Re Our Lady of Sion College Ltd
[2023] VSC 120
•20 March 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2022 01495
IN THE MATTER of an application under s 84(1)(c) of the Property Law Act 1958 (Vic)
- and –
IN THE MATTER of an application concerning the restrictive covenant contained in Instrument of Transfer 636184 registered in the Register Book at the Office of Titles burdening the land known as 12 Graham Place, Box Hill, Victoria, more particularly described as Lot 20 on Plan of Subdivision 4853, being the land in Certificate of Title Volume 4926 Folio 032, by
| OUR LADY OF SION COLLEGE LTD (ACN 054 933 309) | Plaintiff |
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JUDGE: | Matthews AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 14 November 2022 |
DATE OF JUDGMENT: | 20 March 2023 |
CASE MAY BE CITED AS: | Re Our Lady of Sion College Ltd |
MEDIUM NEUTRAL CITATION: | [2023] VSC 120 |
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REAL PROPERTY – Restrictive covenants – Application for discharge or modification of covenant – Application to modify covenant to permit property to be used for educational purposes or purposes of a school - Property Law Act 1958 (Vic), s 84(1)(c) – Vrakas v Registrar of Titles [2008] VSC 281 – Randell v Uhl [2019] VSC 668 – Application to modify covenant granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Townsend of counsel | Fisher McCrae Lawyers |
TABLE OF CONTENTS
Introduction....................................................................................................... 1
Background........................................................................................................ 2
The Subject Land and its history...................................................... 2
The Covenant...................................................................................... 3
The Plaintiff’s proposal and application......................................... 6
Brief procedural history.................................................................... 8
Evidence............................................................................................................. 9
The Milner Report....................................................................................... 9
The neighbourhood........................................................................... 9
Modifications of other covenants.................................................. 13
Purpose and intent of the Covenant.............................................. 14
Assessment of substantial injury................................................... 14
Scenario 1 - reuse of existing dwelling for educational purposes.............................................................. 15
Scenario 2 – a new building in a residential idiom........ 16
Scenario 3 - demolition of the dwelling and use of the Land for informal or formal sports and recreation purposes............................................ 16
Precedent........................................................................................... 17
Mr Milner’s conclusion................................................................... 17
Ms Gray’s evidence................................................................................... 17
Subject Land and surrounding area.............................................. 17
Beneficiaries...................................................................................... 18
College Master Plan......................................................................... 18
Impacts of outdoor recreation – substantial injury..................... 18
Noise from outdoor activities........................................... 19
Lighting. ............................................................................... 20
Existing Vegetation............................................................. 20
Notice.... ............................................................................... 20
Conclusion........................................................................... 21
Second Gray Affidavit........................................................ 21
Applicable principles.................................................................................... 21
Plaintiff’s submissions.................................................................................. 24
Consideration.................................................................................................. 25
Conclusion....................................................................................................... 30
HER HONOUR:
Introduction
Our Lady of Sion College Ltd (‘Plaintiff’) is the registered proprietor of the land known as 12 Graham Place, Box Hill, Victoria, more particularly described as Lot 20 on Plan of Subdivision 4853, being the land in Certificate of Title Volume 4926 Folio 032 (‘Subject Land’). The Plaintiff operates a school, Our Lady of Sion College (‘College’) on land adjoining the Subject Land.
By originating motion filed on 29 April 2022, the Plaintiff seeks orders pursuant to s 84(1)(c) of the Property Law Act 1958 (Vic) (‘PLA’) for the discharge, alternatively modification, of a covenant burdening the Subject Land.
In support of its application, the Plaintiff relies on the following materials:
(a) affidavit of Petras Kruzas, dated 13 June 2022 (‘First Kruzas Affidavit’).[1] Mr Kruzas is a solicitor employed by Fisher McCrae Lawyers, solicitors for the Plaintiff;
[1]A clearer copy of this affidavit was re-sworn on 13 June 2022 and filed on behalf of the Plaintiff.
(b) affidavit of Nancy Tina Apostolopoulos, dated 26 May 2022 (‘Apostolopoulos Affidavit’). Ms Apostolopoulos is the principal of the College;
(c) the expert report of Robert Milner, dated 10 June 2022 (‘Milner Report’);
(d) affidavit of Petras Kruzas, dated 3 August 2022 (‘Compliance Affidavit’);
(e) affidavit of Natalie Gray, dated 15 September 2022 (‘First Gray Affidavit’);
(f) affidavit of Petras Kruzas, dated 2 November 2022 (‘Second Compliance Affidavit’);
(g) affidavit of Natalie Gray, dated 10 November 2022 (‘Second Gray Affidavit’); and
(h) written submissions of the Plaintiff’s counsel dated 11 November 2022 (‘Written Submissions’).
For the reasons which follow, the application to modify the covenant will be granted. The application to discharge the covenant will not be granted.
Background
The Subject Land and its history
The Subject Land is, as set out above, known as 12 Graham Place, Box Hill, being Lot 20 in Plan of Subdivision 4853, or the land more particularly described in Certificate of Title Volume 4926 Folio 032.
The Subject Land is zoned General Residential Zone (‘GRZ’). It is approximately 1,181m2 and is presently developed with a single residential dwelling, set back approximately 13m from Graham Place. It is depicted in the following aerial diagram, the Subject Land being outlined in red:[2]
[2]Milner Report, p 13, Figure 9.
The below diagram, with the Subject Land again outlined in red, shows more of the context in Graham Place:[3]
[3]Milner Report, p 16, Figure 4.
The Covenant
The covenant is contained in Instrument of Transfer 636184 and was created on or around 11 November 1910 (‘Covenant’).
Parsed, the Covenant restricts:
(a) the erection of any building other than a private residence;
(b) any building constructed costing less than five hundred pounds;
(c) any building, the roof of which constructed with anything other than slate or tiles;
(d) subdivision; and
(e) the use of the land for anything other than residential purposes:
… that no building shall at any time be erected on either of the said lots unless it be a private residence costing at least five hundred pounds and of which all the roofs shall be of slate or tiles and that neither of the said lots shall be subdivided or used or permit to be used for any but residence purposes.
The burden of the Covenant applies to lots 17, 18, 19, 20 and 21 in PS4853, extracted above:
… Do Hereby Transfer to the said Thomas Mater all my estate and interest in All That piece of land being Lot seventeen eighteen nineteen twenty and twenty one in the Plan of Subdivision lodged in the Office of Titles and numbered 4853 being part of Crown Allotment sixteen at Box Hill Parish of Nunawading County of Bourke and being [portion?] of the land comprised in Certificate of Title Volume 2946 Folio 589029 Together with a right of carriage way over Graham Place delineated and colored brown on the said Plan of Subdivision And in consideration of the Transfer hereby made the said Thomas Mater for himself his executors administrators and transferees…[4]
[4]Emphasis added.
The land with the benefit of the Covenant is set out in the evidence of Mr Kruzas and is visually represented as follows, with the benefiting lots outlined in blue and the Subject Land outlined in red:
As can be seen from the above diagrams, lots 19 and 21, being the land on either side of the Subject Land, do not have the benefit of the Covenant. Indeed, they are burdened by the same Covenant.
The Plaintiff’s proposal and application
The Plaintiff seeks the following relief:
(a) an order pursuant to s 84(1)(c) of the PLA that the Covenant burdening the Subject Land be discharged; alternatively
(b) an order pursuant to s 84(1)(c) of the PLA that the Covenant burdening the Subject Land be modified, by removing the words struck through and adding the words underlined, as follows:
... and in consideration of the transfer hereby made the said Thomas Mater for himself his executors administrators and transferees doth hereby covenant with the said John Alexander Graham and his transferees owners for the time being of the balance of the land comprised in said Certificate of title that no building shall at any time be erected on either of the said lots unless it be a private residence costing at least five hundred pounds and of which all the roofs shall be of slate or tiles and that neither of the said lots shall be subdivided or used or permitted to be used for any but residence purposes or for educational purposes or for the purposes of a school.
The form of modification in the originating motion had “or for the purposes of a school” and did not contain the words “or for educational purposes”. During the course of the hearing, these phrases were being used interchangeably and I sought clarification as to which it was to be. The Plaintiff’s counsel indicated that it would be best to include both. I do not consider this change in wording to be of significance and I do not consider it necessary for beneficiaries to be notified of the change prior to the application being determined.
Ms Apostolopoulos deposes that if the application is granted, the Plaintiff’s intention is to use and develop the Subject Land for purposes associated with the College.[5] She deposes that the Plaintiff purchased the Subject Land on 20 February 2015, with the intention of applying to change its use and development from ‘residential’ to ‘educational’. Since then, the building on the Subject Land has remained vacant while the College developed a master plan.[6]
[5]Apostolopoulos Affidavit, [3].
[6]Apostolopoulos Affidavit, [2].
A copy of the master plan for the College created by Williams Ross Architects dated 23 July 2019 (‘Master Plan’) is exhibited to the First Gray Affidavit.[7]
[7]First Gray Affidavit, [19]-[25]; exhibit NG-1, pp. 156-222.
The Master Plan includes discussion of opportunities which could be achieved by expanding the campus of the School to the north, including using the Subject Land. This includes the possibility that the Subject Land would be developed with two outdoor multi-purpose courts, shown in the following diagram:
There is no evidence before the Court that the College intends to implement this aspect of the Master Plan. The Court was informed that if the application is approved, the short-term use of the Subject Land will be for administration purposes associated with the College and for storage.
Ms Gray’s evidence in respect of the Master Plan, and whether the design set out above is likely to be able to be put into effect, is set out later in these reasons.
It is fair to say, however, there is no definite proposal for the use of the Subject Land before the Court, other than that it will be used for educational purposes.
Brief procedural history
At the first return of the application on 16 June 2022, I made orders which, inter alia, required the Plaintiff to notify the registered proprietors of the land with the benefit of the Covenant of the application.[8]
[8]The land with the benefit of the Covenant is listed in Schedule A of the orders made on 16 June 2022.
The Plaintiff provided that notice by mail sent on 28 June 2022.[9]
[9]Compliance Affidavit.
Mr Kruzas deposes that following that notification, he received two telephone calls making general enquiries about the application, from or on behalf of the registered proprietor of the property at 5 Graham Place and of the property at 7 Graham Place.[10] Both of those properties have the benefit of the Covenant.
[10]Compliance Affidavit.
As of the date of the Compliance Affidavit, no formal objections to the application had been received by the Plaintiff’s solicitors.[11]
[11]Compliance Affidavit.
At the second return of the application on 11 August 2022, I made a direction pursuant to r 52.09(3) of the Supreme Court (General Civil Procedure) Rules 2015 that the orders I had previously made in respect of notice had been complied with. The orders made on 11 August 2022 included an order fixing the proceeding for hearing on 14 November 2022 and the Plaintiff was directed to serve a copy of the orders made that day on the registered proprietors of the benefiting land.
Mr Kruzas deposes that he served copies of the orders made on 11 August 2022 as directed by post sent on 2 and 5 September 2022,[12] and that he received one telephone call in response. That call was from the registered proprietor of Unit 1, 22 Graham Place, who informed Mr Kruzas that she had no objection to the removal of the Covenant.[13] As at the date of the Second Compliance Affidavit, Mr Kruzas had not heard from any person regarding the notice given to them.[14]
[12]Second Compliance Affidavit.
[13] Second Compliance Affidavit.
[14]Second Compliance Affidavit.
Accordingly, although notice of the application and of the final hearing has been given to the owners of land with the benefit of the Covenant, none have objected to the application or sought to be heard on the application.
Evidence
The Milner Report
Mr Milner is a town planner.
Mr Milner says that there are a range of uses and activities that may fall under the definition of educational purposes, including indoor and outdoor recreation activities.[15]
[15]Milner Report, [60].
He states that he has been instructed by the Plaintiff’s solicitors to prepare a report assessing whether the discharge or a modification to the Covenant would satisfy the considerations of s 84(1)(c) of the PLA. In particular, he has been instructed to explore a range of use and development scenarios that may be considered an educational use and determine which scenarios might result in a substantial injury to surrounding Beneficiaries.[16]
[16]Milner Report, [61].
The neighbourhood
Mr Milner says that Graham Place being located to the eastern edge of the Box Hill metropolitan activity centre has excellent access to a wide range of services and facilities. They include community facilities, multiple public transport options, and access to Whitehorse Road.[17]
[17]Milner Report, [32].
He states that Graham Place running perpendicular to Whitehorse Road and being connected to the adjacent Kangerong Road forms a loop which limits any through-traffic connections to the broader street network as shown in the map below.[18]
[18]Milner report, [33].
Mr Milner says Graham Place is predominantly used for residential purposes, however various non-residential uses are found in the southern part proximate to and fronting Whitehorse Road.[19]
[19]Milner Report, [34].
Mr Milner states that the direct interfaces of the Subject Land are 14 Graham Place and 10 Graham Place.[20] They each contain a single storey brick dwelling with pitched tile roof. The rear of the Subject Land adjoins part of the College campus which consists of a hardstand multi-purpose sports court and grassed playing field. These properties are not beneficiaries of the Covenant.[21]
[20]These being the land on either side of the Subject Land which are Lots 19 and 21 (see above at paragraph 11).
[21]Milner Report, [35].
Mr Milner says that the northern end of Graham Street,[22] containing properties that are the beneficiaries of the covenant, is predominantly characterised by one to two storey detached family homes on large lots constructed from brick with pitched tile rooves and set in generous gardens.[23] He says further that newer, contemporary styled housing stock is emerging throughout the street with more recently constructed large single dwellings and multiple-dwelling developments interspersed but generally maintaining the streetscape rhythm and spacing.[24]
[22]These being Lots 22 to 46 (see above at paragraph 11).
[23]Milner Report, [36], [39].
[24]Milner Report, [37].
Mr Milner says that these beneficiaries’ property north of the Subject Land are separated and buffered from the Subject Land,[25] and eight of those properties are sited around a cul-de-sac offshoot to Graham Place.[26] He further states that various original properties have been subdivided including:[27]
[25]Milner Report, [38].
[26]Milner Report, [39].
[27]Milner Report, [39].
(a) 16 Graham Place which is subdivided into four lots plus common property comprising of two two-storey buildings;
(b) 31 Graham Place which is subdivided into two two-storey brick dwellings on small lots;
(c) 21 Graham Place which is subdivided into two lots each containing a two-storey dwelling; and
(d) 22 Graham Place which contains a multi-dwelling development comprising of three detached dwellings.
Mr Milner says that other notable departures from the existing character of the neighbourhood include:[28]
[28]Milner Report, [39].
(a) 33 Graham Place which is a large brick dwelling built to boundaries with an internal courtyard space, a front setback of 6m, and a corrugated iron pitched roof;
(b) 24 Graham Place which is a two-storey red brick dwelling which is generally larger than its neighbours and contains a tall, pitched roof with no eaves; and
(c) 23 Graham Place which is a contemporary prominent two-storey red brick dwelling with a mansard roof form using slate tiles, minimal font landscaping, and an integrated garage.
Mr Milner says that to the south of the Subject Land,[29] the streetscape is a mix of residential and non-residential uses.[30] He states that the nearby beneficiaries’ properties are on the opposite side of Graham Place and well buffered from the Subject Land.[31]
[29]These being Lots 1 to 16 and Lot 20.
[30]Milner Report, [40].
[31]Milner Report, [41].
Mr Milner says that there are six residential beneficiaries’ properties south of the Subject Land of which:[32]
[32]Milner Report, [42].
(a) 13 Graham Place has been subdivided into three lots, each with a two-storey dwelling with a brick finish and pitched tile roof form;
(b) 9 Graham Place has a large two-storey dwelling that is large and with a mansard roof form using slate tiles; and
(c) 3, 5, 7 and 11 Graham Place each have a small, single storey detached brick dwelling with pitched tile roof forms and generous gardens.
Mr Milner states that the College campus covers the southern end of the block bound by Graham Place, Whitehorse Road to the south and Dorking Road to the east.[33]
[33]Milner Report, [43].
Mr Milner says that the College campus contains several buildings along the Graham Place frontage which includes the original campus building and is arranged with various wings comprising of low scale, well-spaced brick buildings with pitched rooves, appearing similar to residential dwellings within the street.[34] He says that the more contemporary two-storey school buildings that are broader with flat roof lines have been constructed further north on the College campus.[35]
[34]Milner Report, [43] – [44].
[35]Milner Report, [45].
Regarding the entrances to the College Campus, Mr Milner states that the main entrance and primary orientation is to Whitehorse Road which fronts a service lane and the primary staff carpark. He says that the secondary entrances on Graham Place attract a high volume of vehicle movements and vehicles parked along the street kerbs particularly at peak times. He also says that an overflow staff parking lot has been constructed at 1 Graham Place. Mr Milner says that the other frontage to Dorking Road contains two closed gates that provide secondary access to the school.[36]
[36]Milner Report, [46]-[50].
Mr Milner states that a residential aged care building, Gowanlea, is built on the north-west corner of Graham Place with Whitehorse Road which is effectively concealed by a row of screening trees.[37] He says also that a four-storey residential apartment building located further west partly occupies land that includes Lot 8.
[37]Milner Report, [51].
Mr Milner says the Subject Land is located at the transition between higher density residential and non-residential uses, with much of the surrounding land being used for educational activities and built form, and more conventional residential development.[38] He therefore opines that the expectation of single dwelling on lots throughout the original subdivision has been compromised by subsequent multi dwelling use and development.[39]
[38]Milner Report, [53].
[39]Milner Report, [54].
Modifications of other covenants
Mr Milner has not been instructed about other modifications to the covenants within LP4853,[40] and instead relies on the First Kruzas Affidavit and supporting material provided by his instructor. He says the First Kruzas Affidavit identifies a range of non-residential uses within LP4853 include the development of Lot 7 into a carpark, the development of Lots 12 to 18 into part of the College campus, the removal of the Covenant from Lots 17 and 18, and a part of a residential apartment building that has been developed on Lot 8.[41]
[40]which are beneficiaries to the south of the Subject Land.
[41]Milner Report, [55]-[56].
Mr Milner says that the subdivision pattern has been modified and changed to enable the further subdivision and development of original lots with multiple dwellings, including up to as many as four dwellings on former Lot 22.[42] He further says that only a few of the newer dwellings within the streetscape have incorporated slate as the primary roof treatment.[43]
[42]Milner Report, [57].
[43]Milner Report, [58].
Purpose and intent of the Covenant
Mr Milner opines that the purpose and intent of the Covenant was to ensure residential use of the affected Subject Land, ensure the establishment of a single dwelling on the Subject Land, ensure a consistent residential character in the covenanted area, and ensure a particular quality of development determined by the value of the development and the consistent application of a distinct roofing material.[44]
[44]Milner Report, [62].
Drawing similarities to contemporary planning controls and based on the historical treatment of covenants similar to the Covenant, Mr Milner says that the purpose and benefit of the Covenant is to establish and confer upon beneficiaries a certain expectation about the residential character and amenity of affected land within the Parent Title.[45]
[45]Milner Report, [63]-[64].
Assessment of substantial injury
Mr Milner says that the Covenant does not address the manner or detail of residential land use and built form. He says that the Covenant therefore does not provide any assured amenity protection other than the prospect of single dwelling.[46]
[46]Milner Report, [65]-[66].
Mr Milner says that if the Covenant is modified, as proposed at paragraph 13(b) above, the future use and development of the Subject Land for education purposes would be regulated by the Whitehorse Planning Scheme which would regulate off-site amenity impacts more effectively than the Covenant.[47]
[47]Milner Report, [67].
Mr Milner says that as there are no beneficiaries with a direct interface to the Subject Land, direct amenity impacts associated with neighbours are not considerations applicable to his assessment.[48]
[48]Milner Report, [68].
To further develop his assessment of substantial injury, Mr Milner considered three different scenarios for use of the Land by the Plaintiff if the Covenant is modified. These are discussed below.
Scenario 1 - reuse of existing dwelling for educational purposes
Mr Milner states that if the existing dwelling is reused for educational use, such as for school administration, health and well-being, or for teaching or study, the impact on the residential amenity of the beneficiaries and the streetscape would be minimal.[49] He says this is because:
[49]Milner Report, [74]
(a) the fit-out could be undertaken without unreasonably compromising the structural integrity of the existing building; [50]
[50]Milner Report, [70]
(b) it could include a rear extension, subject to tree removal, as it would remain largely concealed from the Graham Palace streetscape and the surrounding beneficiaries’ properties are well buffered from the Subject Land;[51] and
(c) accessibility could be managed internally from the school premises.[52]
Scenario 2 – a new building in a residential idiom
[51]Milner Report, [71].
[52]Milner Report, [73].
Mr Milner says that if the existing dwelling on the Subject land is demolished and a new building is constructed with a form, scale and style complementary to a dwelling and in accordance with planning scheme requirements,[53] the amenity outcome is similar to Scenario 1 which would not detrimentally impact or detract from the character of the neighbourhood nor result in any substantial injury to beneficiaries.[54] He says this is because:
[53]Milner Report, [75] and [77].
[54]Milner Report, [80].
(a) the Covenant does not seek to direct or restrict the siting, layout, size or massing of residential buildings, including construction of the buildings on boundaries or the location and orientation of windows;[55]
[55]Milner Report, [76].
(b) to adhere to planning scheme requirements, the new school building would need to be designed to reference elements of the existing streetscape character;[56] and
(c) the changes that have occurred within Graham Place on land owned by the Plaintiff, particularly more contemporary buildings with a bulkier appearance and flat roof forms, meant that a similar contemporary design is an acceptable outcome for the Subject Land.[57]
Scenario 3 - demolition of the dwelling and use of the Land for informal or formal sports and recreation purposes
[56]Milner Report, [77].
[57]Milner Report, [78].
Mr Milner says that if the existing dwelling is demolished and the vegetation is removed for the establishment of an outdoor sporting facility, he is not concerned with its physical appearance, due to its location and the nearby staff carpark, but it may result in an unacceptable detrimental impact on the amenity of beneficiaries in Graham Place.[58] Mr Milner gave as an example of this an outdoor sports facilities and or recreation space that is able to be used outside of school hours and late into the evening, assisted by overhead lighting.[59] Mr Milner says that an indoor use that does not involve external lighting or late-night outdoor events is the most suitable alternative and recommended that any modification to the Covenant is confined to that.[60]
[58]Milner Report, [81], [85] and [86].
[59]Milner Report, [83] and [84].
[60]Milner Report, [86] and [87].
Precedent
Mr Milner says that a precedent has already been established for the modification of the Covenant to enable the Subject Land to be developed for educational use. School buildings and other non-residential uses are existing and established features of LP4853 and Beneficiaries’ Land.[61] In other words, Mr Milner says that the precedent in the neighbourhood for educational use has already been established.
[61]Milner Report, [88] – [90].
Mr Milner’s conclusion
Mr Milner concludes that the modification of the Covenant to allow for scenario 1 and 2 should be allowed. He also says that the most suitable alternative he proposed for scenario 3 should be allowed.[62]
[62]Milner Report, [91] and [92].
Ms Gray’s evidence
Ms Gray is a town planner and is a specialist in school planning, being a member of Learning Environments Australia.[63]
[63]First Gray Affidavit, [1].
Ms Gray states that she has been instructed by the Plaintiff’s solicitors to provide her expert opinion in relation to the discharge or modification of the Covenant pursuant to s 84(1)(c) of the PLA.[64]
[64]First Gray Affidavit, [3].
Subject Land and surrounding area
Ms Gray states that she has reviewed the Milner Report and agrees with Mr Milner’s description of the Subject Land, the surrounding area, and the relevant planning controls.[65] She says that the Subject Land contains numerous significant trees which will limit any use or development as the Council has a strong policy of protecting and promoting revegetation under clause 22.04 of the Whitehorse Planning Scheme.
[65]First Gray Affidavit, [13].
Ms Gray says that 10 and 14 Graham Place have direct abuttal to the sports fields on the College campus, separated by a paling fence.[66] She says that there is also a temporary storage facility abutting the paling fence in the vicinity of 10 Graham Place.[67]
[66]First Gray Affidavit, [15].
[67]First Gray Affidavit, [15].
Beneficiaries
Ms Gray agrees with the Milner Report in saying that the direct interface properties, 10 and 14 Graham Place, are not beneficiaries and that nearby beneficiaries’ properties are well buffered from the Subject Land.[68]
[68]First Gray Affidavit, [17] and [18].
College Master Plan
Ms Gray says that the Master Plan showing two tennis courts close to the Graham Place frontage, which extends into 10 and 14 Graham Place, is clearly aspirational as it relies on development and use of land not owned by the Plaintiff. Ms Gray says that she was instructed that negotiations with the owner of 14 Graham Place did not progress and the owner of 10 Graham Place has not shown any intention to sell.[69]
[69]First Gray Affidavit, [20] and [21].
Ms Gray opines that even if the Plaintiff is able to purchase 10 and 14 Graham Place, the existing significant trees, planning controls, and standards required by the Council or Department of Environment of Land Water and Planning would limit the scale of activity to a single court and improved site appearance.[70]
[70]First Gray Affidavit, [22] – [25].
Impacts of outdoor recreation – substantial injury
Ms Gray agrees with the Milner Report that the physical appearance of an outdoor recreation use is not a concern as she says outdoor recreation is an established part of the residential environment.[71] However, she considers Mr Milner’s restricted scenario 3 (discussed above at paragraph 55) to be unnecessary restrictive.[72]
[71]First Gray Affidavit, [26].
[72]First Gray Affidavit, [34].
Ms Gray opines that it is clear that there is no substantial injury to beneficiaries as they are substantially buffered from the Subject Land by 14 Graham Place to the north and Graham Place to the west.[73]
[73]First Gray Affidavit, [28].
She says that any impacts from developing the Subject Land for outdoor recreation will be controlled by the Whitehorse Planning Scheme and she says the following:[74]
[74]First Gray Affidavit, [29].
(a) beneficiaries are protected from unreasonable expansion of education facilities as a planning permit will be required to change the use from residential;[75]
[75]First Gray Affidavit, [34].
(b) detailed assessment enables the Responsible Authority to consider whether there needs to be any limitation on the development and use to ensure that planning policy is achieved and that there is no nuisance to those nearby;[76] and
(c) decision guidelines specified for the zone of the Subject Land include an assessment of whether the use or development is compatible with residential use. Relevant considerations include noise and light spill which are included in the amenity policy for non-residential uses in residential areas.[77]
Noise from outdoor activities
[76]First Gray Affidavit, [35].
[77]First Gray Affidavit, [36].
Ms Gray says that there is no legislation in Victoria that specifically controls sporting activities in residential areas partly because outdoor sporting facilities are believed to be appropriate in suburban areas.[78]
[78]First Gray Affidavit, [38].
Ms Gray states that there is more potential to control the activities of a school than of a house.[79] She states most school activities are confined to daytime hours during the school term and that where the interface could result in injury to nearby users, conditions on the operation can include a limitation on the hours of operation. She further says activity on the Subject Land will generally be supervised and the presence of significant trees will likely limit any outdoor activity to informal or small-scale physical education.[80]
Lighting
[79]First Gray Affidavit, [41].
[80]First Gray Affidavit, [39] and [40].
Ms Gray says that the Responsible Authority will be aware of the impact of lighting and regularly limit its hours of operation. She further states that any planning application requires lighting to be baffled so as to not result in injury to neighbours.[81]
Existing Vegetation
[81]First Gray Affidavit, [42].
Ms Gray opines that with the decision guidelines specified in Schedule 3 of the General Residential Zone (Classic Garden Suburban Areas), the Whitehorse Planning Scheme, Significant Landscape Overlay (Schedule 9) and the Vegetation Protection Overlay (Schedule 3), the existing trees in the Subject Land must be retained which therefore limits the development of the Subject Land.[82]
[82]First Gray Affidavit, [43] – [48].
Ms Gray says that therefore Scenario 3 as described in the Milner Report, which involved the removal of vegetation, is unrealistic.[83]
Notice
[83]First Gray Affidavit, [49].
Ms Gray states that neighbours, including those directly abutting the Subject Land are likely to be notified of the specifics of any proposal by the City of Whitehorse or the Department of Environment Land Water and Planning, depending on the value of development. Further, she says any submissions will be carefully considered by the relevant Responsible Authority.[84]
Conclusion
[84]First Gray Affidavit, [52].
Ms Gray opines that discharging or modifying the Covenant in the terms sought by the application would result in no substantial injury to the beneficiaries because any school use would be subject to rigorous assessment through the statutory planning process.[85]
Second Gray Affidavit
[85]First Gray Affidavit, [7], [54] – [56].
Ms Gray deposes in a further affidavit that in her discussions with the plaintiff, it is clear that the intention within the foreseeable future is to retain the land and buildings as is for administrative support and storage. She deposes that the existing driveway will be used for vehicle access and the outdoor areas used for passive recreation.[86]
[86]Second Gray Affidavit, [2].
Ms Gray deposes that the landscape concept plan shown to her, which is exhibited to her affidavit and depicted below (‘Landscape Concept Plan’), shows the existing dwelling removed and a synthetic playing surface introduced to provide for outdoor activity, akin to two small practice courts or two half-courts. She says these are set back from Graham Place generally in accordance with the removed and adjacent dwellings to respect the intention of planning controls and tree protection zones.[87]
[87]Second Gray Affidavit, [3].
Applicable principles
As noted above, this application is made under s 84(1)(c) of the PLA. That section relevantly provides that the Court has the power, on application of any person interested in any land affected by any restriction under a covenant, to order wholly or partially to discharge or modify any such restriction, upon being satisfied that ’the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction’.
Whether the modification of the covenant would ‘cause substantial injury’ is a question of fact requiring consideration of the purpose of the covenant and benefits originally and presently conferred by the covenant, against the impact of the proposed modification upon those benefits.[88] As Gillard J put it in Re Cook,[89] in respect of the assessment of ‘substantial injury’ under s 84(1)(c):
Such injury can only be properly assessed by a comparison between the benefits intended to be conferred and actually conferred by the covenant initially on the persons entitled thereto and the resultant benefits if any remaining to such persons after the covenant has been modified. If from the evidence it appears that the difference between the two will not be substantial, then the applicant will have established a case for the exercise of the court’s discretion under paragraph (c). In order to make this comparison it is proposed to consider what benefits the covenant over the subject land may have conferred upon the persons entitled thereto, and then to assess whether the modification of such covenant would or would not substantially diminish the benefit so discovered.[90]
[88]Re Alexandra [1980] VR 55, 60; Vrakas [35]; Suhr [41].
[89][1964] VR 808 (‘Re Cook’).
[90]Re Cook, 810.
The injury must be ‘real’, in the sense that it is not unsubstantial or fanciful, in order to be ‘substantial’.[91] A wide variety of matters including noise, privacy, accessibility of properties and other matters of amenity may be considered in appropriate cases.[92] As is suggested in the passage cited above from Re Cook, it is necessary to show that the ‘substantial injury’ is properly related to the benefits afforded by the covenants, in the sense that the ‘substantial injury’ derives from the proposed modification.[93]
[91]Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) [10] (‘Re Stani’); Vrakas v Registrar of Titles [2008] VSC 281, [36] (‘Vrakas’).
[92]See generally Re Robinson [1972] VR 278, 283.
[93]Re Cook, 810.
Further, the Court may consider the ‘precedential’ effect of a proposed modification leading to similar applications within the estate or neighbourhood, resulting in a more widespread detrimental change.[94]
[94]Re Stani, 9–10; Vrakas [32].
In Randell v Uhl,[95] Derham AsJ described the guiding principles to assessing whether a beneficiary of the covenant would likely suffer substantial injury from its modification in the following way:[96]
[95][2019] VSC 668 (‘Randell v Uhl’).
[96]Randell v Uhl, [85] (citations omitted). For a similar summary of the principles in respect of s 84(1)(c) of the PLA, see Vrakas, [34]-[46].
(a)a substantial injury must be a detriment to the benefitted land that is real and not fanciful. The requirement that the injury must be substantial is intended ‘to preclude vexatious opposition cases where there is no genuineness or sincerity or bona fide opposition on any reasonable grounds’. That does not mean, however, that s 84(1)(c) of the PLA is restricted to dealing with vexatious or frivolous objections. Although the restriction of s 84(1)(c) of the PLA to ‘substantial’ injury would enable the weeding out of vexatious objections to the modification or removal of a covenant, the dichotomy in the section is not between vexatious and non-vexatious claims but is between cases involving some genuinely felt but insubstantial injury, on the one hand, and cases where the injury may truly be described as substantial, on the other;
(b)the substantial injury relates to practical benefits, being any real benefits to the person entitled to the benefit of the covenant. It is not sufficient for a plaintiff to merely prove that there will be no appreciable decrease in the value of the property that has the benefit of the covenant;
(c)substantial injury may arise from the order for modification of the covenant being ‘used to support further applications resulting in further encroachment and in the long run the object sought when the covenant was imposed [being] completely defeated’. This consideration is referred to as the ‘precedent value’; and
(d)whether there will be substantial injury is to be assessed by comparing:
(i)the benefits initially intended to be conferred and actually conferred by the covenant; and
(ii)the benefits, if any, which would remain after the covenant has been discharged or modified;
(e)if the evidence establishes that the difference between the two will not be substantial, the plaintiff has established a case for the exercise of the Court’s discretion under s 84(1)(c) of the PLA;
(f)it is relevant to consider evidence of statutory planning provisions to the extent they show what realistically will be the result of the removal or modification of the covenant because ‘it would be artificial and wrong to pay no heed at all to the reality of the situation’;
(g)in considering whether the plaintiff has satisfied the Court that there will not be substantial injury:
(i)town planning principles and considerations are not relevant;
(ii)the absence of objectors to the discharge or modification of a covenant will not necessarily satisfy the onus of proof; and
(iii)each case must be decided on its own facts, and each covenant should be construed on its own terms and having regard to the particular context in which it was created;
(h)if the plaintiff satisfies the Court that there will be no substantial injury to the relevant persons, the Court has a residual discretion to refuse the application. The Court in exercising its discretion, may consider town planning principles and the precedent value.
Plaintiff’s submissions
The Plaintiff makes the following submissions in contending that its application to modify or discharge the Covenant satisfies the ‘no substantial injury’ to beneficiaries test required by s 84(1)(c) of the PLA.
The Plaintiff submits that it is significant that the Subject Land does not have any beneficiaries along its northern, southern or eastern boundaries, as:
(a) Lots 12 to 16 were transferred out of LP4853 before the Covenant was signed; and
(b) Lots 17 to 21 on LP 4853 are burdened by the same Covenant and, by definition, cannot simultaneously enjoy its benefit.
Further, the Plaintiff says that it is significant that any beneficiaries to the west are separated by the 25m road reservation of Graham Place.
The Plaintiff also relies on the fact that similar covenants have already been removed from numerous lots within the subdivision.[97]
[97]See paragraphs 45 and 46 above.
The Plaintiff submits that it is fair to say that the use of the Subject Land for educational purposes will not create a precedent given that the College already enjoys a significant presence in the neighbourhood.
In terms of the amenity impacts from the proposal:
(a) the Plaintiff describes the Master Plan as including a long term plan, proposing open-ended opportunities for expansion of the College campus, which included the possibility that the Subject Land would be developed with two outdoor multi-purpose courts. The Plaintiff says that it appears that this was drawn up with little to no input from town planners and incorporates land not owned by it;
(b) the Plaintiff refers to the First Gray Affidavit, in particular Ms Gray’s opinion that if redevelopment of the Subject Land for sports and recreation purposes did occur, it would more likely be reduced in scope to respond to the demands of the responsible authority. The Plaintiff also refers to the Second Gray Affidavit, describing the Landscape Concept Plan as being an indicative depiction of how that development might be more realistically expressed.
(c) by reference to the matters referred to in the preceding paragraph, the Plaintiff submits that this is a more modest development proposal which, if pursued, would satisfactorily respond to concerns of injury to beneficiaries and would likely be accompanied by additional controls on the hours of operation and the like.
Consideration
To grant the application, I must be satisfied that the proposed modification or discharge will not cause substantial injury to the beneficiaries of the Covenant and that there is no reason for the Court not to exercise its discretion to grant the application.
I am satisfied that permitting the modification of the Covenant so as to allow for the use of the Subject Land for educational purposes or for the purposes of a school will not substantially injure the persons entitled to the benefit of the Covenant. My reasons for arriving at this conclusion are set out below.
First, no benefitting land immediately abuts the Subject Land. There is no benefitting land to the south or to the east. The benefitting land to the west is on the other side of the road, being Graham Place. While there are a number of benefitting lots to the north, they are in a distinct part of Graham Place and are separated from the Subject Land by Lot 21.
Second, and possibly most importantly, the proposed modification, being to allow buildings other than a private residence and to allow educational use rather than being confined to residential use, is consistent with the use of other land in the subdivision, including land previously burdened by the same or similar covenants. This is significant for two reasons: an additional lot being used for educational purposes is not likely to significantly change the impact of the College on the neighbourhood, such that it is difficult to conceive of any injury as a consequence, let alone substantial injury; and there is no precedential effect in granting the modification, since use of land in the subdivision for educational purposes has already been permitted.
Third, I do not consider the amenity impacts from the proposed modification to be significant, for the reasons set out above. The College is already there. In addition, there is evidence that Graham Place is already heavily used by the College, in terms of entering and exiting the College campus, for overflow staff parking, and by road traffic in connection with the College.[98]
[98]In particular, see paragraph 42 above.
Fourth, I do not consider the amenity impacts from the proposal to be significant. This needs some more detailed explication.
In this regard, I note that there is no definite proposal being promulgated by the Plaintiff. Rather, the Milner Report canvasses three potential proposals (that is, Scenarios 1, 2 and 3). There is also the long-term proposal contained in the Master Plan which, as already identified, is unable to be achieved at this point of time as it requires use of land which does not belong to the Plaintiff. In addition, there is the Landscape Concept Plan, which Ms Gray considers to be a more realistic proposal than Scenario 3. Finally, there is the evidence given by Ms Gray that the Plaintiff’s intention within the foreseeable future is to retain the Subject Land and the buildings on it as they are, for administrative support and storage, and that the existing driveway will be used for vehicle access and the outdoor areas used for passive recreation (I shall refer to this as Scenario 4).
I accept Mr Milner’s opinion that Scenarios 1 and 2 would not detrimentally impact or detract from the character of the neighbourhood or result in any substantial injury to beneficiaries, for the reasons given by him.[99] Scenario 4 is effectively consistent with Scenario 1, and would similarly not detrimentally impact or detract from the character of the neighbourhood or result in substantial injury to beneficiaries.
[99]See paragraphs 53 and 54 above.
I accept that the long-term proposal contained in the Master Plan is unrealistic, for the reasons given by Ms Gray as set out in paragraphs 63 and 64 above. However and even if it were achievable, I do not think that it would cause substantial injury to beneficiaries, as it involves educational use which is consistent with the use of the College campus, which includes land previously burdened by the same or similar covenants.
For similar reasons, I do not think that Scenario 3, with or without Mr Milner’s preferred restrictions as to no external lighting and use only within school hours, would cause substantial injury to beneficiaries. This is because Scenario 3 is consistent with the current use of the College campus. Accepting Mr Milner’s evidence that the purpose of the Covenant was to ensure residential use of the Subject Land and the establishment of a single dwelling on it, and to ensure a consistent residential character in the covenanted area, it can readily be seen that this purpose has already been significantly impacted by previous modifications or removals of covenants in the area so as to allow for the College to be built or extended and for the carpark in Graham Place to be built. The use of the Subject Land for educational purposes will therefore not substantially impact the beneficiaries of the Covenant. While the restrictions favoured by Mr Milner would likely improve the amenity for beneficiaries associated with the use of the Subject Land for educational purposes, I do not consider it necessary to include those restrictions in the modification of the Covenant so as to avoid substantial injury to beneficiaries.
Consistent with what the authorities say about the manner in which town planning considerations can be used in applications of this type, in coming to the view that Scenario 3 would not cause substantial injury to beneficiaries I have not had regard to the evidence regarding town planning considerations and restrictions (such as vegetation, external lighting, and operating hours) given by Ms Gray. This is because town planning principles and considerations are not relevant when considering whether the Plaintiff has satisfied the Court that there will not be substantial injury to beneficiaries.[100]
[100]Vrakas, [41]; Randell v Uhl, [85(g)].
However, town planning principles and considerations may be relevant to the exercise of the Court’s discretion,[101] to the extent they show what realistically will be the result of the modification of the Covenant because ‘it would be artificial and wrong to pay no heed at all to the reality of the situation’.[102] This is because in considering what a possible worst-case scenario may be, one needs to look at the realistic worst-case scenario, which clearly involves consideration of town planning matters since something not permitted by those controls would not be part of a realistic worst-case scenario.
[101]Vrakas, [46].
[102]Prowse v Johnstone [2012] VSC 4, [104], cited in Randell v Uhl, [85(f)].
Thus, having formed the view that the Plaintiff has satisfied the requirements of s 84(1)(c) of the PLA, the town planning considerations identified by Ms Gray and her opinion as to the likely impact they would have on any of the proposals discussed for the use of the Subject Land for educational purposes are relevant to the exercise of my discretion as to whether to allow the modification of the Covenant or not. In my view, they weigh in favour of the exercise of the Court’s discretion to allow the modification.
The absence of opposition does not determine the application: the PLA clearly requires that the Court must be satisfied that the statutory test of no substantial injury has been met. However, it is permissible to take the lack of opposition into account when considering the exercise of the Court’s discretion to allow the application. In this regard, I consider that the lack of opposition (in fact, there was support from one of the beneficiaries for the application)[103] is a factor weighing in favour of granting the modification.
[103]See paragraph 26 above.
While I am satisfied that the application to modify the Covenant to permit the use of the Subject Land for educational purposes or the purposes of a school, I am not persuaded that the Covenant should be removed. This is because all of the evidence has been directed to the use of the Subject Land for these (or residential) purposes and not to any other purpose. There is simply no evidence before me as to the likely impact on or injury to beneficiaries associated with the use of the Subject Land for other unidentified purposes, and therefore I cannot be satisfied that removing or discharging the Covenant would not cause substantial injury to the beneficiaries.
There is an aspect of the proposed modification to the Covenant, as set out in paragraph 13(b) above which was not addressed in the written or oral submissions of the Plaintiff. This is the proposed deletion of the words “subdivided or” in the third last line of the Covenant, such that the restriction on subdividing the Subject Land would be removed (‘Subdivision Restriction’). I have formed the view that I require submissions from the Plaintiff as to this issue before finalising the orders to give effect to my judgment. The Milner Report already contains evidence regarding subdivision of other lots within the neighbourhood, however it is unclear to me whether the removal of the Subdivision Restriction is pressed by the Plaintiff.
Conclusion
Accordingly, for the reasons set out above, the application to modify the Covenant will be permitted. The application to remove/discharge the Covenant will not be granted.
The proceeding will be listed for 30 March 2023 at 10.30am so as to finalise the orders to be made as a result of this decision. The Plaintiff will need to be in a position to address the fate of the Subdivision Restriction at that hearing.
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