Question of law determined in accordance with attached reasons.

Mr J. D'Amelio, Mr R. Pane, Mr E. Ziegelaar and Mr L. Morgan

Mr T. Montebello of Maddocks Lawyers, instructed by Mr Wilkie of the Council

Opinion upon a question of law referred pursuant to Clause 66(1)(b) of Schedule I Victorian Civil and Administrative Tribunal Act 1998

1. This proceeding concerns a proposal for some 68 dwelling houses or residential units to be erected on a site consisting of some five traditional size residential lots in Murray Street and Dixon Street, Clayton.
2. A question of law has arisen as to whether in the circumstances the terms of a restrictive covenant which exist on the titles for the five allotments constitutes a bar to the grant of the permit which is sought by the proponent Domain Ramsey Group Pty Ltd.
3. The Responsible Authority, Monash City Council has determined to grant the permit and a number of local residents for whom Mr Morgan has adopted the role of spokesman have sought a review of that determination. This part of the review applicant's case, they rely upon Section 61(4) of the Planning and Environment Act 1987 which states as follows:

If the grant of a permit will 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.

1. The review applicants say that what is proposed here would entail the authorisation of a breach of the covenants which affect each of the four titles and none of the options which the statute makes available to deal with that situation has been availed of here. Therefore, there is a fatal objection to the grant of the permit. This argument raises a question of law, so whilst the matter was listed for hearing before Ms Baird the question of law entailed in the argument which I have just described has been referred to me for determination.
2. It is necessary therefore to consider first, the terms of the restrictive covenant itself and it is common ground amongst the parties that a restrictive covenant in these terms is registered as a burden on the title of each of the five allotments. The relevant portion of the covenant states:

The owner of the land will not at any time hereafter carry on or permit to be carried on quarrying or brick making operations upon the said land or dig, carry away or remove or permit to be dug, carried away or removed any marl, stone, earth, clay, gravel or sand from the said land.

1. This proposal entails, if constructed, a basement level car park which would provide some 102 car spaces. The process of construction of this basement car park of necessity entails the digging, carrying away or removal of marl, stone, earth, clay, gravel or sand. In so far as the permit authorises this proposal, Section 61(4) which I have already quoted, it is said, necessitates a refusal of the permit.
2. Mr Morgan (who represents the applicant for review) and his colleagues say that the Responsible Authority should have refused the permit and now on this review, this Tribunal is similarly obliged to refuse the grant of a permit.
3. The proponent, Domain Ramsay Group Pty Ltd to whom the Responsible Authority has said it has determined to issue a permit for this proposal, is represented by its solicitor, Mr Bartley. The Responsible Authority, Monash City Council is represented by its Solicitor, Mr Montebello. The primary submission put by both of these gentlemen is that whatever the correct construction of the covenant, the permit which Council has determined to grant, does not authorise any breach of the relevant registered restrictive covenant. The argument is, if I may say so, a subtle one and requires careful attention. Mr Montebello whose submission on this point is as I have said, supported by Mr Bartley, took me to Clause 32 of the Monash Planning Scheme. The land here in question is zoned Residential 1 and it is that clause of the Scheme which makes provision for those uses which may be had and those developments which may be carried out as of right and without a permit and those which require a permit. He noted first that there was no general obligation to obtain a permit for works upon such land in accordance with the relevant clause. The use of the land for a dwelling house was a use as of right. The only matter which created an obligation to obtain a permit in the present circumstances was that this proposal entailed the erection of more than one dwelling upon each of the five lots and that element of the proposal necessitated the grant of a permit.
4. Mr Montebello took me to the definitions of development and works to be found in the Planning and Environment Act 1987 which definitions of course apply likewise to the Planning Scheme. It is unnecessary for me to quote the two definitions at length beyond noting that 'development' is an expression which in the present context would comprehend the erection of the dwelling houses themselves. 'Works' however, is a concept that relates to the change in the natural existing condition or topography of land. So, says Mr Montebello, the digging of the hole and therefore the necessary removal of sub-soil materials which I understand to be conceded will inevitably include one or more of marl, stone, earth, clay, gravel or sand constitutes 'works', not 'development' and the permit which has been determined to be granted here is a permit for 'development' and not 'works'. Mr Montebello took me to the recent determination of the learned President Morris J. in Panayiotou v Moonee Valley City Council he was required to determine a question of law in similar circumstances to the question of law which I must determine, that is whether a proposal would entail the breach of a registered restrictive covenant. His Honour in his reasons for determining that the grant of the permit which was sought would not authorise anything which would result in the breach of a registered restrictive covenant said that it was necessary first, to characterise what it was the proposed covenant would authorise to determine and secondly whether that would entail a breach of the registered restrictive covenant.
5. Mr Montebello said that when one carried out that process here, one found that the proposed permit was for development and not works. It would be possible he said for this proponent to carry out all the excavations necessary for the erection of the basement level car park without any permit whatsoever and only at that point come to Council and seek a planning permit. In fact that is not what has happened but the fact that it could happen in that way shows that the permit now sought was not one which would authorise the removal of any of the prohibited materials in accordance with the registered restrictive covenant.
6. This is as I have already noted, a subtle and interesting submission and one which I find somewhat difficult. My inclination is to be doubtful as to its correctness. I asked hypothetically, if a developer obtained a permit along the lines of the which is sought here, in hypothetical circumstances where there was no complication entailed from the existence of registered restrictive covenant and within the time limit for commencement of the development dug the entire hole necessary for the basement car park would the developer in those circumstances have commenced the development within the relevant period or would the permit have expired at the end of the period stipulated for commencement?
7. Mr Montebello's submission was that in the circumstances the permit would have expired and digging the hole would be regarded as purely preliminary works. I must say I am somewhat doubtful as to the correctness of his answer but in the view that I take it is unnecessary for me to express a concluded view. I am troubled by the thought that the digging of the hole for the proposed 102 car space basement necessarily entails the carrying out of excavations. The situation which now confronts us is that if this permit is issued a necessary concomitant of its being acted upon is the carrying out of these excavations. Yes, it might be possible to do those excavations without a permit but in my view it is highly arguable that the giving of a permission or authority which carries with it the necessary implication that certain works will be carried out, necessarily entails that the permit or permission authorises the carrying out of those works. Again, in my view, it is unnecessary to express a final view on this point if the view that I take of other elements in this proceeding.
8. Mr Bartley's secondary view or 'fallback' submission was that even if contrary to his primary submission this permit if granted would authorise the carrying out of excavation works, those excavation works ought not in the circumstances be regarded as constituting a breach of the relevant registered restricted covenant. I accept that on an absolutely literalist reading of the covenant, unless one adopted the primary submission of Messrs Montebello and Bartley there would be a breach of the covenant in that the construction of this development would necessarily entail the digging, carrying away or removal of marl, stone, earth, clay or gravel, however in the circumstances is that a proper construction of the words in the covenant? Mr Bartley referred me to the judgment of Harvey CJ in Equity in the Supreme Court of New South Wales in the matter Ex parte High Standard Construction Ltd [1928] NSWStRp 107; (1928) 29 SR (NSW) 274, 278-9 where His Honour said:

... [the] language of the covenant should be interpreted in a colloquial and non-technical sense.

1. He also referred me to a passage of the judgment of Biongiorno J in Tonks v Tonks [2003] VSC 195 at paragraphs 7-8 where His Honour said:

The construction of a restrictive covenant is approached by the Court in the same way it would approach the construction of any other document recording an agreement between parties ... The object of interpretation is to discover the intention of the parties as revealed by the language they used in the document in question ... the Court was not entitled to approach the task of construction by reference to evidence as to what the parties to the original contract of sale, the present proprietors of the relevant property or, for that matter anyone else thought the covenant meant. The matter is purely a question of construction, approached against the background of the facts which existed at the time the contract was entered into.

1. What then are those circumstances? The covenant is contained in a transfer of land bearing date 1941. The transfer is from a Mr Dixon who is described as a market gardener. The terms of the transfer as reference to other assurances suggest that Mr Dixon retained land elsewhere in the area. There was a plan of subdivision registered on title in January 1926. I was invited to conclude that this plan of subdivision was wholly on paper and had no physical existence as at 1941. Mr Bartley took me to subsequent titles showing that the Director of War Service Homes took a transfer to a large number of the units which were transferred in bulk by Mr Dixon in 1941 in 1949 and further, that it was, according to title searches, as recently as 1959 that those units were disposed of by the Director as individual residences.
2. In those circumstances Mr Bartlett submitted that the literal construction urged by Mr Morgan would necessarily entail a conclusion that virtually all useful uses for this land are prohibited by the covenant. He submitted that this was a most unlikely construction to apply to the covenant in the circumstances. For his part Mr Morgan noted that there were no provisos in the registered restrictive covenant. In contrast to a registered restrictive covenant which was by Mrs Rickards in the matter of Isles v Glen Eira City Council where she concluded that a covenant in many respects quite similar to the present one prohibited the construction of an in-ground swimming pool. Notably for the purposes of the present submission the covenant expressly excluded from the prohibition the removal of materials for the construction of the foundations of buildings. Here said Mr Morgan, no such exception was to be found and therefore that was a reason why the construction which he and his colleagues urged me to adopt should be taken.
3. In contrast, Mr Bartley sought to use the same point in a different way. The literal construction would in effect sterilise what was obviously a residential subdivision. Mr Morgan submitted that in 1941 and in the years following it was perfectly possible to construct dwelling houses that sat entirely on stumps as it is customary to do for weatherboard residences. In those circumstances it was not necessary to excavate any strip foundations. Mr Bartley showed me photographs of a large residential development approximately 10 years old to the east of the subject site inviting me to conclude that there was obvious extensive and necessary excavation entailed in the erection of that residential development. It was necessary for strip foundations, necessary for the construction of concrete driveways and so forth. Mr Morgan said that when the enforcement of covenants was a matter solely for the civil courts and not a matter that could be raised before a responsible authority in a planning dispute or in this Tribunal or its predecessors, parties were understandably anxious to avoid the cost of litigation and so one could draw no confident inference from the construction of the development some 10 years ago.
4. In my view in applying the principles expounded by Biongiorno J in Tonks v Tonks one is forced to the conclusion that this covenant was not intended to prohibit the removal of materials such as earth, clay and marl which were removed solely for the ancillary purpose of constructing a dwelling house. It is true as Mr Morgan said that weatherboard residences could be constructed with, I would say, minimal, rather than absolutely no excavation, however why one might ask would the parties to this covenant be objectively taken to intend to exclude all constructions other than weatherboard residences with stumps. Anyone familiar with restrictive covenants in this State knows that overwhelmingly they tend to the opposite, namely prohibiting constructions other than in brick. No doubt the parties to this transfer could as a matter of law have achieved the extreme result that these objectors contend for. In my view however, consistent with the principles enunciated by Biongiorno J in Tonks v Tonks objectively considered that was not the intention of the covenant and it does not prohibit the removal of any of the materials referred to therein on an ancillary basis so solely in connection wit the construction of a dwelling house or dwellings houses.
5. It follows therefore that I would observe as Morris J did in the matter of Panayiotou v Moonee Valley CC that the grant of a permit which is sought here would not authorise anything which would result in a breach of the relevant registered restricted covenant.