Re Izadi and ors null
[2019] VSC 137
•6 March 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2018 02665
IN THE MATTER of an application under s 84 of the Property Law Act 1958 (Vic)
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IN THE MATTER of an application for the modification of a restriction arising under a covenant in a transfer of land registered no. E432033 affecting the land at 204 Hawthorn Road, Vermont South in Victoria, being the land in certificate of title volume 08937 folio 234 by:
| ROOZBEH IZADI, ARMITA CHALABI, ALAN ORANGI and ELLY ORANGI | Plaintiffs |
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JUDGE: | Mukhtar AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 March 2019 |
DATE OF JUDGMENT: | 6 March 2019 |
CASE MAY BE CITED AS: | Re Izadi and ors |
MEDIUM NEUTRAL CITATION: | [2019] VSC 137 |
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REAL PROPERTY ― Restrictive covenant ― Covenant not to erect ‘any building other than a private dwelling house’ ― Additional covenant requiring use of brick and stone and concrete as construction materials ― Existing grant of planning permit for three dwellings ― Construction of three dwellings as permitted ― Partial nonconformity with materials covenant ― Court application to modify materials covenant ― No substantial injury in a subsequent modification of covenant ― Utility of declaratory relief as ancillary remedy ― Property Law Act 1958 (Vic) s 84(1)(c), 84(2)(a)
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiffs | Mr M Townsend | MPW Lawyers |
| No appearance by any affected party |
HIS HONOUR:
The plaintiffs are the registered proprietors as tenants in common of the land at 204 Hawthorn Road in Vermont South. Their land is burdened by a restrictive covenant which originated in a transfer of land E432033 dated 11 April 1972. The relevant part of the covenant states that the transferee (now the plaintiffs as successors in title) –
… will not erect or cause to be erected ... any building other than a private dwelling house with the usual outbuildings and that no such building shall be constructed of materials other than brick brick veneer stone or concrete …
For the purposes of this proceeding, professional title searchers were retained to ascertain the beneficiaries to be identified according to Lots on the relevant subdivision. There are 21 beneficiaries none of whom are located in Hawthorn Road, but are in the area behind the plaintiffs’ land.[1] In the section of Hawthorn Road closest to the plaintiffs’ land the Lots on both side of the street are also burdened by the same covenant.
[1]See exhibit MPW-5 to the affidavit of M P Watson sworn 22 January 2019.
The plaintiffs were registered as owners on 30 November 2017. Before they bought the land, the previous owner Anand Dwivedi applied to the Whitehorse City Council for a planning permit to build three double storey dwellings, and, to vary the building materials covenant to allow the use of ‘concrete sheeting’. Under s 60(5) of the Planning and Environment Act 1987 the responsible authority must not grant a permit which allows the variation of a restriction ‘unless it is satisfied that the owner of land benefited by the restriction … will be unlikely to suffer any detriment of any kind (including any perceived detriment) as a consequence of the variation of the restriction…’. Objections to the application were lodged.
The Council refused to grant a permit to Anand Dwivedi. The Council was concerned that the proposal: was inconsistent with the applicable zoning and policy framework; failed to satisfy the Rescode requirements; was an overdevelopment of the site; and would cause unreasonable external amenity impacts.
Anand Dwivedi sought a review of the refusal from the Victorian Civil and Administrative Tribunal. As the first matter, the Tribunal found the proposal to build three double storey dwellings to be acceptable. It found the proposal had a substantial number of positive attributes which in totality created a strong case for an approval. Those attributes were –
(a) a generous size residential lot with an usually wide frontage;
(b) a main road location appropriate for a more robust, new built form;
(c) an area characterised with a very diverse and somewhat hard-edge streetscape which already featured both single and double-storey dwellings, some of which were quiet prominent;
(d) the presence of imposing double storey dwellings to the rear of the subject land;
(e) a suitable contemporary design for the proposed new dwellings, with upper level setbacks and a low site coverage of 41%; and
(f) the presence of a good size open space area for each of the new dwellings with the very appropriate front setback and onsite car parking.
The Tribunal observed that the neighbours on either side of the property were the ones that were exposed potentially to external amenity impacts of the proposal, particularly as the neighbouring properties had single storey dwellings built on them. Nevertheless, the Tribunal took the view that the interface with both of the side neighbouring properties was reasonable.
Paragraph 23 of the Tribunal’s reasons is important. It states –
It is important to be aware that the restrictive covenant in question here does not involve a restriction that no more than one dwelling can be built on the subject land. Rather, it is a covenant controlling what materials can be used for any building on the site. In this regard, the particular modifications sought is that the range of materials available to use is broadened to include not only concrete but also “concrete sheeting”. I was shown at least one photo of the type of modern “concrete sheeting” product available.
Thus the Tribunal has assumed that the covenant ‘I will not erect any building other than a private dwelling house’ does not mean ‘I will build only one house’. The Tribunal has taken the words to mean not a restriction on the number of private dwelling houses but to mean a restriction on the type of building. So, for example, the covenantee could not build a shop or rooming house or small factory.
Although it was not referred to by the Tribunal, there is judicial support for that view to be found in Tonks v Tonks,[2] a decision of Bongiorno J (later JA) in this court. In that case, the covenant was expressed in this way: ‘…will not erect or cause or permit to be erected on the land hereby transferred or any part thereof any building other than a dwelling house’. His Honour said at [17] –
If the parties to the original covenant had wished to restrict the number of dwelling houses built on each of these lots they could have done so very simply and definitively by replacing the word “a” in the covenant with the word “one”, or by making some similar simple amendment. The true construction of the covenant is that it prohibits the placing of any building on the land unless that building is a dwelling house. Provided that any building constructed can be properly described as a dwelling house there would be no breach of the covenant. The covenant says nothing, in my opinion, as to the number of dwelling houses which might be built. To import a restriction as to the number of houses which might be built on lot 3 into the covenant would extend its effect beyond the words used by the parties without any warrant for doing so.
[2][2003] VSC 195.
In the case of Re Hammond[3] I took leave to express my doubts about Tonks; at least as a case of general application where those words were present. I took the view there was patent ambiguity. By ordinary or dictionary meaning, the expression ‘I will only build a private dwelling house’ was also innately or naturally capable of meaning ‘ I will only build one dwelling house’. The question of ascertaining the intended meaning according to principles of construction under contract law invited extrinsic evidence about the pattern of covenants in the nearby area to see if it was meant to be a single dwelling area or neighbourhood, as occurred in Hammond.
[3][2015] VSC 608.
I do not intend to revisit that question in this proceeding because it does not matter. The plaintiffs played no part in the planning process or the Tribunal review proceedings. It also appears that the Tribunal assumed the objectors in Hawthorn Road were beneficiaries of the covenant, when in fact the title searches done for this proceeding shows that they were not. It matters not. What matters for present purposes is that the permit was granted, and these plaintiffs bought the land in good faith with the benefit of a pre-existing planning permit that allowed the construction of three dwellings on the land, over objection from nearby residents.
The issue before the Tribunal that really matters for present purposes is the materials component of the covenant which Dwivedi sought to vary to include concrete sheeting. It is apparent that the Tribunal was being shown the availability of modern concrete products as a viable alternative to give the same finished appearance as would a brick or concrete surface. On this, there was a question whether the Tribunal had jurisdiction to make the variation sought. The Tribunal said –
24. Without needing to repeat it here, it is common ground that with this type of older restrictive covenant, there is a very rigorous statutory test that must be met, before the Tribunal has jurisdiction to potentially allow the relevant covenant to be varied or deleted. In particular, the Tribunal must be satisfied in relation to any beneficiary that he or she is “unlikely to suffer any detriment of any kind (including any perceived detriment)” – see Section 60(5) of the Planning and Environment Act 1987.
25.On the one hand, during the hearing there was a helpful discussion/review of photos of available building products, in relation to modern building products made out of both ‘concrete’ and also ‘concrete sheeting’. I acknowledge that this discussion indicates that even straight ‘concrete’ products, by today’s standards, can have a pleasant enough appearance.
26.On the other hand, the reality was that at least one beneficiary of the covenant who lives nearby in Hawthorn Road was at the hearing and has actively objected to the proposed variation. As I said at the hearing, when someone who is a beneficiary and living this close to the subject land actively objects to the proposed change to the covenant, it is virtually ‘mission impossible’ to demonstrate that the very strict statutory test mentioned above can be met.
An statutory objection based on ‘perceived detriment’ is easier to satisfy than the ‘no substantial injury’ requirement under the Court’s power of modification under s 84 of the Property Law Act. As there was one beneficiary in the Tribunal who actively objected to the proposed materials variation, the Tribunal regarded it as virtually impossible to demonstrate that the proposed materials could not cause a ‘perceived detriment’.
I think it is apparent from the Tribunal’s reasons that the evidence it had about modern products led it to try and create, reasonably I think, an outcome conducive to a solution workable in practice but faithful to the materials covenant. The Tribunal said –
27 …However, in practice, I am satisfied that given the availability of the type of more positive modern ‘concrete’ products discussed during the hearing, the appropriate way forward is as follows. I consider that I am still in a position to approve the rest of the proposal [i.e., three dwellings] but it would need to be on the basis that there is a new Condition no. 1 sub-clause requiring that (as necessary) any non-compliant building materials are replaced with compliant ones, so as to ensure that the proposed use of materials for the new dwelling does comply with the covenant. I am satisfied that even with this change, the appearance of the new dwellings will be quite workable.
A planning permit issued on 6 March 2015 to allow ‘Construction of three double storey dwellings generally in accordance with the endorsed plans and subject to the following conditions’. Condition 1(a) stated ‘All necessary modifications to the proposed upper level materials, so as to ensure compliance with the restrictive covenant contained in Instrument of Transfer E432033 dated 11 April 1972 which affects the subject land…’.
The plaintiffs bought the land in November 2017. A building permit for the construction of the three dwelling was issued in February 2018. The construction drawings on the building permit contain specifications for materials to be utilised on the upper level as being ‘lightweight concrete rendered wall system’ and ‘100mm thick Polystyrene foam cladding’, each to be finished with a rendered exterior.
I now come to the immediate problem. The construction of the dwellings is all but completed. Only the landscaping remains to be done. The ground level of each dwelling is built of brick veneer with some decorative stone cladding. The pitched roof is covered with concrete tiles. But, the upper level of each dwelling has been built with a polystyrene foam cladding that is finished with an acrylic render surface to give or to resemble the same look as a rendered brick wall. For each dwelling, the plaintiffs’ architects have done an analysis of the materials used by reference to the outside area percentage. For the three units, the total external area (ground and first floor) that has been built with concrete or brick is 75%, 84% and 79%. The plaintiffs say that is a substantial compliance with the materials covenant, and even then, there is no perceptible difference between brick rendered external walls and polystyrene rendered external walls. The plaintiffs have put in evidence photographs of 12 dwellings along Hawthorn Road, two dwellings on the nearby Elonara Road and a dwelling on Scarborough Road. Those photographs show the use of a variety of external building materials including rendered finishes that are mixed with brick in the same manner as the mixture of materials on the plaintiffs’ land.
The Council considers the use of the rendered polystyrene to be to be non-compliant with the words of the restrictive covenant that say ‘…brick brick veneer stone or concrete’. An affidavit from the third plaintiff Mr Alan Orangi states −
10.Council officers have advised me orally that the effect of this situation is that Council will not approve the subdivision of the Land into three lots – one for each dwelling. Despite numerous requests, Council has so far not provided this advice in writing. Rather, Council officers advise that we seek legal advice concerning the Covenant, the result of which was the initiation of this proceeding.
Mr Orangi then states –
11. My understanding of the situation is as follows:
i.the plans comprised in the Planning Permit indicate the materials to be used on the upper level of the dwellings as being “Lightweight Concrete Wall System (Typical) – Rendered”;
ii.the construction drawings comprising the Building Permit contain specifications for materials to be utilised on the upper level as being “Lightweight Concrete Rendered Wall System” (Concrete System) and “100mm thick Polystyrene Foam Cladding” (Polystyrene System), with each to be finished with a rendered exterior;
iii.due to the apparent inconsistency of the specified materials for the upper level, during construction the builder sought approval from the building surveyor to use only the Polystyrene System on the upper level. This request was approved by the surveyor and forms part of the Building Permit;
iv.the Polystyrene System now forms the entirety of the rendered surfaces of the upper levels on all three dwellings on the Land; and
v.it is this Polystyrene System that is considered by Council officers to be non‑compliance with the Covenant.
12.In summary, it appears that the architect and building surveyor had not fully appreciated the relationship between the materials stipulated in the Planning Permit and the requirements of the Covenant, when designing and approving the construction drawings.
13.In my opinion, despite the internal difference between the Concrete System and the Polystyrene System, the rendered finishes on each are imperceptibly different.
14.Co-owner of the Land and plaintiff in this proceeding, Roozbeh Izadi, recently took photographs of dwellings in the streets surrounding the Land. A significant number of dwellings utilise a variety of materials, including rendered finishes mixed with brick, in the manner of the dwellings constructed on the Land. Now produced and shown to me marked AO-5 are copies of the photographs together with the relevant addresses as noted by him.
15.Our architect has conducted a materials analysis of the three dwellings constructed on the land, and provided it to me (Analysis). If the results on the bottom line are computed as a single, combined percentage across the three dwellings, the Analysis indicates that as constructed, the three dwellings are comprised of 78.47% brick and concrete. Now produced and shown to me marked AO-6 is a copy of the Analysis.
16.Prior to purchasing the Land, I was provided with a copy of the VCAT Orders (including the reasons for decision), and together with legal advice at the time, I (together with my co‑owners) always understood that the Covenant did not restrict the number of dwellings on the Land. This understanding appeared well supported by the Planning Permit as issued. No Council officers or other interested persons have identified or raised any concern with me related to the number of dwellings constructed on the Land.
In their predicament, the plaintiffs have applied to this Court under s 84(1)(c) of the Property Law Act to modify the covenant in two ways. First, although the planning was lawfully granted and operative, they seek for regularity or the avoidance of any doubt, to ensure or verify by modification that the covenant does not prohibit the construction of three dwellings. Secondly, they seek to modify the building materials covenant to accommodate the use of the rendered polystyrene cladding on the upper level.
Section 84(1)(c) of the Property Law Act empowers the Supreme Court to modify a covenant if it is satisfied that the proposed modification ‘will not substantially injure the persons entitled to the benefit of the restriction.’ I need not refer to the vast number of authorities on the meaning or operation of that provision. Applications for modifications are made to the Court in abundance. Under s 84(2) the Court also has the power ‘to declare what upon the true construction of any instrument purporting to impose a restriction is the nature and extent of the restriction…’ That is in addition to the Court’s general power to grant declaratory relief.[4]
[4]See s 36 of the Supreme Court Act.
On 4 February 2019, the Court ordered the plaintiffs to give written notice of this application to all land owners (and their mortgagees) that have the benefit of the covenant. The plaintiffs have complied with those orders for service.[5] Their solicitors have received two telephone inquiries of a general nature. No objections from a beneficiary have been received, and no person has appeared in Court to object to the application.
[5]See the affidavit of the plaintiffs’ solicitor, M P Watson, sworn 28 February 2019.
An application to the Supreme Court for a modification of a restrictive covenant on land (usually a single dwelling covenant) is made necessarily by the owner of burdened land before an application is made to the responsible authority under the Planning and Environment Act for a planning permit for the proposed development of the land. Indeed as part of such an application the Court requires evidence of the proposed development. Ordinarily, covenantors who undertake building or other activity in breach of a restrictive covenant would face legal action to restrain conduct in breach, or face enforcement proceedings with mandatory dismantling or corrective orders for works done. It is a peculiar feature of this case that the application is not only brought after completion of the development but moreover in circumstances where the construction occurred under a planning permit for three dwellings, and building plans that contemplated the use of the rendered polystyrene, after a Tribunal hearing in which the use of ‘positive modern concrete products’ was very much under consideration.
The purpose of the materials covenant is to establish a residential neighbourhood of buildings made with quality and durable materials as a matter of structural integrity as well as aesthetic presentation and, I suppose, to get away from what might have once been regarded as undesirable or fire hazardous timber homes or, worse still, shanty fibro-sheeting. The first question is whether the covenant disallows plaster rendering over brick walls. There are various authorities which say that a building materials covenant is not breached by the application of a particular finish such as a concrete render over exposed : see Jacobs v Greig;[6] Grech v Garden City[7] and Clare v Bedelis.[8] The photographs in evidence show that the rendered finish achievable on a substrate of polystyrene foam does make it, at least from a distance, imperceptible from a rendered finish over a brick wall. The same type of finish and aesthetic purpose is achieved. I saw fit to reveal to the parties in Court that I am personally closely familiar with the choice and the use of a rendered polystyrene finish on an upper storey external wall.
[6](1956) VLR 597.
[7][2015] VSC 538.
[8][2016] VSC 381.
Finally, I accept, as was submitted, that the plaintiffs have come to the Court with ‘clean hands’. That is, it is not a situation where there has been a wilful breach of a covenant and a covenantor in breach seeks the Court’s aid to be relieved of the consequences of the breach. The plaintiffs have, in good faith, done no more than take the benefit of the planning permit which was granted to their predecessor in title and constructed the upper level walls with a rendered finish that was, I shall say, contemplated in the approved plans. The materials analysis of the plaintiffs’ architects shows substantial compliance with the purport of the covenant.
Accordingly, aided by the fact that there are no objectors to this application, I can be satisfied under s 84(1)(c) of the Property Law Act that the modification to the covenant to allow three dwellings and to modify the materials covenant will not cause any substantial injury. But I would emphasize, the approach of the Court and this outcome is very much confined to the peculiar facts of the case.
There are two principal orders to be made. The first will be that the restrictive covenant contained in transfer of land no. E432033 dated 11 April 1972 affecting the land at 204 Hawthorn Road, Vermont South, Victoria, shall be modified by deletion of the words struck through in the relevant part of the covenant shown below and the insertion of the words and punctuation in bold text and double underlined, so that the covenant as modified reads:
… COVENANT … that it will not erect … any building other than a private dwelling house (but no more than three) with the usual outbuildings and that
noany such building shall be constructed substantially ofmaterials other thanbrick or brick veneer or stone or concrete …
That modification uses the language of ‘substantial’ compliance. There is some malleability in that expression, although it is commonly used in State and Commonwealth legislation when the subject matter may call for judgment or matters of fact and degree. Indeed the expression ‘substantial injury’ is used and applied in s 84(1)(c) for this very modification application. As for the part of the covenant prohibiting ‘any building other than a private dwelling house’, I have to maintain my view as stated in Hammond that this is an ambiguous expression. But the peculiar circumstances of this case make it a clearly inappropriate vehicle to revisit the decision in Tonks. Independent of that question, there is the fait accompli of the as granted planning permit for three dwellings and its lawful force. There is ample in the Tribunal’s assessment of the permit application to show that the modification of the covenant to allow three dwellings would not cause substantial injury.
Secondly, given the peculiar circumstances, I think it just and convenient to add an ancillary declaration that
The materials already used by the plaintiffs in the construction of the three dwellings on the subject land as described in the evidence before the Court (and in particular the use of a polystyrene foam cladding with a rendered finish on the external walls of the second level of the dwellings) is not in breach of the covenant as modified by the Court.
I have done this in the interests of quelling the controversy in this particular case. The power to grant declaratory relief is discretionary and unfettered, and only confined by the boundaries of judicial power.[9] There is a real not hypothetical question here; the plaintiffs have a real interest in obtaining it; and it relates to a situation that has actually occurred. The fact that there is no contradictor is no barrier especially as no objector has appeared. Above all, the declaration ought to be of real utility.
[9]See Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 581-2.
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