IN THE MATTER of an application for the modification of the restriction arising under
the covenant in a transfer of land registered No. U192765X affecting the land at 20-26 McGowans Rd, Donvale being the land in Certificate of Title volume 10271 folio 680 by:

ANTE XU and XIAO LI	Plaintiffs
v
MARIANNA NATARELLI AND OTHERS (according to the schedule)	Defendants

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JUDGE:	Ierodiaconou AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	4 September 2018, 5 September 2018
DATE OF JUDGMENT:	7 December 2018
CASE MAY BE CITED AS:	Xu v Natarelli
MEDIUM NEUTRAL CITATION:	[2018] VSC 759

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REAL PROPERTY – Restrictive covenant – Application to modify a restrictive covenant – Where fifth defendant’s land transferred out of parent title before covenant was made – Whether fifth defendant has benefit of the covenant – Whether covenant on subject land was part of development scheme that benefits all the land in the plan of subdivision – Whether benefit of a covenant attaches to land not owned by a transferor at date of transfer – Property Law Act 1958 ss 56, 84(1)(c) – Planning and Environment Act 1987 s 173 – Re Mack and the Conveyancing Act [1975] 2 NSWLR 623 – Re Dennerstein [1963] VR 688 – Fitt v Luxury Developments Pty Ltd [2000] VSC 258 – Doyle v Phillips (1997) 8 BPR 15,523 – Vrakas v Mills [2006] VSC 463.

REAL PROPERTY – Whether proposed modification will not substantially injure the persons entitled to the benefit of the covenant – Vrakas v Registrar of Titles [2008] VSC 281 – Jiang v Monaygon Pty Ltd [2017] VSC 591.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr D Lloyd	Aughtersons Solicitors
For the Defendants	Mr S Hopper, with Mr C Dawlings	Mahons with Yuncken & Yuncken Lawyers

TABLE OF CONTENTS

Summary.............................................................................................................................................. 1

Evidence............................................................................................................................................... 1

Restrictive covenant........................................................................................................................... 3

Is the covenant on the subject land part of a scheme of development that benefits all the land in the plan of subdivision?...................................................................................................... 5
By operation of s 56 of the PLA, does the benefit of a covenant attach to land not owned by a transferor at the date of transfer in circumstances where (a) it purports to do so, and (b) the transferor once owned the land?..................................................................................... 17
Applying s 84(1)(c) of the PLA, have the plaintiffs established that the proposed modification will not substantially injure the persons entitled to the benefit of the covenant?........... 26
Plan of Subdivision............................................................................................................ 28
Plaintiffs’ submissions...................................................................................................... 29
Defendants’ submissions.................................................................................................. 32
Analysis............................................................................................................................... 35

Conclusion......................................................................................................................................... 39

HER HONOUR:

The plaintiffs seek to modify a restrictive covenant affecting their property in McGowans Rd, Donvale. It prohibits the erection of more than one single dwelling house on their land. They wish to erect…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Xu v Natarelli

Details

AGLC: Xu v Natarelli [2018] VSC 759
Case: [2018] VSC 759
Decision Date: 7 December 2018

CaseChat Overview and Summary

The matter before the Court was an application by the fifth defendant, Mr Xu, to modify a restrictive covenant in the original subdivision of a larger estate. The covenant, which restricts the use of certain land to residential purposes, was made by the second defendant, Mr Natarelli, after he had already transferred the fifth defendant's land from his parent title. The fifth defendant sought to have the covenant modified to permit commercial use of his land, arguing that the covenant was part of a development scheme that benefits all the land in the plan of subdivision. The Court was required to determine whether the fifth defendant had the benefit of the covenant, and whether the proposed modification would not substantially injure the persons entitled to the benefit of the covenant.

The Court considered the relevant provisions of the Property Law Act 1958 and the Planning and Environment Act 1987, as well as relevant case law. The Court held that the fifth defendant did not have the benefit of the covenant, as it was not part of a development scheme that benefits all the land in the plan of subdivision. The Court also held that the benefit of a covenant does not automatically attach to land that was not owned by the transferor at the date of transfer. The Court further held that the proposed modification would substantially injure the persons entitled to the benefit of the covenant, as it would allow commercial use of the land, which would be contrary to the purpose of the covenant.

The Court refused the application to modify the restrictive covenant. The Court held that the fifth defendant did not have the benefit of the covenant, and that the proposed modification would substantially injure the persons entitled to the benefit of the covenant. The Court emphasised that the purpose of a restrictive covenant is to protect the character and use of land in a subdivision, and that allowing commercial use of the fifth defendant's land would undermine this purpose. The Court also noted that the fifth defendant had not demonstrated any exceptional circumstances that would warrant modification of the covenant. The Court's decision was in line with relevant case law, which emphasises the importance of preserving the integrity of restrictive covenants in a subdivision.

Orders