IN THE SUPREME COURT OF VICTORIA AT MELBOURNECommon Law Division

No. S CI 2013 06581

IN THE MATTER OF an application by Robyn Mary Morrison for the discharge or modification of covenants 0984695 and 1090117 pursuant to s84(1) of the Property Law Act 1958 (Vic).

WHERE

ROBYN MARY MORRISON

Is Plaintiff

CLOSING ARGUMENT

INTRODUCTION

1. This matter concerns an application for the discharge or modification of two single dwelling covenants that presently run with the land known as 44 Beach Road, Mentone (Land)—potentially to allow the construction of a single, double storey dwelling and four double storey dwellings on the Land.

THE LAND

2. The land the subject of the application is known as 44 Beach Road, Mentone or more particularly:

a) the land described in Volume 06837 Folio 252; or

b) Lots 1 and 2 on Title Plan 676870H (formerly known as part of Lot 3 on Plan of Subdivision 007955, Lot 4 on Plan of Subdivision 007955).

3. The Land is shown highlighted in the following detail of the Land Victoria Planning Property Report:

- 1 -

THE COVENANTS

4. The Land is subject to two restrictive covenants:

a) Covenant 0984695 that provides;

We ROBERT WOFF formerly of Church Street Beaumaris but now of Charman Road Cheltenham and WILLIAM WOFF formerly of Wickham Road Highett but now of Cromer Road Cheltenham market gardeners being registered as the proprietors of an estate in fee simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of Four hundred and sixty pounds seven shillings and eleven pence paid to us by Mary Wilson of Beach Road Mentone married woman DO HERBY TRANSFER to the said Mary Wilson ALL our estate and interest in ALL THAT piece of land being lot 3 on plan of subdivision Number 7955 lodged in the Office of Titles Together with a right of carriage way over Marina Road shown on the said plan of subdivision and […] Together with a right of carriage way over Rivoli Street also shown on the said plan of subdivision [and together with all registered appurtenant easements]

AND in consideration of this transfer being signed by the parties hereto (other than myself) I the said Mary Wilson for myself and my heirs executors administrators and transferees covenant with the said Robert Woff and William Woff and their respective heirs executors administrators and transferees registered proprietor or proprietors for the time being of the untransferred portion of the land in Certificate of Title entered in the Register Book Volume 2479 folio 495648.

1. THAT the said land hereby transferred shall not be used for other than residential purposes.

2. THAT no stone earth gravel clay or sand shall be dug or removed from the said land.

- 2 -

3. THAT no more than one dwelling house shall be erected on the said land and that the cost of such dwelling house when erected shall be not less than Two hundred pounds.

AND I the said Mary Wilson request that these covenants shall appear as encumbrances upon the Certificate of Title to be issued on this or any subsequent transfer or transfers of the said land or any part thereof and may run with the land hereby transferred.

Dated this 8th day of September 1920.

and

b) Covenant 1090117 that provides:

We ROBERT WOFF formerly of Church Street Beaumaris but now of 34 Finch Street, Malvern and WILLIAM WOFF formerly of Wickham Road Highett but now of Point Nepean Road Cheltenham gardeners being registered as the proprietors of an estate in fee simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of Four hundred and eleven pounds two shillings and six pence paid to us by VALENTINE FRANK MASON of Elizabeth House corner of Elizabeth and Little Collins Streets, Melbourne public accountant DO HEREBY TRANSFER to the said Valentine Frank Mason all our estate and interest in ALL THAT piece of land being lot 4 on plan of subdivision No. 7955 lodged in the Office of Titles and being part of Crown Portion 50B at Mentone, Parish of Moorabbin, County of Bourke and being part of the land more particularly described in Certificate of Title Volume 2479 Folio 495648 Together with a right of carriage way over Marina Road colored brown on the said plan of subdivision and together with a right of carriageway drainage and sewerage over Rivoli Street coloured brown on the said plan And in consideration of this transfer being signed by the parties hereto (other than myself) I the said Valentine Frank Mason for myself my heirs executors administrators and transferees covenant with the said Robert Woff and William Woff and their respective heirs executors administrators and transferees registered proprietor or proprietors for the time being of the untransferred portion of the land in the said Certificate of Title.

1. That the said land hereby transferred shall not be used for other than residential purposes.

2. That no stone earth gravel clay or sand shall be dug or removed from the said land.

3. That not more than one dwelling house shall be erected on the said land and that the cost of such dwelling house when erected shall be not less than Two hundred pounds. And I the said Valentine Frank Mason request that these covenants shall appear as encumbrances upon the Certificate of Title to be issued on this or any subsequent transfer or transfers of the said land or any part thereof and may run with the land hereby transferred.

Dated this 20th day of February 1923.

- 3 -

(together, the Covenants).

THE APPLICATION

5. The Application described in the Originating Motion dated 10 December 2013 (Application) relies on s84(1)(a) and s84(1)(c) of the Property Law Act 1958 (Vic) (Act) to essentially seek that the Covenants be removed, or in the alternative, amended, to allow the construction of an additional four apartments on the Land:

1. That covenant 0984695 be discharged insofar as it affects the land in certificate of title volume 06837 folio 252:

a) pursuant to s84(1)(a) of the Property Law Act 1958 (Vic) on the ground that such covenant is obsolete;

b) alternatively, pursuant to s84(1)(a) of the Property Law Act 1958 (Vic) on the ground that the continued existence of such covenant will impede the reasonable user of said land in certificate of title volume 06837 folio 252 without securing any practical benefits to other persons; and

c) alternatively, pursuant to s84(1)(c) of the Property Law Act 1958 (Vic) on the ground that the proposed discharge of the covenant will not substantially injure the persons entitled to the benefit of the restrictions in the covenant.

2. Alternatively that covenant 0984695 be modified insofar as it affects the land in certificate of title volume 06837 folio 252 by allowing the construction of a single dwelling and separate building containing 4 dwellings on the said land:

a) pursuant to s84(1)(a) of the Property Law Act 1958 (Vic) on the ground that such covenant is obsolete;

b) alternatively, pursuant to s84(1)(a) of the Property Law Act 1958 (Vic) on the ground that the continued existence of such covenant will impede the reasonable user of the said land in certificate of title volume 06837 folio 252 without securing any practical benefits to other persons;

c) alternatively, pursuant to s84(1)(c) of the Property Law Act 1958 (Vic) on the ground that the proposed modification will not substantially injure the persons entitled to the benefit of the restrictions in the covenant.

3. That covenant 1090117 be discharged insofar as it affects the land in certificate of title volume 06837 folio 252:

a) pursuant to s84(1)(a) of the Property Law Act 1958 (Vic) on the ground that such covenant is obsolete;

b) alternatively, pursuant to s84(1)(a) of the Property Law Act 1958 (Vic) on the ground that the continued existence of such covenant will impede the reasonable user of the said land in certificate of

- 4 -

title volume 06837 folio 252 without securing any practical benefits to other persons; and

c) alternatively, pursuant to s84(1)(c) of the Property Law Act 1958 (Vic) on the ground that the proposed discharge of the covenant will not substantially injure the persons entitled to the benefit of the restrictions in the covenant.

4. Alternatively, that covenant 1090117 be modified insofar as it affects the land in certificate of title volume 06837 folio 252 by allowing the construction of a single dwelling and separate building containing 4 dwellings on the said land:

a) pursuant to s84(1)(a) of the Property Law Act 1958 (Vic) on the ground that such covenant is obsolete;

b) alternatively, pursuant to s84(1)(a) of the Property Law Act 1958 (Vic) on the ground that the continued existence of such covenant will impede the reasonable user of the said land in certificate of title volume 06837 folio 252 without securing any practical benefit to other persons;

c) alternatively, pursuant to s84(1)(c) of the Property Law Act 1958 (Vic) on the ground that the proposed modification of the covenant will not substantially injure the persons entitled to the benefit of the restrictions in the covenant.1

6. Reliance on the second limb of s84(1)(a) was abandoned at the commencement of the hearing.

THE PARTIES ENTITLED TO THE BENEFIT OF THE COVENANTS

7. The beneficiaries to the Covenants are set out in the evidence of Mr Simon Libbis dated 11 December 2013, namely:

14 The Parent Title contained 73 lots created on plan of subdivision LP 7955 (''the Plan").

…

17. The Property is lot 4 and part of lot 3 on the Plan.

Covenant 0984695

18. Covenant 0984695 affects lot 3 on the Plan.

19. The Parent Title has marked on it the transfers of lots from the Plan.

20. After the transfer of lot 3 on the Plan, 63 other lots were transferred out of the Parent Title.

1 Emphasis added.

- 5 -

21. The lots transferred out after lot 3 were lots 2~ 4-6, 9-13, 16-45,47,48, 51-54, 56, 57 and 59-73. It is these lots that have 'the benefit of covenant 0984695.

Covenant 1090117

25 Covenant 1090117 affects lot 4 on the Plan.

26. The Parent Title has marked on it the transfers of lots from the Plan.

27. After the transfer of lot 4 on the Plan 47 other lots were transferred out of the Parent Title.

28. The lots transferred out after lot 4 were lots 1, 2, 5, 6, 9-13, 18, 19, 21, 23, 25, 27-39, 41-45, 48, 51, 56, 57, 59-61 and 66-73. It is these lots that have the benefit of covenant I 090117.

SUBMISSIONS

S84(1)(a) first limb—changes in the character of the property or the neighbourhood

8. The first basis upon which the Plaintiff is seeking to remove or modify the Covenants is that by reason of changes in the character of the Land and/or the neighbourhood the restriction ought to be deemed obsolete. Section 84(1)(a) of the Property Law Act 1958 (Act) 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—

(a) that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material the restriction ought to be deemed obsolete…

9. This provision has traditionally been interpreted narrowly. That is, a covenant is unlikely to be deemed obsolete if it retains any of its original purpose. In Vrakas v Registrar of Titles2 Kyrou J said:

[26] A covenant is “obsolete” if it can no longer achieve or fulfil any of its original objects or purposes or has become “futile or useless”. Miscamble [1965] VR 596, 597, 601; Re Markin [1966] VR 494, 496; Re Robinson [1971] VR 278, 281; Greenwood (1992) V ConvR ¶54-444, 65,196 – 65,197; Pivotel (2001) V ConvR ¶54-635; [2000] VSC 264, [31]-[33]. A covenant is not obsolete if it is still capable of fulfilling any of its original purposes, even if only to a diminished extent. Miscamble [1965] VR 596, 597; Greenwood (1992) V ConvR ¶54-444, 65,197. The test is whether, as a result of changes in the character of

2 [2008] VSC 281 at [23]-[48].

- 6 -

the property or the neighbourhood, or other material circumstances, the restriction is no longer enforceable or has become of no value. Greenwood (1992) V ConvR ¶54-444, 65,196. See also Miscamble [1965] VR 596, 601. If a covenant continues to have any value for the persons entitled to the benefit of it, then it will rarely, if ever, be obsolete. Re Robinson [1971] VR 278, 282; Greenwood (1992) V ConvR ¶54-444, 65,197. A covenant could be held to be not obsolete even if the purpose for which it was designed had become wholly obsolete, provided that it conferred a continuing benefit on persons by maintaining a restriction on the user of land. Greenwood (1992) V ConvR ¶54-444, 65,197 – 65,198.3

10. Given the large number of single dwellings remaining on allotments in the subdivision known as PS7955 (the Marina Road Estate), it is submitted the Court should find that one of the original purposes of the Covenants can still be achieved. For instance, in Prowse v Johnston [2012] VSC 4, Justice Cavanagh expressed the test in the following way:

107 As mentioned above, the plaintiff hardly pressed her claim under the first limb of s84(1)(a), pursuant to which she was required to establish that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material the restrictions ought to be deemed obsolete. The inquiry is as to whether the purpose of the restriction can no longer be achieved. As mentioned above, one purpose, at least, of the restriction is to ensure that there would be only one residence on each block, so as to control the density of population in the neighbourhood. Notwithstanding the presence of Cabrini Hospital on the western side of the Coonil Estate and the influx of people and traffic associated with the Hospital, it is clear that the covenant still has a role to play in achieving its object. There remain a very large number of single dwellings on large allotments in the neighbourhood. At present, there is a complete absence of blocks of units within the Coonil Estate, in contrast to surrounding areas.4

11. Significantly, Prowse v Johnstone concerned an application to remove or vary a covenant on land fronting Wattletree Road—an arterial road—whereas the bulk of beneficiaries lived in the Coonil Estate away from the arterial road. Notwithstanding the separation of the beneficiaries from the subject land in that case, the Court accepted the Defendants’ objections to the application:

108 The objections of the defendants are set out in the various affidavits sworn by them. They are summarised in their written outline of submissions as follows –

(a) Loss of character of the residential estate being an estate with large single dwelling family homes and substantial gardens;

3 Emphasis added.4 Emphasis added.

- 7 -

(b) Loss of privacy and overlooking into neighbouring private outdoor living areas and gardens;

(c) Bulk and dominance of proposed building particularly when viewed from adjoining residences and property;

(d) Loss of large, spacious Edwardian family home on the burdened land and surrounding mature trees and established garden;

(e) Loss of family neighbourhood with front and rear garden;

(f) Loss of spaciousness, beauty and privacy;

(g) Construction of a three-storey building with basement car parking over virtually the entire site in conflict with the prevalent single dwelling residential character of the area;

(h) Additional noise, traffic, parking and access issues associated with 18 units and 33 [actually 36] basement car spaces;

(i) This is the “thin end of the wedge” and the precedent effect of the removal of a covenant for the construction of a large unit development would be very significant;

(j) The character of the Coonil Estate has been maintained for over 90 years and should be preserved;

(k) Much of the Coonil Estate is a recognised heritage overlay area which should be preserved;

(l) The proposed development will be an isolated “eye sore” in stark contrast to the many period and heritage homes surrounding the burdened land; and

(m) The plaintiff’s land was purchased as part of the Coonil Estate, and has benefited from the reciprocal covenants given by others.

109 I accept that these are all admissible objections, though some are stronger than others. They are relevant to show that the covenant is not obsolete. They are also relevant for other purposes, to which I will come. The covenant is not obsolete. The purposes of the covenant are still being achieved throughout the Estate and on the burdened land, with a contribution in that respect from the covenant on the burdened land.

12. More recently, in Freilich v Wharton [2013] VSC 533 an application was made for a medical centre on Wattletree Road, also in the Coonil Estate. In this case, Justice Bell again took into account the views of those beneficiaries living some distance away from Wattletree Road:

51 I do not accept the plaintiff’s submission that I should apply the narrow concept of neighbourhood which is used in planning cases. Nor do I find that the relevant neighbourhood is to be confined as the defendants’ expert said it should be, albeit on a wider basis. In my view, the neighbourhood is constituted by the Coonil Estate, for three related reasons: first, in cases under s 84(1), the court does not apply a

- 8 -

preconceived concept of neighbourhood; second, where relevant, the court should have regard to the concept of neighbourhood which is reflected in the benefits conferred by the covenant; and third, a broader concept of neighbourhood is demanded by the evidence in the case.

13. Applying the principles in both Prowse and Freilich, evidence given by beneficiaries living in Marina Road will not be discounted simply by reason of any notion that the Beach Road component of the Marina Road Estate is located in its own, distinct neighbourhood.

14. Further, Mr Chapman virtually conceded the remaining value of the Covenant when he concluded in his first reports that the Covenants are having a lasting effect:

81 Clearly there is a demand for more intensive residential development in this area of Beach Road. The properties at 44 and 45 Beach Road are seen as anomalies in the context of surrounding redevelopment and subdivision. It is likely that more intensive redevelopment of the properties in a similar manner to the properties to the west in particular has not occurred as direct consequence of the presence of single dwelling covenants.

15. Moreover, he overstates the degree of change in the surrounding area. Scrutiny of the cadastral plan suggests that aside from the property to the immediate west, in fact the predominant form of housing remains single dwellings on lots of varying sizes. Indeed, two out of the three properties highlighted in the detail below are dual occupancies suggesting if this application is approved, it will be one of the first unit developments in this section of Beach Road:

What constitutes the neighbourhood?

16. Matthew Chapman describes the neighbourhood thus:

- 9 -

18. For the purpose of this application I have defined the primary neighbourhood as being the properties along the northern side of Beach Road between Sea Parade to the west and Marina Road to the east.

19. I have defined the secondary neighbourhood as being the properties along the north side of Beach Road between Charman Road to the west and Mundy Street to the east.

17. However, the Defendants say that this is too narrow a description of the neighbourhood.

18. A similar issue was considered in Frelich v Wharton when the Court rejected the narrow description of the neighbourhood:

49 On the plaintiff’s expert evidence, a narrow concept of neighbourhood is applied in suburban planning cases where the neighbourhood would usually be confined to a few houses either side and opposite. As most of the defendants live a few streets away, they would not be treated as belonging to the relevant neighbourhood. Consideration of the south side of Wattletree Road would be precluded. The plaintiff submitted that I should apply this narrow concept of neighbourhood when assessing the substantiality of the defendants’ injury.

50 The defendants’ planning expert supported a wider concept of neighbourhood. In his view, the neighbourhood encompassed an area with soft boundaries extending from Canberra Grove to the north and some distance beyond Wattletree Road to the south (including the park). It was approximately bounded to the east by Dixon Street and the Cabrini Hospital to the west. While this is wider than the concept of neighbourhood which was employed by the expert of the plaintiff, it does not include about half of the Coonil Estate and leaves out a good many of the defendants’ properties.

51 I do not accept the plaintiff’s submission that I should apply the narrow concept of neighbourhood which is used in planning cases. Nor do I find that the relevant neighbourhood is to be confined as the defendants’ expert said it should be, albeit on a wider basis. In my view, the neighbourhood is constituted by the Coonil Estate, for three related reasons: first, in cases under s 84(1), the court does not apply a preconceived concept of neighbourhood; second, where relevant, the court should have regard to the concept of neighbourhood which is reflected in the benefits conferred by the covenant; and third, a broader concept of neighbourhood is demanded by the evidence in the case.5

19. Applying this reasoning to the present case:

a) the court has a broad discretion as to what constitutes a neighbourhood;

5 Emphasis added.

- 10 -

b) the court can fairly take into account the nature of the benefits conferred by the covenants—in the present case—the single dwelling nature of the covenant; and

c) the court can place some reliance on the evidence of the two expert witnesses and the evidence of the beneficiaries who clearly see the Beach Road property as part of their neighbourhood.

20. Of the two expert witnesses, we say Mr Milner’s evidence on this point is to be preferred. Not only is he the more experienced and convincing of the two experts, his evidence is not tainted by:

a) having acted as an advocate for his client in related proceedings; and

b) the surprising generalisation that restrictive covenants are outmoded—

as Mr Chapman’s evidence was. Indeed, there were apparently no written instructions given to Mr Chapman—simply oral instructions from his client—and no indication that Mr Chapman was given a copy of Order 44 to inform him of his duties as an independent witness.

21. In the end analysis, however, there is a real question as to whether there is any meaningful disagreement on the issue of the extent of the neighbourhood. In the Defendants’ submission, irrespective of which definition of neighbourhood the Court takes, the Plaintiff falls a long way short of establishing sufficient neighbourhood change to found a successful application under s84(1)(a).

22. The debate takes a slightly shaper focus in relation to the potential precedential impact discussed below.

S84(1)(c)—substantial injury

23. The third basis for the application for removal or modification of the Covenants is s84(1)(c). Here the court has the discretion to permit removal or modification of a covenant where it would not ‘substantially injure the persons entitled to the benefit of the restriction’.

24. S84(1)(c) of the Property Law Act 1958 (Vic) provides:

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:

- 11 -

25. To begin, there is authority to suggest that the precedential impact of a modification of a covenant alone can be sufficient injury to warrant the rejection of an application.

26. This was a concern expressed in the evidence of:

a) Wendy Heatley ;

b) John Dickson;

c) Judith Tant;

d) Gordon Gakovic ;6

e) Cameron Male; and

f) Robert Milner .

27. This concern was dismissed by Matthew Chapman on the basis that the Beach Road component of the Marina Road estate forms a different neighbourhood to Marina Road:

15. As a result, I cannot agree that the discharge of modification of the existing covenants to enable the development of the subject site would adversely impact the character or amenity of Marina Road. Nor would it set a precedent, given that the subject site resides in an entirely different neighbourhood.7

28. Justice Bell considered s84(1)(c) in some detail in Freilich v Wharton 8 . Following his analysis, he concluded that the precedential impact of a modification would of itself constitute substantial injury within the meaning of s84(1)(c):

71 … While Wattletree Road is different to the interior of the estate in significant respects, those wanting to build on the precedent would seek to compare the plaintiff’s house with other houses in Thanet Street and the nearby streets and distinguish them from houses in the deep interior of the estate. The house stands as a soldier guarding the residential character of the Coonil Estate against commercial encroachment from the south. I accept the evidence of the defendants’ expert town planner that, for those and other reasons, approval of the proposed modification of the covenant, and subsequent planning approval of the proposed commercial use, would have real precedential value.

72 As the plaintiff submitted, some might regard certain features of the modification as creating a good precedent. For example, the house is to be retained and the proposed commercial use would be relatively low-impact. But the defendants have much more to fear than the loss of an unprotected house with heritage character and some other business use

6 “We are concerned that the removal of the covenants will open the floodgates to property developers or investors looking to cash in on what Marina Road has to offer.”7 Second affidavit dated 26 May 20148 [2013] VSC 533

- 12 -

with higher impact. On the evidence, approving the modification would make significantly more likely the happening of the very thing which the covenant seeks positively to prevent, namely the diminution of the residential character of the Coonil Estate by the use of houses not as residences but for trade or business. When this central purpose of the covenant is considered, the precedential value of the modification would be bad indeed.

73 In conclusion, the approval of the modification of the covenant sought by the plaintiff would substantially injure the defendants as persons entitled to the benefit of the restrictions. The application will therefore be dismissed.

29. It is significant that in the present case, the modification will be the first of its kind for the Marina Road estate, one of the few estates remaining in Victoria where covenant removal or modification applications have so far been resisted without failure. That is, the estate remains as intact today as it was when first created. This means the Court has to be particularly cautious about approving the first incursion.

30. The precedent created would take a number of forms:

a) the subdivision of a new lot allowing more than one dwelling;

b) the creation of a battle axe lot—in particular onto Marina Road; and

c) the creation of multi-unit development.

31. The Defendant’s case is that the Beach Road properties fall within the relevant neighbourhood however described, particularly if the Court accepts Mr Milner’s evidence that the common characteristic of the neighbourhood is one of detached single dwellings in a garden setting, often of single storey construction. It is submitted that notwithstanding the Plaintiff’s assertions to the contrary, such a condition extends beyond Marina Road, into Beach Road to the south; Sea Parade and Charman Road to the west and Mundy Street and (to a slightly lesser extent) Plummer Road to the east.

32. It is submitted that, if approved, the eventual disintegration of the covenant will occur in the following way:

a) Applications for unit developments will be made along Beach Road—the obvious starting points being 45, 46 and 47 Beach Road if these properties are sold;

b) Applications for subdivision and/or unit development will be made along Balcombe Road on the basis of the claim that these properties are not part of the same neighbourhood; and

c) Application for battle axe lot subdivisions will be made along Marina and Mundy Roads.

33. As the learned authors Bradbrook and Neave explain:

- 13 -

19.130 In Re Teagle’s and Sparkes’ Application (1962) 14P&CR 68 at 72, the Lands Tribunal pointed out that the criterion which had to be satisfied was that ‘the proposed discharge or modification’ would not be injurious, and not that the proposed development would not be injurious. Of course, if the development proposed by the application for modification or extinguishment will itself be injurious the court will not order modification or extinguishment.

However, in the context of restrictive covenants there may also be cses where, although the particular development proposed may not cause substantial injury, the extinguish mo modification of covenant durdening a particular piece of land may encourage further applications in respect of similar covenants imposed on other pieces of land in the same area. It is in the this context that the court must face the argument that the granting of the application would threaten the intoreigy of the scheme of covenats covering the larger area and would thus stbutantillly injure the persons benefit by those covenants. This ‘thin end of the wedge’ argument was accepted by the Lands Tribunal in Re Teagle’s and Sparkes’ Application would have also have been applied by Jacobs J in Re Gross and the Conveyancing Act [1965] NSWR 886 at 889 if the case had not been decided on other grounds. It has been accepted as a relevant factor in several recent cases.9

Tangible amenity impacts

34. More tangible impacts include concerns about:

a) the height and bulk of the proposed development;

b) the increase in site coverage and consequential loss of garden area;10

c) “loss of spaciousness and privacy”;11

d) perceived overlooking to 1 Marina Road;12

e) “a different character to the established pattern of housing”;13

f) diminution in potential views to 1 Marina Road and other allotments;

g) increase in traffic;14

h) an increase in noise and lighting;15

9 Greenwood v Burrows (1992) V Conv R 54-444 at 65,200; Application of Wolfe (1997) 8 BPR; Vrakas v Registrar of Titles; Fraser v Di Paolo; C/f Tujilo v Watts10 Foster Heatley at paragraph 3(e) of his affidavit dated 20 June 2014.11 Foster Heatley at paragraph 3(f) of his affidavit dated 20 June 2014.12 Foster Heatley at paragraph 3(g) of his affidavit dated 20 June 2014.13 Foster Heatley at paragraph 3(h) of his affidavit dated 20 June 2014.14 Foster Heatley at paragraph 3(i) of his affidavit dated 20 June 2014.15 Foster Heatley at paragraph 3(l) of his affidavit dated 20 June 2014.

- 14 -

i) the presence and activity of five households instead of one; and

j) lack of setbacks; and so on.

35. While these might not be deemed significant in town planning terms, it would be a mistake to approach them in the context of the planning scheme controls as Matthew Chapman who concluded:

110 It is considered that the discharge or modification of the covenants from the property is justified on planning grounds…

36. As Justice Bell explained in Freilich:

41 … It is not to the point that traffic issues are not examined in this way in town planning cases. This is a case about whether the plaintiff has established that the defendants would not be substantially injured by the modification sought. The court should not deny itself the benefit of evidence which may be relevant when determining that question.16

37. Similarly, as Justice Cavanough explained in Prowse planning standards are a compromise intended to facilitate other objectives of social policy:

118 I am not satisfied that all substantial injury would be prevented by the operation of the provisions of the planning scheme. The plaintiff relies in particular on clause 55 of the Stonnington Planning Scheme, commonly known as ResCode. However, those provisions represent a legislative compromise between the interests of developers and the interests of surrounding residents. They leave considerable discretion to the planning authorities.17 They cannot be regarded as a substitute for the proprietary rights of the defendants pursuant to the restrictive covenant.

38. They are of minimal significance in an application to remove or vary a covenant under s84 of the Act.

39. The Defendants accept the evidence of Mr Milner who expressed the view that the proposed development has the capacity to diminish the broader concepts of amenity of the estate, upon which the beneficiaries place great value.

40. This is in addition to the real impacts of the proposed development being pushed up against the northern boundary of the subject land, that with the exception of any single level garage, is not present under existing conditions.

The relief sought seeks to achieve 4 dwellings on the said land without being bound to the circulated design

41. In any event, the relief sought seeks to achieve 4 dwellings on the said land without being bound to the circulated design.

42. The evidence of Ms Morrison dated 13 February 2014 is that:

16 Emphasis added.17 See DWCS [33]-[51].

- 15 -

7. I want to develop the property by constructing a single dwelling and a separate building containing 4 dwellings.

43. If the application is successful, the Plaintiff would be at liberty to seek to construct a development bearing little or no resemblance to the plans before the Court. To this extent, much of the Plaintiff’s evidence is of little real consequence and the true potential for substantial injury is difficult if not impossible to determine. For instance Matthew Chapman assumed the Plaintiff would build in accordance with the plans if the application was successful:

93 Placing a limit on density to prevent more than one dwelling being built on the subject site does not provide any real benefit to the beneficiaries, as the form of development envisaged for the site will be imperceptible from vast majority of properties and has absolutely no impact on the Marina Road streetscape.18

Mr Chapman’s evidence is coloured by his assessment that restrictive covenants are outmoded

44. There is arguably no better indication that Mr Chapman fails to grasp the gravamen of the case his client has to prove than his assessment that restrictive covenants are inconsistent with planning policy and are therefore outmoded:

The Covenant is considered to be out-moded

104. The continued existence of a single dwelling covenant on the properties in Beach Road is clearly out of step with the current planning strategies advocating housing diversity, the better use of existing infrastructure and the provision of increased housing opportunities to meet changing community needs in the City of Kingston and metropolitan Melbourne in general.

105. This particular covenant is considered to be a prime example of a private planning instrument which was employed by subdividers at a time before the advent of modern town planning controls, to regulate the form of development in order to create homogeneity and marketability Single dwelling covenants were the most common of these controls. Development is now controlled by State planning policy under the jurisdiction of municipal planning schemes, which have replaced the need for restrictive covenants and provide more equitable, merit based development outcomes. Restrictive covenants are often contrary to the planning scheme if used as a tool to resist change in the form suburban renewal (and /or intensification of residential densities. They often act as an impediment to the achievement of broader planning principles such as urban consolidation and are an out-moded development control.19

…

18 First report.19 Emphasis added

- 16 -

109 The existence of the single dwelling covenants on the property is therefore unnecessary. Their continued existence on the property is contrary to the basic principle of land use planning that requires the responsible authority to consider land use proposals having regard to all relevant planning policies and provisions on a case by case basis. They serve to undermine the achievement of the wider state and local planning policy objectives as discussed and are therefore considered to be in a planning sense, out-moded and obsolete.

45. A similar contention was rejected in Greenwood v Burrows at 65,198 to 65,203 per Eames J:

It was submitted by Mr Greenberger that “other circumstances” should include all relevant town planning consideration which moved the AAT to allow the appeal. This submission runs counter to the long-established view expressed in this Court that town planning considerations were not the matter which concerned the Court in its determination whether jurisdiction section 84 has been established… Mr Greenberger does not dispute that that has been approach of this Court to date but submits that it is an approach which it is out of touch with modern requirements for the development land. For reasons which I will consider later I am not attracted by this argument and I decline to consider “other circumstances” as being an invitation for me to adopt the role of a town planning tribunal.”20

46. Similarly in Re Robinson (1972) VR 278 at 285 per Adam J held:

For that reason, I do not think the applicant has made out the conditions for my exercise of jurisdiction under section 84(1)(c). I may add that much has been said, both in affidavits and submissions to me, as to the great advantage which would really accrue to this area which is becoming more densely populated by having such shops as are provided for under this plan. I do not enter in that because, as has been repeatedly said, in exercising this jurisdiction the Court is not a planning authority. Whether or not it would be advantageous as a matter of planning to permit this development here seems to me quite beside the point.

47. McDonald J applied this finding in Re Pivotel at 62,221 [50]:

In exercising the power vested in it pursuant to s.84(1) of the Act, the Court is not concerned with town planning considerations – Re Anton Stani, p.6; Re Robinson at p.285; and Greenwood & Anor v Burrows & Ors (1992) V Conv R, 54,444 at 65,198. Accordingly, the determination of the Administrative Appeals Tribunal relevant to lot 38 and the permits issued thereafter as to the use and development of the land cannot be determinative of the issue whether the restriction now impedes the reasonable user of the land. As referred to by Balmford J in M.A. Zeltoff Pty Ltd and Margaret Barkeley v Stonnington City Council [1998] VSC 270 at p.9 there are a number of different statutory means whereby a restrictive covenant may be varied or removed which are provided for separately in legislation involving the operation of different

20 Emphasis added.

- 17 -

principles that must be applied without reference from one to another. That which I must have regard to in these proceedings are the provisions of s.8.4(1) of the Act.

48. See too the Full Court authority of Re Stani at page 6 (see also Kort Pty Ltd v Shaw [1983] WAR 113 per Burt CJ at 115 and Coghlan J in Fraser v Di Paolo [2008] VSC 117 at paragraphs [42] and [55]). The position adopted by the Court for many years is even more appropriate following the 2000 amendments to the Planning and Environment Act 1987 which resulted in the present section 61(4) that provides:

(4) If the grant of a permit would authorise anything which would result in a breach of a registered restrictive covenant, the responsible authority must refuse to grant the permit unless a permit has been issued, or a decision made to grant a permit, to allow the removal or variation of the covenant.

49. Mr Chapman’s failure to understand the separation of public planning and private property law considerations means that his evidence is of limited assistance to the Court on the critical questions arising under s84 of the Property Law Act 1958.

50. His opinion evidence is tainted by his firmly expressed view that any rights afforded by the Covenant are secondary to those of broader planning policy established via the Planning and Environment Act 1987.

CONCLUSION

51. In conclusion, the evidence of Matthew Chapman falls a long way short of discharging the evidentiary burden necessary to support an application to discharge or vary the Covenants:

a) notwithstanding that access to the Land will continue via Marina Road, his contention at [18] and [19] that the primary and secondary neighbourhoods only includes Beach Road properties seems both contrived and at odds with the latest authorities;

b) his evidence that there is developmental change in the surrounding area at [33], albeit limited by the Covenants (at [35], [46] and [64]]) simply underscores the residual value of the restrictions;

c) his indicative plans could be abandoned in favour of something quite different to what is shown in those plans; and

d) his planning assessment of the proposed scheme of development seems tangential to those issues likely to be before the Court if not wholly irrelevant. As Justice Cavanough held in Prowse v Johnstone & Or [2012] VSC 4:

105 Turning to other relevant principles, I note the statement of Kyrou J that town planning principles and considerations are not relevant to the court’s consideration of whether an applicant has established a ground under s 84(1). His Honour cites five Victorian cases in that regard. I

- 18 -

agree that those cases make it clear that it is no part of the Court’s function to consider whether a proposed development would or would not be desirable or acceptable under town planning principles and considerations.21

COSTS

52. In Supreme Court proceedings, costs ordinarily follow the event, thus if the Application fails, our clients are likely to receive what are known as standard costs—all costs reasonably incurred and of reasonable amount.

53. The rule in Re Withers,22 however, is that even if the Plaintiff is successful, the Defendants might still receive their costs. The principle set out in Re Withers is consistent with other decisions of the Court, such as that by Gillard J in Re Markin23, Lush J in Re Shelford Church of England Girls’ Grammar School24 and McGarvie J in Re Ulman.25

Matthew TownsendOwen Dixon Chambers

14 October 2014

Instructed byKing & Wood Mallesons

21 Emphasis added.22 Re Withers [1970] VR 31923 [1966] VR 494.24 Unreported, 6 June 1967.25 (1985) VConVR 54-178.

- 19 -