"Benefit" of covenant; whether land benefiting means only land in relation to which a current right to enforce; can land lose status as "benefiting" by acquiescence?

s 61(4) Planning and Environment Act 1987; prevents Responsible Authority granting a permit for use or development that would contravene a restrictive covenant; does that constraint also apply to the Tribunal on review or can the Tribunal grant such a use or development permit notwithstanding s 61(4)?

VicRoads v AGC Advances Ltd & City of Werribee [1992] 10 AATR 278.

Wilde v Moonee Valley CC, McKay & Ors [1997] 18 AATR 145

Rosemeier & Ors v Greater Geelong City Council (No.2) [1997] 20 AATR 86.

ss 61, 62 Planning and Environment Act 1987.

APPLICANTS FOR REVIEW : Michael Simon Bevilacqua and

RESPONSIBLE AUTHORITY: Port Phillip City Council

MEDIUM NEUTRAL CITATION: [2002] VCAT 1537

Lot 2 on Plan of Subdivision No. 7000 being the land in Certificate of Title Volume 4109 Folio 741.

Rectangle of land on the north west corner of the intersection of Brighton Road with Hennessy Avenue having a frontage of 16.8m to the west side of Brighton Road, a depth of 36.58m along the north side of Hennessy Avenue and an area of 618.24m2.

(i) Does the land owned by objectors have the benefit of the restrictive covenant endorsed on Certificate of Title Volume 4105 Folio 741 being the covenant in Transfer of Land No. 848589?

(ii) Do the provisions of s 61(4) PE Act affect or prevent the Tribunal exercising its powers to determine application for review P001486/2002 on its merits?

Mr John Cicero, solicitor, appeared with Ms Tania Cincotta, solicitor of the firm of Best Hooper, solicitors for the Responsible Authority.

Mr Graeme Peake, barrister, appeared on the instructions of his clients for the applicants.

Mr J B Davis, barrister, appeared for Sara Jancouskis, respondent/objector.

Mr Ross Shaw, respondent/objector, appeared in person as did Ms Dora Cukierman.

The people who appeared made oral submissions and Mr Peake and Mr Cicero also presented written submissions.

Various plans, photographs and other documents were tendered. The evidence and submissions in documentary form have been retained on the file of the Tribunal.

Application under s.79 of the Planning and Environment Act 1987 (PE Act) for review of the failure to grant a permit within the prescribed time.

Residential 1 Zone under the Port Phillip Planning Scheme.

1. This proceeding is one of two concerning the applicants' proposal for the development of the subject land. The land is in a Residential 1 Zone and is used for residential purposes. It is Lot 2 on Plan of Subdivision 7000. it appears that this subdivision was created in or about the First World War. The certificate of title in relation to the subject land is dated 21 March 1918.

2. It was a twelve-lot subdivision into residential allotments, each approximately the same area and proportions as the subject land.

3. The subject land is subject to a restrictive covenant. It is the covenant contained in Transfer of Land 848589 and a note of this encumbrance appears on the certificate of title. The covenant in fact contains a number of constraints, but the one that is relevant for present purposes provides:-

That no building shall be erected on the land hereby transferred except 1 detached dwelling house with the usual outbuildings.

4. There are (or in some cases were) similar restrictive covenants on the other allotments in the subdivision.

5. A copy of the parent certificate of title was tendered as exhibit P3. The dealings endorsed on it show the order in which the allotments created by the subdivision were sold out of the parent title. The land we are concerned with was the subject of the fourth such dealing namely the transfer of land whose number I have mentioned. There were four lots sold out of the subdivision prior to Lot 2 being the subject allotment. Of the three previous dealings, one of them relating to two allotments.

6. That accounts for five allotments. The other seven were transferred after Lot 2. Each of these seven lots became a dominant tenement, so far as the subject land is concerned. Each of them enjoyed the benefit of the restrictive covenant applying to Lot 2. (In fact there appears to be more than seven dealings following the transfer of Lot 2, but it is not necessary to go into that question here). There are some dealings at the end of the list which concern the creation of an easement and some more recent transfers which, I was informed, relate to re-arrangements in relation to areas of road that remained in the parent certificate of title.

7. In the 1920's a two-storey building containing four residential flats was constructed on Lot 2. This construction is clearly in contravention of the covenant. It appears that, when the construction was carried out, there were a number of "dominant tenements" whose owners could have taken legal action to enforce the covenant and to prevent construction in contravention of the covenant. It appears that no such action was taken, or if it was taken, that it was unsuccessful or not persevered with. That has left a situation where the present building has existed on the land for upward of 80 years in contravention of the covenant.

8. The applicants now wish to further develop the land. They wish to retain the existing building with its four units but with enlargements and modifications of various sorts. They propose to increase the size of the building and some rooms within it and to utilise its roof space as attic bedrooms with dormer windows. However, the project does not stop at that. It also involves a substantial extension of the building over the majority of what is now the backyard of the property. This extension would have a sub-floor basement to provide off-street parking for all of the proposed units with two further flats located above the carpark area. The flats will occupy two levels and have a flat roof. The proposal involves a substantial reduction in some of the boundary setbacks and a very significant reduction in ground level open space.

9. This project required planning permission for the development works proposed and also requires the removal or modification of the existing restrictive covenant. The applicants have sought to deal with the restrictive covenant situation by making application for a planning permit for its modification. They have made two permit applications, one for modification of the restrictive covenant and the other for planning permission for the proposed physical development of the land.

10. There has been a failure by the Responsible Authority to determine each of these permit applications within the prescribed time. The applicants have applied under s 79 PE Act for a review of each such failure. Both these applications for review are before the Tribunal and are now listed for hearing on the 19 December 2002. There have been two directions hearings, the second of which was conducted on the 3 October 2002. This directions hearing was appointed following receipt by the Tribunal of a letter dated 18 September 2002 from a firm of architects and planners acting on behalf of the applicants. That letter asked for a directions hearing to consider some specified "legal questions". At that stage the full merits hearing of both these proceedings was fixed to commence at 10.00am on Monday, 11 October 2002. Notice of the directions hearing was dated 20 September 2002 and said that it was for the purpose of considering:-

How the question of law referred to in the letter of 18/9/02 should be determined.

Whether there should be a Preliminary Hearing for that purpose will be dealt with at the full hearing.

Whether notice of the question of law has been given to all parties.

11. The questions of law set out in the letter of the 18 September 2002 contained one as to procedure. It is not now relevant. The other two were in the following terms:-

1. Whether the land owned by the objectors has the benefit of the restrictive covenant. This involves consideration of whether the Tribunal must consider if any objector is able to enforce the covenant.

2. Does Tribunal (sic), as opposed to the Responsible Authority, have the power to grant a permit that will authorise development that contains the restriction if it includes a condition under Section 62, sub-section 1, paragraph (aa).

12. As a result of the directions hearing on the 3 October 2002 several directions were given. These included the vacation of the full merits hearing of the two proceedings that had been fixed for the 11 and 12 November 2002 and the refixing of the hearing to commence at 10.00am on the 19 December 2002 with one day allocated.

13. The directions also included a preliminary hearing in relation to the present restrictive covenant case to be conducted by a legally qualified member on the 11 November 2002 to consider two "legal issues". One day was allocated for the purpose. I was told by representatives before me who were present at the directions hearing that the framing of the legal "issues" was not concluded in the course of the hearing, and it was not until they received the interim document containing the directions that they had a statement of the questions to be considered. In fact, there were complaints that the formulation, when it appeared, is unclear and confusing, and does not clearly state or raise the necessary legal questions sought to be raised. The written formulation is in the following terms:-

* Whether pursuant to Section 60(5) Planning & Environment Act 1987 the owners of the dominant tenement (sic) can be considered to be benefiting from the covenant when as owners of four units on the subject land they have acquiesced in a long standing breach of the covenant.

* Whether the provisions of Section 61(4) Planning & Environment Act 1987 affect or prevent the Tribunal exercising its powers under Section 60(5) Planning & Environment Act 1987 or do the provisions of Section 62(1)(aa) Planning & Environment Act 1987 apply.

14. Approximately 1½ hours at the beginning of the hearing was devoted to the task of trying to work out quite what these questions were asking. There was a consensus that the first, in particular, does not really make sense. Ultimately I was obliged to agree. I suppose that typing slips may have given rise to the problem. Ultimately the questions were reformulated. Although initially there were objections to amendments to the formulation of the questions, ultimately it was agreed on all sides that the hearing should proceed on the basis of the questions as reformulated. It was also agreed that, on this basis, the parties would be faced with the questions they had originally expected, and would not be unfairly disadvantaged.

(i) Does the land owned by objectors have the benefit of the restrictive covenant endorsed on certificate of title Volume 4105 Folio 741 being the covenant in Transfer of Land No. 848589?

(ii) Do the provisions of s 61(4) PE Act affect or prevent the Tribunal exercising its powers to determine application for review P001486/2002 on its merits?

16. Application for review P001486/2002 is the one arising from the failure to determine the permit application for the proposed building works.

17. The majority of the balance of the hearing was devoted to a consideration of Mr Peake's case in relation to the first of the above questions. I gave my answer and reasons orally, having indicated that I did not need to hear from the other parties in relation to it. My answer is "Yes", the objectors do own land that has the benefit of the covenant. What follows is an extensive summary of my reasons in relation to that proposition.

18. In Mr Peake's submission the objectors do own land but it no longer benefits from the covenant. A gist of his argument appears in part 7 of his written submissions. The actual phrase in contention comes from s 60(5) PE Act and relates to whether land is "benefited by the restriction". He looks at a dictionary definition of "benefited" and suggests that the relevant definition here is "Anything that is for the good of a person or thing". He then argues that land is only benefited by a restriction "if the restriction is of some actual benefit to the land, in the sense that the owner of the land can obtain a remedy against the owner of the servient tenement, to prevent a breach of the restriction".

19. I think it is clear, indeed obvious, that the existence of a restrictive covenant is not dependent on it being able to be enforced, or upon there being someone able to enforce it, or upon there being someone against whom it is able to be enforced. Indeed, amongst the authorities he sought to rely upon, Mr Peake referred to "Easements And Restrictive Covenants in Australia", Fourth Edition, by Bradbrook & Neave, paragraphs 18.28 to 18.77. Amongst the passages he referred to there was one that said as much.

20. In this case the restrictive covenant was created as a condition of the contract of sale whereby the subject land was sold out of its original subdivision and the terms of the restrictive covenant are recorded in the transfer of land previously referred to and, in fact, in the endorsement on the relevant certificate of title. That was enough to create the restrictive covenant. It remains in creation unless it has been altered, destroyed or dissolved in some way. Mr Peake admits it was created in 1918 and that the objectors or their predecessors in title acquired the benefit of it when their respective lands were first transferred out of the subdivision and the original parent title. (That process was completed by the middle of 1920). Mr Peake does not point to any action, process or proceeding where the restrictive covenant was destroyed or dissolved. His argument is not so much that the covenant has been destroyed, but that its benefit has been lost, and that the objectors' lands does no longer have that benefit.

21. His putting it that way reminded me of an observation I made in my reasons in Wilde v Moonee Valley CC, McKay & Ors [1997] 18 AATR 145 where I noted that "benefit of the covenant" in this context means the benefit (if any). If there is a restrictive covenant there is land, sometimes called the servient tenement, which is burdened by the covenant and has to endure its restrictions; and there is land, sometimes called the "dominant tenement" which enjoys the benefit of the covenant. In this sense benefit does not necessarily mean for the good of a thing, as in Mr Peake's dictionary definition. Rather "benefit" is to be contrasted with "burden". A particular covenant may be, or may have become, useless for one reason or another. The dominant tenement is still land having its benefit, whatever that benefit might be, even if that benefit is illusionary for practical purposes. Mr Peake in fact politely located the relevant passage in my reasons in that case and cited several other authorities to like effect.

22. His argument, as recorded in paragraph 7.3 of his submissions, is that there was "only benefit" if the owner of the dominant land can obtain a remedy from the owner of the servient land. I do not accept that this is the appropriate, or an exhaustive test, even though it may frequently be indicative. It is common ground that the means of enforcing a restrictive covenant, or obtaining a remedy or rectification against a threatened or actual breach of such a covenant, is by means of court proceedings. The usual course would be to apply to the Supreme Court for suitable injunctions. An injunction is an equitable remedy, and a discretionary one. Mere proving the legal basis for obtaining one does not necessarily mean that it will be granted. Various discretionary considerations might enter, including the conduct of the applicant. Considerations such as consent, acquiescence and the like might be important, perhaps decisive, to whether or not the applicant does or does not obtain the injunctive relief sought.

23. One difficulty about Mr Peake's argument is that he needs to establish that the objectors cannot enforce the covenant or obtain relief from a threatened or actual breach of it. How can he demonstrate this? In my view the only way of demonstrating with certainty that such relief cannot be obtained is for the objectors to bring bona fide proceedings in court seeking the relief. If they fail that will perhaps demonstrate that it cannot be obtained. Another possibility might be to apply to the court for a declaration to the relevant effect. Failing this, it seems to me to be mere speculation as to whether these objectors can enforce the covenant. Various cases might vary considerably as to their likelihood of success. Such variations might exist between different objectors in the present case. However, Mr Peake was content to base his case on common to them all. I do not think it is for me, as constituting this Tribunal, to speculate on the likely outcome of such court enforcement proceedings, and then use such speculations as the basis for saying that the objectors as owners of dominant tenements do or do not have benefit under the covenant. Whether actually beneficial or not, they have "the benefit" of the covenant. It is not for me to second-guess the court, or to conduct a trial of issues for which the court has jurisdiction, and in relation to which the Tribunal does not have jurisdiction. I agree that the Tribunal has power to determine preliminary points that are necessary to determine whether it should exercise powers for which it does have jurisdiction, but I don't think that situation arises here.

24. I tackled the question, so to speak, from the other end. Mr Peake admits that the single dwelling covenant was created with the contract and transfer of land in 1918. Its benefit went to the owner of the lands that then remained in the parent title, the vendor. Subsequently the other lots were sold and the benefit went with the land, to the new owners of those lots. It also remained with the owner of the residue for the time being. Mr Peake also admits this much.

25. He was at first a little reluctant to admit it. He mentioned that there were various elements necessary to the creation of a valid covenant that ran with the land. However, he did not have any basis for suggesting that any of these elements were absent, and ultimately agreed that, in this absence, and with everything appearing to be in order, I could and should proceed on the basis that the covenant was validly created and did, at least initially, run with the land, that is, the various allotments sold after Lot 2 and the residue remaining in the parent title. Thus he admits that the land now owned by objectors, when originally alienated by the subdivider, had the benefit of the covenant.

26. He contends that such benefit has since been lost. It has been lost, according to him, because a building containing four residential flats was built in the subsequent decade, now 80 years ago, without any known complaint or challenge having been brought against that action. In this connection he relies on equitable doctrines of consent, acquiescence and/or laches (delays).

27. These principles would undoubtedly be relevant and could be relied upon if one or some of the objectors now took action in the Supreme Court seeking to enforce the single dwelling covenant, perhaps by seeking a declaration that the four flats are illegal and/or an injunction for their removal. In fact, acquiescence and delay would be very powerful discretionary considerations against granting such equitable relief. They might very well be sufficient to enable the defendant to successfully defeat the proceedings, although I still do not think it is for me to try the issue in this Tribunal which lacks the relevant jurisdiction. Mr Peake agrees that the appropriate forum would be the court, so far as such enforcement proceedings are concerned.

28. However, in the present case it is not just the four flat dwellings that has stood for 80 years that we are concerned with. The current proposal is for a building approximately twice that size to contain two extra flats. This would very greatly increase the intensity of development of the land. The fact that there may have been acquiescence in relation to four flats and the present dwelling does not, by any means, mean that there has been acquiescence in relation to six flats in the newly proposed building. I do not at all agree with Mr Peake that acquiescence, so far for what there has been up to date, amounts to acquiescence for what is now proposed, or that it destroys the right to seek to enforce the covenant, at least to the extent that the proposal exceeds that in relation to which there has been acquiescence. To consent to a mouse does not imply consent to an elephant, or even a rat. A neighbour with the benefit of a single dwelling covenant might acquiescence in the construction of a granny flat to accommodate the owner's aged relative, but that does not imply acquiescence to the multi-storey building to contain 20 flats, or even a second granny flat. The authorities quoted by Mr Peake also referred to the proposition that acquiescence to a small infringement of a covenant does not amount to acquiescence in a large one, or mean that the large one cannot be enforced.

29. I do not accept that acquiescence in four would necessarily mean acquiescence in six. If it did, there could be a subsequent proposal for two more, and then two more again, and again, until the four had grown to 20 or 100. Also, I'm not impressed by an argument that says acquiescence in relation to "several" implies acquiescence in relation to another but larger "several".

30. The current proposal is significantly bigger in the scale of the development and the number of dwellings. One might speculate that enforcement in relation to what is there now would have a poor prospect of success, but enforcement in relation to what is now proposed would nevertheless have an excellent prospect. I have declined to try the issue. There may be many things relevant that have not been put before me. Nevertheless, and for what it is worth, my opinion on what has been placed before me is that the defence against action to enforce the covenant, insofar as it relates to the increase over what has stood for 80 years, would have a bleak prospect of success. Consent, acquiescence and delay would be important. In other words, if I were to embark upon the exercise that Mr Peake has urged upon me, he would have a difficult case. Ultimately, on the basis of the evidence and submissions advanced, I came to the conclusion that these objectors do own land which, in terms of s 60(5) PE Act is "benefited" by the restrictive covenant noted on the certificate of title of the subject land.

31. The second question is whether s 61(4) PE Act prevents the Tribunal from determining the review of the failure to grant permission for the buildings and works on its merits. That means whether that sub-section bars the Tribunal where that application seeks permission for something which would be contrary to the restrictive covenant. The question would not arise if the restrictive covenant had already been removed or suitably varied. Of course, at this stage, it has not.

32. There is no doubt that s 61(4) imposes such a restriction on the Responsible Authority. The question is whether that restriction also applies to the Tribunal.

(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.

34. In its very terms this sub-section prevents the Responsible Authority from granting such a permit unless there is already a permit or a decision to grant a permit for the removal or variation of the covenant. The question of such a bar does not arise if the covenant has already been removed or varied by some other means, for example, by a successful application to the Supreme Court under s 84 of the Property Law Act.

35. Does that bar or restriction on the Responsible Authority also apply to the Tribunal? On the face of it, one would expect the answer to this question to be "Yes". In review proceedings the Tribunal is said to "stand in the shoes of the Responsible Authority" for the purpose of rehearing and redetermining the permit application. In doing so it frequently has considerably more material before it, both in terms of evidence and argument, than was available to the Responsible Authority. Nevertheless, the Tribunal is undertaking again the task of the Responsible Authority, and in doing so it has the powers and functions of the Responsible Authority. A current statutory confirmation of this can be found in s 51(1) of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act) which provides:-

51(1) In exercising its review jurisdiction in respect of a decision, the Tribunal -

(a) has all the functions of the decision-maker; and

(b) has any other functions conferred on the Tribunal by or under the enabling enactment; and

(c) has any functions conferred on the Tribunal by or under this Act, the regulations and the rules.

36. Consequently many references in planning legislation to the "responsible authority" mean, in effect and for the purposes of review proceedings, "the responsible authority, or, on review, the Tribunal". That latter phrase very commonly appears in the reasons given for Tribunal decisions.

37. All this does not mean that the Tribunal is necessarily limited, in every respect, to the powers and functions of the Responsible Authority. The Tribunal, being created by a statute, has such powers and functions as are given to it by a statute. These sometimes exceed the powers given by statute to the Responsible Authority. Nevertheless, it is right to say that the Tribunal has the powers of the Responsible Authority plus any other powers specifically given to it by statute. It has the powers of the Responsible Authority because they are given to it by statute. There are powers and functions that the Responsible Authority lacks. The Tribunal also lacks them unless they are granted to it by statute.

38. On the basis of all this one would suppose that the limitation imposed on the Responsible Authority by s 61(4) PE Act is also imposed on the Tribunal, acting in the place of and exercising the powers of the Responsible Authority, in review proceedings. In other words, one would expect the proper effect and application of this sub-section would be to prevent the Tribunal from granting a permit that would authorise anything which would result in the breach of a restrictive covenant, unless a permit had been issued or a decision made to grant a permit to allow the removal or variation of the covenant. That is the view advocated by everyone at the hearing except Mr Peake. He argues to the contrary.

39. Mr Peake's argument is that the restriction in the sub-section that applies to the Responsible Authority does not apply to the Tribunal. According to him, the Tribunal can grant a permit which, because of sub-section (4), the Responsible Authority could not grant it.

40. In his argument he relies on sub-sections (2) and (3) of s 61, and upon reading sub-section (4) thereof in the context of that section as a whole.

41. Section 61(1) empowers the Responsible Authority, in determining an application for a permit, to grant a permit or to grant a permit subject to conditions or to refuse to grant a permit on any grounds it thinks fit. Sub-section (2) goes on to provide that the Responsible Authority must refuse to grant a permit if a relevant referral authority objects to the grant of the permit.

42. The effect of sub-section (2), clearly enough, is that a referral authority, by objecting to the grant of a permit, takes over from the Responsible Authority the discretion as to whether a permit should be granted. That discretion is still an administrative decision and it is still to be exercised on the merits. It is just that the decision of the referral authority can override the decision that would have been made by the Responsible Authority, if the referral authority had not objected. The formal decision to refuse to grant a permit is still made by the Responsible Authority. It still issues the Notice of Refusal. It is just that s 61(2) means that the refusal is compelled on the Responsible Authority by the referral authority, even if the Responsible Authority would otherwise grant a permit.

43. This does not take away the right of the permit applicant, pursuant to s 77 PE Act, to apply to the Tribunal for a review of the decision to refuse to grant a permit. When such a review under s 77 comes before the Tribunal it can determine to grant a permit or to grant it subject to conditions or to refuse it. It does so after hearing the evidence and arguments advanced by the parties in relation to the merits of the application. It sometimes happens that a case comes before the Tribunal where the Responsible Authority favours the grant of a permit, but was compelled to issue a Notice of Refusal because of the objection of the referral authority. Sometimes, in this situation, the Tribunal has the Responsible Authority arguing for the grant of a permit whilst it is the referral authority that has the task of justifying the refusal, compelled by its objection.

44. As I have said, in such a situation there is still a review on the planning merits of the administrative decision that was originally made, even though the effective decision was made by the referral authority rather than the Responsible Authority. The applicants' right to such a review is not affected and the Tribunal is empowered to make such decision, on the merits as it considers to be appropriate.

45. Although s 61(2) imposes a restriction on the Responsible Authority, on proper analysis and understanding, it can be seen as a machinery matter rather than a statutory prohibition on the ultimate grant of a permit. In this respect it is quite different to the restriction imposed in s 61(4), not withstanding Mr Peake's arguments to the contrary.

46. The key issue in the question he raises is whether the prohibition in sub-section (4) applies to the Tribunal as well as the Responsible Authority, or only to the Responsible Authority and not to the Tribunal.

47. The sub-section can be read either way, and to that extent it can be said to contain an ambiguity. Mr Peake wants it read in the context of s 61 as a whole, and that reading tends to support his argument. However, unlike sub-sections (1), (2) and (3), sub-section (4) was not in the PE Act as it was originally enacted. It is a recent addition inserted by an amending Act entitled "The Planning and Environment (Restrictive Covenants) Act 2000 No. 100 with operation from the 13 December 2000. That amending Act enacted a particular reform in relation to planning law. Although the amending Act contained a number of sections, and made a number of amendments, they relate to the key provision which is the insertion of s 61(4).

48. The situation prior to that amending enactment was that, where several different permissions, consents, licenses or approvals were needed for a particular proposal, the proponent was free to seek those things in any order the proponent desired. Of course, that is subject to any statutory provision which compelled a particular order. However, in the absence of a statutory provision saying that one must come first or that another may not be obtained until a specified one is obtained, it was a matter in relation to which the proponent could make a choice.

49. An example of this situation is where there was a proposal for a development of two or more dwellings on land subject to a single dwelling covenant such as the one in the present case. Before the amending Act, the developer could apply for planning permission for the buildings and works involved without, at that stage, taking any action in relation to the restrictive covenant. Of course, the obtaining of such a planning permit only authorised the development so far as the planning legislation is concerned. It did not overcome the constraint imposed by the restrictive covenant. The development could not lawfully proceed until the restrictive covenant was amended or removed. Apart from any common law remedies that could be achieved by means of a successful application to the Supreme Court under s 84 of the Property Law Act, or by means of a planning scheme amendment, or by the obtaining of a planning permit for the variation or removal of the covenant. The developer could seek relief from the restrictive covenant after the planning permit for the buildings and works was already in hand. Alternatively, the developer could seek to have the restrictive covenant varied or removed prior to seeking planning permit. If permission for the buildings and works and permission for the variation or removal of the restrictive covenant were both being sought by means of permits under the planning legislation, then they could be sought simultaneously.

50. This situation was recognised in a number of cases including the decision of my colleague Mrs Monk and myself in Swintons Pty Ltd v City of Melbourne (unreported Planning Appeals 1993/57829 and 1993/68123 but noted at [1994] 13 AATR 16).

51. Apparently some proponents chose to apply for the planning permit for buildings and works first, and then tackle the problems of the restrictive covenant. This was seen as a problem, and the amending Act was passed to overcome it. In principle it should not have been a problem, because the question of whether a restrictive covenant should be removed or varied, by whatever means was adopted, was and should have been recognised as a separate question from the one of whether the buildings and works were appropriate to receive a planning permit for a proposed development. Different considerations are applicable and whoever is making the decision in relation to the covenant, for example the Supreme Court under s 84 of the Property Law Act, should decide that case in accordance with the relevant considerations, unswayed by whether there was, or was not, a planning permit for the buildings in existence.

52. Be that as it may, the amending Act was passed. It is obvious, from a reading of that amending Act as a whole, what its purpose is. Put briefly, it was to prevent the granting of a planning permit for something that would be contrary to a restrictive covenant. In other words, it compelled the proponent to see to the removal or modification of the covenant before the planning permit could be obtained. It was, and is, a statutory provision compelling an order on the developer. The proponent is no longer free to seek and obtain the planning permit for the buildings before dealing with the restrictive covenant. The other must be done first, or at least at the same time.

53. As I have said, I consider this purpose to be quite clear from a reading of s 61(4) and from a reading of the amending Act as a whole. It is not necessary, in my opinion, to go to reports of the proceedings in Parliament, and in particular to the Second Reading speech in relation to the introduction of the amending Act, to discern the purpose and object of the amending Act. However, Mr Cicero has referred me to the Second Reading speech in the Legislative Council on the 3 October 2000. The Second Reading Speech refers to some interrelationship between restrictive covenants and public planning law and to some reforms in relation to that interrelationship introduced by the previous Labor Government in 1988 and the Kennett Liberal /National Party Coalition Government in 1993. Having referred to the then existing situation the speech goes on:-

This caused a variety of problems. Covenants beneficiaries had to participate in two applications to defend a covenant.

They also found that relying on the covenant in support of their objections was not a relevant planning consideration. Applicants lost the chance for simultaneous consideration of both development and covenant matters. Responsible authorities and the now Victorian Civil and Administrative Tribunal lost opportunities to act as a one-stop shop. At times, responsible authorities felt obliged to grant permits even though they supported the covenant.

This bill implements a simple principle to end these problems - - that a permit to use or develop land must not be granted if the permit would result in the breach of a covenant. It may only be granted if authority to remove or vary the covenant is given either before or at the same time as the grant of the permit.

Enforcement of covenants is properly left to the courts. However, the bill makes sure the covenant is removed or varied before the use or development commences. If a permit is granted or an amendment is approved to remove or vary a covenant at the same time as a permit to use or develop the land, a mandatory condition must be included on the permit to use or develop the land. The condition will require the owner to ensure the relevant action by the registrar of land titles to remove or vary the covenant is complete before the permit is effective.

All this merely confirms the purpose of the amending Act and of s 61(4).

54. That discussion of permit conditions is a reference to s 62(1)(aa) which was also introduced into the PE Act by the amending Act. Section 10 of the amending Act, operating from the 13 December 2000, inserted paragraph (aa) into s 62(1).

55. Section 62 deals with the conditions that can be imposed in a permit.

Sub-section (1) specifies conditions which must, in specified circumstances, be imposed while sub-section (2) refers to various sorts of conditions that may be imposed but whose imposition is not mandatory. The inserted paragraph reads:-

62(1) In deciding to grant a permit, the responsible authority must -

(aa) if the grant of the permit would authorise anything which would result in a breach of a registered restrictive covenant, include a condition that the permit is not to come into effect until the covenant is removed or varied;

56. It is obvious that s 61(4) and the other provisions introduced by the amending Act are not merely machinery or procedural provisions having the effect of transferring (in some circumstances) the discretion in relation to an initial administrative decision from one authority to another (ie from the Responsible Authority to the referral authority) with the right of review by the Tribunal left intact. Rather it is intended to impose a statutory bar to prevent the grant of certain permits at all, whether by the Responsible Authority or the Tribunal, if such permit will allow something that would contravene a restrictive covenant. It is fundamental to the whole purpose, not only of s 61(4), but to the whole purpose of the amending Act, that neither the Responsible Authority, nor the Tribunal, can grant such a permit. The Tribunal is not intended to be able to grant such a permit prior to the removal or variation of the covenant, anymore than the Responsible Authority. Mr Peake's argument, if upheld, would defeat that purpose, because it would defeat the statutory bar that the amending legislation is intended to impose. In practice an applicant would just need to go through the formality of applying to the Responsible Authority for a permit for the development of two dwellings (or whatever it is that would contravene the covenant) and, having it refused by the Responsible Authority because of s 61(4), it could apply to the Tribunal for a review under s 77 PE Act, thus circumventing the intended statutory prohibition and arriving at a position where the grant of the permit became discretionary before the Tribunal, and not prohibited at all.

57. Insofar as s 61(4) can be said to be ambiguous on the basis that it can be read in accordance with Mr Peake's argument to allow the Tribunal to circumvent its prohibition, or alternatively in accordance with Mr Cicero's argument, to the effect that it should be read that way and must be read as a prohibition on both the Responsible Authority and the Tribunal, then it is clear that it is the double prohibition (Cicero) view that is in accordance with, and promotes, the object and purpose of the sub-section and the whole amending Act. Mr Peake's argument is directly contrary to, and destructive of, the purpose of the particular provision and the amending Act.

58. Having regard to s 35(a) of the Interpretation of Legislation Act 1984, it is clear to me that the Cicero view is the correct one and the one that must be given effect to. That sub-section provides:-

35. In interpretation of a provision of an Act or subordinant instrument -

(a) construction that would promote the purpose or object underlying the Act or subordinant instrument (whether or not that purpose or object is expressly stated in the Act or subordinant instrument) shall be preferred to a construction that would not promote that purpose or object;

Incidentally, sub-section (b) of s 35 provides, amongst other things,

(b) consideration may be given to any matter or document that is relevant including but not limited to -

(ii) reports of proceedings of any House of the Parliament;

59. Mr Peake sought to further bolster and illustrate his argument by references to s 62(1)(a) and s 61(3) PE Act. For completion I will refer to those provisions and to a passage in the report of the Supreme Court decision of VicRoads v AGC Advances Ltd and City of Werribee [1992] 10 AATR 278 referred to by Mr Peake.

60. I said earlier that s 62(1) PE Act dealt with mandatory provisions in relation to permit conditions. Section 62(1)(a) provides:-

62(1) In deciding to grant a permit, the responsible authority must-

(a) include any condition which the planning scheme or a relevant referral authority requires to be included;

Section 62(1)(b) reinforces the effect by saying that the Responsible Authority must not include additional conditions that conflict with any condition included under paragraph (a) or (aa).

61. The planning scheme is a piece of subordinant legislation and part of the law. If the planning scheme specifies that a particular condition must be imposed, then it must. If it must, it must be imposed by the Responsible Authority. If the case comes to the Tribunal on review, and the Tribunal grants a permit, then it likewise must include any condition which the planning scheme requires to be included. There is no choice in the matter.

62. It is otherwise with a condition required by a referral authority. It will be recalled that s 61(2) compels a responsible authority to refuse to grant a permit if a referral authority objects. Then that provision transfers the effective initial administrative decision to the referral authority. However, a referral authority may decide not to object, provided that a certain condition or conditions are imposed. Where it follows that course, the Responsible Authority is compelled, by s 62(1)(a), to include the conditions required by the referral authority.

63. The decision to impose such a condition, like the decision to grant a permit, is a discretionary administrative decision to be made on the planning merits. Where the referral authority imposes the requirement of a particular condition it effectively takes that part of the decision out of the hands of the Responsible Authority and itself assumes it. It does not compel the Responsible Authority to grant a permit or to refuse one, but if the Responsible Authority decides to grant a permit, then it must include the condition specified by the referral authority.

64. As with the decision to grant a permit, a situation can arise, where there is a review, that the Responsible Authority opposes the condition required by the referral authority, and it falls to the referral authority to justify its proposed condition to the Tribunal. As with the decision to grant a permit, the decision to impose such a condition, is subject to review. That review is provided for in s 80(1) PE Act. The permit applicant has a right to review any condition in a permit which the Responsible Authority has issued or decided to issue, whether that permit appears because the Responsible Authority thought it should be imposed or because the referral authority required, pursuant to s 62(1)(a), that it must be imposed. In either event the Tribunal has the power, in a review under s 80(1) to decide whether or not the condition will be imposed and in what terms it will be imposed, whether it originated from the Responsible Authority or the referral authority. In this respect it is the same as a review of the refusal under s 77 PE Act, whether the refusal originates from the Responsible Authority, or was imposed on it by the referral authority. In both these instances the Responsible Authority is compelled to give way to the view of the referral authority, where the referral authority imposes its view, but in both instances the permit applicant has an effective right of review before the Tribunal under s 77 or 80(1) as the case requires.

65. There is no similar right to review the requirement of the planning scheme. There is no provision in the Act like s 77 or s 80(1), that gives a right to the Tribunal to review the provisions of the planning scheme. To alter those provisions it is necessary to amend the planning scheme pursuant to the procedure laid down in the Act. Whether or not such an amendment should be made to the planning scheme is a legislative matter and is outside the powers and jurisdiction of the Tribunal. Incidentally, the same is true in relation to s 61(4). There is no power given to the Tribunal by a provision like s 77 or s 80(1) to review s 61(4). That can only be altered by Parliament. Both the planning scheme and s 61(4) are parts of the law that must be observed by the Tribunal, just as much as it must be observed by the Responsible Authority. The Tribunal, like the Responsible Authority, has no power to make a decision repugnant to the law, including those particular laws. The fact the Responsible Authority has a, sometimes fettered, power to make administrative decisions in relation to the grant of a permit or the imposition of a condition, and that these powers may be taken over, in effect, in some circumstances by a referral authority, and the further fact that the Tribunal has powers under ss 77 and 80(1) to review those decisions, does not alter the situation that the Tribunal, like the Responsible Authority, is bound by the law.

66. The situation as I have expounded it above is borne out by the AGC case, and other decisions of the Tribunal, including decisions of my own, made at a much earlier stage in the life of the PE Act. The AGC case is authority for the proposition that I have discussed above, that the Responsible Authority must, in accordance with s 62(1)(a) impose a condition required by the referral authority (in that case VicRoads) and has no discretion to do otherwise; but that such a decision, imposed by VicRoads, is nevertheless subject to review by the Tribunal under s 80 PE Act. The Tribunal can, where the Responsible Authority could not, decide that the condition will not be imposed, or that it will be imposed in terms other than those required by the referral authority.

67. That is what was in issue in that case, and that is what it decided.

68. Mr Peake has sought to rely on a passage on page 283 of the report, and perhaps an abbreviated repeat of the proposition on page 285, which is directed to and covers the point in issue, but which, in some respects, is expressed a little more widely. I do not think that it follows that Smith J, deciding that case, was doing other than directing himself to the point in issue in that case, or that he was deciding anything beyond that point in issue. For the purposes of this passage it can be noted that s 25(2) of the Administrative Appeals Tribunal Act 1984 (AAT Act) is similar to the now applicable s 51(1) VCAT Act. The passage reads:-

In this instance the City of Werribee had proceeded on the basis that the relevant referral authority, had required that the condition in question be included and thus it had no alternative. It was argued for VicRoads that the Administrative Appeals Tribunal was also obliged to follow the same course. The referral authority, VicRoads, had argued before the Tribunal that the condition should be retained and thus that it had required that that condition be included in the Permit. This argument involves consideration of the powers of the Tribunal.

By s. 25(2) of the Administrative Appeals Tribunal Act 1984, the Tribunal

`may exercise all the powers and discretions that are conferred by the relevant enactment on the person who made the decision.'

But the Tribunal's powers in relation to planning appeals are specifically dealt with in the Planning and Environment Act 1987. It provides for a general right of appeal against any condition in a permit imposed by a responsible authority. This is done by the following section:

An applicant for a permit may appeal to the Administrative Appeals Tribunal against any condition in a permit which the responsible authority has issued or decided to grant to a person.

By its reference to "any condition" the Act prima facie allows an appeal in respect of conditions imposed by virtue of s. 62(1) of the same Act.

Section 85 deals with the powers of the Tribunal Planning appeals (sic). S. 85(1)(e) in particular provides that the Tribunal may

"direct that a permit must or must not contain any specified condition".

If there is an inconsistency between the general provision, s. 25 of the Administrative Appeals Tribunal Act 1984, and the above specific provisions, the specific provisions must in my view prevail. The Tribunal's power in relation to conditions is to be found in s. 85 and not in s. 62. Thus it was not relevant for the Tribunal to consider s. 62(1) in reaching its decision and the failure to mention it is not an error.

69. The last reference in the above quotation relates to an argument that the Tribunal, in that case, was in error because of its failure to mention and consider s 62(1). That argument was not upheld, amongst other reasons because it had been agreed that the Tribunal need give only a brief outline of its reasons. It was not assumed in the circumstances that a relevant matter had been overlooked, particularly as the Tribunal is "a specialist Tribunal" (page 282) and "an expert Tribunal" (page 283).

70. It is perfectly true and correct for the court to have observed that the Tribunal's power in relation to conditions on review is to be found in ss 80 and 85, and that the restriction imposed on the Responsible Authority in relation to conditions required by referral authorities in s 62(1) is not applicable to the Tribunal in relation to such reviews.

71. The court is talking about the Tribunal's powers on review in relation to conditions. It does not mean that the Tribunal is free from the constraints of the law in relation to what conditions it may impose. It is, like the Responsible Authority, constrained by the common law principles in relation to the validity of permit conditions as expounded in such cases as Pyx Granite Co Limited v Ministry of Housing & Local Government [1958] 1 QB 554, 271 William Street Pty Ltd v City of Melbourne [1975] VicRp 15; [1975] VR 156, Protean (Holdings) Ltd v Environment Protection Authority [1977] VicRp 5; [1977] VR 51, etc, gathered together, cited and explained in Rosemeir v City of Greater Geelong (No. 1) [1997] 20 AATR 86. Similarly the Tribunal cannot impose conditions that are repugnant to (contrary to) the law in the form of statutory law like the planning scheme and Acts of Parliament. This does not mean that the Tribunal is not confined by the planning scheme pursuant to s 62(1) or by s 61(4).

72. Section 62 authorises the Responsible Authority, and on review the Tribunal to impose other conditions that are thought fit, subject to the common law rules in relation to the validity of conditions. Section 62(2) contains reference to a number of types of conditions that may be imposed by the Responsible Authority, or the Tribunal on review. In some cases those paragraphs in s 62(2) authorise the imposition of conditions that might otherwise be invalid or of doubtful invalidity. Insofar as s 62(2) authorises the imposition of a condition that would otherwise be invalid according to the tests of validity for conditions, it does relate to the power of the Tribunal to impose conditions. To that extent the second last sentence of the above quotation from the judgement of the court in the AGC case is expressed a little widely. However, His Honour was talking about something else, and I do not suppose that he would disagree with what I have just said. I do not accept, in the terms employed by Mr Peake, that the AGC case is binding authority to the contrary on that particular point. The contrary would be something of a revolutionary proposition in relation to planning law on the subject of permit conditions. If I am wrong on this, then I need to be corrected by the Supreme Court. In the meantime, I am quite convinced that I am not wrong. I am sure that s 62(2) authorises the Tribunal to impose conditions that might, without that statutory authority, offend the common law rules as to condition validity, just as it similarly authorises the Responsible Authority. To that extent it would be overstatement to assert that the Tribunal derives no power from s 62(2). The expression Mr Peake has sought to rely upon is by the way, and directed to another purpose. It is not intended to bear the load or serve the purpose for which he intends to employ it.

73. I am satisfied that the distinctions I have drawn between the Tribunal's power to review administrative decisions as to the grant of the permit and the imposition of conditions by referral authorities on the one hand and the obligation of the Tribunal, like the Responsible Authority, to observe the law, including any restrictions that the law imposes on the grant of permits or the imposition of conditions on the other, is a valid one. If this is thought to be wrong, then I am afraid the matter must be taken further, namely to the Supreme Court.

74. For the above reasons, my answer to the second question posed is "Yes".