Xu v Natarelli

Case [2018] VSC 759


IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S CI 2017 02339

IN THE MATTER of an Application pursuant to section 84 of the Property Law Act 1958 for the modification of a restrictive covenant

- and –

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:

  1. 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…

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Xu v Natarelli [2018] VSC 759
Case
[2018] VSC 759
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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

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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