Re PJLJ Pty Ltd, Richard Dunstan Reynolds and Patphair Investments Pty Ltd
[2015] VSC 401
•12 August 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
IN THE MATTER of applications pursuant to section 84 of the Property Law Act 1958 for
the modification of restrictive covenants
IN THE MATTER OF THE APPLICATIONS of:
S CI 2014 6142
| PJLJ PTY LTD (ACN 602 180 969) | Plaintiff |
S CI 2014 06842
| RICHARD DUNSTAN REYNOLDS | Plaintiff |
S CI 2014 6215
| PATPHAIR INVESTMENTS PTY LTD (ACN 601 789 066) | Plaintiff |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 11 May 2015 |
DATE OF JUDGMENT: | 12 August 2015 |
CASE MAY BE CITED AS: | Re PJLJ Pty Ltd, Richard Dunstan Reynolds and Patphair Investments Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2015] VSC 401 |
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REAL PROPERTY — Restrictive covenants — Single dwelling restrictions ‑ Applications for modification — Applicable legal principles —Objectors refusing to be added as defendants – Whether appropriate to hear objectors concerns and submissions ‑ Objectors granted leave to express their concerns and to make submissions— Whether modifications will not substantially injure the persons entitled to the benefit of the covenants — Application granted — Property Law Act1958, s 84(1)(c).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr David Lloyd of Counsel | Aughtersons Lawyers Pty Ltd |
| For the Objectors | Mr Hogan and Ms McNaught in person |
HIS HONOUR:
Introduction
The plaintiffs apply under s 84(1) of the Property Law Act1958 (‘the Act’) in three separate proceedings for the modification of three restrictive covenants burdening their properties.
Each covenant presently prohibits the construction of more than one dwelling house on the plaintiffs’ properties.[1] The proposed modification will permit the construction of up to three dwellings. The three properties burdened with the restrictive covenants are as follows:
[1]There are three restrictions in each covenant: a single dwelling restriction, a prohibition on quarrying operations and a requirement that the single dwelling, exclusive of any outbuildings, be of at least 1000 pounds value.
(a) 52 Timms Avenue, Kilsyth, Victoria, being the whole of the land described in Certificate of Title Volume 7828 Folio 104. It is lot 24 on Plan of Subdivision 21014. The covenant is contained in transfer of land No 2412055. The plaintiff and registered proprietor is PJLJ Pty Ltd (‘PJLJ’). There was a house on this property that has now been demolished;
(b) 1 Churchill Way, Kilsyth, Victoria, being the whole of the land described in Certificate of Title Volume 7600 Folio 095. It is lot 63 on Plan of Subdivision 21014. The covenant is contained in transfer of land No 2175570. The plaintiff and registered proprietor is Richard Dunstan Reynolds (‘Reynolds’); and
(c) 3 Churchill Way, Kilsyth, Victoria, being the whole of the land described in Certificate of Title Volume 7600 Folio 084. The covenant is contained in transfer of land No 2169559. The plaintiff and registered proprietor is Patphair Investments Pty Ltd (‘Patphair’).
The plaintiffs rely solely on the ground in s 84(1)(c) of the Act, that the proposed modifications will not cause substantial injury to any person having the benefit of the covenant.
There are two objectors who appeared before me and a number of local residents who have signed a petition objecting to the modifications sought. The objectors appearing (‘Objectors’) were:
(a) Mr Paul Hogan, who owns and lives at 34 Churchill Way, Kilsyth, (lot 48 on Plan of Subdivision 21014). He has the benefit of the covenant; and
(b) Ms Margaret Anne McNaught, who owns and lives at 37 Churchill Way, Kilsyth (Lot 36 on Plan of Subdivision 21014). She also has the benefit of the covenant.
Neither objector desired to be added as a defendant. They merely wished to express their objections to the three proposed modifications. Mr Lloyd of counsel, who appeared for the plaintiffs, referred me to an article written by him that appeared in the Law Institute Journal in May 2014,[2] and through that article referred to other cases where objectors, who were not prepared to be added as defendants, were heard by the Court and had their concerns taken into account.[3]
[2]Law Institute Journal, May 2014, 35.
[3]Re Milbex Pty Ltd [2006] VSC 298 and Re Djurovic [2010] VSC 348.
In order to enable the expeditious and cost effective hearing of the plaintiffs’ applications, I heard the objectors and, after considering the cases referred to by Mr Lloyd, I have determined that it is appropriate to proceed to determine the applications after taking into account the concerns and submissions of the objectors. In doing so I have also relied, of course, on the evidence filed by the plaintiffs in support of their applications.
The Evidence
In each application there is an affidavit made by the solicitor acting for each applicant, Glen Andrew Egerton and an affidavit of an expert, Mr Robert Easton. The affidavit of Mr Easton in each proceeding exhibits a report in which he expresses the opinion that having regard to the changes in the character of the neighbourhood it is appropriate that the covenant be modified as requested and that this modification will not substantially injure the persons entitled to the benefit of the restriction. In support of these opinions Mr Easton refers to the history of the respective titles to the properties, identifies those lots on the plan of sub-division (PS21014) that have the benefit of the covenant and gives a comprehensive account of the changes that have taken place in the sub-division since it was registered.
The Neighbourhood
Mr Easton notes in each report that the plan of sub-division was created in April 1951 and then contained 76 lots. It included all the land in the parent title. In his opinion the best definition of the neighbourhood is the land originally contained in the parent title which corresponds with the land in the sub-division.
In each report, Mr Easton notes the result of his investigations and inspections as follows:
(a) 51 Timms Avenue (Lot 16) was burdened with a covenant in the same terms as the covenants sought to be modified in this case. That covenant was modified pursuant to a planning permit in 2012 to allow two dwelling houses (with some qualifications as to the size and setback of the second dwelling). This property is located diagonally opposite PJLJ’s land at 52 Timms Avenue;
(b) 53 and 55 Timms Avenue (formerly Lots 17 and 18) were re-subdivided by Lodged Plan 113644 in 1974 to alter the shape of the lots and provide additional access via Alamein Avenue. An additional double-storey dwelling is now at the rear of number 53 Timms Avenue. The site was further sub-divided by plan of sub-division 700975 in July 2011. The original covenant was varied by order of this Court on 13 April 2005 to allow two dwellings on the former Lot 17;
(c) 40 Timms Avenue (formerly Lot 19) which is located 80 metres west of PJLJ’s land at 52 Timms Avenue was recently developed with four two-storey dwellings accessed by a central driveway. The original covenant burdening the land was modified in 2010 pursuant to the issue of a planning permit;
(d) 4 Montgomery Court (Lot 27), which was burdened by the same covenant but it was modified by order of this Court made on 15 August 2011 so as to allow the construction of no more than five dwellings. It is presently being developed with four dwellings;
(e) 45 Churchill Way (Lot 30) has been subdivided and now contains two single storey dwellings. It appears from the researches undertaken by Mr Easton that the covenant burdens one of the lots but not the other;
(f) 31 Churchill Way (Lot 38) has three single-storey dwellings erected on it. The original covenant burdening the land still remains on the three lots into which this land has been sub-divided;
(g) 57 Pascoe Avenue (Lot 41 and part Lot 40) is now subdivided and contains two dwellings, and the original covenant was varied to enable this to be done;
(h) 46 Churchill Way (Lot 43) has been redeveloped with two dwellings and sub-divided for that purpose. The covenant was modified by order of this Court on 21 October 2010 to enable this to be done;
(i) 44 Churchill Way (Lot 44) now contains two dwellings, one single storey and one double-storey. The Lot was sub-divided on 23 August 1994 and the covenant burdening the Lot was varied at the time the plan of sub-division was approved;
(j) 32 Churchill Way (Lot 49) contains three single-storey dwellings. The Lot was sub-divided in 1996 and the covenant burdening the land modified at the time the plan of sub-division was approved;
(k) 18 Churchill Way (Lot 55) now contains two single-storey dwellings. That is a result of a sub-division in 1999. The covenant remains on both titles;
(l) 15-29 Churchill Way was originally a four acre lot (Lot 56). The original covenant burdening this land was different from the covenants burdening the other lots in the sub-division in that it specified that the one dwelling restriction be applicable to any lot having a frontage of not less than 60 feet and a depth of not less than 165 feet. The covenant was varied to allow a preschool centre and subsequently the lot was sub-divided to allow seven conventional residential lots fronting Churchill Way leaving a balance lot of 2.5 acres. That balance lot was further sub-divided in 1961 creating Louisa Street linking to Churchill Way, with four conventional residential lots fronting Louisa Street and a balance lot fronting Pascoe Avenue. The latter balance lot was subsequently sub-divided into two lots in 1961;
(m) 7 Churchill Way (Lot 59) has been developed with a second dwelling at the rear with a frontage to West Court. The covenant burdening this lot was varied by a planning permit registered in 1993;
(n) 425 Mt Dandenong Road (Lot 64) has two single storey dwellings erected on it as a result of the sub-division in 1996 that varied the covenant;
(o) 427 Mt Dandenong Road (Lot 65) was recently developed with a second dwelling and sub-divided for that purpose. The covenant was modified by issue of a planning permit in March 2009;
(p) 429-431 Mt Dandenong Road (Lots 66 and 67) have been consolidated and contain a drive through liquor store. The original covenant applying to these Lots was in different terms to the covenants sought to be modified as they refer to a shop and dwelling. Both covenants were discharged by this Court in 1975;
(q) 433 Mt Dandenong Road (Lot 68) contains three shops with a frontage to Mt Dandenong Road. The buildings are two storey with a dwelling on the upper levels. The covenant burdening this land referred only to a restriction relating to excavation (quarrying and the like);
(r) 12 Churchill Way (Lot 69) has been developed with three single-storey units. The original covenant was removed by order of this Court in 1989;
(s) 10 Churchill Way (Lot 70) has been re-developed with two single-storey dwellings at the rear of an existing dwelling, and thus contains three dwellings. It appears the original covenant applicable to this lot has not been discharged;
(t) 6 Churchill Way (Lot 71) has recently been redeveloped with three double-storey dwellings behind the existing dwelling (four dwellings altogether). The covenant applying to this Lot was modified by order of this Court in May 2011;
(u) 2 Churchill Way (Lot 73) has been redeveloped as three single-storey dwellings. The covenant burdening this land was discharged by this Court in 2003;
(v) 435 and 445 Mt Dandenong Road (Lots 74 and 75) were re-subdivided in 1951 to create six shop sites and a rear laneway. Five of these lots were later consolidated and the resultant lot is now the site of a panel beating business. The original covenant burdening these lots did not contain any restriction as to the number of dwellings and only related to excavation (quarrying and the like); and
(w) 437–447 Mt Dandenong Road (Lots 76 and Lot 9 on LP21344) is now developed with a group of narrow fronted shops.
Mr Easton observes that the general character of the neighbourhood is now substantially different from what it was in 1951 when the subdivision was established. He notes that at that time there were no statutory planning controls. They were introduced in about 1954. The present planning controls provide extensive protections in a way not provided by the somewhat primitive controls contained in the covenants.
In Mr Easton’s opinion there have been material changes in the character of the neighbourhood since 1951 and the continued existence of the single-dwelling restriction is impeding the reasonable use of the land in a similar manner to other properties that have been developed in close proximity to each of the subject properties.
In Mr Easton’s opinion traffic impacts are not significant if the covenants are modified to allow the dwellings on each of the subject sites. Churchill Way and Timms Avenue are now public roads providing a link to Mt Dandenong Road and other roads outside the subdivision. For this reason these roads do not only carry local traffic. Further, Churchill Way is wider than is usual, having a pavement width of 8.4 metres.
Throughout the neighbourhood 18 other standard residential lots have been developed with between two and four dwellings or units, and nine of these lots have been developed with either three or four dwellings or units.
It is important to observe that none of the covenants restrict the kind of building materials, the dwelling size or height, or the number of storeys. In relation to each of the subject properties Mr Easton sets out a variety of information and opinions. The following is a summary.
52 Timms Avenue – PJLJ
The property is generally rectangular in shape and is located on the south-east corner of Churchill Way and Timms Avenue, Kilsyth. It has a frontage of 60 feet (19.3 metres) to Timms Avenue and a depth of 150 feet (45.7 metres) along Churchill Way. It has a land area of about 9,000 square feet (836m2). It has the remnants of on old dwelling on it, but is effectively vacant land.
Timms Avenue and Churchill Way are both relatively major thoroughfares serving the broader area. Within the subdivision there are 13 other corner lots that have been redeveloped with units, shops or business premises. Only five corner lots within the neighbourhood still contain single dwellings.
Elsewhere in the neighbourhood there has been a diverse range of alternate dwelling styles and types since the covenants were created. This includes both single and double-storey dwellings. Moreover, the neighbourhood is no longer purely residential with business premises established particularly on Mt Dandenong Road.
The proposal by PJLJ is to construct three dwellings on 52 Timms Avenue, with two being accessed via Churchill Way and the third via Timms Avenue. Due to the operation of ResCode, the dwelling fronting Timms Avenue will be set back 8.5 metres. The two dwellings facing Churchill Way will result in the present paling fence running the entire length of the site being removed, thus removing an unattractive interface with the road. These two dwellings will have a three metre set back from Churchill Way. If a large single dwelling were constructed the setback required would be less, at two metres, and that could apply over the full length of the Churchill Way boundary.
There are only two properties with a common boundary with PJLJ’s land, being 48 Churchill Way (Lot 32) and 54 Timms Avenue (Lot 25). Both of these properties have the benefit of the covenant and the owners have not raised any objection.
The proposal for the redevelopment of PJLJ’s land shows that the open, rear yards of the proposed dwellings will be adjacent to 54 Timms Avenue, which is a consequence of the more restrictive setbacks applied in the Maroondah Planning Scheme. Between the property on the other boundary, 48 Churchill Way, and the subject property there is an easement which forces a mandatory setback of 1.8 metres. There will be no adverse over-shadowing of neighbouring properties and no significant impact on the properties on the north side of Timms Avenue and the west side of Churchill Way (and those on the west side of Churchill Way immediately opposite the boundary of the subject land do not have the benefit of the covenant in any event).
1 Churchill Way ‑ Reynolds
The property is generally rectangular in shape and is located on the west side of Churchill Way, Kilsyth, approximately 50 metres north of its intersection with Mt Dandenong Road. It has a frontage of 75 feet (22.9 metres) to Churchill Way and a depth of 138 feet (42 metres). It has a land area of about 9,570 square feet (890m2) and contains a single-storey, weatherboard dwelling. It has a cross-over on its southern boundary providing access to Churchill Way. It is adjacent to commercial premises along Mt Dandenong Road, and Churchill Way is a major thoroughfare serving the broader area.
Mr Reynolds proposes to construct two dwellings at the rear of the existing dwelling. All dwellings will be accessed via a common property driveway from Churchill Way. Dwelling three will need to be setback five metres from the rear of the western boundary. As the common driveway is to be located on the south side of the site, it will adjoin properties used for commercial purposes. There is therefore no potential for any noise or other impacts on the surrounding or nearby residential properties.
There are only two residential properties having a common boundary with 1 Churchill Way. They are 3 Churchill Way and 1 West Court, both of which properties have the benefit of the covenant. With regard to 3 Churchill Way, the layout of the proposal is such that the open, rear yards of the existing and proposed dwellings would be adjacent to that boundary. In relation to 1 West Court, the 5 metre setback provides a substantial buffer. The impact of the redevelopment would be the same as if a single, large dwelling were constructed on the site. There will be no adverse overshadowing of neighbouring properties.
In summary Mr Easton is of the view that there would be no significant impact on any properties in the vicinity of the site. It should be noted that 3 Churchill Way, the subject of the application by Patphair, is immediately to the north of the subject land and it is proposed to be redeveloped with three dwellings as has been the case with the land opposite on the east side of Churchill Way (Lot 73).
3 Churchill Way ‑ Patphair
Save for a splay corner, the property is generally rectangular in shape and is located on the south-west corner of Churchill Way and West Court, Kilsyth. It has a frontage of 65 feet (19.8 metres) along Churchill Way and a depth along West Court of 120 feet (36.7 metres). It has a land area of about 9,570 square feet (889m2) and contains a single-storey, weatherboard dwelling. It has a cross-over on its northern boundary providing access to the centre of the site. On the land, along the northern boundary, there is erected a large commercial looking building presently used as the ‘Theatrix Dance Centre’.
Patphair proposes to remove the existing dwelling and dance studio, and construct three dwellings on the site. Two dwellings will have access via West Court and the third via Churchill Way. Due to the operation of ResCode, all dwellings would have to be setback 7.5 metres from Churchill Way or three metres from West Court, and at least 1.2 metres from the western and southern boundaries. The present dance studio building is already constructed to the street frontage and side boundary, with minimal setback.
There are only two properties having a common boundary, 1 Churchill Way (see above) and 1 West Court (also see above). In Mr Easton’s opinion there will be no significant impact on either property by the redevelopment proposed. The observations in relation to Mr Reynold’s land at 1 Churchill Way are equally applicable. The land is close to the commercial developments along Mt Dandenong Road (which were originally shown as residential lots within the subdivision), and developments have been undertaken on the opposite side of Churchill Way as referred to earlier.
For all these reasons, Mr Easton is of the opinion that the construction of three dwellings on each of the subject sites will not substantially injure the persons entitled to the benefit of the restrictions.
Objectors
The Objectors did not give any evidence. They made submissions as to the effect of the modifications on them in the ownership of their respective properties.
Applicable Law
The plaintiff relies only on s 84 (1)(c) of the Act. Section 84 of the Property Law Act 1958 provides, so far as relevant:
(1)The Court shall have power from time to time on the application of any person interested in any land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon by order wholly or partially to discharge or modify any such restriction …upon being satisfied—
(a)that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material the restriction ought to be deemed obsolete or that the continued existence thereof would impede the reasonable user of the land without securing practical benefits to other persons or (as the case may be) would unless modified so impede such user; or
(b) ….
(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction:
…
(4)Any order made under this section shall be binding on all persons whether ascertained or of full age or capacity or not then entitled or thereafter capable of becoming entitled to the benefit of any restriction which is thereby discharged, modified or dealt with and whether such persons are parties to the proceedings or have been served with notice or not.
The principles that govern an application to discharge or modify a restrictive covenant under s 84 (1)(c) of the Act may be summarised as follows:[4]
[4]Vrakas v Registrar of Titles [2008] VSC 281, [23]-[48]; see also Prowse v Johnstone & Ors [2012] VSC 4, [97] per Cavanough J; Re Comdain Homes Pty Ltd [2013] VSC 487 at [32]; and Wong v McConville & Ors [2014] VSC 148 at [33].
(a) Whether a person entitled to the benefit of the covenant would be substantially injured within the meaning of s 84(1)(c) is a question of fact.[5] It follows that each case must be decided on its own facts;[6]
[5]Re Alexandra [1980] VR 55, 60.
[6]See Fraser & Ors v Di Paolo & Anor [2008] VSC 117, [43], [58] (‘Fraser’).
(b) The applicant has the onus of establishing the matters set out in s 84(1)(c) upon which he or she relies.[7] This means that the applicant must effectively prove a negative;[8]
[7]Re Cook [1964] VR 808, 809, 812 (in relation to s 84(1)(c)); Re Robinson [1972] VR 278, 281; Re Stani (unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 7; Greenwood v Burrows (1992) V ConvR 54-444, 65,192 (“Greenwood”); Re Pivotel Pty Ltd [2000] VSC 264, [28] (“Pivotel”).
[8]Re Cook [1964] VR 808, 812-13; Greenwood v Burrows (1992) V ConvR 54-444, 65,199; Bevilacqua v Merakovsky [2005] VSC 235, [24] (unreported, Ashley J, 30 June 2005) (“Bevilacqua”).
(c) The test for whether a discharge or modification of a covenant would “substantially injure” a person entitled to the benefit of the covenant is similar to that in relation to “practical benefits” in the second limb of s 84(1)(a);[9]
[9]Re Robinson [1972] VR 278, 283; Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 10; Pivotel [2000] VSC 264, [37]; Bevilacqua [2005] VSC 235, [24] (unreported, Ashley J, 30 June 2005).
(d) The emphasis is on the injury suffered by the persons entitled to the benefit. From the nature of the proprietary right arising from the restrictive covenant, the injury must occur in relation to the person’s enjoyment of his or her property;[10]
[10]Re Cook [1964] VR 808, 810.
(e) Whether the proposed discharge or modification “will not substantially injure the persons entitled to the benefit of the restriction” requires a comparison between the benefits initially intended to be conferred and actually conferred by the covenant, and the benefits, if any, which would remain after the covenant has been discharged or modified. If the evidence establishes that the difference between the two (that is, the injury, if any) will not be substantial, the ground in s 84(1)(c) is made out;[11]
[11]Re Cook [1964] VR 808, 810-11; Fraser [2008] VSC 117, [36].
(f) The injury must be something more than ‘unsubstantial’, it must be real and not a fanciful detriment;[12]
[12]Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 10; Greenwood (1992) V ConvR 54-444, 65,199.
(g) It is not enough for the applicant merely to prove that there will be no appreciable injury or depreciation in value of the property to which the covenant is annexed;[13]
[13]Re Cook [1964] VR 808, 810.
(h) A lack of specific plans makes it more difficult for an applicant to show that there will be no substantial injury to persons entitled to the benefit of a covenant;[14]
[14]Stanhill Pty Ltd v Jackson & Ors (2005) 12 VR 224, 246 (“Stanhill”); Bevilacqua [2005] VSC 235, [22] (unreported, Ashley J, 30 June 2005).
(i) The prospect that, if the application for the discharge or modification of a covenant were granted, that might be used to support further applications in a similar vein, may be relevant.[15] Such “precedent value” may, in an appropriate case, of itself be a factor demonstrating that an applicant fails to establish the requirements in s 84(1)(c);[16]
[15]Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 11; Greenwood (1992) V ConvR 54-444, 65,200; Fraser [2008] VSC 117, [49]–[57].
[16]Greenwood (1992) V ConvR 54-444, 65,200.
(j) 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).[17] However, town planning principles and considerations may be relevant to the exercise of the Court’s residual discretion.[18] “Precedential” issues similar to those discussed above may also be relevant in the exercise of that discretion;[19]
[17]Re Robinson [1972] VR 278, 285; Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 6–7; Greenwood (1992) V ConvR 54-444, 65,198; Pivotel [2000] VSC 264, [50]; Bevilacqua [2005] VSC 235, [22] (unreported, Ashley J, 30 June 2005).
[18]Greenwood (1992) V ConvR 54-444, 65,200–65,201; Bevilacqua [2005] VSC 235, [22] (unreported, Ashley J, 30 June 2005).
[19]Greenwood (1992) V ConvR 54-444, 65,201.
(k) The absence of objectors to the discharge or modification of a covenant will not, in itself, necessarily satisfy the onus of proof;[20]
(l) Even if the matters set out in a limb of s 84(1)(a), or in s 84(1)(c), are proved by the applicant, the Court has a discretion to refuse the application;[21] and
(m) The Court has a discretion as to whether to modify a covenant if s 84(1) is satisfied.[22]
[20] Re Cook [1964] VR 808, 812.
[21]Re Cook [1964] VR 808, 810; Re Robinson [1972] VR 278, 285-6; Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 7; Greenwood (1992) V ConvR 54-444, 65,192, 65,200; Stanhill (2005) 12 VR 224, 239.
[22]See for example, Vrakas [2008] VSC 281, [67]–[71]; and Suhr v Michelmore [2013] VSC 284, [47]–[48].
In Re Stani[23] the Court approved the approach to s 84(1)(c) given by Gillard J in Re Cook:[24]
From the nature of the proprietary right arising from the restrictive covenant clearly the injury must occur in relation to the person's enjoyment of his property.
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 other words any injury sufficient to prevent the Court modifying the restriction must be something more than unsubstantial, must be real and not a fanciful detriment.
[23]Unreported, Full Court of Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976, at 10).
[24][1964] VR 808, at 810-11.
Submissions
Plaintiffs
The question in this case is whether the plaintiffs have established a negative, namely that the proposed modifications will not substantially injure those persons entitled to the benefit of the restriction. The test is similar to that applying in relation to ‘practical benefits’ in the second limb of s 84(1)(a).[25]
[25]Vrakas [2008] VSC 281, at [34].
The plaintiffs rely on the evidence of Mr Easton, referred to above, and submitted that:
(a) It is not a discharge of the covenant that is sought, but its modification to allow the construction of three dwellings on each of the properties. The plaintiffs do not seek a ‘carte blanche’ to do whatever they wish on their respective properties;
(b) Indicative drawings of the proposed developments have been provided;
(c) The town planning and building controls will appropriately regulate the developments to deal with the Objectors’ concerns. In particular the town planning controls enable the Council and, if necessary, VCAT to consider a wide range of factors including the bulk, mass, height, density, lot coverage, overshadowing and overlooking of the proposed developments. The plaintiffs need to obtain a planning permit for what they each propose. It is not sufficient simply to have the covenant modified. It must go to Council and satisfy Council and, if necessary, VCAT that what is proposed meets all the town planning requirements, and building controls as well;
(d) Without modification of the covenant and with no town planning permit, the plaintiffs could each build a large, two-storey house on the respective lands. Three dwellings occupying a similar amount of site coverage is (visually) not substantially different from one very large structure which just happens to be a single dwelling;
(e) Thus, on a comparison of the benefits intended to be conferred and actually conferred by the covenants, and the benefits which would remain after the covenants are each modified, the difference between the two is not substantial. There is no substantial or real injury, to the persons with the benefit of the covenant, which would result from the modification;
(f) With respect to the precedential effect of the modifications sought, the so-called floodgates argument, they will be of minimal significance in this subdivision. This is not the first application for modification of a covenant in this neighbourhood and subdivision. There have been many developments involving multiple dwellings. The evidence of the expert retained by the plaintiffs, Mr Easton, supports the fact that there have been many multi-dwelling developments in the neighbourhood and subdivision; and
(g) The objectors have said that they do not wish to be joined as defendants in the proceeding. Only someone who is a defendant in the proceeding is entitled to participate to the extent of cross-examining Mr Easton and that is not the case here.
Objectors
The Objectors made submissions both orally and by reference to letters and a short petition-like document. The substance of the submissions concerned the following attributes of the living environment, that were asserted to be the result of the covenants:
(a) They ‘guaranteed an open urban living environment’ which was a ‘valuable commodity within the area’;
(b) They enabled space for families to grow and play in an environment with established trees and gardens;
(c) They ensure the character of the street (Churchill Way) with single-storey dwellings of varying architectural styles and different building materials, but with private gardens and established trees; and
(d) They preserve the privacy of the neighbouring gardens.
It was said that the modifications of a covenants will open the way for other blocks of land burdened by the covenant to be developed so that more than one dwelling is erected on each lot.
In particular, Mr Hogan contended that there were other applications before the Council within the neighbourhood in which some 50 dwellings were proposed He submitted that the continued allowance of over-development in the neighbourhood is changing its character. He attached to his written correspondence a series of photographs of the current character together with photographs of the style of the development that is changing that character. He referred to the increase in traffic in the streets, which he said were already overloaded because Churchill Way is used as a cut through from Hull Road to Mt Dandenong Road. He expressed concern that an increase in traffic and parked cars (from residents and their visitors) will make it extremely dangerous. It is noteworthy that immediately to the south of Mr Hogan’s property and adjoining it there is a three dwelling development (Lot 49).
Consideration
Having regard to the authorities mentioned above, and the plaintiffs’ evidence and the Objectors’ comments, in my opinion the principal questions are:
(a) What is the purpose of the ‘single-dwelling’ restriction found in each covenant?;
(b) What is the benefit conferred on a beneficiary in precluding more than one dwelling on the burdened properties?; and
(c) Would a beneficiary suffer a substantial injury should each of the covenants be modified and three dwellings are constructed on each property?
There are three restrictions in each covenant: a single-dwelling restriction, a prohibition on quarrying operations, and a requirement that the single dwelling, exclusive of any outbuildings, be of at least 1000 pounds value. One can conclude that the intention of the covenants is to encourage a substantial (1000 pound minimum cost in 1951) single, residential dwelling (no shops or factories, etc.). But as there are no other restrictions, such as the kind of building materials, the dwelling size or height, the number of storeys, or setbacks, the best one can say is that the covenants relate to the density and usage of the neighbourhood.
It is important in this case, as it was in Hermez v Karahan[26] and Koller v Rice[27] (to which I refer below), that the intention of the covenant is evidenced by what it does not say as much as by what it does say. Importantly, there is no limitation on building coverage, site permeability or plot ratio, and no specified building envelope. The covenants do not make any attempt to preserve large areas of private, open space. It does not impose any restriction that could have the effect of requiring any specific landscaping or require the planting of vegetation. There is no limit on dwelling height nor any reference to the scale of dwellings anticipated by the covenants, other than a requirement for dwellings to cost not less than 1000 pounds (in 1951 values).
[26][2012] VSC 443.
[27][2011] VSC 346.
Thus, without any modification to the covenants, the properties may each be developed with a single dwelling of substantial dimensions. The planning laws do not restrict the size and bulk of a single dwelling on the subject lands in the way in which the current dwellings have been constructed. Thus, the evidence of Mr Easton is that a large two storey dwelling could be erected on each property that has the same characteristics as the additional dwellings proposed to be erected. The concern of the Objectors was in part related to the propensity for two storey developments to change the character of the neighbourhood. This is no, however, a characteristic protected by the covenants.
In Hermez v Karahan,[28] the plaintiff proposed to develop a vacant lot with two double-storey residences. Daly AsJ considered that an undeveloped block of land is not a suitable comparator. She said in this regard:[29]
having regard to the pattern of development in the neighbourhood, it is likely that any development on the land, even a single dwelling development, is likely to be consistent with a substantial proportion of properties in the neighbourhood (including 40A Paringa Boulevard), that is, the construction of a substantial, possibly double storey residence with a footprint which covers a major proportion of the area of the land. The construction of such a dwelling would raise the same amenity issues identified by Mr Karahan in his affidavits and submissions, and Mr Karahan and other nearby residents would not have the opportunity to raise these issues in a planning approval process if only one dwelling was to be built on the land.
[28][2012] VSC 443.
[29][2012] VSC 443, [33].
In Koller v Rice,[30] Dixon J faced a development involving the construction of a two-storey dwelling behind an existing dwelling, but subject to a single-dwelling covenant, which included a minimum living floor area. He noted:[31]
In undertaking a comparison between the benefits initially intended to be and actually conferred by the covenant and the benefits, if any, which would remain after the covenant has been modified, I accept the evidence of Ms Spinks. Leaving aside the issue of the materials used in construction, which is not presently relevant, the intention of the covenant appears to be to ensure single, large dwellings are constructed on the land. That intention is not to preserve large private open space areas or space around buildings. Had that been intended, other controls or restrictions would be found in the covenant.
The distinction between the size and configuration of the form of a single building, observing the restrictions of covenant, compared with that the size and configuration of the form of two dwellings, if allowed, is negligible. The restrictive covenant impedes the use of the land for more than one dwelling but in practical terms does not limit the building footprint for a single dwelling. A permitted single dwelling could, in compliance with planning laws, be larger in form, bulk and plot coverage than two dwellings on the lot. While observing the restrictive covenant, the plaintiff’s land could be further developed with building extensions and/or other works that would be similar in form to a second dwelling.
[30][2011] VSC 346.
[31]Ibid at [31]-[32].
So it is in this case as well. The evidence of the expert in this case is that a single dwelling could, in compliance with planning laws, be as large in form, bulk and plot coverage as three dwellings on each property. The covenants do not, either at law or in practise, limit the building footprint for a single dwelling nor do they guarantee any particular degree of open space, garden, trees or vegetation.
There is no possibility of the modifications sought in these cases operating as precedents. The number of other changes in the neighbourhood is, in my view, so extensive that not only has the precedent been set already, but the character of the neighbourhood has already begun to change to a significant extent.
The physical circumstances of each of the subject properties in relation to their neighbours and surrounds are such that the prospect of there being any injury to those with the benefit of the covenants is minimal. The evidence of Mr Easton referred to above, which I accept as reasonable, is compelling in relation to the minimal effect of the proposed developments on the neighbours, both immediate and more remote.
Such things as the extent of the open space, landscaping, vegetation and trees are not regulated by the covenants, except in the most indirect manner, and are regulated by the planning laws. Overshadowing and overlooking are, likewise, not regulated by the covenants. The removal of the restrictions in each case before me is by no means the end of the matter as the residents in the neighbourhood will have the opportunity to object to the granting of the planning permits that will, according to the evidence, be required.
Conclusion
For these reasons, I am satisfied that modification of the covenants in the way proposed will not substantially injure the persons entitled to the benefit of them.
I will make orders accordingly.
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