should be given its proper meaning, and the dispute in this case resolved on that basis. It must be borne in mind that the provision does not only relate to restrictive covenants. Section 84C(1) enables an application by a person having an interest in land subject to an "overriding interest". Such an interest is defined in s84A as meaning:
"(a) any condition or covenant, not arising under a lease or an agreement for a lease, that has the effect of imposing a restriction on the use of the land subject to it;
(b)any easement or profit a prendre to which any land is subject;
(c)any restriction on the use of land arising by reason of a notation on a folio of the Register or on any map or plan lodged in the office of the Recorder;
(d)any statutory right of user referred to in section 84J[6]."
[6] "84J Statutory rights of user
In determining what operation the provision has, it should be borne in mind that it is intended to deal with all of those types of interest. That may impact on whether or not "user of land" is used in the general underlying sense as contended for by the appellants.
Resolution
I reject the appellants' submissions. Grounds 5 and 6 as argued are not made out. I am not able to see any good reason to confine the operation of the provision to users of land as a type in a general underlying sense, as distinct from the specific characteristics of a particular user. I hold that the provision should be interpreted accordingly. I do not lose sight of the fact that this approach tends to make a greater range of overriding interests vulnerable under the provision, but I am satisfied that the Parliament meant the provision to operate in that way. I should say that my view of this is influenced to an extent by the fact that I have concluded that the jurisdiction under subs(1)(b) is discretionary. I will explain my reasons for that when dealing with ground 7 as such. The discretion mitigates the impact of the provision when interpreted in the way I have.
Further, I have already noted that it is implicit in the respondents' argument that "in accordance with a planning scheme" means in accordance with the terms of the scheme and with any approval or a permit given or granted under it. The appellants did not argue the contrary. I think this implicit proposition is correct. In some cases specific aspects of a user may be provided for by the scheme itself; in others they will be set out in approvals or permits which may be granted or issued under that scheme. This means accepting that when Parliament used the word "in accordance with a planning scheme", it meant in accordance with things which are contemplated by a scheme. My reasons for holding as I have, are as follows.
First, it seems to me that the operation of the provision as I have held it to be, is more suggested by the words "in accordance with an interim order or planning scheme", than the general one as argued by the appellants. Accepting that "in accordance with" means "in harmony with" or "in conformity with", that is far more indicative of the operation of the provision for which the respondents argue. The use of the word "impede" also suggests that to be the preferable view. As I have shown, "impede" certainly includes "prevent", but the broader meaning of the word "impede" supports the conclusion that the expression "a user of land" in accordance with a planning scheme is not used in a generic sense. Additionally, although of no great significance, I think that the use of the word "a" in "a user", as distinct from "any", supports the respondents' contention.
The scope of s84C(1)(c) also provides good reason to interpret the provision in the way contended for by the respondents. It will be recalled that this provision enables the extinguishment or modification of the interests if the appropriate tribunal is satisfied that the interest would impede "some reasonable user of the land for public or private purposes, not being a user referred to in paragraph (b), …". Subsection (1)(c) operates in conjunction with subs(6), par(a) of which provides that an overriding interest is not to be extinguished or modified unless the tribunal is satisfied that in impeding the user of land it does not secure the person entitled to the benefit of the interest any practical benefits of substantial value or advantage to them. In this sense of its combined operation, subs(1)(c) has equivalents in other jurisdictions. In New South Wales, Victoria and Western Australia, the equivalent provision refers to an impediment to "the reasonable user of the land", whilst the UK, Queensland and Northern Territory provisions refer, as does subs(1)(c), to "some reasonable user of the land"
The use of the word "some" in conjunction with reasonable user, plainly suggests that the particular user or proposed user is to be considered in all of its relevant aspects, and not just general user type.. An examination of a range of cases shows that this type of provision has often been utilised in respect of particular instances of user, in the sense of the nature and extent of characteristics of a general type of use.[7]
[7] The instances of "user" go beyond what may be seen as generic types of use. See the discussion in Bradbrook and Neave, Easements and Restrictive Covenants in Australia, 3rd ed, (2011) at 609 – 611 [19.115] – [19.116]. Some examples are as follows. Five separate townhouse dwellings on land subject to a restrictive covenant confining buildings to "one dwelling house with usual outbuildings" – Fraser v Daoli [2008] VSC 117; construction of two dwelling houses where only one permitted by the restrictive covenant – Vrakas v Registrar of Titles [2008] VSC 281. In a similar vein see also Re Hydeshire Ltd's Application (1994) 67 P & CR 93 and Re Williamson's Application (1994) 68 P & CR 384.
The reason I raise this is because the operation of subs(1)(b) might be gleaned from the area of operation of subs(1)(c). The latter excludes from its operation "a user referred to in paragraph (b)". There is no reason to suppose that subs(1)(c) is to be generally construed in any different relevant way than its equivalents. Given that par(c) might ordinarily be expected to deal with the specifics of a particular user, then it follows that par(b) might be expected to do the same. The end result is that subs(1)(b) deals with such things which are in accordance with a planning scheme, and subs(1)(c) applies to a user of land where the land is not the subject of any zoning under an interim order or planning scheme, or where the particular user is not regulated at all. That seems to be a far more sensible approach to the combined operation of the two provisions.
As to the implicit proposition as to the the meaning of the words "in accordance with a planning scheme, it is quite clear from the Parliamentary papers that the mischief which the subsection was designed to remedy was the traditional view that town planning principles and considerations were not relevant to the consideration of whether an applicant has established a ground under s84(1):Vrakas at [41] and the cases cited. Both the Points for the Minister's Second Reading Speech and the Clause notes refer to a conflict which had arisen between restrictive covenants and town planning.
In my view, it is clear from the language that the Parliamentary intention was to provide for the extinguishment or modification of overriding interests which impeded a user of land in accordance with the public planning process. That would include the specifics of a user allowed by approval or permit. No doubt the meaning could have been made clearer by way of specific reference to such things as permits, but I think the true meaning is plain enough.
Parliament must be taken to have been aware of the way in which planning schemes generally operate. That is, Parliament must have contemplated that planning schemes do not comprehensively regulate what is and what is not allowed in terms of use and development, and that much is left to the discretion of planning authorities by way of the granting of permits and consents. The relevant amendment was effected in 1978 but it seems quite plain that planning schemes operated then in basically the same way as they do now. Reference to the provisions of PtXVII of the repealed Local Government Act 1962 and to cases such as Kingcole Hobart Properties Pty Ltd v Planning Appeal Board (1993) 2 Tas R 328 and R v Town and Country Planning Commissioner; ex parte Scott [1970] Tas SR 154 show this to be so. It may be that the terms of such schemes have become more comprehensive and detailed, but there is the presumption that an Act is deemed to be always speaking. Here, that would mean recognising that Parliament intended the provision to be applied in the future so as to give effect to its original intention. The need to recognise the mischief sought to be eliminated may become more acute.
In a part particularly relied on by the respondents, the Clause notes state that it was felt to be wrong that a private restrictive covenant "should be able to hold up development to which the statutory planning of an area does not object". The respondents particularly rely on the use of the word "development". However, the phrase "does not object" might suggest a reference to the terms of a scheme, and no more. Similarly, in the same vein, the example which follows that statement – set out in [38] above – refers to a use of land which "a town plan might allow". However, I think that the use of such expressions does not serve to deny the conclusion that the intended outcome was to enable town planning decisions and considerations to have precedence over restrictive covenants in certain circumstances
I am satisfied that the continued existence of the restrictive covenant would impede the respondent's user of land in accordance with the Scheme. That leaves the questions of the existence of a discretion, and if it does exist, whether it should be exercised in the respondents' favour.
Ground 7 – a discretion under s84C(1)(b)?
Ground 7 reads as follows:
"7(a) The Recorder failed to consider or to properly consider whether as a matter of discretion the covenant should be extinguished.
(b) Alternatively, the Recorder failed to give any or any adequate reasons for apparently exercising the discretion given to her by s84C to extinguish the covenant rather than by refusing to extinguish it."
As argued, the essential point raised is that the Recorder wrongly took the view that once she was satisfied that the covenant would impede a user of land in accordance with the planning scheme, she was required to extinguish it, and had no discretion to do otherwise. That this was the approach the Recorder took, is clear from her affidavit, a relevant part of which I have already set out. In that affidavit the recorder more particularly said:
"I do not believe that this [s84C(1)(b)] is a section which vests in me a discretion to consider leaving the restrictive covenant in place."
As can be seen ground 7(a) is worded so that it assumes the acceptance by the Recorder of the existence of the discretion, and 7(b) complains of inadequate reasons. The respondents however took no issue with the argument proceeding as it did, and accordingly it is the essential point, as described, which I have to resolve.
The appellants argue that it is well established that the power conferred by the type of provision such as 84C(1) (leaving aside subs(1)(b)), is discretionary. They refer to Bradbrook and Neave (above) at [19.62] 575 and the cases there cited. The authors say:
"Even if the applicant can establish one of the grounds in the legislation the court retains a residual discretion to reject the application or to modify the covenant or easement rather than extinguishing it."
Eleven cases are cited in support. The first is Re Ghey and Galton's Application [1957] 2 QB 650 at 660, the most recent is Frasers Lorne Pty Ltd v Burke [2008] NSWSC 743.[8] In Vrakas v Registrar of Titles (above) Kyrou J at [45] said that, "Even if the matters set out in the limb of s84(1)(a), or in s84(1)(c) are proved by the applicant, the Court has a discretion to refuse the application".[9] In support, his Honour referred to five previous Victorian decisions, one of which is an unreported decision of the Full Court of the Supreme Court of Victoria, Re Stani, 7 December 1976. The remaining three are amongst those cases cited in Bradbrook and Neave. In Prowse v Johnstone (above), Cavanough J adopted what Kyrou J said in Vrakas as to the existence of the discretion. (In Prowse, Cavanough J fully adopted Kyrou J's "comprehensive summary of the relevant legal principles" which includes issues later to be considered in these reasons.)
[8] The authors' reference is to (2008) 14 BPR 26,131.
[9] Section 84(1)(b) of the Property Law Act 1958 (Vic) is effectively the same as the Tasmanian s84C(1)(d).
The appellants submit that if Parliament had intended that there be no discretion in respect of subs(1)(b), it might be expected that the provision would appear elsewhere and not in the context of s84C(1). It would have been a simple matter to remove it from that context and to make it clear that once a relevant impediment had been established, there was no discretion but to extinguish, or at least modify, a relevant interest.
The respondents submit that Parliament's intention is clearly to provide that, where there is a conflict between a private restrictive covenant and an interim order or planning scheme, it is the order or scheme which is to take precedence, and no question of a discretion arises. The introductory words in s84C(1) are to the effect that the appropriate tribunal "may, by order, extinguish or modify the interest if it satisfied" of any of the matters set out in pars(a) to (e); [emphasis added]. The respondents submit that with respect to the operation of subs(1)(b), "may" means "must".
That the use of the word "may" in s84C(1) might either be used in the sense advanced by the appellants as denoting the existence of a discretion, or as merely a term of enablement as the respondents argue, is made clear by the Acts Interpretation Act, s10A(1)(c). That provides that "the word 'may' is to be construed as being discretionary or enabling, as the context requires". I must determine what is required by the context in which the word appears. I am in no doubt that the proper construction of the word "may" as applied to subs(1)(b) is that it confers a discretion. First, there is overwhelming authority for the proposition that a discretion exists in relation to the types of provision represented by s84C(1)(a), (c), (d) and (e). Given the prominent consideration that these sorts of provisions enable serious inroads upon vested proprietary rights, there is every reason to think that Parliament meant there to be a discretion in relation to subs(1)(b).
Although subs(1)(b) provides that the relevant property interests should be subjugated to provisions of planning schemes, there is no good reason why the outcome should not ultimately be one of discretion. Further, although not of itself conclusive, there is something to be said for the suggestion that if subs(1)(b) were to be treated differently from the other four paragraphs of s84C(1), then it might be expected it would have been dealt with separately and apart from those paragraphs. That is, it would have been given a different context.
For those reasons, ground 7 as argued is made out. I will examine the factual material before dealing with the exercise of the discretion following the outcome of grounds 5 and 6, and then if necessary, deal with the respondents' application under s84C(1)(a) and (e).
Further facts
I have already set out the basic factual background. The application to the Recorder exhibited survey plans of the various allotments, together with an aerial photograph showing the location of the different developments and buildings. There are also a number of photographs showing various aspects of the area from Opossum Road and other vantage points. In evidence is a copy of the plan of survey for SP139006 which has had the location of the dominant and servient lands noted on it. A copy is attached to these reasons and marked "A". A copy of the plan of subdivision of the respondents' land is annexed and marked "B". As can be seen, the subdivision is more dense in the northern corner of the respondents' land. Apparently, the respondents are to retain lot 1 on which they are building a house.
The subdivision to the north of the respondents' property referred to in par10(e)(i) of the application adjoins the northern boundary. It is SP154382 and the owners are shown as R & K Leighton and B & M Davis. To avoid confusion it is convenient to call it the Leighton/Davis subdivision. It is an internal subdivision adjoining houses built on Quarantine Road to the north west and to Opossum Road to the north east. The material shows provision for a roadway to be constructed from that subdivision through to the respondents' subdivision. An aerial photograph attached to the respondents' application, which appears to have been taken in 2007, shows that no roadway construction or houses have been built, although later photographs of the area which appear to have been taken in 2008 – 2009 show those activities to have commenced. This is referred to in par10(e)(iii) of the application.
All of this this is further explained in the respondents' application to the Recorder, in which they set out some facts about their land and the surrounding properties. The relevant paragraphs are as follows:
"9When we purchased the Property in or about February of 2003, our block constituted approximately 6.5 acres and Mackie who retained their land at 232 Opossum Road remained the owner of the 14 acres adjoining. He was concerned, as an adjoining owner, to preserve the rural nature of the area. That was the reason the covenant was put in place.
10Some seven (7) years have since passed and since that date the following has occurred:
(a) just over twelve (12) months from the sale of the original Folio to us, Mackie themselves subdivided their land into four (4) allotments. The larger of the Lots, Certificate of Title Volume 143441 Folio 4 (owned by the Pearson's) is land upon which the Mackie's former home remains located. A house has since been built on the property comprised in Folio of the Register Volume 143441 Folio 1 (Upston & Andrew);
(b) the owners of Volume 143441 Folio 2, the Chugg's, have recently constructed a shed on the property. Their adjoining future house site is far closer to the other owners of the dominant land than any of the servient land;
(c) a new house has also been constructed on the Scott's land (Volume 152362 Folio 1);
(d) each of the owners of the dominant tenement have views of each other and the Pearson's access is in between the Scott's property and that owned by Upston and Andrew meaning the Pearson's drive past all of the existing residences on the dominant land each time they enter or leave their own residence;
(e)(i) land to the north of the Property […] has now been subdivided into a residential subdivision of 9 residential lots plus a road.
(ii)…
(iii)5 houses have been or are being constructed on some of the lots and have a full view down through the valley over the Property and also that of the owners of the dominant tenement.
(iv)the roadway through that land, Davista Drive and Robka Court were constructed as part of a Council directive for future planning purposes to access the Property. The access ensures there is no interruption to quiet enjoyment by the owners of the dominant land by vehicle access;
(f) … We are in the process of building a house on the area noted at Lot 1 on the subdivision. This house will be the closest of all the houses in the proposed subdivision …
(g) the balance Lot on the subdivision plan directly adjoins the land of Pearson's and forms the first buffer between the subdivision land and the owners of the dominant tenement. There is a dam on Pearson's property, shown on the aerial shot which further adds to the distance between the proposed subdivision lots and the owners of the dominant tenement;
…
(l) each of the rear views of the owners of the properties of 212-236 Opossum Road already get a view into the land of Pearson and Chugg. Indeed, the owners of lots 10 and 1-4 on the subdivisional plan will get the same or similar view as numbers 218-226 Opossum Road already have and certainly are not anywhere near as close as 232 Opossum Road.
…".
The Recorder had before her statutory declarations of Clark Chugg and Lauren Chugg made on 3 August 2010, as well as detailed submissions from the appellants. The Chuggs' statutory declarations are in identical terms. They make the following points:
· when they bought the land from Mr Mackie, he said that their block, along with what is the respondents' land and Upton/Andrew land could not be subdivided as he had created a covenant "so that it could not be split up any more so as not to ruin the outlook of that area";
· the covenant was not obsolete as it was only put in place about seven years ago, and was put in place to stop exactly what the respondents wished to do;
· the covenant on the respondents' land was put in place after the Mackies sold a section of their land which was later subdivided into 10 lots;
· they paid a lot more for their land "than the average block", knowing that it and the surrounding land could not be subdivided;
· there was concern about stormwater from the subdivisional development getting into dams on their land and on the Pearsons' land;
· the respondents objected to the 10 lot subdivision which occurred on adjoining land (which is presumably the development referred to in par(e) of the respondents' application which I have set out above).
The Recorder also had an affidavit of Mr Mackie, sworn on 17 August 2010, which was put before her by the appellants. As to his purpose in requiring the restrictive covenant when he agreed with the respondents to sell them the land, Mr Mackie says:
"[It was] to prevent the lands being sold from being subdivided or developed into a greater number of allotments than four (4) for the purpose of preserving the quieter and more peaceful ambience of the benefited land, so that the outlook thereof was not towards intensively developed small suburban housing allotments but significantly larger allotments, of 'country' or rural – 'residential' nature, to a maximum of four (4) such allotments.
That the purpose in creating the … restrictive covenant was not, as is asserted by [the respondents] to preserve the 'rural' nature of the area. The purpose was to allow only lesser intensive development of the burdened land than intensive urban dwelling allotments."
The exercise of the discretion
The exercise of the discretion must proceed on the basis that the restrictive covenant will not be lightly set aside. This is for one of the reasons which persuaded me that the discretion existed in relation to subs(1)(b). The extinguishment of the interest is the deprivation of the proprietary right. "Great caution is required in acceding to an application …" Frasers Lorne Pty Ltd v Burke (above) per Bereton J at [29]. See also Averono v Mbuzi (above) and Oleander Nominees Pty Ltd v The Owners of Lakeside Villas Strata Plan 14025 [2002] WASC 255 at [30].
The appellants rely on four factors which they say militate against the granting of the application. They are that:
· the application is made by the original covenantors;
· the application was made only six years after the covenant was created;
· the sole purpose of the application was to permit development of the servient land in order to generate monetary profit for the respondents as owners of that land, and not for a purpose which would confer a continuing benefit on the servient land without detracting from the benefit conferred on the dominant land by the continued existence of the covenant;
· the respondents were only able to acquire the servient land by the contractual arrangement in the form of the restrictive covenant, and now want to be released from that contractual undertaking.
The appellants acknowledge that in relation to the facts of this case, each of these factors overlaps with the others. The respondents put little if anything in response, relying principally on the argument that there was no discretion to exercise. Essentially, they seem to rely on the fact of Council approval for the subdivision, and on the matters which are set out in the application to the Recorder.
As to the first factor, that of the respondents being the original covenantors who are making the application, the high point of the authorities is probably Re Markin [1966] VR 494. In that case Gillard J doubted whether there was power to grant relief under s84(1) of the Property Law Act 1958 (Vic). After considering a number of authorities which bore on the point, and the section itself, his Honour at 498 said that he believed there was jurisdiction to modify or discharge the covenants, albeit the applicants were the original covenantors. His Honour continued:
"On the other hand I believe a court should be slow to exercise its discretion in favour of such applicants … it should entertain a strong bias against the original covenantor seeking to modify or discharge a restriction on his title brought about by his own voluntary act in entering into a contract with the covenantee thereon."
Whilst it might not be correct to treat the factor as giving rise to a strong bias against applicants who are the original covenantors, it remains an important factor to be taken into account. It often coincides with a relatively short period of time between the creation of the covenant and the time seeking its extinguishment. In Cresswell v Proctor [1968] 1 WLR 906, the Court of Appeal was dealing with an application under s84 of the Law of Property Act 1925 (UK) by the original covenantors for the modification of the covenant about two years after it was entered into. At 913 Harman LJ said:
"The idea that you can modify a covenant, voluntarily entered into, can be modified within a year or so, without any change in circumstances of the property at all, is to me shocking. It is not beyond the jurisdiction of the court to modify a covenant the day after it is made if it saw fit to do so. But the powers of the court, or indeed the tribunal before whom the matter first comes, are discretionary powers, and I cannot imagine circumstances in which, within a few months, a covenant solemnly entered into would be released."
Dankwerts LJ observed that the application was made within a short period "seeking to legalise a breach of the covenant … freely entered into …", whilst Winn LJ at 915 described the application as "a startlingly prompt attempt to escape from a voluntarily undertaken contractual obligation – …".
In Jones v Rhys-Jones (1975) 30 P & CR 451 at 461 Ormrod LJ referred to Cresswell v Proctor and said that their Lordships in that case:
"… were doing no more than formulating a proposition of good sense, namely, that where an original covenentor is applying for a modification of a restrictive covenant recently entered into by him this is one of the matters, and an important one, which the [tribunal] can, and must, take into account and to which it must give due weight in deciding whether or not, in its discretion, to modify the covenant".
Similarly, in Jones Stephenson LJ at 459 said:
"Without the assistance of authority I would have thought that the shortness of time which has elapsed since the burden of a covenant was imposed on an original covenantor or was transferred to a subsequent purchaser was a factor which could properly be put into the scale against modification or discharge whether the application under s84 be made by an original covenantor (when it would weigh more) or by a subsequent purchaser (when it would weigh less)."
Lastly, as to these two overlapping factors, in Perth Construction Pty Ltd v Mount Lawley Pty Ltd (1955) 57 WALR 41 at 48, Virtue J (with whom Dwyer CJ and Wolff J agreed) said that "It would be difficult to imagine a more unmeritorious application under the section … " One of three factors which contributed to that conclusion was that the applicant had "entered into a binding legal obligation without the slightest intention of abiding by it … ". The approach of Virtue J clearly suggests that the general conduct of the parties may be of relevance. This is supported by more recent authority: Pieper v Edwards (above) per Hutley JA at 340 (Samuels JA agreeing but dissenting as to the outcome, Mahoney JA at 345); Frasers Lorne Pty Ltd v Burke (above) at [31] – [33].
It may well be a self-evident proposition, but it seems to me an inevitable conclusion that a factor to be taken into account in the exercise of the discretion, at least in relation to subs(1)(b), is the degree of impediment caused by or resulting from the restrictive covenant. A tribunal may be satisfied that an overriding interest would impede a user of land in accordance with the planning scheme, but only to a particular degree.
In this case the exercise is, at least in part, an empirical one. The respondents have approval for a 10 lot subdivision. The restrictive covenant does not, of course, make all subdivisional development impossible; it operates to limit subdivisional development to four lots, with a further limitation on the extent of building on each lot.
It also seems to me that another factor which is relevant to the exercise of the discretion under subs(1)(b) is the extent to which there may be some imperative for the development from a planning perspective, as distinct from a desirability. That is not to deny the operation of the provision itself, but to recognise that whilst developments may be permitted under a planning scheme, the principal purpose of them is to benefit the developer, with a secondary benefit, in the case of subdivision, being the availability of land for home and building purposes.
In this case, the Council has said only that the removal of the covenant was not contrary to the intent and requirements of the Scheme. The land which is the subject of the covenant is zoned "Future Urban" under the Scheme, the intent of which which I set out in [21] above. The uses and developments involved in the respondents plan of subdivision are discretionary under the Scheme; they are not permitted as of right. There is also an assertion in the appellants' written submissions, not contradicted by the respondents, that they unsuccessfully applied to the Council under s103(1)(b) of the Local Government (Building and Miscellaneous Provisions) Act 1993, for the amendment of Sealed Plan 145016, of which the servient lands are part.[10] (The respondents' lands are comprised in folios 6 and 7 of volume 145016 of the Register.) The Council refused the application.
[10] "103 Amendment of sealed plans
I decline to exercise the discretion in the respondents' favour. I consider that the combined weight of factors which militate against the granting of the application is such that it compels the refusal of the respondents' application. In summary, those factors are as follows. The respondents are the original covenantors. The application to have the restrictive covenant removed was made some six years after they entered into it. In that time they sold off part of the land, and later – about four years after entering into the covenant – obtained approval for the subdivision of what remained. The covenant does not prevent them from subdividing into four lots. Although I acknowledge that the apparently proper application of planning principles has seen the approval of their subdivision, there seems to be no compelling need at this time for the development to take place, at least so as to justify the extinguishment of proprietary rights.
It follows from the failure of the application under s84C(1)(b) that I need to determine the alternative bases relied on by the respondents.
The application under s84(1)(a)
For the application to succeed under this provision, the respondents need to show that by reason of changes in the character of the property or the neighbourhood, or other circumstances of the case which may be deemed material, the restrictive covenant has become obsolete. The notion of obsolescence under this type of provision has been often considered, as have its other operative parts.
The following is a summary of the established meaning of the provision, and of its operation in general.
· Obsolescence means that the relevant interest is currently incapable of fulfilment, or serves no useful purpose: Ashoil Holdings Pty Ltd v Fassoulas [2005] NSWCA 80 at [40], and the cases cited.
· The Tasmanian provision, unlike for instance the New South Wales equivalent, requires an objective determination of obsolescence, and not whether the interest "ought to be deemed obsolete".
· If a restrictive covenant continues to have any value for the person who is entitled to the benefit of it, then it can rarely, if at all, be said to be obsolete; the inquiry is into the purposes of the covenant: Re Robinson (above) at 281 – 282; Vrakas v Registrar of Titles (above) at [26].
· The points in time that are relevant to the determination are the time at which the restrictive covenant was created, and the time when the application for its extinguishment is determined: C Hunton Ltd v Swire [1969] NZLR 232 at 234.
· "The property" to be considered in the context of changes of character is the servient land: Re Greaves' Application (1965) 17 P & CR 57.[11]
[11] The similar provision where it exists in most other States refers to a change in the user of any land having the benefit of the easement or restriction, or in the character of the neighbourhood.
As to what constitutes "the neighbourhood" for the purposes of the provision, this is to be determined by the facts of each case. In this case, the appellants do not disagree with the contention of the respondents that the neighbourhood would take into account land beyond the relevant lands being both the servient and dominant lands. It would seem to be reasonable to take into account areas which may be able to be seen, or which would have to be seen from, or which would have to be traversed to gain access to, the dominant lands.
The only changes to the property itself which have occurred is the sale of lot 5 to the Littlejohns, and the commencement of the construction of a house. Those things are of no consequence. As to the neighbourhood, there is no doubt that there have been changes, the principal one of which is the Leighton/Davis subdivision to the north of the respondents' land, and the commencement of the building of homes on that land. The respondents say that this development is very significant. There have also been houses built on the Upton/Andrew land and on the Scott land, the latter now also having a shed on it. Of themselves I would not regard those changes of any real consequence, but they are to be put alongside the changes effected by the nine lot subdivision.
The respondents say that this subdivision will materially affect the view from the dominant lands, and, in turn, the houses constructed in that subdivision will afford a view south over the dominant lands. Some houses on Opossum Road already have a similar view.
I accept that the purpose of the restrictive covenant was not to preserve the rural nature of the area, but that it was to allow less intense development of the servient land than intensive urban dwelling allotments. Such intense development is represented by the Leighton/Davis subdivision to the north, and the respondents' subdivision. Such dense residential allotments presently exist along Quarantine Road to the north west, and along Opossum Road to the north east.
Once fully developed, the respondents' subdivision is of the type which quite clearly the restrictive covenant was intended to prevent, whilst at the same time allowing for lower density residential development. Presently, the dominant lands retain that character.
"A covenant is not obsolete if it is still capable of fulfilling any of its original purposes even if only to a limited extent": Vrakasv Registrar of Titles (above) per Kyrou J at [26], citing Re Miscamble's Application [1966] VR 596 and Greenwood v Burrows [1992] V Conv R 54 – 444. The Leighton/Davis subdivision and the other changes which have occurred may be taken as having effected a change in the character of the neighbourhood, but I am not able to see anything in that change which renders the covenant incapable of fulfilment or serving a useful purpose. Restricting residential development to four lots with single dwellings may still provide a benefit for the dominant lands. The change does not render otiose the original objects of the covenant. The respondents did not identify any "other circumstances of the case" said to be material. The application under subs(1)(a) should fail.
The application under s84(1)(c)
The invocation of the jurisdiction under this provision depends on satisfying the tribunal that the proposed extinguishment will not injure the persons entitled to the benefit of the interest. It is a completely separate and independent basis for extinguishment or modification. It is not a matter to be proved cumulatively to pars(a), (b) and (d). As discussed in Bradbrook and Neave at 621 [19.28], there may be a degree of overlap between pars(a) and (e). In a sense, the question under subs(1)(e) may well be answered by the resolution of the obsolescence debate. That the covenant is still capable of fulfilling its original purpose, or one of its original purposes, may implicitly suggest that its removal is likely to injure those entitled to its benefit. This seems to have been recognised by the respondents' counsel who submitted that, "Due to the significant change in the character of the neighbourhood and the fact that the covenant no longer serves the purpose for which it was established, … its extinguishment will not injure any person's entitlement to the benefit of the interest."
As to the provision itself, there must be an injury which has present substance, and which is not merely hypothetical: Re Mason and the Conveyancing Act (1960) 78 WN (NSW) 925 at 928. Injury may be of an economic kind by way of a reduction of the value of the land benefitted, or of a physical kind by way of loss of amenity: Frasers Lorne Pty Ltd v Burke (above) at [27]; Oleander Nominees Pty Ltd v The Owners of Lakeside Villas Strata Plan 14025 (above) at [49]. "Injure" means an injury which is more than trivial or inconsequential, and does not include simple inconvenience: Stanhill Pty Ltd v Jackson (above) at 238; VrakasvRegistrar of Titles (above) at [36].
What is important about the provision is that it is the proposed extinguishment or modification of the interest which has to be shown as not injurious, and not the proposed development itself. The assessment of injury is done by 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 extinguished: Fraser v Di Paolo [2008] VSC 117 at [36]; Vrakas v Registrar of Titles (above) at [35].
The respondents argue that because of the significant changes in the neighbourhood, principally the Leighton/Davis subdivision, and the fact that there is no longer a "quieter and more peaceful ambience of the benefitted land" (in Mr Mackie's words) the extinguishment of the covenant will not injure those entitled to the benefit of it. The appellants argue that the extinguishment of the covenant will permit the very thing that it was originally intended to prevent, and which it continues to prevent. The facts of the matter demonstrate a benefit in amenity to the dominant lands which will be lost if extinguishment happens. The appellants further argue that extinguishment causes injury of the required type and degree in that it represents the "thin end of the wedge". In McMorris v Brown [1999] 1 AC 142, the judicial committee said at 151 [25]:
"A familiar and at times legitimate argument … is known as the thin end of the wedge argument. Other expressions are sometimes coupled with it, such as the 'the first is the worst'. … [D]ecisions [in Jamaica] have accepted that cases may arise in which it is very difficult to say that the particular thing which the applicant wishes to do will itself cause anyone any harm; but that harm may still come to the persons entitled to the benefit of the restriction if it were to become generally allowable to do similar things. Or such harm may flow from the very existence of the order making the modification through the implication that the restriction is vulnerable …".
Their Lordships went on to say that a similar approach was taken in England, the prevailing approach being as indicated in Re SnaithandDolding's Application (1995) 71 P & CR 104 at 118.
In this case, the argument is perhaps more relevant to modification than extinguishment. However, were the covenant extinguished, it may be possible for the respondents to further subdivide the area in the southern most corner of the dominant lands, being the land south of the dam shown on annexure "B". If modification is the outcome, the whole of the land arguably becomes more vulnerable to a further application under s84C(1).
On the facts of this case, I take the view that it cannot be said that the proposed extinguishment will not injure the person's entitlement to the benefit of it. I am satisfied that there will be some injury to owners of the dominant lands as a result of the density of the development. Although there is a dense residential development underway to the north of the servient land which sits to the north and north east of the dominant lands, the dominant lands provide a buffer. The proposed development of the respondents' land will constitute a dense visual bulk of housing along the northern boundary of their land. Although the two residential developments will abut one another, it brings much closer to the dominant lands such a dense visual bulk. The respondents' application under this provision should also fail.
Outcome
I note that neither party raised the question of modification of the restrictive covenant. The case was argued solely on the basis of extinguishment. Apparently the question of modification was raised during the time the Recorder had the matter under consideration, and neither party was interested in pursuing that as an option.
It follows from the foregoing that the orders are as follows:
(a) the appeal is allowed;
(b) the decision of the Recorder of Titles is set aside;
(c) the respondents' application under s84C(1) of the Conveyancing and Law of Property Act 1884 is refused.
"A"
"B"
(1) On the application of the Recorder or of an interested person the Supreme Court may remove into the Court any proceedings before the Recorder on an application for an order under the foregoing provisions of this Part."
(1) Subject to this section, where the Supreme Court is satisfied that to facilitate the reasonable user of any land (in this section referred to as 'the dominant land') for some public or private purpose it is consistent with the public interest that a statutory right of user should be created over other land (in this section referred to as 'the servient land') it may, by order, impose upon the servient land, or on the owner for the time being thereof, an obligation of user or an obligation to permit the user of that land in accordance with the order.
(2) A statutory right of user imposed under this section shall take the form of an easement, licence, or other right that may be created by act of the owners of the dominant land and the servient land or any of them."
(1)When a plan has taken effect, it may be amended by the council –
…
(b) on the application of any person having an interest in land subject to the plan."
4
19
1