[2003] VCAT 167

Applications for Review P1799/2002 and P1802/2002 are refused. No permits

Mr P Connor of Counsel, who called evidence from Mr G Buchanan, Consultant Town Planner

1. Both applications are made pursuant to s 79 of the Planning and Environment Act 1987 for review of failures by the Responsible Authority to grant a permit within the prescribed time.

2. The subject land is at 54 Warncliffe Road, East Ivanhoe. It is generally triangular in shape, bounded by McArthur Road and Warncliffe Road where these roads converge at the roundabout at the eastern end of the Ivanhoe East Shopping Centre. The land has an area of 1303 square metres, with frontages to Warncliffe Road and McArthur Road each of 48.62 metres. It contains a double storey brick building which has been used as veterinary clinic and dwelling since 1949. It is currently used as veterinary clinic/surgery at ground floor level and contains a dwelling at upper floor level. The dwelling is used as a dwelling but not in conjunction with the veterinary surgery. A mainly brick structure which would be more accurately described as a carport rather than a garage is located to the rear and built to the Warncliffe Road frontage. The carport can accommodate four cars parked in tandem and is currently used for parking by a member of staff of the veterinary clinic. No on site parking is provided for the clients of the clinic. There is a swimming pool, and an outbuilding which was formerly used as a studio, in the rear yard of the building. The veterinary clinic fronts Warncliffe Road.

3. Single storey brick dwellings are located on the abutting lots to the southeast and southwest. Opposite the land across Warncliffe Road is a car sales outlet and abutting that land to the south is St Georges Anglican Church. Opposite across McArthur Road is detached housing.

4. Application P1799/2002 is in respect of a proposal to remove the carport structure, the outbuilding formerly used as a studio, and the swimming pool and construct a car park generally on the land occupied by the carport to accommodate five vehicles. The car park is to be available to both staff and clients of the veterinary clinic. No external alterations are proposed for the main building on the land. The clinic is staffed by one veterinary practitioner and this is not proposed to change. Internal changes are proposed for the building, including the conversion of the dwelling upstairs to become part of the clinic. These internal changes do not require planning permission.

5. Application 1802/2002 is in respect of the proposed subdivision of the land into two lots. Lot 1 is to contain the existing main building and proposed car park and is to comprise 801 square metres. Lot 2, which is to have frontages to Warncliffe Road and McArthur Road, is to comprise 502 square metres and it is intended that it be developed in the future for a dwelling.

6. The land is in the Residential 1 zone. Pursuant to the zoning a permit is required for a veterinary clinic under the innominate use category in Section 2 of the use table to the zone. A permit is also required to construct a building or carry out works for a Section 2 use pursuant to Clause 32.01-6. A permit is also required for the subdivision of land pursuant to Clause 32.01-2 and must meet the requirements of Clause 56.

7. The land is also included in the Environmental Significance Overlay - Schedule 4. Pursuant to Clause 42.01-2 a permit is required to, inter alia, construct a building or construct or carry out works, subdivide land, and remove, destroy or lop vegetation (subject to some exemptions). Under Section 3 of Schedule 4, a permit is required to, inter alia, remove, destroy or lop any significant tree or area of vegetation specified in the table to the clause, and to construct or carry out works within the critical root zone (calculated as extending for a distance of no less than 5 metres beyond the drip line) of any significant tree specified in the table to this clause. The table to the clause lists the Ulmus glabra 'Lutescens' (Golden Elm) on the land as a significant tree. This tree is located in the southeastern part of the land and is located in proposed Lot 2.

8. The land is also included in Heritage Overlay HO91, which is a heritage place described as "A V Jennings Beauview Estate". Pursuant to Clause 43.01-1 a permit is required to subdivide or consolidate land, demolish or remove a building, and construct or carry out works.

9. The land is also included in the Vegetation Protection Overlay Schedule 3. Pursuant to Schedule 3 a permit is required for the removal, destruction or lopping of trees greater than 5 metres in height or with a trunk circumference of more than 0.5 metres at a height of 1 metre above ground level. Neither proposal involves the removal, destruction or lopping of trees.

10. It would seem that the establishment of the veterinary clinic predated the introduction of planning controls which required a planning permit for that use on the land. A Certificate of Compliance was issued by the Responsible Authority on the 29 November 2001 pursuant to s 97O of the Planning and Environment Act 1987, stating that the existing use of the land for the purpose of a veterinary centre complies with the current planning scheme.

11. The land and other land in the Beauview Estate is encumbered by the restrictive covenant contained in the Instrument of Transfer No. 1085591 dated 13 November 1922. The covenant provides, inter alia, that the registered proprietors of lots burdened by it:

"will not at any time hereafter erect...any shop laundry factory business establishment hoardings or erections for advertisements almshouses or charitable institution nor shall such lots nor any building erected thereon be at any time used or suffered to be used as a shop laundry factory business establishment hoardings or erection for advertisements almshouses nor shall there at any time be erected or suffered on the said lot .... any more than one dwelling house with offices outbuildings and appurtenances appropriate thereto which dwelling house shall be roofed with tiles or slates and not otherwise shall cost exclusive of Architect's fees and the outlay in respect of any outbuildings and fences not less than Five hundred Pounds........"

Council resolutions to refuse the permits had the Applications for Review not been lodged

12. Subsequent to the Applications for Review being lodged, the Responsible Authority considered the two proposals and resolved that had the Applications for Review not been lodged it would have refused both proposals. In relation to the proposal which is the subject of P1799/2002 the ground on which the Responsible Authority would have refused to grant a permit was:

The grant of a permit would result in the breach of a restrictive covenant and must be refused pursuant to Section 61(4) of the Planning and Environment Act 1987

13. In relation to the proposal which is the subject of P1802/2002 the grounds on which the Responsible Authority would have refused to grant a permit were:

"The application is premature given that a dwelling cannot be constructed on proposed Lot 2 unless the existing building on the property ceases to be used as a dwelling.

The proposed subdivision has failed to adequately take into account the environmental constraints on the site and demonstrate that future development can satisfactorily be accommodated on proposed Lot 2".

Question of law and reconstitution of Tribunal to include a legal practitioner

14. As a preliminary matter in these proceedings, Ms Cincotta informed me that the Responsible Authority's case in relation to the proposed car park in Application for Review P1799/2002 was that development of the car park would be a contravention of the covenant and therefore the Responsible Authority and the Tribunal were barred from granting permission for it pursuant to s 61(4) of the Planning and Environment Act. She submitted that substantiation of the Responsible Authority's case involved interpretation of the provisions of the covenant and that this was a question of law. Raising the question of a question of law is itself a question of law. As I am not a legal practitioner, I can determine a question of law only with the consent of all the parties pursuant to Clause 66, Schedule 1 of the VCAT Act. Not all the parties were present and Ms Cincotta did not give her consent. The proceedings were then stood down and the Tribunal was reconstituted by including Deputy President Horsfall for the purpose of determining the question of law of whether the construction of the proposed car park would be a breach of the covenant. On resumption of the hearing Deputy President Horsfall heard submissions on that question, reserved his decision, and then withdrew.

* If the use of the dwelling as a veterinary surgery is a business establishment the construction of a car park for use in connection with that business would also be a breach of the covenant.

* The use of the premises for the veterinary surgery constitutes the use as a business establishment.

* If a building formerly used as a dwelling is used as a business establishment then that constitutes a breach of the covenant.

* The words in the covenant carry with them the connotation that the office must be part of or used in conjunction with the dwelling. It must be a "dwelling house with offices", but a separate dwelling and a separate set of rooms used as a veterinary surgery. The existing veterinary surgery use is in breach of the covenant, and the development of a car park for use in conjunction with the veterinary surgery operation would also be a breach of the covenant.

* The grant of a permit subject to Application for Review P179/2002 for the construction of the car park would be a breach of the covenant and therefore would be breach of Section 61(4) of the Planning and Environment Act 1987.

Deputy President Horsfall's determination is set out in full below at the conclusion of my reasons.

16. Application for Review P1799/2002 must be refused because the grant of the permit would result in a breach of the covenant and is prohibited by Section 61(4) of the Planning and Environment Act 1987.

17. The purpose of the proposed subdivision which is the subject of Application for Review P1802/2002 is to allow the subsequent development of a dwelling on the new lot. The development of a new dwelling would require planning permission pursuant to the Environmental Significance and Heritage Overlays which apply to the land. The parties agree that the development of a dwelling on this new lot would be a breach of the covenant in the absence of a condition being included in the permit to subdivide. The condition proposed by the responsible authority and agreed to by the applicant is as follows:

"Prior to the issue of Statement of Compliance the owner must enter into an agreement with the responsible authority pursuant to s 173 of the Planning and Environment Act 1987 which provides that the use of Lot 1 for the purpose of a dwelling shall cease within 60 days of the issue of any building approval for the construction of a dwelling on Lot 2. A memorandum of the agreement is to be entered on title as soon as practicable and the cost of the preparation and execution of the agreement and entry of the memorandum on title must be paid by the owner."

18. The subdivision per se would not be a breach of the covenant. However, given the finding of Deputy President Horsfall that in order to avoid breaching the covenant the existing use of the land must be a "dwelling house with offices", but a separate dwelling and a separate set of rooms used as a veterinary surgery, the result of a permit being granted subject to the condition proposed would be a breach of the covenant in that proposed Lot 1 would not contain a separate dwelling and a separate set of rooms used as a veterinary surgery. The development of a new dwelling on proposed Lot 2 in the absence of the proposed condition would not remedy the breach of the covenant that is occurring on Lot 1 and would result in the continuation of a business activity not in or associated with this new dwelling. The continuation and expansion of the dwelling component on Lot such that the business activity is reduced and becomes a use which is not dominant but a use in or associated with the existing dwelling would, in addition to a new dwelling on Lot 2, be a breach of the covenant.

19. Given the provisions of the covenant, to all intents and purposes the subdivision, if approved, would result in the creation of a lot which was incapable of being developed. In determining this application to subdivide I am required to consider pursuant to Clause 32.01-2, inter alia, the decision guidelines at Clause 65 of the Banyule Planning Scheme. Clause 65. The matters set out in Clause 65.02 include "The existing use and possible future development of the land and nearby land". That the proposed new lot would be, to all intents and purposes incapable of being developed without breaching the covenant is therefore a relevant consideration. It would not be orderly and proper planning to create such a lot. I have therefore not allowed Application for Review P1802/2002.

DETERMINATION BY DEPUTY PRESIDENT HORSFALL OF QUESTION OF LAW

20. A question of law arose during the course of the hearing as to whether a permit

could be granted by virtue of Section 61(4) of the Planning and Environment Act 1987 on the basis that the grant of the permit would result in a breach of a registered restrictive covenant.

21. This determination of the question of law is made by Deputy President Horsfall as a member of the Tribunal who is a legal practitioner.

22. Section 61(4) reads as follows:

"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".

23. There is no application before the Tribunal for the removal or variation of the covenant and no party has produced any evidence of any order to that effect by the Tribunal or the Court.

24. The title particulars and the text of the covenant insofar as is relevant has been quoted above.

25. Ms Cincotta for the Responsible Authority, supported by Mr Fitt and Mr O'Brien, the Respondents/Objectors, supported the interpretation that the issue of a permit for the construction of the car park would result in a breach of the restrictive covenant.

26. It was not contested that the existing house and garage on the land has been used as a dwelling and veterinary clinic for many years, but Mr Eccles has found that the occupation of the upper storey as a dwelling is not an occupation in conjunction with the use of the building as a veterinary surgery.

27. Mr Connor argued that the acquiescence by the beneficiaries of the covenant in the use of the dwelling had the effect of negating or extinguishing the covenant in the same way as a title to land or an easement might be extinguished by adverse possession or non user. It appears from the title that a veterinary surgeon became the registered proprietor in 1948 and Mr Connor submitted that the land has been used for that purpose since. He submitted the delay and acquiescence is fatal even if the use constitutes a business establishment.

28. I do not accept Mr Connor's submission that acquiescence disposes of the matter. It may be that acquiescence has affected the common law rights of the beneficiaries of the covenant to enforce it in proceedings in the Courts, but the question that arises under Section 61(4) is whether the grant of the permit would authorise anything which would result "in a breach" of a registered restrictive covenant.

29. I take the view that a breach of a covenant may occur even though one or more beneficiaries may have lost their rights to enforce the breach.

30. I rely on the decision of Senior Member Byard in Bevilacqua v Port Phillip City Council Application P001485/2002 dated 26 November 2002 when he decided that acquiescence in a breach of a single-dwelling covenant for the construction of four units for many years did not constitute acquiescence to construct two additional units. In this case any acquiescence would only apply to the "use" of the dwelling, whereas the proposal to construct the car park would be not only an extension of that use but also may be a breach of that part of the covenant prohibiting the erection of a business establishment.

31. Mr Byard in that decision stated at paragraphs 26, 27, 28 and 29:

"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".

32. Ms Cincotta asserted that the veterinary clinic existing on the site was in breach of the restrictive covenant as it constituted a "business establishment" and that construction of the car park foreshadows expansion of that business.

33. I agree with her submissions in that in interpreting a restrictive covenant the principles set-out in Bradbrook and Neave Easements and Restrictive Covenants in Australia, Second Edition, at paragraph 15.4, are applicable, namely:

* The meaning of particular words and phrases will depend on the context in which they appear.

* The terms of the covenant must be interpreted in the light of the language of the document as a whole, and that

* The words of a covenant are interpreted in their colloquial and ordinary sense and not in any technical or legal sense.

34. However, I also agree with Mr Connor that a reference to the context includes a reference to the time or date when the covenant was created and the circumstances at that time and must be interpreted to endeavor to ascertain the intention of the parties at the time.

35. I find that if the use of the premises as a veterinary surgery can be categorised as a "business establishment" then the construction of the proposed car park for use in conjunction with those premises would constitute construction of part of a business establishment in breach of the covenant and its use as such would likewise be a breach of the prohibition in the covenant against use of the land as a "business establishment".

36. Ms Cincotta argued that the creation of the 5 car spaces in place of 4 tandem car spaces in the carport/garage presently used for customers will constitute an intensification of the business, but Mr Connor responded by saying that it will not do so. He submitted the spaces will provide for 1 veterinary surgeon, 1 staff member and 3 customers, which are the needs of the current practice. He submitted only 1 additional car space will not produce any increase in the cash receipts or number of clients for the business, and that there are no alterations to the dwelling proposed in this application.

37. He admitted it might be that the existing practice could be accommodated more commodiously within the existing dwelling but that any change to that effect is not the subject of the present application.

38. The main question comes down to whether the use of the premises for a veterinary surgery constitutes use as a "business establishment".

39. Ms Cincotta submitted that the meaning of "business" included the use of premises for the provision of professional services and the systematic conduct of any occupational premises would appear to amount to the conduct of a business, at least where it involves the ingress of members of the public, and she cited Rolls v Miller [1884] 27CH D 71 at 88. She also referred to the definition of "business" in the Macquarie Dictionary (Second Revised Edition) where the word is defined as "one's occupation, profession or trade" and where "establishment" is defined as "a place of business or residence and everything connected with it (as furniture, fixtures, grounds, employees...)". After the hearing the Tribunal was provided with extracts from The Oxford English Dictionary 1933, Volume 1, A - B, of these definitions, to give the Tribunal examples of usage contemporaneously with the time of the covenant, but these did not take the matter further and confirmed the modern definitions.

40. Mr Connor submitted that the wording of the covenant has two aspects namely construction and use.

41. In relation to the erection of business premises, the words of the covenant are:

"...will not at any time hereafter erect......any shop laundry factory business establishment hoardings or erections for advertisements almshouse or charitable institution..."

42. He relied on the words "shop, laundry factory.....hoardings or erections for advertisements, almshouse or charitable institution..." as providing the contest for interpretation and submitted that the mischief to be prohibited by the covenant is the erection of a retail, commercial or industrial building of that nature or such a use and that the replacement of the existing provision of 4 car spaces with a car park with one additional space was not the erection of a business establishment in that sense. However I have found above that if the use of the dwelling as a veterinary surgery is a business establishment that the construction of a car park for use in connection with that business would also be a breach of the covenant.

43. However Mr Connor's submission as to the context of the other words in the covenant also embraces the proposition that the phrase "business establishment" in the context of the words was not intended by the parties to cover a professional services such as a veterinary surgery. He relied again on his formulation of the mischief to be prevented by the covenant and submitted that the use is not of this nature. In this argument he referred to the single-dwelling aspect of the covenant which prohibited the construction of any dwelling other than "one dwelling house with offices outbuilding and appurtenances". He submitted that at the time of the making of the covenant it was common for professional services to be made available from a dwelling house and that the provision in the text of the covenant for offices accommodated this possibility. Thus, for example, a solicitor or medical practitioner could use "offices" for their professional practices or for any other purpose in the dwelling house and he submitted this was not intended to be prohibited by the covenant.

37. I agree with Ms Cincotta's submission that the use of the premises for the veterinary surgery constitutes use as a "business establishment". I understand the findings of Mr Eccles are that the first floor of the dwelling is occupied as a dwelling but independently and separately from the veterinary surgery. The whole of the ground floor is used as a veterinary surgery. This can only be described as a "business establishment" and I do not think the other words in the covenant "shop laundry factory hoardings or erections for advertisements almshouse or charitable institutions" places any constraints on the nature of the building which must exist before it can breach the covenant. If a building formerly used as a dwelling is used as a business establishment or if a building used as a dwelling is also used as a business establishment then that constitutes, in my view, a breach of the covenant.

38. A further question is whether the words "one dwelling house with offices

outbuilding and appurtenances" enables or creates an exception in these circumstances from the covenant. In my view they do not. The evidence before the Tribunal in this case is that the dwelling is occupied independently and separately from the veterinary surgery. The words in the covenant referred to carry with them the connotation that the office must be part of or used in conjunction with the dwelling. It must be a "dwelling house with offices", but a separate dwelling and a separate set of rooms used as a veterinary surgery. This is a use in breach of the covenant, and the development of a car park for use in conjunction with the veterinary surgery operation would also be a breach of the covenant.

39. Accordingly my determination is that the grant of the permit subject to Application for Review P1799/2002 for the construction of the car park would result in a breach of the covenant and therefore would be a breach of Section 61(4) of the Planning and Environment Act 1987.