A. The application is allowed and the responsible authority is directed to issue a permit subject to the following conditions:-

1. The restriction in the Instrument of Transfer No. 4470232 dated 8 April 1903 pertaining to the development and use of Lots 1 and 2 on Plan of Subdivision No. 4144, contained in Certificate of Title Volume 2926 Folio 015 is to be removed.

2. This permit will expire if the removal of the restriction is not registered in the Titles Office within 2 years of the date of this permit.

B. Subject to no party submitting a contrary submission within 21 days of the date of these orders, there is no order as to costs.

1.1. This is an application of the owners of 661-663 Orrong Road Toorak, H and C. Arifoglou, against the Stonnington City Council's failure to issue a permit to remove the restrictive covenant or restriction from the subject property in accordance with the powers granted to the responsible authority under Section 60 of the Planning and Environment Act ("the Act"). The applicant owners claim the restrictive covenant is unenforceable as it does not expressly benefit any land. If the Tribunal considers the restrictive covenant is enforceable, the applicant's claim, in the alternative, is that the removal of the permit will not cause any detriment to any owner entitled to the benefit of the covenant.

1.2. At the hearing of this application the responsible authority opposed the grant of the permit on the grounds that:

(a) the responsible authority did not have jurisdiction to remove the covenant if the covenant is unenforceable;

(b) if the covenant is unenforceable do the objectors have any standing pursuant to subsections 60(2) or (5) of the Act;

(c) does subsection 60(2) or subsection 60(5) apply to this application to remove this covenant; and

(d) if the application is subject to the provisions of subsection 60(5) and the objectors have standing, are their objections vexatious.

1.3. Ms Bullen is the owner of the allotment adjacent and to the west of the subject lots, being Lot 4 on P.O.S. 4144, and land potentially benefited by the restriction on Lots 1 and 2. Ms Bullen objects to the grant of the permit on the basis that:-

(a) the responsible authority does not have jurisdiction to entertain and determine an application under Section 60 of the Act that a restrictive covenant is unenforceable;

(b) in the covenant in the Instrument of Transfer there is sufficient specification as to identify of the lands benefited by the covenant;

(c) alternatively, the covenant is enforceable as part of a scheme of development or building scheme applying to all of the lots on the plan of subdivision; and

(d) Ms Bullen will suffer detriment if the application is granted.

2.1. The subject allotments were created by Plan of Subdivision 4144 from the parent title Volume 2636 Folio 527076. Upon the approval of the plan of subdivision, the title particulars of Lots 1 and 2 were Volume 2926 Folio 015 ("the subject property").

2.2. The subject property is encumbered by a covenant contained in the Instrument of Transfer Number 470232, dated 8 April 1903, which provided, inter alia:-

"And the said Henry Alfred Kirkby doth hereby for himself, his heirs executors, administrators and a transferees covenant with the said Courtnay Cooke his executors, administrators and transferees that no building or erection or any part there of hereafter to be erected on the said Lots hereby transferred or either of them shall be used otherwise or as part of or auxiliary to a dwelling house and one dwelling house only shall be erected on any one of such lots and besides such one dwelling house no other dwelling house or any part of any other dwelling house or any buildings appurtenant to or intended to be used with any other dwelling house shall be erected on any other part of the same Lot"

"Provided that it also shall not be obligatory on the said Courtnay Cooke, his executors, administrators and transferees to obtain any covenant of a similar nature to the covenant lastly here and before mentioned from any other purchaser of any other Lot or Lots in the said plan of subdivision."

2.3. Plan of Subdivision No. 4144 was lodged at the Office of Titles on 18 November 1899 and appears to have been approved on by that office on 28 May 1900. It comprised 13 lots. Upon sale two lots were sold together on two occasions; being the subject land ie. Lots 1 and 2 and, secondly, Lots 12 and 13. Therefore , there were 11 sales comprising the disposal of the lots making up P.O.S. 4144. A short history of each of those sales, in chronological order, is as follows:-

(i) Lot 3, Courtnay Cooke to Phoebe Young on 14 April 1900 - this transfer had a covenant contained within it in the following terms:-

"And in pursuant of a covenant on her part contained in a contract of sale for the purchase of the said land here and before transferred the said Phoebe Young doth hereby for herself her executors administrators and transferees and so as to bind the said land into whosoever hands the same or any part thereof may at any time and hereafter come and the registered proprietor or proprietors of the same land or any part thereof for the time being covenant and agree with the said Courtnay Cooke his executors, administrators and transferees and also as a separate covenant with each and every of the registered proprietor or proprietors for the time being of any other part on the land of the said plan of subdivision and their and each of their executors administrators and transferees respectively that no building...And one dwelling house only shall be erected on the said Lot"...(emphasis added);

(ii) Lot 10, Courtnay Cooke to Jane Shaw on 9 August 1901 - this transfer had a covenant contained within it in the following terms:-

"And the said Jane Shore hereby covenants and agrees that no building or erection or part there of to be erected on the said land or part or parts there of shall be used otherwise or as of part of or auxiliary to a dwelling house and one dwelling house only shall be erected on the said land"

(iii) Lot 5, Courtnay Cooke to Ada Cooke ( his wife) on 15 August 1901 - a covenant in the following terms was contained in the instrument of transfer inter alia:-

"And the said Ada Cooke covenants and agrees with the said Courtnay Cooke that no buildings or erections...and one dwelling house only shall be erected on the said land..."

(iv) Lot 7, Courtnay Cooke to Amy Liley on 9 March 1903 - no restriction was set out in the transfer of land;

(v) Lots 1 and 2, Courtnay Cooke to Henry Kirkby on 8 April 1903 - the subject of this application, the covenant has been described above;

(vi) Lot 8, Courtnay Cooke to Helen McNeil on 24 March 1903 - containing a covenant in similar terms to that contained in the instrument of transfer for Lots 1 and 2 including the proviso;

(vii) Lots 9, Ada Cooke, (widow) to Florence Palfreyman on 5 February 1904 - containing a covenant within the instrument of transfer that is similar to Lots 1 and 2 but without the proviso;

(viii) Lot 11, Ada Cooke to James Davies 12 October 1904 - there is no restriction set out in the instrument of transfer;

(ix) Lots 12 and 13, Ada Cooke to Robert Officer, 20 January 1905 - there is a covenant in the instrument of transfer in the following terms:-

"And the said Robert Officer (the Younger) hereby undertakes and agrees that no building or buildings or any part thereof hereafter to be erected on the said land or part or parts thereof shall be used otherwise than as a dwelling house or part thereof or an appurtenance there to and that as regards that part of the said land fronting Springfield Avenue to a depth of 160 feet no more than 2 dwelling houses should be erected thereon one within the limits of the said lot twelve and one within the limits of the said lot thirteen.";

(x) Lot 4, Ada Cooke to Ernest Wood, 19 April 1905 - this contains a condition in the instrument of transfer that is similar to that on the instrument of transfer for Lots 1 and 2 and includes the proviso;

(xi) Lot 6, Ada Hammond (nee Cooke) to Lucia Quick 1 May 1907 - there is no restriction set out in the instrument of transfer.

2.4. The documents lodging the plan of subdivision for approval show that this was done on behalf of the owner, Courtnay Cooke, by Smart and Walker, presumably Solicitors, on 18 November 1899. Although the instruments of transfer are prepared by various firms of solicitors the witnessing of all the transfers involving Courtnay Cooke as vendor are signed by M.O. Walker, Solicitor, Melbourne. The instrument of transfer for Lot 5 from Courtnay Cooke to Ada Cooke was drawn up by Smart and Walker of 95 Williams Street Melbourne.

3.1. The responsible authority's power to remove or vary a restriction arises under Section 60 of the Act, in particular Subsections (2) and (5), these are respectively:

"(2) The responsible authority must not grant a permit which allows the removal or variation of a restriction (within the meaning of the Sub-division Act 1988) unless it is satisfied that the owner of any land benefited by the restriction (other than an owner who, before or after the making of the application for the permit but no more than 3 months before its making, has consented in writing to the grant of the permit) will be unlikely to suffer-

(c) loss arriving from the change of character of the neighbourhood; or

as a consequence of the removal or variation of the restriction."

"(5) The responsible authority must not grant a permit which allows the removal or variation of a restriction referred to in subsection (4) unless it is satisfied that-

(a) the owner of any land benefited by the restriction ( other than an owner who before or after the making of the application for the permit but no more than 3 months before its making, has consented in writing to the grant of the permit) will be unlikely to suffer any detriment of any kind (including any perceived detriment) as a consequence of the removal or variation of the restriction; and,

(b) if that owner has objected to the grant of the permit, such is the objection vexatious or not made in good faith."

3.2. The criterion as to which subsection applies to a restriction is set out at subsection (4) as follows:

"Subsection (2) does not apply to any restriction which was -

(a) registered under the Subdivision Act 1988; or

(b) lodged for registration or recording under the Transfer of Land Act 1958; or

3.3. The responsible authority in its decision to refuse the application said that it did so under Section 60 (2) of The Act; as these restrictions were created between 1900 and 1907, I consider it apparent that subsection (5) is the appropriate subsection against which the application is to be assessed.

3.4. I will deal with each of the grounds of the responsible authority and the objectors in turn commencing with their submission that the responsible authority and thereby the Tribunal has no jurisdiction to entertain the application.

4. IF THE RESTRICTION IS NOT ENFORCEABLE DOES THE TRIBUNAL HAVE JURISDICTION TO CONSIDER FOR REVIEW AN APPLICATION TO REMOVE THE RESTRICTION?

4.1. The responsible authority's and Ms Bullen's basis for this challenge on the responsible authority's jurisdiction is based on the submission that to ground the power in Section 60 of the Act there needs to be an identifiable subject matter that enlivens the jurisdiction of the responsible authority to consider the application, in this case "the owner of any land benefited by the restriction"; therefore, if there was no owner who benefits then there is no subject matter for the responsible authority to ground its decision.

4.2. I am interested not solely in the responsible authority's jurisdiction but the Tribunal's powers to hear a review of an application to vary a restriction. To this extent I have widened the ambit of the objecting parties submission that the responsible authority does not have jurisdiction to consider removing or altering a restriction on the grounds that no enforceable restriction exists.

4.3. I consider the objectors' submission incorrect for two reasons. Dealing with the jurisdiction of the Tribunal only, I do not consider that in this review the source of the Tribunal jurisdiction is Section 60 of the Act. Rather being a review of a failure by the responsible authority to decide an application for a permit, the source of the Tribunal jurisdiction is Section 79 of the Act. To quote Alesios Fishing Company Pty Ltd The Greater Geelong City Council [2000] VCAT 1975 (30 September 2000) at paragraph 24:

"As far as I am concerned the only power to determine such matters as to whether or not land is a public highway in this application depends on a such a finding being necessary to determine that the Tribunal has jurisdiction to decide the issues properly raised in the application for review"

Thus, I consider the fate of the restriction is required to be decided, to decide the application under s79 of the Act.

4.4. However, parties may submit that this begs the question, as in this review the Tribunal has the same powers as the responsible authority and if the responsible authority does not have power to determine the application under Section 60 then neither should the Tribunal.

4.5. I consider that the objector's submissions in regard to subsection (5) relies upon a reading of the subsection that is too narrow. I consider that the central issue in subsection (5) is to ensure that no owner who benefits is likely to suffer detriment. The gist of the subsection is, therefore, the assessment of detriment. The source of the responsible authority's jurisdiction is an assessment of detriment, it is not identifying an owner who benefits. If there is no owner who benefits there can be no detriment to any owner; and, such a finding is within the responsible authority's jurisdiction on my reading of subsection (5).

4.6. I consider that my reading is a more natural and more logical reading of the subsection than the submissions of the responsible authority and Ms Bullen. If the legislature had intended that the jurisdiction to assess whether a restrictive covenant was unenforceable should have resided solely in the Supreme Court via Section 84 of the Property Law Act, it could have easily inserted a simple phrase in subsection (5) limiting the responsible authority's jurisdiction to those applications where it positively found that an owner benefited. The legislature has not done this. I consider the responsible authority has jurisdiction under subsection 60(5) to consider the application whether to vary or remove the restrictive covenant.

5.1. The applicant submitted that the restrictive covenant contained in the instrument of transfer for the subject land is unenforceable as no dominant tenement was identified in the words constituting the restriction contained; thereby, no owner who benefited was identified. This submission was opposed by the responsible authority and the objector's, in particular Ms Bullen, who as the owner of Lot 4 was potentially a beneficiary of the restrictive covenant placed on the subject land. Clearly, there is no express specification of the land to be benefited in this transfer. This could have been done by naming particular allotments or the use of such words, which have commonly been used in identifying the land to be benefited, as "in respect of the lots remaining untransferred in the parent title."

5.2. The applicant argued that for the benefit of a restrictive covenant to pass, in equity, by express annexation, it can only do so where the land to be benefited is clearly identified: Re Dennerstein [1963] VicRp 93; [1963] VR 688. In the initial hearing of the application of Re Dennerstein (supra) before Dean J on 16 July 1962, His Honour held that the covenant containing the restriction was invalid because the benefit thereof was not annexed to any land and it was simply a covenant in the favour of named persons and their executors, administrators and transferees without words sufficiently, expressly or by implication, to annex the benefit of the covenant to any land.

5.3. The covenant under consideration in Re Dennerstein was in broadly similar form to that in this proceeding, where it stated, inter alia:-

"Each purchaser shall enter into covenants with the vendors, their executors, administrators and transferees that he or his executors administrators and transferees will not erect or allow to be erected..."

Thus, as in this proceeding, there was no specific land identified which benefited from the covenant contained in the instrument of transfer.

5.4. Counsel for Ms Bullen replied, also citing re Dennerstein, that the land to be identified can be identified by implication. He submitted that the instrument of transfer clearly contained a covenant prepared as a restrictive covenant and it must benefit some property; therefore, by implication it must benefit the other lots in the plan of subdivision, which plan of subdivision is identified in the body of the restrictive covenant when describing the allotments that are to be transferred by the instrument of transfer.

5.5. This is a matter of fact and calls for the interpretation of the covenant in the instrument of transfer in accordance with the normal rules of interpretation. However, I do not consider that because the instrument of transfer contains what appears to be a covenant or restriction, I should interpret its language with any degree of presumption that it should operate as a covenant or restriction. The words used to formulate the covenant should be construed according to their natural and ordinary meaning to establish if what is described as the covenant in fact fills the requirements of a restrictive covenant as described in the authorities, including re Dennerstein.

5.6. As no land to be benefited is identified whatsoever, I do not consider that the implication that the covenant is a restrictive covenant benefiting the balance of lots in the subdivision can arise unless there is some extrinsic evidence as to the surrounding circumstances which would give rise to such an implication. In this case I consider the extrinsic circumstances surrounding the sale of the allotments and the wording used in the various instruments of transfer of the lots creates the opposite impression; in that, the first lot transferred contained a covenant which identified the lots, other than the lot being transferred, as benefiting from the covenant, see the transfer to Ms P Young of 14 April 1900. Thereafter, no other instrument of transfer for any of the other sales identified any land to be benefited within what purported to be the covenant. During all of the period that the original vendor, Mr C. Cooke, was selling the allotments created by the plan of subdivision he presumably had as his solicitor in relation to the sales Mr Walker, who had lodged the plan of subdivision for approval. The only inference, I can draw from this is that after the first instrument of transfer to Ms P. Young, a decision was made that no reference to benefiting the other lots in the plan of subdivision would be made in any subsequent transfer such that these later covenants were kept personal to Mr Cooke, his executors, administrators and transferees.

5.7. I do not accept Mr Porter's submission that the identity of the land to be benefited can be implied by identification of the plan of subdivision in the body of the instrument of transfer. The identification of the plan of subdivision in the instrument of transfer is used solely to identify the lot or lots to be transferred. The identity of the plan of subdivision is not within the words used to set out the covenant or restriction. If the covenant did not exist, as in the transfer of Lot 7 to Ms A. Liley; on 9 March 1903, the plan of subdivision is still stated to identify the lot being conveyed.

5.8. Further, I consider that to allow such an implication could create contradictions and misunderstandings; for example, in Newton Abbot Co-operative Society Ltd v Williamson and Treadgold Ltd [1952} 1 CH 286, the instrument of transfer contained a covenant by the purchaser of the business not to carry on the business of ironmongery on the premises purchased. If in the identification of the property to be transferred there was a plan of subdivision identified, would that mean by implication that all of the allotments in that plan of subdivision were prevented from carrying on the business of an ironmonger?

5.9. As noted at page 289 of Bradbrook and Neave "Easements and Restrictive Covenants in Australia" 2nd Ed., 2000, at page 289:-

"If the covenant is simply made with the covenantee and his or her heirs and assigns, and the document contains no indication that the covenant is intended to benefit the property, as distinct from its owners, the traditional view is that the benefit of the covenant will not pass by express annexation...Where there is no express annexation the court will usually regard the covenant as imposed simply to protect the covenantee while he or she holds the land, or to enable the covenantee to dispose of the land together with an express assignment of the benefit of the covenant, more advantageously: Chambers v Randell [1923] 1 CH 149 at 155."

I consider the facts of this case as described above give rise to a similar conclusion.

5.10. Therefore, I do not consider that the covenant on its face is enforceable as a restrictive covenant for the benefit of other lots in the plan of subdivision. It can only be construed as a restrictive covenant if it can be established that the covenant in the subject instrument of transfer is part of a scheme of development.

6.1. Ms Bullen submitted that if the Tribunal found that there was no express or implied annexation of the covenant then it should find that the plan of subdivision was part of a scheme of development in which all of the allotments were to benefit from a covenant, for the erection of one house only. The applicant opposed this submission and said further that, even if a building scheme was established, the subject site was not bound by it as:-

(a) there was no notification of the existence of any building scheme on the plan of subdivision or the Certificate of Title to the subject lots; and,

(b) the instrument of transfer does not indicate the lands are affected by a building scheme.

6.2. The essential elements for the establishment of a building scheme, containing restrictions enforceable in equity by one owner of land against another, are set out by Lord Parker in Elliston v Reacher [1908] 2 CH 374 at 384:

"I pass, therefore, to the consideration of the question whether the plaintiffs can enforce these restrictive covenants. In my judgment, in order to bring the principles of Renals v Colishaw (1878) 9 CH 125 at 129 and Spicer v Martin (1888) 14 AC at 24 into operation it must be proved:

(1) that both the plaintiffs and defendants derive title under a common vendor;

(2) that previously to selling the land to which the plaintiffs and defendants are respectively entitled the vendor laid out his estate, or a defined portion thereof (including the land 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 or their predecessors in title, purchased their lots from the common vendor on the footing that the restrictions subject to which the purchases were made were to annure for the benefit of the other lots included in the general scheme whether or not they also annured for the benefit of other lands retained by the vendors.

If these four points are established, I think that the plaintiffs would in equity be entitled to enforce the restrictive covenants entered into by the defendants or their predecessors with the common vendor irrespective of the dates of the respective purchases. I may observe, with reference to the third point, that the vendors object in imposing the restrictions must in general be gathered from all the circumstances of the case, including in particular the nature of the restrictions."

6.3. These principles have been cited with approval in a number of Victorian cases: Re Dennerstein (supra), Fitt v Luxury Developments Pty Ltd [2000] VSC 258 (20 June 2000). The four principles are questions of fact.

6.4. Ms Bullen submitted that a building scheme existed over the allotments created under the plan of subdivision; however, I was not provided with a clear and concise list of the factual matrix surrounding the plan of subdivision and the sale of the allotments that gave rise to such a conclusion. It was said that the inference for a building scheme arose because of the proviso at the end of the covenant to protect the vendor and his transferees from being required to provide a covenant in similar terms for any future transfer of the remaining lots. However, I do not see the proviso as indicating a scheme of development; in fact, I consider it infers the opposite. It indicates that the owner did not want to be held to ensuring or making the transfer of all the lots subject to similar restrictions. The vendor wished to retain the right in respect of each transfer as to whether or not he or she placed a restriction on the use of the land or not.

6.5. As can be seen from the history of the sale of the lots, they were not laid out with similar restrictions on the transfer of each allotment. The conditions on the sale of the lots varied from no restrictions whatsoever in the case of the sale of three lots, to restrictions on seven sales that are personal to the vendor. It is only in respect of the first sale; Lot 3, that has a restriction which identified the land to be benefited.

6.6. The lots were not offered for sale at one auction but sold individually over a seven year period from 1900 to 1907.

6.7. Therefore, I do not consider that the vendor showed any intention to subject the lots uniformly to restrictions and to restrictions that although varying in detail are consistent, and, further, are consistent with a general scheme of development. In fact, as I have outlined above I consider that it can be inferred from the fact that the original vendor had the same solicitor, who witnessed his signature on the transfer for the first six transactions and that only the first transfer, to Ms P Young of 14 April 1900, identified any land to be benefited; that the vendors intention when viewed overall, with some covenants containing provisos and other transfers with no covenant, was that there was no intention on the part of the initial vendor, Mr C Cooke or his widow Ms A Cooke, the subsequent vendor, to lay out a scheme of development.

6.8. Likewise, I do not consider that the restrictions were intended by the common vendor to be annured for the benefit of all the lots intended to be sold.

6.9. In relation to the fourth principle in Elliston (supra) I do not see how the plaintiffs and the defendants or their predecessors in title could have purchased their lots on the footing that the restrictions to which each of their purchases were subject were annured for the benefit of the other lots in the plan of subdivision. This is particularly so in the case of the purchaser of the subject lots, Mr Kirkby, who signed a transfer which contained the proviso that it was not obligatory for the vendor to obtain similar covenants from any other purchaser of lots on the plan of subdivision.

6.10. Therefore, I do not consider that the facts surrounding the creation of the plan of subdivision and the transfers of the allotments by the original vendor, and subsequently the beneficiary of his estate, indicate that, in fact, the plan of subdivision is subject to a scheme of development.

6.11. Given my decision in relation to the four principles enunciated in Elliston v Reacher (supra), I do not consider that I need to address the applicant's concern that there was an insufficient notification of the existence of the building scheme and on the plan of subdivision on the Certificate of Title: see Fitt (supra). However, I do note that on none of the documents presented to me has there been any reference whatsoever to a scheme of development or a building scheme.

7.1. The applicant submitted that if the Tribunal considered there was no covenant the objectors cannot have standing in this proceeding. The applicant did not identify whether by objectors they also meant potential beneficiaries such as Ms Bullen.

7.2. I would consider that Ms Bullen does, as a possible beneficiary by reason of being the owner of an allotment created by the subject plan of subdivision, have standing. As a potential beneficiary I do not see how her standing would disappear if I decided, as I have, against her argument that there is a valid restrictive covenant on the subject allotments.

7.3. In relation to the other objectors, for example: Toorak Village Residents Action Group Inc., I have read their submissions, I have considered them in the light of the considerations I have to take into account in this review and, as such, I do not consider the matters raised in the objectors' submissions to have any significant relevance. In the light of my decision, I do not consider that I have to decide whether objectors other than Ms Bullen have standing. However, I note that the matters raised by the Toorak Village Residents Action Group Inc. were very pertinent to any future application for the development of the subject land; as stated above, their submission did not raise matters relevant to the narrow compass of my enquiries in respect of the restrictive covenant only.

8.1. Given my decision in relation to the existence of a restrictive covenant over the subject land, I do not consider that I have to expressly address this question. The submission as to detriment was limited by all parties and I do not consider that I have been sufficiently addressed upon it. Although, prima facie, it would appear obvious that Ms Bullen would be under a likelihood to suffer a detriment to her amenity and possibly financially, from a diminished lot value, if there was a substantial redevelopment on Lots 1 and 2 beside her property, Lot 4.

9.1. I consider that the responsible authority should have granted the application to remove the restriction contained in Instrument of Transfer 4470232, pertaining to Lots 1 and 2, Plan of Subdivision No. 4144, being numbers 661-663 Orrong Road, Toorak, on the basis that there is no land identified as benefiting from such restriction and no scheme of development was established.

9.2. Unless there is a contrary submission by any party within 21 days of the date of these orders, I will order that there is to be no orders as to costs. Any party that wishes to make a contrary submission should recognise that the costs of any subsequent hearing may well be in issue.