Zwierlein v Coelho

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST

S ECI 2020 03074

IN THE MATTER of an application under section 84 of the Property Law Act 1958 (Vic)

- and -

IN THE MATTER of an application for the modification of the restrictive covenant contained in Instrument of Transfer X240228V in the register kept by the Registrar of Titles and affecting the land known as 8 Jasmine Court, Warragul, more particularly described in Certificate of Title Volume 10492 Folio 779, by:

ROBERT ZWIERLEIN & ANOR (according to the attached Schedule)	Plaintiffs
v
ROBERT MICHAEL COELHO & DIANNE ELIZABETH COELHO & ORS (according to the attached Schedule)	Defendants

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JUDGE:	Hetyey AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	3 and 4 May 2021
DATE OF JUDGMENT:	3 August 2021
CASE MAY BE CITED AS:	Zwierlein v Coelho
MEDIUM NEUTRAL CITATION:	[2021] VSC 451

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PROPERTY LAW – Restrictive covenant – Covenant restricting, amongst other things, construction of more than one dwelling house – Application for modification – Property Law Act 1958 (Vic) s 84(1)(c) – Whether proposed modification will not substantially injure the persons entitled to benefit of covenant – Subject land physically removed from most beneficiaries of covenant – Whether change in neighbourhood character or loss of amenity – Whether increase in residential density, traffic and noise – Whether modification would create adverse precedent – Application granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M D Townsend Ms N Blok	MPW Lawyers
For the Defendants	Mr D P Lloyd	Rennick & Gaynor

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background......................................................................................................................................... 2

Features and location of the land................................................................................................ 3
The covenant.................................................................................................................................. 5
Prior application............................................................................................................................ 6

Procedural history.............................................................................................................................. 7

Identifying the beneficiaries........................................................................................................... 9

Relevant legal principles................................................................................................................ 12

Purpose of and benefits arising under the covenant................................................................ 14

Location of land within subdivision and surrounding neighbourhood.............................. 17

Plaintiffs’ proposed development................................................................................................ 19

Whether absence of substantial injury........................................................................................ 21

Neighbourhood character.......................................................................................................... 22
Impact on 9 Jasmine Court........................................................................................................ 25
Amenity of reserve...................................................................................................................... 27
Visual impact on 7 Jasmine Court............................................................................................ 29
Traffic, noise and safety............................................................................................................. 31
Creation of precedent................................................................................................................. 34

Discretion.......................................................................................................................................... 35

Conclusion......................................................................................................................................... 37

HIS HONOUR:

Introduction

The town of Warragul is located in West Gippsland and is accessible from the Princes Highway to its south, with the Baw Baw Plateau and the Great Dividing Range to its north. Jasmine Court is situated within the north-eastern, urban boundary of the town. Somewhat uniquely, at the bowl of Jasmine Court, the road narrows and extends onwards, providing vehicular and pedestrian access to a small number of properties which form part of a low-density enclave located behind the conventional part of Jasmine Court, and between a linear reserve and a golf course.

Robert and Linda Zwierlein (‘the plaintiffs’) are the registered proprietors of land located within this enclave at 8 Jasmine Court (‘the land’ or ‘the subject land’).[1] The land currently accommodates a single dwelling in which the plaintiffs reside. The plaintiffs wish to subdivide the land into three lots and to construct a further two dwellings (with one dwelling on each of three resulting lots). However, the land is burdened with a restrictive covenant (‘the covenant’) which prohibits, amongst other things, the construction of more than one dwelling house. The plaintiffs apply under s 84(1) of the Property Law Act 1958 (Vic) (‘the Act’) to modify the covenant to enable them to carry out this proposed development. The defendants, who oppose the application, are neighbouring land owners who have the benefit of the covenant.
[1]The land is more specifically described in Certificate of Title Volume 10492 Folio 779 as Lot 115 on Plan of Subdivision 312306L.

The key question in this case is whether the plaintiffs can prove a negative; namely whether the proposed modification to the covenant will not cause ‘substantial injury’ to the beneficiaries of the covenant. The defendants allege they will suffer substantial injury as a consequence of changes to the neighbourhood character, a loss of amenity, an increase in residential density, traffic and noise, and the creation of an adverse precedent. For reasons which I explain more fully below, I am satisfied that the plaintiffs have demonstrated that no substantial injury to the beneficiaries of the covenant will arise if the proposed modifications are allowed.

Background

The land was created through the subdivision of Certificate of Title Volume 10120 Folio 034 (‘the parent title’) pursuant to the Plan of Subdivision 312306L (stage 5) which was registered on 18 January 2000 (‘the plan of subdivision’ or ‘the subdivision’). The subdivision is extracted below with the property delineated in yellow.

Figure 1: plan of subdivision

The parent title was itself created upon the completion of the plan of subdivision of the land in Certificate of Title Volume 9952 Folio 315 (‘the head title’). Register search statements for both the parent title and the head title indicate that these folios have been cancelled and that new folios were created upon the cancellations. It seems that the head title was carved into a number of residential lots and a number of significantly larger lots, one of which was the parent title. The properties within Jasmine Court (aside from 7A, 7B and 7C Jasmine Court, which are to the immediate south of the land) are lots which formed part of the parent title.

As can be seen from the above diagram, the subdivision comprises a total of approximately 154 residential lots, three ‘super lots’ in the eastern section of the subdivision (which have been developed for non-residential purposes, including a school) and a number of contiguous ‘reserve’ lots, which form a linear open space in the west of the subdivision and immediately east of the land and which are zoned as ‘public park and recreation’.

Features and location of the land

The land itself is a large, irregularly shaped parcel of approximately 4,810 square metres in size, including a maximum depth of around 70.44 metres and a maximum width of 93.75 metres. As earlier noted, there is currently one house on the land which is located at its southern boundary and set within a mature garden.

Situated at the western edge of the subdivision, the land is one of two lots which form part of the subdivision and are located within the low-density enclave to the rear of Jasmine Court. The other lot is Lot 116, or 9 Jasmine Court, which is to the immediate north of the land, around 4,668 square metres in size, triangular in shape and owned by Robert Michael Coelho and Dianne Elizabeth Coelho (‘9 Jasmine Court’). These two lots are somewhat distinguished and removed from the rest of the subdivision because of their proportions and physical separation from the other lots in Jasmine Court proper and as a consequence of the intervening linear reserve.

Also within the enclave are the properties at 7A, 7B and 7C Jasmine Court, although they do not fall within the plan of subdivision. The five lots comprising the enclave are located within a gully, with Jasmine Court proper rising steeply towards the east and higher land located on the Warragul Golf Course to the west.

The following diagram, which is extracted from the plan of subdivision, illustrates the land (shown in yellow) relative to 9 Jasmine Court and the linear reserve, and the size and layout of the remaining lots within Jasmine Court. The diagram also depicts the lots within Jasmine Court that have the benefit of the covenant (shown in blue).

Figure 2: Jasmine Court map

The land, along with 9 Jasmine Court and 7A, 7B, and 7C Jasmine Court, are all accessed via a concrete road which operates as an extension of Jasmine Court. The road heads east from the head of Jasmine Court, crosses a creek and bisects two reserve lots which form part of the linear reserve, and then turns southward, passing the subject land and then terminating in a cul-de-sac at 7A, 7B, and 7C Jasmine Court. The road is between 3 to 5 metres in width at various points as it cuts through the reserve (of which the road forms a part). The following aerial photograph illustrates the access arrangements to the relevant properties via the road (the road depicted as a red dashed line).

Figure 3: aerial photograph of Jasmine Court

The linear reserve itself follows the alignment of the creek. The creek, which is lined with trees, separates the reserve into an eastern side, containing a gravel walking track, and a western side, which encompasses the concrete road and a narrow section of grass.

The covenant

Following the creation of the plan of subdivision, the land was first transferred pursuant to the Instrument of Transfer X240228V. The instrument contained the covenant which was signed on 22 November 2000 and registered on 3 January 2001. The covenant provides that the registered proprietors of the land will not:

(a)at any time erect construct or build or cause to be erected constructed or built on the said lot or any part thereof any buildings other than one dwelling house (together with usual outbuildings) and such dwelling house shall not have less than 75 per centum of the external walls (excluding windows) constructed of brick, brick veneer, stone or like materials;
(b) at any time permit the land or any part thereof to be used as a carriageway, thoroughfare, road, lane or route or conveyance for any vehicle vehicles equipment plant or machinery of any kind.

Broken down, the covenant imposes the following restrictions:

(a) a restriction on the development of the land to no more than one dwelling house (‘the single dwelling restriction’);

(b) a requirement that the dwelling house must have external walls consisting of 75% brick, brick veneer, stone or similar materials (‘the building materials restriction’); and

(c) a restriction on the use of the land as a carriageway or crossing for vehicles (‘the thoroughfare restriction’).

Prior application

In or around 2011, the plaintiffs applied to the Baw Baw Shire Council for a planning permit to modify the covenant to allow a three-lot subdivision and construction of three dwellings on the land. The application was refused by the Council and the plaintiffs appealed to the Victorian Civil and Administrative Tribunal (‘VCAT’). VCAT ultimately refused the appeal.[2] However, the decision of VCAT is of limited relevance to the present application because it pertained to a different statutory test set out in s 60(2) of the Planning and Environment Act 1987 (Vic). That provision essentially states that a permit for the variation or removal of a restriction in respect of land must not be granted unless the responsible authority is satisfied that a beneficiary of a covenant will be unlikely to suffer financial loss, loss of amenity, loss arising from change to the character of the neighbourhood, or any other material detriment as a consequence of the removal or variation of the relevant restriction. There are also differences between the nature of the proposal which was then before VCAT and the proposal the subject of the present application.
[2]Zwierlein v Baw Baw SC [2011] VCAT 74.

Procedural history

The plaintiffs commenced their application by originating motion on 27 July 2020. On 7 August 2020, Matthews JR (as her Honour then was) ordered that notice of the application be provided by way of pre-paid priority post to the registered proprietors of proximate land that may take the benefit of the covenant, to persons having objected to the VCAT application, and for the placement of a sign on the land and a sign in a prominent position nearby to the land for the giving of notice to beneficiaries more generally. Those orders were duly complied with by the plaintiffs. The notification process elicited four objections from six people residing in Jasmine Court. Objections were received from:

(a) Christine Petch of 7 Jasmine Court (Lot 114 of the plan of subdivision);

(b) John and Diane Marsden of 5 Jasmine Court (Lot 112 of the plan of subdivision);

(c) Robert and Dianne Coelho of 9 Jasmine Court (Lot 116 of the plan of subdivision); and

(d) Faye Warren of 12 Jasmine Court (Lot 119 of the plan of subdivision).

On 2 October 2020, Matthews JR (as her Honour then was) made further orders to enable the joinder of those objectors as defendants to the proceeding. The orders also set out a timetable of steps in preparation for the trial of the matter, including the filing of an amended originating motion and affidavit material. The proceeding was then fixed for trial commencing on 3 May 2021.

The plaintiffs rely upon a number of affidavits in support of their application. Those affidavits are:

(a) the affidavit of Robert Milner affirmed on 23 July 2020, together with its exhibit, being an expert report dated July 2020;

(b) four affidavits of Myles Patrick Watson, solicitor, sworn on 27 July 2020, 24 September 2020, 23 December 2020 and 1 April 2021, respectively, together with their exhibits, including a further report prepared by Mr Milner dated 18 December 2020 in response to expert evidence relied upon by the defendants and correspondence dated 15 March 2021 from Mr Milner addressing a discrepancy in the material previously relied upon by him;

(c) the affidavit of Robert Zwierlein sworn on 27 July 2020; and

(d) the affidavit of Linda Zwierlein sworn on 31 March 2021, together with exhibits, including concept floor plans for the development proposal and photographs of the neighbourhood.

The plaintiffs also rely upon their written submissions dated 7 August 2020, 27 January 2021 and 4 May 2021.

In opposing the application, the defendants rely upon the following affidavits:

(a) the affidavits of Robert Michael Coelho; Dianne Elizabeth Coelho; John Hartley Marsden; and Christine Megan Petch; and Faye Leslie Warren, each sworn on 26 November 2020;

(b) the affidavit of Faye Leslie Warren, sworn on 27 November 2020; and

(c) the affidavit of Marco Negri, sworn on 26 November 2020, together with its exhibit, being an expert report dated November 2020.

The defendants also rely upon their written submissions dated 3 March 2021.

During the course of the trial, the parties encouraged me to undertake a view of the land and the surrounding neighbourhood. They agreed that I should do so in the absence of legal practitioners and the parties themselves. After hearing the evidence, I decided this would be appropriate and helpful. On 6 May 2021, my Associate and I undertook an inspection of the land and its locality. My Associate then provided the parties with a brief report of the view. Where relevant, I will refer to my observations throughout the course of these reasons, together with any reasonable inferences I have drawn from my inspection.[3]
[3]See s 54 of the Evidence Act 2008 (Vic).

On 25 May 2021, the plaintiff filed a further amended originating motion pursuant to leave granted by the Court during the course of the trial. The document amended the proposed modifications to the covenant, including by defining the features of the dwelling houses sought to be built on the land and clarifying the scope of the modifications to avoid any unintended interpretations and consequences. The further amended originating motion now seeks the following modification to the covenant:

(a)at any time erect construct or build or cause to be erected constructed or built on the said lot or any part thereof ~~any buildings other than one~~ more than three dwelling houses (together with usual outbuildings); any such dwelling house or outbuilding must not be fewer than four metres from the northern boundary and fewer than six metres from the eastern boundary of the said lot, not have more than 190 square metres site coverage (excluding garaging or any outbuildings), and not be any higher than 9 metres above natural ground level and such dwelling houses shall not have less than 75 per centum of the external walls (excluding windows) constructed of brick, brick veneer, stone or like materials;
(b)at any time permit the land or any part thereof to be used as a carriageway, thoroughfare, road, lane or route or conveyance for any vehicle vehicles equipment plant or machinery of any kind save for those associated with ordinary residential ~~purposes~~ use of the said lot;
(c)for the avoidance of doubt it shall not be a breach of these restrictions for one dwelling house located within the southern half of the said lot to exceed the site coverage restriction …

Identifying the beneficiaries

The covenant in question is expressed to be ‘attached to and run at law and in equity with each other and with every lot on the [plan of subdivision] (other than the lot … sold).’ However, it is clear that the benefit of a covenant can only attach to the land owned by the covenantor at the time the covenant was signed.[4] That is because there must be privity between the covenantor and the proprietors of the benefiting land.[5] An exception arises in the case of a building or development scheme where all (or mostly all) the lots in a subdivision are sold subject to a restrictive covenant so that all the purchasers of the lots, and their assigns, are bound by, and entitled to the benefit of, the covenant.[6] In such a case, the reciprocal rights and obligations of the owners of the lots are grounded in equity, rather than in contract, and arise from the community of interest of the owners.[7]
[4]Re Mack and the Conveyancing Act [1975] 2 NSWLR 623, 626 (Wootten J) (‘Re Mack’).
[5]Xu v Natarelli [2018] VSC 759, [105] (Ierodiaconou AsJ) (‘Xu v Natarelli’).
[6]Re Mack (n 4) 626, 630 (Wootten J); Fitt v Luxury Developments Pty Ltd [2000] VSC 258, [249]–[254] (Gillard J) (‘Fitt v Luxury Developments’); Randell v Uhl [2019] VSC 668, [58] (Derham AsJ) (‘Randell v Uhl’).
[7]Re Mack (n 4) 626, 629-630 (Wootten J).

Here, there is no reference in the certificate of title to the land (or on the face of any document or instrument referred to in the title) or in the covenant itself, the parent title or the plan of subdivision, which would indicate the existence of a building or development scheme.[8] Further, the defendants do not allege that a scheme exists as a question of fact.[9]
[8]Vrakas v Mills [2006] VSC 463, [45] (Hargrave J, as his Honour then was) (‘Vrakas v Mills’); Xu v Natarelli (n 5) [63]–[67] (Ierodiaconou AsJ); Randell v Uhl (n 6) [82] (Derham AsJ).
[9]As to the requirements for establishing the existence of a building or development scheme see Elliston v Reacher [1908] 2 Ch 374, 384 in which Parker J outlined four requirements that must be proved: ‘(1.) that both the plaintiffs and defendants derive title under a common vendor; (2.) that previously to selling the lands to which the plaintiffs and defendants are respectively entitled the vendor laid out his estate, or a defined portion thereof (including the lands purchased by the plaintiffs and defendants respectively), for sale in lots subject to restrictions intended to be imposed on all the lots, and which, though varying in details as to particular lots, are consistent and consistent only with some general scheme of development; (3.) that these restrictions were intended by the common vendor to be and were for the benefit of all the lots intended to be sold, whether or not they were also intended to be and were for the benefit of other land retained by the vendor; and (4.) that both the plaintiffs and the defendants, or their predecessors in title, purchased their lots from the common vendor upon the footing that the restrictions subject to which the purchases were made were to enure for the benefit of the other lots included in the general scheme whether or not they were also to enure for the benefit of other lands retained by the vendors’. These principles have been cited with approval and applied in numerous Australian authorities including Cobbold v Abraham [1933] VLR 385; Langdale Pty Ltd v Sollas [1959] VR 634; Fitt v Luxury Developments (n 6) [255] (Gillard J); Vrakas v Mills (n 8) [28] (Hargrave J, as his Honour then was); Randell v Uhl (n 6) [59] (Derham AsJ).

It follows that the benefit of the covenant extends to all the land remaining in the parent title at the time the covenant was signed by the original parties to the instrument. Any assignees of the properties to which the benefit of the covenant is annexed are also beneficiaries of the covenant.[10]
[10]See Re Arcade Hotel Pty Ltd [1962] VR 274; Pirie v Registrar-General (1962) 109 CLR 619, 628–9 (Kitto J); Fitt v Luxury Developments (n 6) [87]–[89] (Gillard J).

It is common ground that all of the defendants, as owners of their respective lots in Jasmine Court, are beneficiaries of the covenant. Those lots were within the parent title at the time the covenant was made. The question is: how many other lots within the plan of subdivision also have the benefit of the covenant? For reasons of convenience and efficiency, the plaintiffs have not conducted title searches of every lot in the plan of subdivision in order to ascertain all of the beneficiaries of the covenant, aside from the lots within Jasmine Court which remained within the parent title at the time the covenant was made. However, the plaintiffs were content to accept that all lots within the plan of subdivision took the benefit of the covenant, other than specific lots within Jasmine Court which are not shaded in blue in figure 2 above. It was also submitted that 7A, 7B, and 7C Jasmine Court did not benefit from the covenant because these lots are not within the plan of subdivision. The defendants did not take issue with this approach and made submissions to similar effect. The defendants also conceded that beneficiaries who lived outside Jasmine Court would be less impacted by the plaintiffs’ proposed modifications to the covenant.[11]
[11]Transcript of Proceedings, Zwierlein v Coelho, (Supreme Court of Victoria, S ECI 2020 03074, Hetyey AsJ, 4 May 2021) 113–4.

In my view, the approach taken by the plaintiffs in identifying the beneficiaries of the covenant was both practical and appropriate in the circumstances. Further, despite the plaintiffs placing a sign giving notice of the application within the reserve near the land, no objection was received from anyone who lives outside Jasmine Court (whether in the capacity as beneficiary of the covenant or otherwise). Whilst that is instructive, I have not considered the question of substantial injury under s 84(1)(c) of the Act solely by reference to the beneficiaries in Jasmine Court who have formally objected to the application.

Relevant legal principles

Section 84(1)(c) of the Act relevantly provides:

(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 (subject or not to the payment by the applicant of compensation to any person suffering loss in consequence of the order) upon being satisfied—
…
(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction …

The plaintiffs have the burden of proving, as a matter of fact,[12] that the proposed modifications to the covenant will not substantially injure those who have its benefit. As earlier observed, this means the plaintiffs must prove a negative.
[12] Vrakas v Registrar of Titles [2008] VSC 281, [40] (Kyrou J) (‘Vrakas v Registrar of Titles’), citing Re Alexandra [1980] VR 55, 60.

A recent distillation of the principles informing the operation of s 84(1)(c) of the Act was undertaken by Derham AsJ in Randell v Uhl, which I gratefully adopt:[13]
[13]Randell v Uhl (n 6) [85], as adopted by Macaulay J in Hivance Pty Ltd v Moscatiello [2020] VSC 183, [12].

(a)a substantial injury must be a detriment to the benefitted land that is real and not fanciful.[14] 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’.[15] That does not mean, however, that s 84(1)(c) of the [Act] is restricted to dealing with vexatious or frivolous objections. Although the restriction of s 84(1)(c) of the [Act] 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;[16]
[14]Vrakas v Registrar of Titles (n 12) [36].
[15]Ridley v Taylor (1965) 1 WLR 611, 622 (Russell LJ); referred to with approval in Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 10.
[16]Greenwood v Burrows (1992) V ConvR 54-444, 65, 199 (Eames J) (Greenwood); MacLurkin v Searle [2015] VSC 750 [54]–[56] (MacLurkin); Jiang v Monaygon Pty Ltd [2017] VSC 591, [37].
(b)the substantial injury relates to practical benefits, being any real benefits to the person entitled to the benefit of the covenant.[17] 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;[18]
[17]Vrakas [2008] VSC 281, [30], [34] and the cases cited.
[18]Re Parimax (SA) Pty Ltd (1956) SR (NSW) 130, 133 (Myers J).
(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’.[19] This consideration is referred to as the ‘precedent value’;[20] and
[19]Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 11.
[20]Vrakas [2008] VSC 281, [39] and the cases cited.
(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;[21]
[21]Prowse v Johnstone [2012] VSC 4, [104] (Prowse).

(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 [Act];[22]
[22]Re Cook [1964] VR 808, 810–11 (Gillard J) (Cook); approved in Freilich v Wharton [2013] VSC 533, [25] (Bell J).
(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’;[23]
[23] Prowse [2012] VSC 4, [104].
(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;[24]
(ii)the absence of objectors to the discharge or modification of a covenant will not necessarily satisfy the onus of proof;[25] and
(iii)each case must be decided on its own facts,[26] and each covenant should be construed on its own terms and having regard to the particular context in which it was created;[27]

(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.[28] The Court in exercising its discretion, may consider town planning principles and the precedent value.[29]

[24]Vrakas [2008] VSC 281, [41] and the cases cited.

[25]Ibid, [43].

[26]Ibid, [44].

[27]Prowse [2012] VSC 4, [52].

[28]Cook [1964] VR 808, 810; Re Robinson [1972] VR 278, 285–6; Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 7; Greenwood (1992) V ConvR 54-444, 65, 192 and 65, 200; Stanhill Pty Ltd v Jackson (2005) 12 VR 224, 239 (Stanhill).

[29]Vrakas [2008] VSC 281 [45]–[46].

In Re Ulman,[30] McGarvie J considered the proper approach to applying s 84(1)(c) of the Act was ‘to compare what the covenant before modification permits to be done on the land which it binds with what it would permit to be done after modification’.[31] Similarly, in Prowse v Johnstone, Cavanough J observed that, when assessing the benefits conferred by the covenant, the Court should assess ‘the realistic probabilities of the plaintiff actually bringing about the “worst” that could be done under the existing covenant’.[32]
[30](1985) V Conv R 54-178.
[31]Ibid 63, 420.
[32]Prowse v Johnstone [2012] VSC 4, [104] (‘Prowse v Johnstone’).

Purpose of and benefits arising under the covenant

Before turning to the question of whether the proposed modifications would occasion serious injury to the defendants and other beneficiaries, it is necessary to briefly say something about the purpose of the restrictions contained within the covenant and the benefits intended to be conferred on the beneficiaries by the covenant.

The plaintiffs’ expert, Mr Milner, opined in his report that the overarching purpose and intent of the covenant was to enable the reasonable residential use and development of the land and the establishment of a certain built form character, including by prescribing the use of certain building materials. Proceeding on the basis that other lots within the plan of subdivision have similar covenants in place, Mr Milner was also of the view that the purpose and intent of the covenant was to support the establishment of a residential estate distinguished by a consistent residential character and pattern of single dwelling development.

Mr Negri, the expert engaged by the defendants, noted that 9 Jasmine Court is encumbered by a covenant in similar terms to the covenant the subject of the proceeding. The subject land and 9 Jasmine Court are each over 4000 square metres in size. Having regard to the context and size of the subject land, Mr Negri was of the view that the purpose of the covenant is to achieve a ‘low-density residential outcome in the area bounded by the [g]olf [c]ourse and the [l]inear [r]eserve with buildings constructed of brick and stone’.[33] Mr Negri also observed that whilst the allotments located in Jasmine Court proper are also burdened by similar covenants, those covenants apply to much smaller allotments of between 650 square metres and 800 square metres.
[33]Exhibit MN1 to affidavit of Marco Negri sworn 26 November 2020, 22.

At the trial, Mr Negri explained there was a clear distinction between the conventional residential development which had occurred east of the linear reserve (within Jasmine Court proper) and the low-density enclave to the west of the reserve. For this reason, he considered that the covenant operated differently in relation to the two distinct sections of Jasmine Court. In the case of Jasmine Court proper, the covenant served to create a residential density of one dwelling per conventional sized lot, whereas in the western enclave, the covenant created a requirement of one dwelling per very large allotment.

Having regard to the terms of the covenant, the features of the land, the surrounding environs, and the existence of similar covenants attaching to other lots within the plan of subdivision (especially those within Jasmine Court), I am of the opinion that the intention of the covenant is to encourage the development of a low-density, residential neighbourhood characterised by a consistent residential built form and pattern of single dwelling development.

In my view, the building material restriction ensures a consistent use of external materials comprising brick or stone and a high build quality to enhance the amenity and aesthetic of the subdivision. Together with the single dwelling restriction, it also informs the appearance of the land from the street.

The single dwelling restriction undoubtedly contributes to the relative low-density of the neighbourhood. The benefits of a single dwelling restriction were explained by the Full Court of the Supreme Court of Victoria in Re Stani[34] to entail ‘a reasonable density of population giving a reasonably quiet residential atmosphere, attractive in that it would provide a tranquil, quiet existence’.[35] More recently, in 196 Hawthorn Road Pty Ltd v Duszniak, Lansdowne AsJ considered that the purpose of a single dwelling restriction is ‘to afford the benefits of low density with the consequential benefits of greater spaciousness, less noise, traffic and general activity than in more densely populated residential areas’.[36]
[34]Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976.
[35]Ibid 8.
[36](2020) 61 VR 539, 563 [75]. Her Honour cited recent decisions to support that view including: Oostemeyer v Powell [2016] VSC 491; Re Morihovitis [2016] VSC 684; Jiang v Monaygon Pty Ltd [2017] VSC 591; Re Sanders [2019] VSC 217; Re EAPE (Holdings) Pty Ltd [2019] VSC 242 (‘Re EAPE (Holdings)’).

I note Mr Negri also considered that another practical benefit derived from the covenant was the protection from additional traffic entering the local traffic network generated by more than one dwelling house on the land. However, I do not accept that the volume of traffic is directly regulated by the single dwelling restriction. That is because a single dwelling does not determine how many adult occupants reside within the dwelling and how many cars they own.[37] Any impact on traffic flow as a result of the single dwelling restriction is largely incidental.
[37]Re EAPE (Holdings) (n 36) [46] (Lansdowne AsJ).

As regards the thoroughfare restriction, Mr Milner was of the view that its purpose was to preserve the amenity of the neighbouring lots and land within the plan of subdivision by preventing the subject land being used as an accessway to join with the local road network. Similarly, Mr Negri regarded the thoroughfare restriction as operating to prevent the land from being used to provide a vehicle connection to neighbouring land, including the golf course, which might be the subject of future development. Neither expert read this restriction as preventing the construction of a driveway to serve a dwelling on the land. I agree that the thoroughfare restriction, when read objectively and ‘construed by reference to the instrument as a whole and not in the abstract, but by reference to the location of the physical characteristics of the properties which are affected by it’,[38] was not intended to restrict the construction of a driveway on the land but was designed to prevent the land from being used as a means of access to neighbouring properties and other road connections. I also agree that the thoroughfare restriction contributes to the neighbourhood character by reducing the volume of traffic passing through Jasmine Court and preserving the tranquillity of the environment.
[38]Barport Pty Ltd v Baum [2019] VSCA 167, [68] (Kyrou, McLeish and Niall JJA) (citations omitted).

Importantly, neither expert suggested the covenant served to restrict or control building width and form; overlooking and overshadowing; building setbacks and siting; site coverage; architectural style; fencing; the removal of trees and other vegetation; or landscaping. In his report, Mr Negri explained that under the current terms of the covenant, it would be possible to build on the land a single dwelling house of predominantly brick or stone, unlimited in height, proportion, scale, siting and orientation.

Location of land within subdivision and surrounding neighbourhood

I have already described the land, its location and current state of development. It is necessary to say something of the surrounding neighbourhood and the broader subdivision itself.

Unlike s 84(1)(a) of the Act, under which changes in the character of a neighbourhood may lead to a covenant being deemed obsolete, s 84(1)(c) does not mention the term ‘neighbourhood’. However, the concept of neighbourhood is still important when assessing whether a proposed modification will not substantially injure those persons entitled to the benefit of a covenant for the purpose of s 84(1)(c).

As Derham AsJ explained in Wong v McConville:[39]

… reliance on [the s 84(1)(c)] ground necessitates an understanding of the location and character of the neighbourhood, particularly where … some of the objector defendants lived in parts of the neighbourhood remote from the Land and relied on the indirect effect of the modification on them by reason of the precedent that the modification might establish.

[39][2014] VSC 148, [19] (Derham AsJ) (‘Wong v McConville’).

In the present case, although the plaintiffs’ application was solely based on s 84(1)(c) of the Act, both experts referred to the nature and character of the neighbourhood in which the land was located. A number of the defendants also gave evidence about the perceived adverse impact of the plaintiffs’ proposed development on the character of the neighbourhood and its amenity, including the potential precedential effect of the proposed modification. With the exception of Mr and Mrs Coelho, the defendants are all located outside the low-density enclave to the rear of Jasmine Court proper and, in that sense, are remote from the land.

At the trial, both experts elaborated on what they considered the relevant neighbourhood to be. Mr Milner explained that the immediate neighbourhood comprised the entirety of Jasmine Court, including 7A, 7B and 7C (properties which are not part of the plan of subdivision itself), and incorporated the linear reserve, which separated the low-density enclave part from the properties in Jasmine Court proper. He said the neighbourhood has a western outer edge represented by the Warragul Golf Course and also includes at its periphery parts of Bowen Street and Tulip Court (located immediately north of Jasmine Court). Mr Negri’s evidence as to the extent of the relevant neighbourhood was largely the same. Additionally, Mr Negri considered the neighbourhood to encompass Elm Court to the south of Jasmine Court, and a southern extension of the linear reserve that runs parallel to the land but which is not part of the plan of subdivision.

I am prepared to proceed on the basis that the relevant neighbourhood encompasses:

(a) all of Jasmine Court, including 7A, 7B and 7C Jasmine Court which are to the south of the subject land;

(b) the contiguous linear reserve which separates the two parts of Jasmine Court, including the southern extension running parallel to the land;

(c) the concrete road which originates from the head of Jasmine Court, runs across and along the linear reserve, and which services the subject land, 9 Jasmine Court and 7A, 7B and 7C Jasmine Court;

(d) the section of Bowen Street which intersects with Jasmine Court; and

(e) Tulip Court to the north.

When I conducted my view, I inspected these aspects of the neighbourhood.

Since its registration, the subdivision (of which the relevant neighbourhood forms a part) has been progressively filled out, although a few lots remain to be developed, including along Bowen Street. The Warragul Structure plan, which is implemented in the Baw Baw Planning Scheme, confirms that the land forms part of a broader ‘General Residential Zone Area’ and that future development is expected to the north of the plan of subdivision.[40]
[40]Exhibit RM-1 to affidavit of Robert Milner, affirmed 23 July 2020, [28].

Plaintiffs’ proposed development

As previously mentioned, the plaintiffs wish to subdivide the land into three lots and to construct a further two dwellings (with one dwelling on each of three resulting lots). The substance of the plaintiffs’ proposal is set out in Mr Milner’s July 2020 report. It involves the creation of traditional lots to the north and in the middle of the land, with street frontage to the road. The plaintiffs’ current residence is proposed to be retained on the largest of the three new lots on the southern end of the land. The dwellings to be located in each of the three resulting lots are to be situated within a garden setting, with the potential to retain existing trees and vegetation.

Over the course of the proceeding, the plaintiffs’ proposal was refined in a number of ways. Firstly, an error identified by the defendants relating to the size of the land, and the consequential sizes of the proposed three new lots, was corrected. Secondly, following consideration of the objections received to the proposal and Mr Negri’s report, the plaintiffs changed their proposal to include a four metre setback from the northern boundary between the land and 9 Jasmine Court, and a six metre setback from the road. Thirdly, in her affidavit of 31 March 2021, Ms Zwierlein provided a basic floor plan and concept rendering for each of the two new dwellings. She made clear the plaintiffs would personally undertake both the subdivision and the development of the two additional dwellings proposed to be constructed on the land. She also confirmed at the trial that it is the plaintiffs’ intention to retain and improve the vegetation along the northern boundary. She explained that the plaintiffs proposed to leave the existing trees along this boundary and to fill out the understory with additional plantings. She also explained that the two new dwellings would face the road and the linear reserve. Fourthly, pursuant to the Court’s leave given during the course of the trial, the plaintiffs filed a further amended originating motion on 25 May 2021 which seeks to enshrine into the covenant the proposed setbacks, along with further modifications to the covenant which serve to limit the site coverage of any new dwellings to no more than 190 square metres (excluding any garage or outbuilding) and restrict the building height of any new dwellings to no more than 9 metres.

Under the terms of the plaintiffs’ current proposal for the subdivision of the land:

(a) the proposed northern lot would be approximately 1,328 square metres with a frontage of 34.7 metres;

(b) the proposed central lot would be approximately 1,327 square metres with a frontage of 21 metres; and

(c) the proposed southern lot (with the existing dwelling) would be approximately 2,155 square metres with a frontage of 38 metres.

An amended concept subdivision plan of the land is set out below.

Figure 4: amended concept subdivision plan of the land

It must be said that the proposed development is materially different to the development the subject of the earlier VCAT application. Whilst the antecedent proposal also entailed the creation of three allotments and one dwelling per allotment, the configuration, arrangement and size of each allotment were quite different. In particular, there was to be two significantly smaller northern lots laid out in a ‘battle-axe’ configuration and abutting 9 Jasmine Court, with a much larger southern allotment.

Whether absence of substantial injury

The defendants allege they will be substantially injured as a consequence of the plaintiffs’ development proposal and the modifications to the covenant. The objections taken by the defendants to the plaintiffs’ proposal are expressed at both a general and specific level and include concerns about:

(a) a change to the character of the neighbourhood generally;

(b) a change to the character of the low-density enclave within the eastern part of Jasmine Court and, in particular, the Coelho land;

(c) the visual impact of the proposal on beneficiaries who use the linear reserve adjacent to the land and the loss of amenity of the reserve;

(d) an apprehended increase in traffic, noise and congestion and a risk to community safety; and

(e) the precedential effect of any modification to the covenant.

Neighbourhood character

A number of the defendants gave evidence that the plaintiffs’ proposal would result in a degradation of the neighbourhood character and an undesirable increase in residential density. For example, Ms Warren deposed that the proposal would affect the current leafy streetscape. Mr Marsden asserted that the plaintiff’s proposal ’defies’ the low-density character of the neighbourhood. Similarly, Mr Coelho gave evidence that the proposed development would have an adverse effect on adjoining properties and alter the style of the low-density enclave within Jasmine Court. The defendants’ expert, Mr Negri, was also of the opinion that the modification to the covenant would allow development to occur on the land in a way that diminished the low-density character of the enclave.

Having considered the plaintiffs’ proposal in depth, and having had the benefit of viewing the land and the surrounding neighbourhood in context, I do not consider there would be an impact on the neighbourhood character and amenity sufficient to cause the beneficiaries of the covenant any substantial injury. Further, the character and amenity of the neighbourhood will not be materially changed by the proposed development. I have come to these conclusions for the following reasons:

(a) a departure from the single dwelling restriction on the plaintiffs’ land would not significantly detract from the low-density residential neighbourhood and pattern of single dwelling development within the subdivision. The proposed new lots, with their relatively large size, wide frontage and adequate setbacks will not diminish the sense of spaciousness within the subdivision or the low-density enclave in Jasmine Court to the west of the linear reserve;

(b) a reasonably low-density of housing and a quiet and tranquil residential atmosphere will still be preserved in the event the covenant is modified in the manner proposed. The three lots proposed will still be approximately double the size of the lots located in Jasmine Court proper and substantially larger than all other lots within the subdivision, with the exception of 9 Jasmine Court. Whilst the three proposed lots would be smaller than the properties to the immediate south at numbers 7A, 7B and 7C Jasmine Court,[41] the subject land would be subdivided into three lots, each with a single dwelling, in a manner which is not dissimilar to the subdivision which has historically occurred in respect of 7A, 7B and 7C.[42] Those properties also form part of the surrounding neighbourhood and may be seen by the defendants and other beneficiaries, although they are not part of the plan of subdivision itself;
[41]According to Mr Milner, 7A, 7B and 7C Jasmine Court are irregularly shaped lots with street frontages of between 11 to 12 metres, and areas of approximately 2,713 square metres, 2,930 square metres and 3,473 square metres, respectively. Conversely, the dimensions for these blocks given by Mr Negri were 2,715 square metres, 2,908 square metres and 3,341 square metres for 7A, 7B and 7C, respectively.
[42]The relevant planning permit for this development was issued by Baw Baw Shire Council on 10 July 2000: see exhibit RM-1 to affidavit of Robert Milner, affirmed 23 July 2020, app 6.

(c) the proposed development does not appear, in bulk, size, intensity or site coverage, to eclipse other developed lots within proximity of the land. The proposed features of the plaintiffs’ development, a number of which are now sought to be incorporated into the covenant itself, will likely complement other instances of built form within the neighbourhood, including a number of residences I saw along the northern section of Bowen Street, which intersects with Jasmine Court;

(d) the neighbourhood character which defines the low-density enclave in Jasmine Court is not solely attributable to the covenant or the similar covenant which exists in respect of 9 Jasmine Court. I accept Mr Milner’s evidence that the amenity of the low-density enclave is also inevitably influenced by the use and development of the neighbouring land to the south at 7A, 7B and 7C Jasmine Court, which contribute to a beneficiary’s experience of the enclave and the neighbourhood itself. I also accept Mr Negri’s evidence that part of the low-density character of the enclave is ‘captured by the reserve itself’. These opinions were reinforced by my own experience walking through the enclave and the neighbourhood generally. It was my impression that the existence and layout of the linear reserve has clearly contributed to the sense of open space, low-density of population, and quiet and tranquil ambience within the enclave; and

(e) the parties’ experts essentially agree that because both the land and 9 Jasmine Court are located within the enclave, these lots are separated from the rest of Jasmine Court and the balance of the subdivision. They are each located at the very western edge of the subdivision and accessed via the narrow road which extends from the bowl of Jasmine Court. As was the case in MacLurkin v Searle,[43] the subject land is physically removed from the beneficiaries of the covenant, with the exception of Mr and Mrs Coelho at 9 Jasmine Court. At the trial, Ms Petch gave evidence that 7 Jasmine Court is approximately 40 metres from the subject land and Mr Marsden accepted that 5 Jasmine Court was between 70 to 80 metres from the subject land.[44] Separation arises not only through distance, but also because of the intervening linear reserve and its tree-lined watercourse. The location, remoteness and unique aspects of the land within its setting ultimately reduce the capacity for most of the beneficiaries of the covenant to perceive the proposed development on the land.

[43][2015] VSC 750, [94] (Derham AsJ).

[44]Transcript of Proceedings, Zwierlein v Coelho (Supreme Court of Victoria, S ECI 2020 03074, Hetyey AsJ, 3–4 May 2021) 83, 88.

Impact on 9 Jasmine Court

In his report, Mr Milner was mindful of the fact that the land and its northern neighbour, 9 Jasmine Court, benefit from a different and ‘special’ amenity and are experienced in a different context because they are practically removed from the balance of the residential lots in the subdivision. It follows that, of all the lots within the subdivision which take the benefit of the covenant, 9 Jasmine Court is the property most potentially impacted by its modification.

Mr Coelho gave evidence about the potential impact of any modification to the covenant in relation to the subdivision generally and his property specifically. He expressed an apprehension that 9 Jasmine Court would experience an adverse effect as a consequence of an alteration of the style to the low-density enclave. At the same time, Mr Coelho said that if his land was not similarly burdened with a covenant, he would have given thought to building one or two additional dwellings on the property. He was also concerned that any new dwellings on the subject land will overlook into his land and that much of the mature vegetation which borders the two properties would be removed during the course of building works. The defendant’s expert, Mr Negri, expressed the view that the proposed modification to the covenant would result in a diminution of the low-density characteristic of the enclave and thereby cause a substantial injury to 9 Jasmine Court. He also considered there was a potential impact on the amenity of this property because of overlooking and an increase in traffic. (I will consider the issue of traffic separately below).

Notwithstanding these concerns, I am satisfied that the proposed modification will not cause substantial injury to Mr and Mrs Coelho for the following reasons:

(a) because the proposed allotments are intended to be arranged side-by‑side with the new dwellings facing the road and reserve and with only one allotment adjoining 9 Jasmine Court, the subject land would be perceived as a single dwelling when viewed from Mr and Mrs Coelho’s property;

(b) there is already extensive vegetation along the northern boundary, which I observed on my view. As a consequence of this vegetation, the subject land is barely visible from 9 Jasmine Court. Because the plaintiffs’ proposal entails a four metre setback from the northern boundary, the retention of existing trees along this boundary and additional plantings to fill out the understory beneath these trees, the visual impact of a dwelling closer to Mr and Mrs Coelho’s land will be moderated by the screening afforded by this foliage;

(c) the potential for overlooking into 9 Jasmine Court from one dwelling on the proposed northern allotment is the same as the potential for overlooking from a single dwelling on the land as currently constituted and as permitted by the covenant. This was conceded by Mr Negri in his report.[45] Moreover, the covenant does not presently serve to regulate overlooking or privacy. In fact, the plaintiffs’ proposal, which includes a four metre setback at the northern boundary, a maximum building height of nine metres and the retention and improvement of vegetation, may conceivably enhance the privacy protection afforded to Mr and Mrs Coelho’s land;

(d) from the perspective of 9 Jasmine Court, there is no difference in substance between what the plaintiffs propose if the covenant is modified and what can currently be built on the land without modification to the covenant. Under the current terms of the covenant, the plaintiffs could already build a double story, single dwelling near the northern boundary. However, it is also possible that such a dwelling could be very large (greater than the 190 square metres proposed), higher than nine metres and hard up against the northern boundary, with a significant portion of the vegetation on the land removed. In other words, the features of a permitted dwelling under the existing terms of the covenant could have a greater adverse impact on Mr and Mrs Coelho’s land than what is currently proposed by the plaintiffs; and

(e) because of the land’s position and orientation relative to 9 Jasmine Court, any further development of the land would not cause any overshadowing on Mr and Mrs Coelho’s property.

[45] Exhibit MN1 to affidavit of Marco Negri, sworn 26 November 2020, [125].

Amenity of reserve

Mr Negri noted in his report that a visual connection between the land and the properties in Jasmine Court proper is limited by separation, distance and landscaping within the linear reserve. However, he also stated that the subject land can be experienced by proprietors of Jasmine Court properties walking and exercising along the linear reserve. He considered that if the modification to the covenant was permitted, the owners of properties within Jasmine Court and Tulip Court would suffer an injury caused by a change in character experienced whilst using the linear reserve. Mr Negri explained in his oral evidence that whilst there was an opportunity to view the land from the road or from the western aspect of the reserve, the view of the land from the walking track was filtered by vegetation on the eastern side of the reserve and was therefore more limited. Following my inspection of the land and the reserve, I can confirm that to be the case.

Mr and Mrs Coelho and Ms Warren deposed to regularly using the linear reserve for walking and other recreational purposes. At the trial, Mr Marsden also confirmed that he used the walking track. Ms Petch gave evidence that she walked on a daily basis along the vehicular road and past the land, before passing over a pedestrian bridge and back onto the walking track in the reserve. Despite being challenged under cross-examination as to the likelihood of her walking down the road as opposed to the walking track, I accept her evidence in this regard.

The defendants ultimately submit that the extent to which the proposed dwellings on the land may be visible ‘will depend on where the beneficiaries are standing or moving within the reserve when using it; the closer they are to the western side of the reserve [where the road is located], the more visible the dwellings are likely to be’.[46]
[46]Robert Zwierlein et al, ‘Defendants’ Outline of Submissions’, Submission in Zwierlein v Coelho, S ECI 2020 03074, 2 March 2021, [17].

However, I am of the view that most beneficiaries of the covenant who reside within Jasmine Court (with the exception of Ms Petch and perhaps Mr and Mrs Coelho) or Tulip Court and who make use of the reserve, would predominantly do so via the walking track and not the vehicular road which ends in a cul-de-sac. I hold that view having regard to the layout, landscaping and topography of the reserve itself and because the primary function and purpose of the road is to permit access to the properties within the low-density enclave within Jasmine Court.

Further, the actual interface between the linear reserves within the plan of subdivision and the subject land is limited. Only one of the linear reserve lots (‘Reserve No 5’, as depicted in the Figure 1 plan of subdivision) runs adjacent to the land for a distance of approximately 20 metres, whilst the eastern boundary of the subject land is almost 94 metres. That is in the context of a network of interlinking linear municipal reserves and a walking track which spans around 12 kilometres in length (including a number of road crossings).[47]
[47]Zwierlein v Baw Baw SC (n 2) [12].

In addition to the existing vegetation in the reserve which filters the view of the land, I also accept Mr Milner’s evidence that there would be substantial scope for additional landscaping and re-vegetation on the land itself which would, in turn, provide even greater opportunity for screening of the proposed new dwellings from the walking track. That opportunity exists because the proposed building footprint on each of the three lots would not be significant relative to the size of each allotment.

Importantly, the lots comprising the linear reserve do not themselves have the benefit of the covenant. Nor was the walking track a feature of the linear reserve as shown in the plan of subdivision. It appears to be a later development and not part of the original design or intent of the subdivider. The same can be said of the vehicular road which does not appear in the plan of subdivision, although it was formally placed on the Register of Public Roads maintained by Baw Baw Shire Council in July 2020.[48]
[48]Exhibit MFI-2 Register of Public Roads search extract tendered by the defendants at trial on 3 May 2021.

When accessing the reserve, the walking track and the road, the beneficiaries of the covenant are therefore experiencing the subject land from the perspective of land which does not take the benefit of the covenant (or which is outside of the subdivision) and by using amenities which were not provided for at the time the covenant was created. In that context, any visual impact or loss of amenity occasioned by the modification of the covenant and experienced by beneficiaries who use the reserve would not appear to constitute an injury, let alone a substantial one. I also note that aside from the defendants themselves, no other beneficiaries of the covenant who reside within the subdivision and make use of the reserve or the walking track have objected to the plaintiffs’ application on the basis that they will experience substantial injury.

Finally, Mr Marsden suggested in his affidavit that the covenant ‘exists to protect the low-density character of [the] neighbourhood which, in turn, protects the creek and the nature reserve and its surrounds’ but that the plaintiffs’ proposed development ‘defies’ that purpose. However, there was no expert evidence about any environmental impact on the creek and the reserve as a result of the proposed development. In any event, it must be noted that the covenant does not exist to protect the linear reserve and its creek. As I have mentioned, the lots which comprise the linear reserve do not take any benefit from the covenant.

Visual impact on 7 Jasmine Court

There is also a question of whether the proposed modification to the covenant would visually impact upon Ms Petch, as owner of the property at 7 Jasmine Court. Ms Petch says that she purchased her land because it has the benefit of the covenant and because the terms of the covenant ensured the views from her property would remain free from building development. She says that her dwelling was designed to take advantage of this particular aspect and currently has views from her lounge room, deck area and rear bedroom over the reserve into the area of the subject land which is proposed to be developed. She is concerned that the plaintiffs’ proposal will destroy her enjoyment of this vista.

During my view, I stood in the linear reserve against the fence of Ms Petch’s property in order to assess Ms Petch’s view into the subject land, which is around 40 metres away. Like the view from the walking track itself, the line of sight from this vantage point to the subject land is filtered by vegetation along the creek. The vegetation includes a number of mature trees and an understory of plants, and provides a reasonable degree of visual screening of the subject land from Ms Petch’s property. Included below is a photograph I took to illustrate this perspective which includes the walking track in the foreground.

Figure 5: perspective from boundary of 7 Jasmine Court.

Even assuming a higher vantage point from Ms Petch’s lounge room, deck area and rear bedroom, the view is likely to be partially obscured by the tree canopy. Any visual impact of the plaintiffs’ proposal is unlikely to be significant.

Further, as is the case with 9 Jasmine Court (the land owned by Mr and Mrs Coelho), there is no difference in substance between what the plaintiffs propose if the covenant is modified and what can currently be built on the land without any modification to the covenant. The plaintiffs could construct a large single dwelling directly across from Ms Petch’s property with a significant portion of the vegetation on the land removed.

Moreover, under the terms of the Baw Baw Planning Scheme, a dwelling on the land could be three stories and up to 11 metres high, with a minimum garden space of 35% for a lot exceeding 650 square metres.[49] The plaintiffs’ proposed modifications to the covenant would limit the site coverage of any new dwellings to no more than 190 square metres (excluding any garage or outbuilding and relative to lot sizes of 1,328 square metres, 1,327 square metres and 2,155 square metres) and restrict the building height of any new dwellings to no more than 9 metres. The proposed new restrictions, together with the potential for additional vegetation and landscaping on the three proposed lots, may in fact provide greater protection of Ms Petch’s views than is currently the case.
[49]Exhibit MN1 to affidavit of Marco Negri, sworn 26 November 2020, 14.

I also note that under cross-examination Ms Petch conceded she had not undertaken a title search of the subject land prior to purchasing her property. Therefore, whilst she may have had regard to the views from her property when designing and building her house, it seems that she did not specifically rely upon the terms of the covenant when doing so.

I am ultimately satisfied that Ms Petch will not experience a substantial injury arising from any visual impact caused by the proposed modification of the covenant.

Traffic, noise and safety

There was much said at trial about the potential impact of the proposed modification to the covenant on traffic along Jasmine Court and the associated issues of noise and safety.

The defendants submit that that it is self-evident there will be an increase in traffic flow along Jasmine Court if there were to be three dwellings instead of one on the subject land. They point to the fact that the concrete road is narrow and already services a number of existing dwellings.

In her affidavit, Ms Petch identified that her property at 7 Jasmine Court and 10 Jasmine Court both have driveways which directly access the concrete road. She suggested that an increase in traffic and congestion on the road would create a safety hazard, particularly where the road intersects with the walkway which is used by pedestrians and cyclists. Similar concerns were expressed by Mr Marsden and Mr Coelho in their respective affidavits. At the trial, Ms Petch also suggested that she would see and hear every car which travelled along the road and past her driveway and front window.

Mr Coelho suggested in his evidence that the traffic along the concrete road would double if the proposed modification was allowed. However, given the road currently facilitates vehicle access to dwellings on 9 Jasmine Court, the subject land and 7A, 7B and 7C Jasmine Court (five dwellings in total), an additional two dwellings would unlikely result in a doubling of traffic.

In his report, the defendants’ expert, Mr Negri, indicated there would be a change in vehicle movements experienced by the residents within Jasmine Court proper and by Mr and Mrs Coelho in respect of 9 Jasmine Court. He noted VCAT had found in the earlier application concerning the covenant that given the narrowness of the road and its intersection with the walking track which was used by pedestrians and cyclists, the road was not suitable to support the more intense subdivision of land within the enclave.[50]
[50]Zwierlein v Baw Baw SC (n 2) [19].

Conversely, Mr Milner observed in his report that because of the development of 7A, 7B and 7C Jasmine Court, the experience of the concrete road and Jasmine Court by the beneficiaries of the covenant had already changed with the result that the addition of two dwellings on the land would likely be ‘almost indiscernible’. He gave further evidence at trial that an additional two dwellings on the subject land would only result in 16 additional vehicle movements per day in the context of 190 to 200 total vehicle movements per day along the entirety of Jasmine Court. He also explained that the Baw Baw Planning Scheme rated Jasmine Court as having an expected volume of between 300 and 1000 vehicle movements a day. Mr Milner’s modelling was put to Mr Negri under cross-examination who suggested that the difference between his assessment of total vehicle movements in Jasmine Court, including as a result of an additional two dwellings, and Mr Milner’s assessment would be marginal. He also had no cause to dispute the vehicle capacity figures set by the relevant Planning Scheme.

In my view, given the number of dwellings already situated within the Jasmine Court enclave, an additional two dwellings would not create any significant increase in traffic, congestion or noise for the beneficiaries of the covenant. Whilst I accept that Mr and Mrs Coelho and Ms Petch may perceive an increase in traffic more than other beneficiaries given the location of their properties relative to the subject land and the concrete road, the change in traffic and noise, over the course of a day, will not be material. I do not regard this incidental increase in traffic as constituting a substantial injury for the purpose of s 84(1)(c) of the Act. As I have already observed, the volume of traffic along the road is not directly regulated by the single dwelling restriction contained within the covenant.

Because the plaintiffs’ proposal will not significantly increase the level of traffic and congestion within Jasmine Court, it follows that it is unlikely the proposal will result in a significant safety hazard for users of the walking track or road. There are also physical features of the concrete road and walkway which already operate to mitigate any safety risk associated with having an additional 16 (or even 20) vehicle movements per day. As Mr Milner confirmed during cross-examination, the unusual road geometry at the head of Jasmine Court requires drivers to slow down. Drivers are also compelled to exercise caution where the road crosses the creek, at which point it narrows significantly and is enclosed by steel barriers on either side. During my inspection, I also saw signage on either side of the intersection between the walkway and the road which notifies pedestrians and cyclists that there is a road ahead.

Lastly, I note that in his expert report, and at trial, Mr Negri expressed the opinion that the wording of an earlier draft of a proposed modification to the covenant[51] could inadvertently result in the land being used as a point of access to any future residential development of neighbouring land, including the golf course to the west. I am satisfied that this ambiguity has been addressed by the more precise language used in the plaintiffs’ further amended originating motion dated 25 May 2021 and that such use of the land would not be permitted in the event the modifications are allowed.
[51]See the draft further amended originating motion contained within exhibit MPW–14 to the affidavit of Myles Patrick Watson, sworn 1 April 2021.

Creation of precedent

The last substantive ground advanced by the defendants in opposition to the plaintiffs’ proposal is the precedential effect of any modification to the covenant. They submit that, to date, there have not been any approved modifications or variations of any similar covenants affecting lots in this part of the subdivision. They submit that by granting the plaintiffs’ application, a precedent would be set for future applications relating to the Coelho land or even the proposed new lots deriving from the subject land. This, they argue, may bring about a change to the current low-density character within the enclave, establishing smaller lot sizes as the norm and heightening the risk that future modifications may contribute to a longer-term change to the low-density attributes of the area more generally.

In my view, the issue of precedent is not a determining factor in this case. As was the position in Wong v McConville,[52] the unique and unusual features of the subject land, and its physical separation from the majority of the beneficiaries of the covenant reduce the possible precedential impact of the proposed amendment to the covenant.
[52]Wong v McConville (n 39).

Further, I do not regard the plaintiffs’ proposal as being the ‘thin edge of the wedge’ for future development within the subdivision. In reality, the only other lot within the subdivision that could rely on the plaintiffs’ application as a precedent to modify a similar covenant is 9 Jasmine Court. So much was conceded by Mr Negri under cross-examination. The other lots within Jasmine Court are, on average, approximately 650 square metres in size and not obvious candidates for similar applications. There are no other lots of comparable size to the subject land within the subdivision.

Additionally, whilst Mr Coelho was concerned that the granting of the plaintiffs’ application would create a precedent, resulting in further subdivision, an increase in density and a loss of its character of the enclave, he also made clear under cross‑examination that he had no intention to re-develop his property in the event the plaintiffs’ proposal was successful. The impact of any precedential value of the plaintiffs’ application is therefore reduced. However, even if a successor in title to 9 Jasmine Court tried to exploit the precedent of the plaintiffs’ application, given the long triangular shape of the property and its closer proximity to the creek with the attendant possibility of water inundation, it is difficult to see how three dwellings could be comfortably accommodated on this allotment. Whilst any such application is hypothetical, it would, of course, need to be determined on its own merits.

Lastly, any further subdivision of the resulting new lots on the subject land seems inherently unlikely as it would significantly change the low-density character of the enclave.

Discretion

It follows from the above analysis that the plaintiffs have demonstrated there will not be any substantial injury experienced by the beneficiaries of the covenant in the event the Court was to grant them the relief sought under s 84(1) of the Act. However, the Court still has a residual discretion to approve or refuse the application.

In discussing the Court’s discretion in Vrakas v Registrar of Titles, Kyrou J observed:

Persons who apply to this Court seeking relief that they perceive will bring them financial and other benefits and which they know is perceived by other parties to be detrimental to them should be as specific as possible about the proposals they have in mind so that the Court is placed in the best position to assess the impact that those proposals may have on all the parties. Plaintiffs who do not produce to the Court any specific plans but base their case on a general desire to optimise their options in relation to their property, as in this case, face the risk that the Court will not be satisfied, on the evidence, that they have made out their case.[53]

[53]Vrakas v Registrar of Titles (n 12) [70].

Similarly, in Oostemeyer v Powell,[54] it was noted by Riordan J that the failure by an applicant to establish its plans for the property with specificity may result in the Court not being satisfied that the requirements of s 84(1) of the Act have been fulfilled.
[54][2016] VSC 491, [47].

Initially, the defendants took issue with the fact that the plaintiffs had not: (a) made clear whether they themselves would undertake the development of the land; or (b) provided concept plans, floor layouts, setbacks to boundaries, and elevations of the two new proposed dwellings.

However, as the defendants conceded in closing submissions, many of these deficiencies have been belatedly addressed in the plaintiffs’ most recent iteration of their proposal. Exhibited to Ms Zwierlein’s affidavit of 31 March 2021 were concept plans and floor layouts. In addition, the final version of the proposal contemplated the incorporation within the covenant of setbacks at the northern and eastern boundaries, together with a specified maximum height and site coverage in respect of each proposed new dwelling. What remains absent are elevations and particulars of the siting of the new dwellings on each lot.

Whilst the plaintiffs may be criticised for not putting forward specific plans at an earlier stage of the proceeding, they have ultimately provided the defendants and the Court with a sufficiently detailed description of the proposed development if the modification to the covenant is allowed.

There are no other circumstances of the case to suggest the Court should exercise its discretion to refuse the application.

Conclusion

Having regard to the reasons set out above, I am satisfied that the plaintiffs’ proposed modification of the covenant will not substantially injure the persons entitled to its benefit.

I will ask the parties to confer and within seven days provide to the Court an agreed minute of order to give effect to these reasons and to deal with the question of costs. In the event the parties cannot agree, they will be required to file and serve within 14 days written submissions of no more than five pages in length and alternative proposed orders. The Court will then determine any remaining controversy on the papers.

SCHEDULE OF PARTIES

S ECI 2020 03074
BETWEEN:
ROBERT ZWIERLEIN	First Plaintiff
LINDA ZWIERLEIN	Second Plaintiff
- v -
ROBERT MICHAEL COELHO & DIANNE ELIZABETH COELHO	First Defendants
FAYE LESLIE WARREN	Second Defendant
CHRISTINE MEGAN PETCH	Third Defendant
JOHN HARTLEY MARSDEN & DIANE JOY MARSDEN	Fourth Defendants

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Citations

Zwierlein v Coelho [2021] VSC 451

Cases Citing This Decision

0

Cases Cited

14

Statutory Material Cited

0

Xu v Natarelli [2018] VSC 759

Fitt v Luxury Developments Pty Ltd [2000] VSC 258

Randell v Uhl [2019] VSC 668

[2021] VSC 451

3 August 2021