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[2022] VSC 306
General information, not legal advice.
Supreme Court of Victoria
2022-06-08
Matthews AsJ
Original judgment source is linked above.
REAL PROPERTY - Restrictive covenants - Application for a declaration that land not affected by any purported restriction in the covenants - Property Law Act 1958 (Vic), s 84(2) - Westfield Management Ltd v Perpetual Trustee Co Ltd [2007] HCA 45; (2007) 233 CLR 528 - Deguisa v Lynn (2020) 268 CLR 638 - Phoenix Commercial Enterprises v Canada Bay Council [2010] NSWCA 64.
REAL PROPERTY - Restrictive covenants - Application for modification of covenants - Property Law Act 1958 (Vic), s 84(1)(a) and (c) - Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) - Vrakas & Anor v Registrar of Titles & Ors [2008] VSC 281 - Prowse v Johnstone [2012] VSC 4 - Re Cook [1964] VicRp 106; [1964] VR 808.
For the Fifth to Seventh and Tenth to Fifteenth Defendants
1 This proceeding concerns the land at 16 St Georges Road, Toorak in the State of Victoria, being the land more particularly described in Certificate of Title Volume 9700 Folio 219 as Lot 1 on Title Plan 888511F ('Land').
2 In brief, the Plaintiffs intend to subdivide the Land into five vacant residential lots, and to sell those lots. There are two restrictive covenants recorded on the title to the Land. The Plaintiffs seek declarations pursuant to s 84(2) Property Law Act 1958 (Vic) ('PLA') that the Land is not burdened by those covenants; and in the alternative, orders pursuant to s 84(1)(a) or (c) of the PLA that those covenants be modified to permit construction of five dwellings in accordance with the subdivision proposal and with a proposed development envelope annexed to the Originating Motion.
3 For the reasons which follow, I am not satisfied that:
(a) the declarations sought pursuant to s 84(2) of the PLA ought to be made;
(b) the covenants impede the reasonable user of the Land, and for that reason would not make an order for the modification of the covenants pursuant to s 84(1)(a);
(c) the covenants do not secure a practical benefit to other persons and would not make an order for the modification of the covenants pursuant to s 84(1)(a); and
(d) further and in the alternative, the proposed modification of the covenants will not substantially injure the persons entitled to the benefit of the restriction, and would not make an order for the modification of the covenants pursuant to s 84(1)(c).
4 At the trial of the Originating Motion the Plaintiffs tendered the following evidence:
(a) Affidavits of Andrew Jia, the Plaintiffs' solicitor, affirmed 25 February 2020 ('First Jia Affidavit'); 18 March 2020 ('Second Jia Affidavit'); 11 May 2020 ('Third Jia Affidavit', part of exhibit only);[1] 29 July 2020 ('Fourth Jia Affidavit'); 16 December 2020 ('Fifth Jia Affidavit'); and 12 March 2021 ('Sixth Jia Affidavit'), and exhibits to each.
(b) Affidavit of Grace Baliviera sworn 19 November 2020 ('Baliviera Affidavit') and exhibits thereto.
(c) Expert Reports of Robert Milner, town planning consultant, being the exhibits to the affidavits of Robert Milner affirmed 17 March 2020 ('First Milner Report'); 15 December 2020 ('Second Milner Report'); and 29 July 2021 ('Third Milner Report').
(d) Expert Reports of Brian Dudakov, certified practicing valuer, being the exhibits to the affidavits of Brian Dudakov sworn 27 November 2020 ('First Dudakov Report') and 21 July 2021 ('Second Dudakov Report').
(e) Expert Report of Oliver Garratt, drone pilot photographer, being the exhibit to the affidavit of Oliver Garratt affirmed 21 July 2021 ('Garratt Report').
(f) Expert Report of Michael Rogers, arborist and arboricultural consultant, being the exhibit to the affidavit of Michael Rogers sworn 27 July 2021 ('Rogers Report').
(g) Affidavit of Xiao Yan Bao, the Second Plaintiff, affirmed 30 September 2021 ('Bao Affidavit') and exhibits thereto.
5 The First and Second Defendants tendered the following evidence:
(a) Expert Report of David Barnes, town planning consultant, being the exhibit to the affidavit of David Barnes affirmed 11 June 2021 ('Barnes Report').
(b) Expert Report of Charmaine Chalmers Dunstan, traffic engineering and traffic planning consultant, being the exhibit to the affidavit of Charmaine Dunstan affirmed 11 June 2021 ('Dunstan Report').
(c) Expert Report of Bryce Raworth, conservation consultant and architectural historian, being the exhibit to the affidavit of Bryce Raworth affirmed 11 June 2021 ('Raworth Report').
(d) Expert Report of Michael Schuh, certified practicing valuer, being the exhibit to the affidavit of Michael Schuh sworn 11 June 2021 ('Schuh Report').
(e) Expert Report of Johnny Wilkinson, 3D artist, being the exhibit to the affidavit of Johnny Wilkinson sworn 11 June 2021 ('Wilkinson Report').
(a) Affidavits of David Neil Prior, the Third Defendant, affirmed 15 June 2021 ('First Prior Affidavit') and 29 September 2021 ('Second Prior Affidavit'), and exhibits thereto.
(b) Affidavit of Tania Louise Cincotta, solicitor for the Third and Fourth Defendants, affirmed 15 June 2021 ('Cincotta Affidavit') and exhibits thereto.
(c) Expert Report of Marco Negri, town planning consultant, being the exhibit to the affidavit of Marco Negri affirmed 15 June 2021 ('Negri Report').
(d) Expert Report of Kim Stapleton, architectural visualiser, being the exhibit to the affidavit of Kim Stapleton affirmed 15 June 2021 ('Stapleton Report'); and the further affidavit of Kim Stapleton affirmed 4 November 2021 ('Second Stapleton Report').
(e) Expert Report of Geoffrey Brown, certified practicing valuer, being the exhibit to the affidavit of Geoffrey Brown affirmed 25 June 2021 ('Brown Affidavit').
8 The Fifth to Seventh and Tenth to Fifteenth Defendants tendered the following affidavits, the deponents of which were not cross-examined:
(a) Affidavit of Darryl Lindsay Washington affirmed 10 June 2021 ('Washington Affidavit').
(b) Affidavit of Mary-Ann Mitrakas sworn 11 June 2021 ('Mitrakas Affidavit').
(c) Affidavit of Peter Philip White affirmed 11 June 2021 ('White Affidavit').
(d) Affidavit of Georgina Caroline Peele affirmed 11 June 2021 ('Peele Affidavit').
9 In the course of the trial agreed objections to the above evidence were recorded.
10 Further, I proposed to take an unaccompanied view of the Land and surrounding neighbourhood from the publicly accessible street level, and all parties assented to this. I conducted the view on 21 February 2022 during a break in the trial.
11 Finally, each party has provided written outlines of opening submissions. The Plaintiffs have provided a further written outline of opening submissions in reply. At the close of the trial, following oral submissions from each party,[2] the parties were permitted to provide supplementary written closing submissions. In accordance with orders made at the conclusion of the trial, the Defendants filed and served their supplementary written closing submissions on 3 March 2022 and the Plaintiffs on 10 March 2022.
12 All of the evidence and submissions enumerated above have been taken into account.
13 Most of the evidence described below regarding the description and history of the Land was uncontentious.
14 The Land is contained in Certificate of Title Volume 9700 Folio 219, as Lot 1 in Title Plan 888511F.[3] It is a regularly shaped parcel of land of 4,256m2 in area, abutting St Catherines Lane on the northern and eastern boundaries, St Georges Road at the western boundary and the land at 14 St Georges Road and 5&6 Teringa Place at the southern boundary.
15 The Land was created upon the transfer of the whole of the land in Certificate of Title Volume 3693 Folio 518 ('Parent Title'), which in turn was created upon the transfer of the whole of the land in Certificate of Title Volume 3678 Folio 427 ('Grandparent Title').[4] The Grandparent Title was created by the consolidation of part of Certificate of Title Volume 3557 Folio 376 ('First Great Grandparent Title'), containing what is called 'Parcel B', and the whole of Certificate of Title Volume 3670 Folio 972 ('Second Great Grandparent Title') containing what is called 'Parcel C'.[5]
16 Parcel B is a regularly shaped plot of land of approximately 3,902m2. Parcel C is a 3.05m wide strip of land along the Land's northern boundary, bordering St Catherine's Lane, being an area of approximately 325.37m2.[6] It is a peculiar product of the pattern of transfers and consolidations described in this section.
17 The First and Second Great Grandparent Titles were each created upon their transfers from Certificate of Title Volume 1997 Folio 399334 ('Great Great Grandparent Title'). The Great Great Grandparent Title described a very large parcel of land owned by Mr Mars Buckley, of Buckley & Nunn department store, on which he and his wife Mrs Marion Buckley lived in a stately home known as 'Beaulieu', which they acquired in 1863 ('Beaulieu Estate').[8] For convenience I will use the term 'Beaulieu Estate' to describe all of the land within the Great Great Grandparent Title, and the lots transferred out of it from time to time.
18 At the time of the Buckleys' acquisition of the Beaulieu Estate, and until 1874, the Governor of Victoria resided at Toorak House immediately across St Georges Road, and the neighbourhood was characterised by substantial mansion estates.[9]
19 Following the passing of Mr Buckley in 1905, in or around 1912 Mrs Buckley entered into an arrangement with Mr Lauchlan Kenneth Scobie MacKinnon - described in Mr Raworth's report as a 'notable solicitor, company director and horse racing enthusiast' - for the subdivision and sale of lots in the Beaulieu Estate to various purchasers, and for Mr MacKinnon to retain a substantial parcel containing the house Beaulieu.[10] The lots were sold between 1912 to 1915.[11]
Excerpt of Certificate of Title Volume 1997 Folio 399334 'Great Great Grandparent Title'[12]
20 The First and Second Great Grandparent Titles were created, respectively, by the following instruments of transfer, each of which contained a covenant:
(a) Instrument of Transfer 674226 registered 3 February 1912; and
(b) Instrument of Transfer 703483 registered 19 December 1912.[13]
21 Instrument of Transfer 674226 contains a covenant in the following terms ('Major Covenant') in respect of Parcel B:
I Elizabeth Marion Buckley of "Beaulieu" Toorak widow being registered as the proprietor of an estate in fee simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of .... DO HEREBY at the request and by the direction of the [solicitor] TRANSFER to the said Robert McDonald ALL my estate and interest in ALL THAT piece of land being ... particularly described in Certificate of Title ... Volume 1997 Folio 399334 and more particularly delineated and colored red on the plan drawn in the margin hereof TOGETHER with a right of carriage way over the land ... AND the said Robert McDonald for himself his executors administrators and transferees hereby covenants with the said Elizabeth Marion Buckley and her transferees the registered proprietor or proprietors for the time being of the land in Certificate of Title Volume 1997 Folio 399334 that no shops laundries factories works schools almshouses or churches shall be or be allowed to be erected on the said land nor shall any halls or buildings of any kind to be used wholly or partly for any religious educational or charitable purposes or for public entertainment of any kind whatsoever or any hoarding for advertisement be erected or be allowed to be erected on the said land and that no quarrying operations shall at any time hereafter be carried on in or upon the said land and no marl stone earth clay gravel or sand shall at any time hereafter be dug carried away or removed from the said land and that not more than one dwelling house shall be erected on the said land and no dwelling house except one constructed at a cost of not less than One thousand five hundred pounds (exclusive of all architects fees and the cost of erecting any out-buildings and fences) shall be erected or allowed to be erected on the said land.[14]
22 Instrument of Transfer 703483 contains a covenant in similar but more limited terms ('Minor Covenant'), in respect of Parcel C. It relevantly provides:
I Elizabeth Marion Buckley of "Beaulieu" Toorak widow being registered as the proprietor of an estate in fee simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of .... DO HEREBY at the request and by the direction of the [solicitor] TRANSFER to the said Robert McDonald All my estate and interest in ALL THAT piece of land being ... particularly described in Certificate of Title ... Volume 1997 Folio 399334 and more particularly delineated and colored red on the plan drawn in the margin hereof TOGETHER with a right of carriage way over the land ... AND the said Robert McDonald for himself his heirs executors administrators and transferees hereby covenants with the said Elizabeth Marion Buckley and her heirs executors, administrators and transferees the registered proprietor or proprietors for the time being of the balance of the land in the said Certificate of Title Volume 1997 Folio 399334 as follows: _
(a) No shops laundries factories works schools almhouses or ... churches shall be or be allowed to be erected on the said land nor shall any halls or buildings of any kind to be used wholly or partly for any religious educational or charitable purposes or for public entertainment of any kind whatsoever or any hoarding for advertisement be erected or be allowed to be erected on the said land.
(b) No quarrying operations shall at any time hereafter be carried on in or upon the said land and no marl stone earth clay gravel or sand shall at any time hereafter be dug carried away or removed from the said land.[15]
23 The Major Covenant and the Minor Covenant (together, 'Covenants') each seek to restrict 'quarrying operations' and the nature or use of buildings and structures built on the Land ('Quarrying Restrictions'). The Major Covenant contains additional provision seeking to restrict the number and value of dwellings built on the Land ('Dwelling Restrictions').
24 As noted, the First and Second Great Grandparent Titles were consolidated into the Grandparent Title, which then passed into the present title to the Land without disturbance of the Covenants.
25 The benefit of the Covenants was conferred on 'the said Elizabeth Marion Buckley and her transferees the registered proprietor or proprietors for the time being of the land in Certificate of Title Volume 1997 Folio 399334', being the Great Great Grandparent Title describing the Beaulieu Estate. It was not contested that the benefit of the Covenant runs with that land and the parts subdivided out of it, subject to the proper view on whether the Covenant burdens the Land at 16 St Georges Road in a continuous way. Given that the transfers of the Parcel B and Parcel C land occurred at different times, there is a slightly different network of beneficiaries, however it was not suggested that anything turned on this.
26 The transfers of Parcel B and Parcel C formed part of a wholesale subdivision in 1912 of the Beaulieu Estate by Mrs Buckley at the direction of Mr MacKinnon. Almost all of the parcels of land transferred out of the Beaulieu Estate were made subject to restrictive covenants in a similar form to the Major Covenant. The outcome is a network of covenants within the boundaries of the Beaulieu Estate, each sharing a similar burden and similar benefits in respect of the surrounding land, though not every parcel is burdened by a covenant or takes the benefit of each other covenant. Most, but not all, of the land in the Beaulieu Estate takes the benefit of either or both of the Covenants.[16]
27 The figure below indicates the transfers out of the Beaulieu Estate, where each pink lot is a lot transferred out of the Estate subject to a restrictive covenant, and where the green space is the lot retained in the title and not transferred. The Land is marked by the relevant instrument of transfer numbers, being 674226 in respect of the larger Parcel B and a barely legible 703483 in respect of Parcel C across the top of Parcel B.
28 The parcel of land in green immediately to the north of the Land was later transferred out of the larger part of the land retained by Mr MacKinnon by instrument of transfer 780744, and is now 18 St Georges Rd and 1 St Catherines Lane. A restrictive covenant in similar terms to the Major Covenant was included in the transfer of that land, for the benefit of the land now forming the site of St Catherine's School, 15 and 15A Heyington Place, and the northern and western part of Crestmont Court.[17]
29 There was further subdivision of the Beaulieu Estate subsequent to the initial transfers out of the Great Great Grandparent Title. The characterisation of this subdivision was in dispute, and I will therefore address it later in this judgment.
Diagram of subdivision and transfers out of Great Great Grandparent Title, from Certificate of Title Volume 1997 Folio 399334[18]
30 The Plaintiffs seek to subdivide the Land into five lots and sell them, with the result that as many as five dwellings may be constructed on the Land. By their third further originating motion dated 24 February 2022 ('Originating Motion'), the Plaintiffs seek the following, in the alternative:
(a) a declaration pursuant to s 84(2) of the PLA that the Land is not affected by the Covenants on the grounds that the burden of the said covenants does not extend to bind any interest in the Land beyond the interests of Robert McDonald his heirs, executors, administrators or the direct transferees taking an interest in the Land from Robert McDonald.
(b) orders pursuant to ss 84(1)(a) or (c) of the PLA:
(i) that the Major Covenant burdening the Land be modified as follows:
... no shops laundries factories works schools almshouses or churches shall be or be allowed to be erected on the said land nor shall any halls or buildings of any kind to be used wholly or partly for any religious educational or charitable purpose or for public entertainment of any kind whatsoever or any hoarding for advertisement be erected or be allowed to be erected on the said land and that no quarrying operations shall at any time hereafter be carried on or in or upon the said land and no marl stone earth clay gravel or sand shall at any time hereafter be dug carried away or removed from the said Land and that no more than one five dwelling houses be allowed, and developed generally in accordance with the plan set out at Annexure A, the construction of which shall cost no less than four million dollars per dwelling and no part of any building or structure shall exceed a height of 9 metres above natural ground level no dwelling house except one constructed at a cost of not less than One thousand five hundred pounds (exclusive of all architects fees and the cost of erecting any outbuildings (i) and fences) shall be erected or be allowed to be erected on the said land.[19]
(ii) that the Minor Covenant burdening the Land be modified as follows:
No shops laundries factories works schools almshouses or churches shall be or be allowed to be erected on the said land nor shall any halls or buildings of any kind to be used wholly or partly for any religious educational or charitable purposes or for public entertainment of any kind whatsoever or any hoarding for advertisement be erected or be allowed to be erected on the said land.
No quarrying operations shall at any time hereafter be carried on in or upon the said land and no marl stone earth clay gravel or sand shall at any time hereafter be dug carried away or removed from the said land.
On the basis that the continued existence of the restrictions would unless modified impede the reasonable user of the land without securing practical benefits to other persons; or alternatively, that the proposed modifications will not substantially injure the persons entitled to the benefit of the restrictions.
31 Annexure A to the Originating Motion is the following diagram labelled 'Building Envelope Development Plans' ('Proposed Envelope'):
32 The Proposed Envelope indicates the rough horizontal dimensions for the proposed subdivision and dwellings on the subdivided lots, including their setback from St Georges Road, St Catherines Lane and the boundary with 14 St Georges Road and 5&6 Teringa Place. According to the Proposed Envelope, the proposed subdivision would result in:[20]
(a) two lots of approximately 940m2 each with frontage to St Georges Road; and
(b) three lots of approximately 800m2 each with frontage to St Catherines Lane.
33 The trial commenced on the basis of a prior version of the Originating Motion, dated 5 March 2021, which was substantially the same but did not provide for modification of the Major Covenant in a manner which would restrict the height of the buildings, and provided for building 'generally' in accordance with the Proposed Envelope.[21] The Second Milner Report had included a recommendation of a 9 metre height limit,[22] which the Plaintiffs suggested that they 'relied upon',[23] but which had not been incorporated into an amended originating motion until the matter was pressed at trial and acceded to on the second last day of trial. Leave was granted for the present Originating Motion to be filed on 24 February 2022. For this reason, much of the evidence adduced by all parties addresses a potential maximum building height of 9 metres, as well as a potential maximum of 12 metres being the maximum height under the relevant planning controls.[24] However, the Court is to determine the application on the present Originating Motion which incorporates the 9 metre building height limit.
34 The Plaintiffs' proposed modifications to the Covenants in respect of the Quarrying Restrictions are intended to cover the earthworks involved in the construction of the dwellings. The Defendants do not object to the removal of the Quarrying Restrictions from the Covenants. It is of historical interest that the purpose of the Quarrying Restrictions appears to be the protection of neighbourhood safety and amenity from the practice of quarrying building materials on-site, which Mr Raworth states was 'common in the suburbs of Melbourne in earlier periods'.[25] Given our removal from that state of affairs, and the agreement of all parties, I would have no difficulty making orders for the removal of the Quarrying Restrictions pursuant to ss 84(1)(a) or (c) of the PLA.
35 In the context of the Proposed Envelope, it does not appear that anything of importance turns on the distinction between Parcel B and Parcel C land, or between the Major and Minor Covenants. Put another way, it is immaterial in the context of the Proposed Envelope that there is a small part of the Land which is not subject to the Dwelling Restrictions.
37 On 28 September 2018 the Second Plaintiff granted a power of attorney to the First Plaintiff, pursuant to a management agreement executed earlier that month, in relation to the management of the Land including powers to manage the commercial use of the Land and to deal with disputes in relation to the Land.[28] In accordance with the powers granted by the Second Plaintiff, the First Plaintiff commenced this proceeding by originating motion filed 26 February 2020. At that time, the Second Plaintiff was not a party to the proceeding.
38 On 19 March 2020, Derham AsJ made orders for postal notice of the proceeding to be given to each person being a registered proprietor of land identified as having the benefit of the Covenants, and for public notice of the proceeding.
39 On 13 May 2020, his Honour noted the inquiries and objections received in response to those notices and made orders for the joinder of the following persons as Defendants:
(a) Qi Yang of 18 St Georges Road;
(b) Xiaoyu Zhu of 1 St Catherines Lane;
(c) David Neil Prior of 14 St Georges Road;
(d) Philip Harry Goodman of 5&6 Teringa Place;
(e) Joyce Marks of 8A St Georges;
(f) Mary-Ann Mitrakas of 3 Crestmont Court;
(g) Darryl Lindsay Washington and Julia Washington of 4 Crestmont Court;
(h) Erica Margaret Marriott of 4A Crestmont Court;
(i) Jeremy Ashley Carp of 5 Crestmont Court;
(j) Simon Kessel and Julie Miriam Kessel of 3 Heymount Close;
(k) Fannie Man Ying Wong and Hoi To Wong of 15 Heyington Place;
(l) DFP Investment Group Pty Ltd of 4 Glendye Court and 1 Heymount Close; and
(m) St Catherine's School of 15A Heyington Place and 17-25 Heyington Place.
40 On 7 August 2020, his Honour made orders for the Second Plaintiff to be joined, at the request of the First Plaintiff and with the consent of the Second Plaintiff and the Defendants.[29]
41 On 30 October 2020, his Honour granted leave to the Eighth and Ninth Defendants, being Ms Erica Marriott and Mr Jeremy Carp, to withdraw their appearances in the proceeding.
42 The Defendants remaining in the proceeding have conducted the proceeding in three 'camps':
(a) The First and Second Defendants are the registered proprietors of 18 St Georges Road and 1 St Catherines Road, respectively. 18 St Georges Road is a large lot of approximately 5,170m2 immediately across St Catherines Lane to the north of the Land, on which a large single dwelling is currently being constructed. 1 St Catherines Lane is a small lot of around 246 sqm, located at the rear south‑east corner of 18 St Georges Road. It is occupied by a dwelling that is presently being used as a site office for the new dwelling being constructed on 18 St Georges Road.[30]
(b) The Third and Fourth Defendants are the registered proprietors of 14 St Georges Road and 5&6 Teringa Place, respectively. 14 St Georges Road is a large lot adjoining the Land along most of the south boundary.[31] 5&6 Teringa Place is also a large lot abutting the Land at the south-eastern boundary, consolidated into a single title under Plan of Consolidation 379224A.[32]
(c) The Fifth to Seventh and Tenth to Fifteenth Defendants are registered proprietors of properties in Crestmont Court, Heymount Court, Heyington Place and Glendye Court, being properties generally to the east and south-east of the Land across St Catherines Lane.[33] The Fifteenth Defendant is St Catherine's School, which occupies a large lot to the north-east of the Land across St Catherines Lane.[34]
43 Each of the above 'camps' of Defendants adduced evidence and made submissions in respect of their particular properties, as well as evidence and submissions of more general application concerning matters such as the neighbourhood character or the proper construction of the Covenants. Where the Defendants are substantially in agreement or make overlapping submissions, I will refer to them as 'the Defendants', but will otherwise refer to each 'camp' of Defendants.
44 The Plaintiffs seek a declaration pursuant to s 84(2) of the PLA that the Land is not affected by the Covenants, on the basis that the burden of the Covenants does not extend to bind any interest in the Land beyond the interests of the original transferee (Robert McDonald) and/or certain related parties, and the direct transferee of Mr McDonald ('Declaration Application').
45 In the alternative, the Plaintiffs seek orders pursuant to s 84(1) of the PLA for the modification of the Covenants in the manner set out in the Originating Motion, namely (together, 'Modification Applications'):
(a) orders pursuant to s 84(1)(a) of the PLA on the basis that the continued existence of the restrictions imposed by the Covenants would impede the reasonable user of the Land without securing practical benefits to other persons or would unless modified so impede such user ('s 84(1)(a) Application'). I note that the Plaintiffs do not seek to rely on the power in s 84(1)(a) of the PLA to make orders on the grounds that the restrictions in the Covenants ought to be deemed obsolete; or
(b) alternatively, orders pursuant to s 84(1)(c) of the PLA on the basis that the proposed modification will not substantially injure the persons entitled to the benefit of the restriction ('s 84(1)(c) Application').
46 The Declaration Application is a matter of the proper construction of the Covenants, and its disposition in favour of the Plaintiff would make it unnecessary to address the Plaintiffs' alternative Modification Applications. It is convenient to set out the parties' submissions and my consideration of the Declaration Application before addressing the Modification Applications.
47 As noted at paragraph 34 above, there is no dispute as to the modification of the Covenants to remove the Quarrying Restrictions. The Modification Applications are therefore only disputed in relation to the Dwelling Restrictions contained in the Major Covenant, and in particular the restriction of the number of dwellings to a single dwelling, though I am required to be satisfied of the elements of s 84(1) in respect of both Covenants.
48 There is a preliminary matter concerning the Plaintiffs' interest in the Land or in the proceedings which I will first briefly address.
Preliminary matter: the Plaintiffs' interest in Land or proceeding
49 Section 84(1) of the PLA provides that the Court shall have power 'on the application of any person interested in any land' to make orders in respect of covenants over that land. Section 84(2) similarly conditions the Court's declaratory power on an application 'of any persons interested', presumably referring to an interest in the land or in the proceeding (ie. the applicant or a beneficiary to the covenant joined as a defendant to the proceeding).
50 The First and Second Defendants raise questions about the interest of the Plaintiffs, and in particular the First Plaintiff which commenced the proceeding. Their cross‑examination of Mr Jia and Ms Bao was substantially dedicated to this issue. Ms Bao gave evidence that she had intended on living in a single dwelling on the Land upon acquiring it, and had briefly lived there, but later authorised the First Plaintiff by a power of attorney and management agreement to make decisions in respect of it and is no longer involved in decisions about the Land.[35]
51 Mr Jia's evidence was that he does not receive instructions from Ms Bao and only acts for her through the power of attorney given to the First Plaintiff.[36] Mr Jia said that he does not have a separate direct retainer or costs agreement with the Second Plaintiff. Mr Jia also accepted that the power of attorney originally executed between the Plaintiffs was invalid by reason of non-compliance with the Powers of Attorney Act 2014 (Vic), and that a further power of attorney in substitution dated 13 February 2020 was later executed.[37] Mr Jia was pressed on which power of attorney was relied upon for the commencement of the proceeding by the First Plaintiff, and said in relation to the 13 February 2020 instrument that 'this power of attorney wouldn't have existed back then.'[38] I will return to the issue of the timing of the power of attorney shortly.
52 Drawing from this evidence, the First and Second Defendants submit that Ms Bao, as Second Plaintiff, has 'little idea what is going on with this application', and queried the precise nature of her interest and involvement in the proceeding. The First and Second Defendants describe the arrangements between the Plaintiffs, and the flow of instructions from the First Plaintiff only, as 'very curious'. Further, the First and Second Defendants submit that neither of the Plaintiffs have an 'interest in the long term interests of the area' and intend only to subdivide and sell the Land.
53 The First and Second Defendants' submissions in this regard rise no higher than insinuation, as they do not clearly articulate a basis upon which they say that the Plaintiffs do not have a sufficient interest to bring the applications. It was not entirely clear what use the First and Second Defendants sought to make of this submission. It was not squarely put that this meant that the Plaintiffs (or one of them) lacked standing to bring the proceeding. Rather, as will become clearer, the gist of the First and Second Defendants' submissions seemed to be that this should be a factor weighing in their favour when it comes to whether the Court should exercise its discretion to modify the Covenants.
54 It is telling that nothing is made in the First and Defendants' closing submissions as to the validity or otherwise of the power of attorney by which the First Plaintiff is said to have commenced this proceeding, despite the not inconsiderable amount of time spent cross-examining Mr Jia on this topic. That is because the invalid power of attorney was rectified on 13 February 2020, and the proceeding commenced on 27 February 2020. There is no evidence other than Mr Jia's statement on cross‑examination that the rectified power of attorney was not the document upon which the First Plaintiff relied when commencing the proceeding, and I am prepared to accept that this was a simple mistake on Mr Jia's part. Even if that is not correct, in circumstances where the power of attorney was later re-done and that one has not been impugned, I do not see how that casts doubt over the commencement of the proceeding when the later document was operative at the relevant time. There is no evidence of any impropriety as to the execution of the power of attorney dated 13 February 2020 and the First and Second Defendants properly make no submissions in that regard.
55 On the evidence, Ms Bao as registered proprietor of the Land has granted a power of attorney to the First Plaintiff, which then commenced this proceeding in that capacity and has instructed its solicitors accordingly. There is nothing at all 'curious' about that arrangement, nor is it surprising or even relevant in that context that Ms Bao would not be directly involved in the conduct of the proceeding. I address whether the Plaintiffs' intentions in respect of dealing with the Land are relevant to the exercise of the Court's discretion at paragraphs 171-177 below. For present purposes it suffices to say that it has never been a requirement to establish a sufficient interest in land that an applicant intend to live on the land for any length of time, or at all.
Application for a declaration pursuant to s 84(2) of the PLA
56 Section 84(2) of the PLA provides as follows:
The Court shall have power on the application of any person interested -
(a) to declare whether or not in any particular case any land is affected by a restriction imposed by any instrument; or
(b) to declare what upon the true construction of any instrument purporting to impose a restriction is the nature and extent of the restriction thereby imposed and whether the same is enforceable and if so by whom.
57 The Plaintiffs seek a declaration under this provision that the Land is not affected by the Covenants, on the grounds that the burden of the Covenants does not extend to bind any interest in the Land beyond the interests of Robert McDonald, his heirs, executors, administrators, or the direct transferees taking an interest in the Land from Robert McDonald.
58 The Plaintiffs submit that a restrictive covenant recorded on the title to property is susceptible to the making of a declaration pursuant to s 84(2)(a) where the covenant does not comply with the applicable equitable requirements.[39] In the old case of Tulk v Moxhay it is said that equity requires:[40]
(a) a covenant (that is, an enforceable agreement between parties); which
(b) is restrictive (that is, negative in character); and
(c) 'touches or concerns' the land either retained by the covenantee or the subject of a common building scheme; and
(d) is intended to be annexed to the retained land (or to land under a common building scheme) or to 'run with' that land.
59 As well as these requirements, there is also a requirement that the burden of the covenant attaches to land which is intended to run with that land.[41] The Plaintiffs submit that this is a question of proper construction of the covenant. If such an intention is not evident, then as a matter of construction the original covenantor's successors in title are not bound by the covenant.[42] It is submitted that on their proper construction, the Covenants do not evince an intention that the burden of the covenant runs with the Land in a continuous way, and that the present registered proprietors are therefore not bound by it.
60 The Plaintiffs note that as the Covenants were created in 1912, they are not affected by the provision now at s 79 of the PLA deeming the burden of covenants to run with the Land unless a contrary intention is expressed. Section 79 of the PLA operates only on covenants made 'after the commencement of this Act'. Section 2(3) of the PLA provides that that expression shall be construed so as to include a reference to the commencement of the Property Law Act 1928 (Vic). The 1928 Act was the first Act to introduce a provision deeming the burden to run, derived from section 79 of the Law of Property Act 1925 (UK).[43]
61 The Plaintiffs rely primarily on the text of the Covenants. The Major Covenant provides that 'the said Robert McDonald for himself his executors administrators and transferees hereby covenants with' the transferor, Ms Buckley. The Minor Covenant is in substantially the same form, except that it includes the 'heirs' of Mr McDonald. The Plaintiffs submit that the proper construction of the Covenants in this respect is that the Covenants ran with the Land only so far as Mr McDonald's executors administrators, transferees, and additionally in respect of the Minor Covenant heirs, and so was entitled to be notified; but was limited only to the immediate transferees or heirs of Mr McDonald and did not run with the Land when the Land passed to the subsequent executors, administrators, transferees or heirs. In other words, the Covenants run with the Land but, relevantly, only for such period of time as the registered proprietor of the Land was Robert McDonald and/or his immediate transferee.
62 The Plaintiffs submit that the construction of the terms of the Covenants begins with consideration of their ordinary meaning in 'common vernacular use', read in context, with the objective of ascertaining the intention of the parties.[44] The Plaintiffs submit that the expression 'his ... transferees' ordinarily means only the direct transferees of Mr McDonald, and would not include subsequent transferees as they would not be 'his' (ie Mr McDonald's) transferees, emphasising the use of the possessive 'his'. In this sense the word 'his' is said to modify and limit the meaning of the word 'transferees' such that its plural form refers only to the potential for several direct transferees, and not to several successive transferees.
63 This is submitted to be entirely consistent with the burden of the Covenants resting on Mr McDonald's 'executors [and] administrators', and in the case of the Minor Covenant 'heirs'. As a matter of construction, it is submitted that the expressions 'his executors, administrators and transferees' and 'his heirs executors administrators and transferees' conjunctively identify persons taking an interest in the Land directly from Mr McDonald, and do not provide, for example, for any transferees of Mr McDonald's administrators. In the same way, it is submitted that the Covenants do not express an intention to bind transferees of Mr McDonald's transferees.
64 The Plaintiffs submit that restrictive covenants are not to be interpreted with reference to any extrinsic material, following the decisions of the High Court of Australia in Westfield Management Ltd v Perpetual Trustee Co Ltd[45] ('Westfield') and Deguisa v Lynn[46] ('Deguisa'). In Deguisa, in particular, the Court concluded in relation to a building scheme which was referred to, but not wholly disclosed by, the certificate of title:[47]
A person who seeks to deal with the registered proprietor in reliance on the State's guarantee of the title of the registered proprietor disclosed by the certificate of title in the Register Book (or its electronic equivalent) is not to be put on inquiry as to anything beyond that which is so notified.
65 The Plaintiffs submit that this authority requires the Court to 'shut its eyes to everything except the bare bones of the instrument containing the restrictive covenant'.[48] It is said that the Court should place itself in the shoes of an individual, such as a prospective purchaser of the land, reading the register afresh and ascertaining the meaning of instruments recorded on the register on their face.
66 The Plaintiffs acknowledge that the principle of construction drawn from Westfield and Deguisa distinguishes between extrinsic evidence of 'objective' matters (such as the nature of a surface over which the grant of an easement applied, or technical terms and abbreviations used in surveying) and evidence going to the intentions and expectations of the parties to the instrument.[49] The Plaintiffs submit that the case of Phoenix Commercial Enterprises v Canada Bay Council[50] upheld this distinction in construing a registered lease by reference to 'objective' extrinsic material.[51] It is submitted that the expression 'his transferees' is not such a technical surveying or legal term requiring reference to extrinsic material, and that evidence in relation to its meaning is evidence of the intention or contemplation of the parties to the covenant and as such is inadmissible for those purposes.
67 The Plaintiffs also appeared to accept that considerations of common or commercial sense may be relevant to the construction of the Covenants. On the Plaintiffs' view, there is commercial sense to the time-limit in the Covenants, as they grant Mr McDonald's transferees the flexibility to impose or withhold the Covenants in their subsequent transfers, and it may have been Mr McDonald's hope that the transferees would pay a premium for that flexibility.
68 According to the Plaintiffs, the principle of construction in Deguisa displaces any other presumption or the application of the doctrine of contra proferentem. Save for matters of 'objective fact' and matters of common or commercial sense, it is said that Deguisa prohibits reference to any material which is extrinsic to the register of titles.
69 Nevertheless, in support of their preferred construction, the Plaintiffs submit that it is the 'usual course' for covenants intended to run with the burdened land to be expressed as being made by the covenantor on behalf of themselves and successors in title.[52] The Plaintiffs similarly submit that it is common practice for covenants to include a saving provision whereby the parties express their intention that the covenants run with the land.[53] It is submitted that the absence of such clarifying statements in the Covenants supports the view that the parties did not intend for the Covenants to burden successors in title or to run with the Land.
70 Similarly, the Plaintiffs refer to evidence of Mr Raworth, an architectural historian who gave expert evidence in the proceeding, indicating that other covenants such as those in respect of 17 Heyington Place, Toorak, and 19 Monaro Road, Toorak had also been time-limited,[54] and that a similar approach (albeit with a different mechanism) could have been taken in respect of these Covenants. 17 Heyington Place is part of the Beaulieu Estate, and now forms part of St Catherine's School.[55]
71 The Plaintiffs' written submissions filed prior to the trial contend that their proposed construction is consistent with historical decisions in relation to Covenants in the same or very similar form in respect of properties transferred out of the Great Great Grandparent Title:
(a) SCV Ref 1959 No 3373, Re L Randerson Pty Ltd ('Randerson'): This decision deals with the covenant contained in instrument of transfer 673900. The text relevantly read: "Arthur Frederick Hooper for himself his executors administrators and transferees hereby covenants with the said Elizabeth Marion Buckley and her transferees registered proprietor or proprietors of the land in ...". Smith J on 20 April 1959 made a declaration that the land was not affected by the covenant in the transfer. The Plaintiffs submit that the declaration of Smith J was made following evidence that the relevant land had been transferred from Mrs Buckley to Mr Hooper to a Marjorie Cross Turnbull and that the applicant L Randerson Pty Ltd had lodged a caveat over it; all land was transferred out of parent title by 4 June 1915; and that there was no evidence of a building scheme.[56]
(b) SCV Ref 1959 No 3558, Re The Trustees Executors and Agency Company Limited ('Trustees'): This decision deals with the covenant contained in instrument of transfer 674618. The text relevantly read "Maurice Howard Lawrence Baillieu doth hereby for himself his executors administrators and transferees covenant with the said Elizabeth Marion Buckley her executors administrators and transferees as follows ...." Duffy J on 8 October 1959 declared that the subject land was not affected by the covenant in the transfer. The Plaintiffs submit that the declaration of Duffy J was made following evidence that the land had been transferred to Edward Yencken and then the Trustees Executors and Agency Company Ltd, and an explanation of the decision of Justice Smith in Randerson.[57]
72 The Plaintiffs' submission also acknowledges the decision and declaration in SCV 1961 No M4132, Re Edward Leo Curtis and Elvira Lillian Curtis ('Curtis'),[58] but submits that it was made on a different basis, that is on the basis of the decision of the Full Court of this Court in Re Arcade Hotel Pty Ltd ('Arcade Hotel').[59] That decision stood as authority for a requirement that a restrictive covenant be expressed to be annexed to, and for the benefit of, 'the whole or any part thereof' of the land in question, such that a restrictive covenant would no longer be enforceable where it referred only to 'the whole of' a parcel of land which had since been subdivided and parts transferred out.[60] That footing for a declaration was removed, retrospectively as well as prospectively, with the commencement of s 79A of the PLA in 1964.
73 Senior counsel for the Plaintiff properly conceded in his oral opening that there is no record of written reasons for the Court's decisions in Randerson or Trustees obtained from the archived file or put into evidence in this proceeding, and the Plaintiffs could not say why the declarations were made in those proceedings.[61] As such, the Plaintiffs' submission was narrowed to a contention that the construction of the Covenants put forward by the Plaintiffs is at least not a novel one, in the sense that it had been proposed by applicants in respect of similar covenants.
74 The Defendants made some submissions in common, and generally endorsed one another's submissions.
75 The starting point of each of the Defendants' submissions was the statement of principle by Gillard J in Fitt v Luxury Developments Pty Ltd[62] that 'if the wording [of a covenant] is that it is made by the covenantor for himself his heirs and assigns then as a general proposition the burden will normally run with the land.'[63] Each Defendant relied on this passage to some extent, though the Third and Fourth Defendants described it as raising a 'presumption' that covenants framed in such a way run with the land in question. The Defendants agree that the proper approach is to determine whether the Covenants evince an intention that they will run with the Land, and that the above passage in Fitt is authority for the proposition that it is sufficient for a covenant to be expressed in respect of the covenantor and his or her heirs or assigns.
76 The Defendants generally accept that reference to extrinsic material in aid of construction of the Covenants is constrained by Westfield and Deguisa. Each of the Defendants criticise the Plaintiffs for reliance on that principle while seeking to adduce extrinsic evidence in their favour - for example, the historic decisions of this Court in Randerson and Trustees, or even evidence for the uncontested fact that the parties to the Covenants were also parties to contracts of sale for the Land. As is discussed below, the Third and Fourth Defendants also seek to narrow the approach to those principles taken by the Plaintiffs.
77 Further, each of the Defendants deny that the ordinary meaning of the terms of the Covenants, and in particular the expressions 'his transferees', limits the burden of the Covenants to the direct transferee of Robert McDonald. Each of the Defendants point to the plural form 'transferees' as an indication that more than a single transfer was intended to be covered by the Covenants. The Defendants also dispute that the term 'his' is limiting in the manner the Plaintiffs contend, on the basis that each subsequent transferee to whom an interest passes could be described as a 'transferee'. The First and Second Defendants make the additional submission that the term 'his' in the Covenants more properly attaches to 'executors [and] administrators', which are evidently limited to the executors and administrators of Mr McDonald himself; and that the word 'and' in 'executors administrators and transferees' is disjunctive rather than conjunctive.
78 The Defendants point to decisions concerning similarly worded covenants, which they submit provide no support for the construction of the Covenants contended for by the Plaintiffs. It is convenient to address the particular submissions in respect of each of these in my consideration, in order to avoid unnecessary repetition of the relevant terms of the covenants and to identify the particular points of relevance to this application. Each of the Defendants refer to Fitt and to Prowse [2015]. The First and Second Defendants additionally referred to Blue Concept Pty Ltd v Christine Farnan[64] and Re Ferraro.[65] Appropriately, the First and Second Defendants also referred me to the matter of Pollard v Registrar of Titles,[66] which may not assist their case and in any event was submitted to be distinguishable on its facts. The Third and Fourth Defendants helpfully set out as an annexure to their written submissions a schedule of authorities to make this point,[67] and also refer to Re Royal Victoria Pavilion, Ramsgate and Morrells as examples of cases of covenants where there was a manifest intention for the covenants to be personal only. The Fifth to Seventh and Ninth to Fifteenth Defendants refer specifically to Vrakas v Mills,[68] and to several other cases more generally, for the proposition that the Court has never found that the use of the first or third person possessive pronoun evinces an intention for 'transferees' to be limited only to those who take a direct transfer from the covenantor.[69]
79 Further, the First to Fourth Defendants refer to material concerning contemporary practices in the Land Titles Office which is consistent with the terms of the Covenant. This material is in two texts ('Titles Office Practice Material'):
(a) 'Manual of Titles Office Practice in Victoria' by Mr Norman Currey, Registrar of Titles in Victoria from 1922 to 1932; and
(b) 'Transfer of Land Acts 1915-1921 and other Acts affecting the Transfer of Land, Commentary, Notes of Australasian Decisions, Forms in General Use and Rulings and Practice of the Office of Titles' by Dallas Wiseman, Barrister, in 1925.
80 Each of the Titles Office Practice Materials state as a general rule or practice of the Titles Office at the time that a restrictive covenant will not be notified as an encumbrance on the title unless the covenant is, inter alia, 'express to be entered into by the transferee, his heirs, executors, administrators and transferees, with the transferor, as registered proprietor of other land retained by him, his heirs, executors, administrators and transferees'. The First to Fourth Defendants submit that these are relevant to the approach taken to framing the Covenants in 1912 and in interpreting them in the present day,[70] and indicate that the terms of the Covenants are sufficient and do not require further words of annexation such as an express indication of intent for the instrument to be recorded on the title and run with the land. The Third and Fourth Defendant make submissions concerning the admissibility of this evidence which I set out below, and upon which I understand the First and Second Defendants also rely.
81 Each of the Defendants submitted that the Plaintiffs' reliance on the historic cases of Randerson and Trustees is misguided, as there was no record of the Court's findings or the basis of its decisions and, in any event, the material in Randerson equally points to a decision on the same basis as the later decisions of Curtis and Arcade Hotel, which is no longer good law.
82 The First and Second Defendants submit that the Plaintiff's preferred construction is 'novel' and flies in the face of approximately a century of interpretation of the Covenants, including by the Plaintiffs, their solicitors, and their expert witnesses, all of which appeared to accept that the Covenants ran with the Land into the present, at least until the originating motion was first amended to include the Declaration Application on 5 March 2021. The First and Second Defendants point to the recording of the Covenants on the title to the Land as evidence that they were 'recorded to be continuous over time and not limited to one transfer', and that they were not interpreted on their making in 1912 as limited to one transfer.
83 The First and Second Defendants further submit that the Plaintiffs have not pointed to anything concrete within the Covenants themselves to suggest that the intention of the parties was to limit the passing of the burden of the Covenants to only Mr McDonald and his direct transferee. It is further submitted that the covenant in respect of 17 Heyington Place, to which the Plaintiffs referred as an example of a time‑limited covenant, does not assist the Plaintiffs as it contains a very clear limiting device of ten years, and is in that sense not comparable to the construction proposed by the Plaintiffs for the present Covenants. The First and Second Defendants further contend that the Plaintiffs' hypothesis as to the commercial rationale for limiting the Covenants in the manner proposed is not based on any evidence, and is speculative and wholly unconvincing.
84 The Third and Fourth Defendants rely on the 'presumption' raised by Gillard J in Fitt, that a covenant expressed to bind the covenantor, his heirs and assigns will run with the land, unless there is some clearly stated intention to the contrary. It is submitted that there is no such clear contrary intention in the text of the covenant; and that, in the context of this presumption being enlivened and not displaced, the meaning of the word 'transferees' is clear. On this basis it is said that it is not necessary to have regard to extrinsic materials in order to properly construe the Covenants.
85 It is also submitted that the fact of notification of the Covenants on the title is evidence of the parties' intention that it be so notified, which evidence is intrinsic to the certificate of title. This is said to indicate that the parties to the Covenants intended that the Covenants run with the Land.
86 Further, and in the alternative, the Third and Fourth Defendants submit that the principles in Westfield and Deguisa are not so restrictive as the Plaintiffs contend, and there are exceptions to those principles.[71]
87 First, the Third and Fourth Defendants submit that those principles do not exclude all extrinsic materials, and permit at least the following categories of materials:
(a) evidence to assist the Court 'make sense of that which the register identifies by terms or expressions found therein' such as surveying terms or abbreviations;[72]
(b) documents which can be found by searching other parts of the register, such as a copy of the relevant plan of subdivision and corresponding covenants affecting other parts of the estate;[73] and
(c) instruments expressly referred to in the memorial on the certificate of title.[74]
88 Further, the Third and Fourth Defendants submit that the New South Wales Court of Appeal in Phoenix Commercial Enterprises recognised that Westfield does not exclude the approach whereby a document recorded on the register will be construed as having the meaning that a reasonable reader, with such knowledge of the surrounding circumstances as is available to them, would attribute to it.[75] It is said that materials concerning the contemporary practice of the Land Titles Office is material to which a reasonable reader would have regard to, and is therefore capable of assisting in the interpretation of the Covenants.
89 Second, the Third and Fourth Defendants submit that the Court in Westfield and Deguisa did not consider the question whether the contra proferentem principle applies in the construction of restrictive covenants, and do not provide support for the Plaintiffs' assertion that the principle has no application. The Third and Fourth Defendants point out that in Prowse [2012], a decision relied upon by the Plaintiffs for their preferred construction of the Covenants, Cavanough J engaged in an extensive consideration of Westfield and Phoenix Commercial Enterprises,[76] and proceeded on the basis that earlier authorities in respect of the contra proferentem rule continued to apply.[77] It is submitted that his Honour would no doubt have commented on any inconsistency had he perceived any. It is further submitted that the contra proferentem rule is a general rule of construction, and does not offend the principle of indefeasibility of title upon which the Court in Westfield and Deguisa based their approach, or the more specific conclusions of the Court in those decisions in respect of extrinsic material.
90 The Third and Fourth Defendants also submit that the Plaintiffs' submission as to the commercial basis or benefit of their proposed construction is a 'leap of faith', as it is highly speculative, internally contradictory, and is in any event not the most probable or sensible approach which the parties to the Covenants were likely to have adopted. In particular, it is submitted that there is no basis for an inference that a premium would be forthcoming for land which was not to be burdened in an ongoing way, as compared to the likelihood of greater value in a consistent and certain outcome for all parties. This is especially so in the context of each lot in the Beaulieu Estate having been transferred with a similar covenant. Further, it would seem inconsistent with the suggested purpose of the Major Covenant (discussed below), that a neighbourhood of stately homes and gardens be maintained, that a restriction intended to achieve that purpose could survive only a single transfer.
Fifth to Seventh and Ninth to Fifteenth Defendants
91 These Defendants primarily relied on their submissions concerning the lack of clear intention in the Covenants for their burden to be limited to the immediate transferees only, and the lack of authority for the construction preferred by the Plaintiffs, having regard to the authorities concerning similarly worded covenants. I have outlined these above.
92 The Fifth to Seventh and Ninth to Fifteenth Defendants acknowledge that the Covenants do not contain an explicit reference to the burden running with the Land, in contrast to some of the authorities referred to. However, they submit that the Covenants nonetheless evince that intention, relying on the 'general proposition' stated in Fitt. Further, it is submitted that the conceptual basis for this 'general proposition' can be identified in the following relevant passages from Fitt:
In 1848 in the historic case of Tulk v Moxhay equity intervened and provided remedies which were not available at common law in respect to the enforcement of a restrictive covenant against a subsequent transferee of land from the original covenantor.
... the burden is imposed upon successors to the covenantor "upon the same principle that the grantee of a guilty trustee ... is bound to convey the res to the cestui que trust". There would be "the like injustice, if the purchaser with notice, or the volunteer, were allowed to profit at the expense of the cestui que trust or [the covenantee] by ignoring the trust ... or the restrictive agreement". Accordingly, equity imposes upon the successor to the covenantor "a constructive duty" which is "coextensive" with the express duty of the covenantor to the covenantee. The position of successors to the covenantor with respect to the burden of the covenant thus rests not upon any legal principle of privity of estate but upon "the equitable principle of privity of conscience".[78]
93 It is submitted that the utility of restrictive covenants relies on their capacity to transmit restrictions as to the use of land across time, irrespective of the doctrine of privity of contract.
Applicable principles and admissible material
94 As the Third and Fourth Defendants submit, the parties appear to be in substantial agreement as to the principles of construction of Covenants save for two issues. However, those two issues are substantial, and contain a number of subordinate issues of principle and in respect of the admission of evidence which must be considered before I turn to the construction of the Covenants. First, the application of Westfield and Deguisa in general and in the present case, in particular with respect to the use of extrinsic material. Second, whether the contra proferentem or any other presumptions apply.
95 I accept the Third and Fourth Defendants' submissions at paragraph 87 above as to the 'exceptions' to the rule in Westfield and Deguisa, though I doubt whether the second and third are properly 'exceptions' rather than elements of the rule, broadly expressed. The fundamental proposition in Westfield is that a person encountering the register of titles is entitled to understand the state and condition of a title from the information contained in the register, which includes documents found on the register or expressly referred to in the memorial. The Plaintiffs do not appear to disagree with these submissions and do not press the, respectfully, rather broad comment of Cavanough J in Prowse [2012] that the Court should 'shut its eyes to everything except the bare bones of the instrument containing the restrictive cove[79]nt'.79
96 A little more should be said about the principles in Westfield and Deguisa. In Westfield, the Court unanimously held that:
The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.[80]
97 In Phoenix Commercial Enterprises, the New South Wales Court of Appeal said that the view expressed in that passage 'is not dependent upon any considerations of the extent of indefeasibility, but rather on the inherent probabilities concerning the inquiries that a purchaser of Torrens title land will make.'[81] The Court may not have intended to restate the test in terms of probabilities at large, as it went on to discuss the permissible inquiries into 'objective matters' such as the physical layout of the locus in quo and its surrounds at the time of the grant.[82]
98 The High Court in Deguisa affirmed a stricter test:
A person who seeks to deal with the registered proprietor in reliance on the State's guarantee of the title of the registered proprietor disclosed by the certificate of title in the Register Book (or its electronic equivalent) is not to be put on inquiry as to anything beyond that which is so notified.... Anything less is inconsistent with the natural and ordinary meaning of the text of s 69 [of the Real Property Act 1886 (SA)] and the purpose of the Act.[83]
99 One basis on which this conclusion was reached was the conceptual incoherence in requiring 'generalised searches beyond that of the current certificate of title' to the standard of a 'prudent conveyancer', as had been accepted by the Court of Appeal of South Australia.[84] The Court was there concerned with a submission that the relevant encumbrance ought to have been identifiable by a search of the more unusual surname of one of the vendors of the parent title from which the encumbered lot had been transferred, and did not refer to Phoenix Commercial Enterprises at any point. However, the Court's rejection of the standard of a 'prudent' search of the register in favour of a standard governed by the information appearing on title is clearly inconsistent with a test of 'inherent probabilities' that may be drawn from Phoenix Commercial Enterprises. Rather, in Deguisa, the Court affirmed the view of Barwick CJ in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd[85] that what is 'notified' for the purposes of Torrens land encumbrances is limited to the instruments themselves, and 'instruments referred to in such instruments which were themselves registered.'[86]
100 On this basis, the parties were in agreement that I could have regard to other covenants contained in instruments of transfer out of the Great Great Grandparent Title, as corresponding covenants affecting other parts of that estate. I agree that this is consistent with the approach taken in Deguisa.[87] I note that Deguisa also makes clear that the principle is not so wide that any document on the register is available as an aid, but consider that the covenants in respect of properties transferred out of the Great Great Grandparent Title are admissible as material referred to in the relevant instrument or instruments referred to in that instrument. In this way it is possible to trace the benefit of the Covenants back to the Great Great Grandparent Title and identify covenants within the network in the Beaulieu Estate. I do not consider that other covenants, such as that said by the Plaintiffs to be imposed in respect of 19 Monaro Road, Toorak, are admissible. Nothing in respect of that covenant is to be found in the register pertaining to the Land or is able to be derived from instruments referred to in respect of the Land.
101 The parties were also in agreement that I could have regard to matters of common or commercial sense in determining the presumed intention of the Covenants. I accept that this is appropriate, subject to the avoidance of reference to extrinsic material which might be adduced in support of a particular rationale for the Covenants. The passage from Phoenix Commercial Enterprises extracted by the Third and Fourth Defendants should be cited in full, as it articulates the analytical and evidentiary position from which the Covenants may be construed:
It is important that what their Honours [in Westfield] state is that it is rules of evidence assisting the construction of contracts inter partes, of the type referred to in Codelfa at 350-352,[88] that do not apply to construction of the easement. They do not deny the applicability of the principle whereby a document will be construed as having the meaning that a reasonable reader, with such knowledge of the surrounding circumstances as is available to him or her, would attribute to it. If surrounding circumstances cannot be established by evidence to construe an easement, that does not mean that one is thrown back onto the discredited exercise of seeking to construe a document simply by reference to a supposed "natural and ordinary meaning" of the words. Rather, it means that the sort of surrounding circumstances to which one can look are limited to those that one can know without evidence from outside the terms of the document itself.[89]
102 I consider that the circumstances which 'one can know without evidence from outside the terms of the document itself' include matters of common or commercial sense. They also include the fact that the parties to the Covenants were also parties to a transaction for the sale and purchase of the Land. That appears from the terms of the instruments of transfer containing the Covenants, which record that the land described therein is transferred in consideration of certain sums of money.
103 I do not accept that the circumstances to which regard may be had include the terms of the Titles Office Practice Material, or indeed evidence as to the 'usual course' for covenants intended to run with the land adduced by the Plaintiffs. That is all evidence which falls outside the terms of the instrument and relevant parts of the register, and which goes beyond the clarification of technical surveying or legal terms. A very astute reader of the register might think that such material might assist, and it may be 'available' to that reader in a way that material concerning the intention of private parties to a covenant is not;[90] however, the Court in Deguisa made clear that such a reader is not to be on notice of 'documents that might have been found outside the Register Book or documents that might be found in the Registry Office but were not incorporated by an entry on the certificate of title.'[91] For that reason neither the Titles Office Practice Material nor evidence as to the practice or 'usual course' for expression of covenants is admissible in respect of construction of the Covenants.[92]
104 To the extent that the First and Second Defendants seek to submit that the recording of the Covenants on the title is evidence of their continuity in time, I would not accept that submission. Section 88(3) of the Transfer of Land Act 1958 ('TLA') clearly provides that, apart from the operation of Part III of the TLA, a recording of a restrictive covenant in the register does not give it any greater operation than it has under the instrument creating it. Part III of the TLA outlines the structure and effect of the register including the principle of indefeasibility of title. As Gillard J said of s 88(3) of the TLA in Fitt:
the recording of a restrictive covenant on the folio of the land subject to the burden is no more than notification of the claim that there is a restrictive covenant burdening the land, and the recording does not in any way establish or effect the validity or otherwise of the restrictive covenant.
What the recording does is to give notice to anybody who wishes to acquire an interest in the burdened land that a claim is made by another that there is a valid restrictive covenant affecting the land. But it is viewed as a claim only and the recording on the folio in the Register for Land does not establish its validity. [93]
105 The same can be said of whether the recording of a Covenant establishes its operation or duration.
106 However, the Third and Fourth Defendants make a more sophisticated submission. They say that the fact that the Covenants were recorded on the title to the Land is evidence in support of the view that the parties intended the Covenants to run with the Land. I accept that this is so, though I do not consider that it is evidence of much significance in respect of whether the Covenants were intended to run with the Land indefinitely. I do not take issue with the submission as a matter of evidence, as I accept that the fact of the recording of the Covenants is a matter apparent on the face of the register. And it seems to follow from the purpose of the recording of covenants as set out in the TLA and described by Gillard J that where parties seek to have a covenant recorded on title, their intention is that future dealings on the title will be with notice of the benefit claimed and corresponding burden, such that the covenant is not limited to the parties themselves by registration of a subsequent interest. However, in the circumstances of this case, it is of little assistance or significance in resolving the dispute as to whether the Covenants ran with the Land only while in the hands of Mr McDonald or his direct transferee, or whether they run with the Land for all transferees throughout time.
107 The principle of contra proferentem is well established in authority. Cavanough J's formulation of the contra proferentem rule in respect of restrictive covenants, in Prowse [2012], is that:
where a doubt or ambiguity about the meaning of a restrictive covenant arises and cannot otherwise be resolved, the rule is that the covenant should be construed against the covenantor, although this is a rule of last resort.[94]
108 The issue between the parties is whether Westfield or Deguisa displace the application of that rule.
109 I consider that the contra proferentem rule remains available to the Court as an aid in construction of the Covenants. I am not satisfied that Westfield or Deguisa displace its application. Neither decision addresses the rule, and I would not deny the application of a longstanding and important principle of law without clear statement or necessary implication.[95] I accept the Third and Fourth Defendants' submission that it is not a necessary implication of either the underlying principles relied upon by the Court in Westfield or Deguisa, or the more specific conclusions in relation to extrinsic evidence, that a general principle of construction such as the contra proferentem rule has no application. The Plaintiffs have offered no confining principle which might explain why, in their submission, the Torrens system of title by registration leaves no room for contra proferentem, but continues to embrace other general principles of construction such as the contextual and harmonious reading of the whole of an instrument. It is not suggested that these general principles or the authorities from which they are drawn are extrinsic evidence sought improperly to be used in aid of construction. While the matter was also not expressly considered by Cavanough J in Prowse [2012], I am encouraged by his Honour's apparent view that the contra proferentem rule continues to apply in the face of the decision in Westfield.[96] I also consider that the continuing application of general principles of construction notwithstanding Westfield follows from the passage in Phoenix Commercial Enterprises cited at paragraph 101 above.
110 Similarly, I do not accept the Plaintiffs' submission that the decisions in Westfield and Deguisa leave no room for the operation of any presumptions, however I do not consider that it is necessary to decide that question. That is because I also do not accept the Third and Fourth Defendants' submission that Gillard J's 'general proposition' in respect of when a covenant will run with the land in Fitt has the force of a presumption to be displaced. His Honour's view was expressed in a more general way as statement of principle or guidance, and was not expressed as a presumption. Rather, in the paragraph following his Honour's 'general proposition', his Honour expresses doubt as to whether the deeming provision in s 79 of the Property Law Act 1928 'adds anything to or changes the law... because it is still necessary to show an intention from the wording that the burden of the covenant was to run with the covenantor's land.'[97] It seems to me that this is far from a statement that the law, prior to or even following the introduction of that provision, presumed that a covenant which referred to heirs and assigns would evince the relevant intention. The Third and Fourth Defendants did not take me to any authority which draws any such presumption from Fitt. Nevertheless, I am content to take his Honour's statement as a general proposition.
111 I accept the Defendants' submissions as to the precedential value of the decisions in Randerson and Trustees. There is no record of the reasons for those decisions before me and I decline to speculate as to those reasons, save to say that I agree with the Defendants that it is as likely, if not more so, that the decisions were made on another basis including the basis later articulated in Arcade Hotel. In any event the Plaintiffs have withdrawn their submissions as to the basis for those decisions, and instead submit only that their approach is not 'novel' as it was previously proposed by the plaintiff's solicitors in Randerson and Trustees. That an argument was made by solicitors in a previous proceeding carries no weight at all. I also have doubts as to whether the evidence in those proceedings as to the chain of title of the relevant properties is not merely background to the proceeding or evidence relevant to the Arcade Hotel point, rather than the basis for an application of the kind now made by the Plaintiffs.
112 I also consider that there is limited, if any, precedential value in the interpretations given to other covenants in other contexts. I do not consider that precedent is a matter of extrinsic evidence, and that submission was not made. However, it is also a principle of some authority that great caution should be exercised in considering the use of interpretations adopted in other cases in relation to other instruments.[98] In most of the cases to which I was taken by the Defendants, there was no application to the Court for a declaration that the Covenant was unenforceable, let alone an application on the basis now put by the Plaintiffs.[99] Although in some such cases the form of the covenant is similar to the Covenants under consideration here, I would not infer from the Court's explicit or implicit acceptance that the covenants met the characteristics of Tulk v Moxhay that the Court thereby had reached a conclusion as to the question now before me.[100] That question was simply not before the Court on those occasions.
113 In other cases, the covenants under consideration were different in form to the Covenants in this case. For example, in Prowse [2015] and Blue Concept, similar arguments to those made by the Plaintiffs in the present case concerning the construction of the expression 'his transferees' or 'her transferees' were made and rejected. However, in each case the covenants also contained express requests or statements of intent that the covenants be recorded on title as encumbrances.[101] As a matter of principle and evidence I do not consider that the absence of such additional words is fatal to the Defendants' case; however these cases certainly do not assist in the construction of the Covenants.
114 In Pollard, the Court considered a covenant which sought to assign its benefit to 'the covenantee and his transferees'.[102] Mukhtar AsJ expressed the view that 'the reference to transferees of the covenantee can only be a reference to the immediate transferees of the covenantee as any subsequent transferee would not be a transferee of the covenantee.'[103] However, that was in the context of his Honour's finding that there was no benefitting land identified, and that the expression 'the covenantee and his transferees' provided no proper basis for an implied identification of the benefitting land. That question is quite different to the question whether the present Covenants support the implication that their effect terminated upon the second transfer after the creation of the Covenants, or continued to run with the Land.
115 In Re Ferraro, I was similarly tasked with determining an application for a declaration on the basis that no land was identified as taking the benefit of a covenant. The First and Second Defendants point to a passage in that decision where I acknowledge the plaintiff's concession that 'the wording of the covenants allow for the inference that the original parties intended to burden the land acquired by the covenantor', where the relevant covenant was framed in terms of a burden on the covenantor 'his heirs executors administrators and transferees'.[104] However, when read in context that passage clearly refers to the proper identification of the burdened land, and makes no comment on the expression 'his heirs executors administrators and transferees'. Further, the relevant covenant also contained an express statement of intention that the covenant run with the said land and be recorded as an encumbrance on title.[105]
116 For completeness, certain of the cases to which the Defendants drew my attention were decided on the basis of what I have called the Arcade Hotel point, and are not relevant.[106]
117 For what it is worth, I also accept the Fifth to Seventh and Ninth to Fifteenth Defendants' submissions concerning the conceptual basis for the enforceability of restrictive covenants against third parties. However, those submissions and the passage cited from Fitt say nothing about the particular efficacy of the Covenants in question or, in particular, whether they run beyond the initial transferee of the covenantor. Rather, it is a premise of the enforceability of restrictive covenants against third parties that the burden of the covenants continues to run with the land.
118 As the Plaintiffs point out, the Plaintiffs' submission may amount to a submission that the Court 'read in' limiting words into the expression 'his ... transferees', such as 'direct' or 'immediate'; but the Defendants' submissions similarly seek to have the Court 'read in' words to the effect of 'his ... transferees and each subsequent transferee'. The task of the Court is to discern the proper intention of the Covenants, which may be limiting in the manner the Plaintiffs suggest or more expansive in the way that the Defendants suggest.
119 The Plaintiffs' submissions as to the grammatical construction of the expression 'his ... transferees' have force, in particular the use of the possessive 'his' as a modification of the word 'transferees'. There is also force in the Defendants' submissions that the plural form of the word 'transferees' contemplates more than one transferee, though this submission does not grapple with the possessive 'his' as a limiting factor. I do not accept the First and Second Defendants' submission that 'his' attaches only to 'executors [and] administrators' and/or 'heirs', as the expression in the Major Covenant, for example, 'his executors administrators and transferees' is clearly a composite and conjunctive one. It would strain the grammatical sense of that expression to remove from the word 'transferees' the modification 'his'.
120 However, I consider that the parties have focussed too narrowly on the expression 'his executors administrators and transferees', and even more narrowly on the expression 'his ... transferees', to the neglect of the whole of the instrument. The correct construction of the Covenant, and the expression 'his ... transferees', is not to be found solely by reference to the grammatical construction of that expression.
121 As recognised by the Court in Phoenix Commercial Enterprises, the decisions in Westfield and, by extension, Deguisa do not require the Court to abandon established principles of construction and rely solely on the 'ordinary meaning of words', where those established principles do not offend the Torrens system.[107] Indeed, in Deguisa, the Court affirmed that the fundamental approach taken in Westfield was that:
... the dealings recorded on the certificate of title, together with the information appearing on that folio of the Register Book, provide a purchaser taking his or her title to land from the registered proprietor "with the information necessary to comprehend the extent or state of the registered title to the land in question".[108]
122 Far from displacing the conventional approach of construing the words of an instrument in their context, Westfield and Deguisa affirm that approach, albeit with limits recognised on the context to which the Court may have regard.
123 When reading the whole of the Covenants, particular regard should be had to the nature and terms of the restrictions imposed. Each of the Covenants prohibits the building of a wide variety of public buildings including schools, shops, factories, churches, or any halls for any religious educational or charitable purpose or public entertainment. The Covenants also provide that no quarrying operations or similar earthwork activities be carried out on the Land 'at any time hereafter'. The Major Covenant adds the restriction on the number and value of any residences to be built on the Land. I consider that, when taken as a whole, the reasonable reader of the register would take these provisions to impose a more durable kind of restriction than that proposed by the Plaintiffs. Without regard at this point to the evidence put before me in respect of the Modification Applications, it is likely that a reasonable reader of the Covenants and of the network of similar covenants within the Beaulieu Estate would discern a purpose of controlling the nature of development on the Land and its neighbouring properties, in order that a certain standard of amenity be protected from land-use which may create noise, traffic, pollution or other nuisance or hazard. It would seem inconsistent with that discernible intention that the protection of amenity only last so long as the Land or indeed its neighbouring properties are in the hands of the first two transferees in time, especially as the protections concern matters such as the construction of schools, churches, and substantial dwelling houses which bear no immediate or clear relationship to the passing of title between transferees. Put another way, the nature of the restrictions imposed in the Covenants evince an intention that those restrictions be maintained across time, and do not support the Plaintiffs' submission that they were intended to lapse upon the passing of the Land from the second to the third transferee.
124 Further, the prohibition on quarrying or other earthworks 'at any time hereafter' clearly indicates an intention that at least that restriction run with the Land indefinitely. I do not attach importance to the absence of that expression in respect of the other restrictions in the Covenants, given my conclusions as to the nature of those restrictions. In any event it was not submitted that the Covenants were bifurcated in that way, such that the quarrying restrictions were intended to last indefinitely while the development restrictions were intended to be more limited.
125 These views are bolstered with regard to the likely commercial or practical rationale for the Covenants, though I do not give this great weight by itself. I accept the Defendants' submissions that the Plaintiffs' proposed rationale is highly speculative, and is difficult as a matter of commercial logic. I cannot accept that the Court should presume the intention of the Covenants was to be time limited in the manner suggested in order to increase the value of the Land. For the reasons already stated in relation to the admissibility of evidence concerning covenants within the larger estate, prospective purchasers would be on notice of the network of similarly worded covenants and, had they known or suspected that those covenants did not in fact protect them in the long-term, the value of the Land may decrease. Further, the evident purpose of the covenants in achieving amenity benefits for the residents of land within the Beaulieu Estate, including the stateliness of single dwellings on such large lots and the generous space between them, would be defeated if the Land could be otherwise developed following two transfers of the title. Similarly, this evident purpose of the Covenants for the covenantee, ie Mrs Buckley, would be defeated if the restrictions only burdened the Land when owned by Mr McDonald or his direct transferee.
126 Likewise, I consider that reference can properly be had to the covenant in respect of 17 Heyington Place, forming part of the estate, which contained an express time‑limiting device. Comparison to that covenant does not assist the Plaintiffs, and indeed is detrimental to their case, as it becomes immediately apparent that the parties to the Covenants could have designed a clear limitation mechanism had they so chosen.
127 To this may be added that the parties caused the Covenants to be recorded on title. As I have mentioned, I do not make much of this evidence on its own, and it would be clearly inconsistent with s 88(3) of the TLA to draw from the recording of a covenant on title alone the requisite intention. However I consider that it is an aid in my analysis and that it supports the Defendants' position.
128 I also consider that the 'general proposition' stated by Gillard J in Fitt is of some assistance, as it suggests that the form of words used in the Covenants may be sufficient in appropriate circumstances. However, for the reasons stated above in respect of the weight of authority generally, I do not give this undue weight.
129 Finally, if there is any remaining ambiguity as to the meaning of the Covenants it is resolved by reference to the contra proferentem rule against the Plaintiffs, standing in the shoes of the covenantor.
130 In the face of this, the Plaintiffs have pointed to nothing concrete, other than a grammatical construction of the expression 'his... transferees', which would indicate that the intention of the Covenants is to be limited by a number of transfers of the Land. I have already dealt with that grammatical construction. Either the Plaintiffs' or the Defendants' construction is open on the terms of that expression. However, in this case there are compelling contextual aids to construction which support the Defendants' approach.
131 It is also telling that the very wording of the declaration sought by the Plaintiffs requires words to be added to the terms of the Covenants (ie the 'direct' transferees), in order for the meaning of the Covenants contended for by the Plaintiffs to be apparent. That meaning is by no means clear on the face of the Covenants.
132 In this application, the onus is on the Plaintiffs to satisfy me that the declaration should be made. That onus arises by operation of s 84(2) of the PLA, not by any presumption said to arise in respect of such applications. I am not satisfied that the Plaintiffs have discharged this onus.
133 As a result, I would refuse to grant the Declaration Application.
134 In the alternative to the Declaration Application, the Plaintiffs make the following applications for modification of the Covenants pursuant to s 84(1) of the PLA:
(a) the s 84(1)(a) Application on the basis that the continued existence of the restrictions imposed by the Covenants would impede the reasonable user of the Land without securing practical benefits to other persons or would unless modified so impede such user; or
(b) alternatively, the s 84(1)(c) Application on the basis that the proposed modification will not substantially injure the persons entitled to the benefit of the restriction.
135 As will become evident, there is a substantial overlap between the two Modification Applications and a great deal of evidence was led which addresses both. I intend to outline the parties' submissions as to the relevant principles informing the Court's determination of both Modification Applications and then consider the evidence which addresses both, before dealing with matters peculiar to one or the other.
136 Section 84(1) of the PLA gives the Court power to discharge or modify a restrictive covenant upon being satisfied that:
that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material the restriction ought to be deemed obsolete or that the continued existence thereof would impede the reasonable user of the land without securing practical benefits to other persons or (as the case may be) would unless modified so impede such user;[109]
137 In considering the s 84(1)(a) Application and the parties' submissions, I shall refer to:
(a) the phrase "by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material" as the introductory words in s 84(1)(a);
(b) the phrase "the restriction ought to be deemed obsolete" as the first limb; and
(c) the phrase "the continued existence thereof would impede the reasonable user of the land without securing practical benefits to other persons or (as the case may be) would unless modified so impede such user" as the second limb.
138 In this instance, the Plaintiffs do not seek to rely on the first limb but they do rely on the second limb of s 84(1)(a).
Section 84(1)(a): Changes in the character of the property or the neighbourhood
139 The Plaintiffs submit that in Re Stani, the Court considered that the introductory words in s 84(1)(a) of the PLA, in respect of consideration of changes in the character of the property or neighbourhood or other circumstances, apply to the 'second limb' of s 84(1)(a) including to the question of reasonable use.[110] In that case, the Court cited Re Ghey and Galton's Application that:[111]
It must be shown, in order to satisfy this requirement, that the continuance of the unmodified covenants hinders, to a real, sensible degree, the land being reasonably used, having regard to the situation it occupies, to the surrounding property, and to the purpose of the covenants.[112]
140 The Plaintiffs submit that changes in the character of the property or neighbourhood or other circumstances are relevant to consideration of reasonable use due to the terms and structure of s 84(1)(a), and are recognised in the common law test cited in Re Stani set out above. It is submitted that relationship between changes in the neighbourhood character or other matters, and the impediment to the reasonable user, was acknowledged by Pagone J in Suhr v Michelmore:[113]
Whether the continued existence of the restriction would impede the reasonable user of the land is a question of fact to be determined by inquiry into the consequences of the changes in the character of the property or of the neighbourhood or of other circumstances of the case which may relevantly and probatively bear upon the continued impact of the restriction upon the reasonable user of the land. The operation of s 84(1)(a) is conditional upon a causal connection between the stipulated changes and the impediment to the reasonable user. It is, therefore, necessary to look at the changes which have occurred and their impact upon the reasonable user of the land.
141 The Third and Fourth Defendants dispute that the introductory words apply to the second limb of s 84(1)(a), and submit that the phrase only applies to the first limb of obsolescence.[114] The Third and Fourth Defendants deny that Re Stani supports the Plaintiffs' proposition. They point to the decision of Menhennitt J in Re Alexandra, where his Honour considered Re Stani and Re Ghey and Galton's Application and nonetheless held that the reference to 'changes in the character of the property or the neighbourhood' are relevant only to the first half of cl. (a)'.[115] In Stanhill Pty Ltd v Jackson,[116] Morris J appears to have proceeded on the assumption that the introductory words apply only to the first limb of s 84(1)(a).
142 The other Defendants accepted that the introductory words do apply to the second limb of s 84(1)(a).
143 I do not think that Re Stani or Re Ghey and Galton's Application stand for the proposition put forward by the Plaintiffs. The Full Court in Re Stani appeared to assume that the introductory words to s 84(1)(a) do not apply to the second limb, in setting out the provisions of s 84(1) upon which the applicant had relied:
No reliance was placed on the first half of paragraph (a): it was not suggested that there had been such changes in the character of the property or the neighbourhood or other circumstances that would render the restriction obsolete. But the applicant did rely upon the second half of paragraph (a) which is composed of two elements, viz, that the continued existence of the covenant would, unless modified, impede the reasonable user of the land and that it would do so without securing practical benefits to other persons.[117]
144 On the other hand, the passage in Re Ghey and Galton's Application appears to me to refer primarily to matters of contemporary circumstance and context, and to the purpose of the covenant. These are a different matter and, moreover, are not said to limit consideration of the impediment to the reasonable user to what arises 'by reason of' those matters. Having regard to the passage in Re Stani cited immediately above, I do not think that the Court's approval of the much more general statement in Re Ghey and Galton's Application is significant.
145 The Plaintiffs submitted that Re Stani should be followed as a decision of the Full Court of this Court. I accept that this is so. However, it appears to me that only the decision of Pagone J in Suhr is in conflict with that authority, insofar as his Honour considered that the operation of the whole of s 84(1)(a) is 'conditional upon a causal connection between the stipulated changes and the impediment to the reasonable user.'[118]
146 In any event I do not consider that the conflict in authority amounts to much. Although it is not be the case that s 84(1)(a) requires that the stipulated changes be causally related to the impediment to reasonable user, I accept that the matters raised in the introductory words to s 84(1)(a) may be permissible and relevant considerations in respect of the second limb to that section. There is nothing in the section which suggests that the Court may not have regard to those kinds of considerations in determining whether the covenants impede the reasonable user of the land.
147 There is some dispute between the parties as to the proper interpretation of the expression 'impede the reasonable user of the land' for the purposes of s 84(1)(a).
148 The Plaintiffs submit that the correct test for reasonable use is the test cited in Re Stani,[119] in the passage cited at paragraph 139 above. It is said that this test concerns whether the covenant restrains a reasonable user of the land, and that it will be sufficient to show that, for example, the proposed use by an applicant is reasonable. The Plaintiffs further submit that inquiry into the context and purpose of the covenant will inform what constitutes rea[120]able use.120
149 The Defendants rely on Vrakas, in which Kyrou J cited the test cited in Re Stani and went on to say:
It is not sufficient merely to show that the continued existence of the covenant would impede a particular reasonable use which is proposed by the applicant. The applicant must show that the restriction will impede all reasonable uses.[121]
150 The Defendants submit that Re Stani does not dictate otherwise, and that the reference in that case to 'the land being reasonably used' leaves open the approach taken in other cases concerning the determination of reasonable user. Senior Counsel for the Third and Fourth Defendants, in particular, took me through a considerable body of authority tracing the history of the expression 'any reasonable user', from Re Henderson's Conveyance[122] to the decision of Macaulay J in Rosenwald v Hogg, in order to demonstrate this point. The Defendants further submit that this approach is sensible and accords with the purpose and requirements of s 84(1) of the PLA generally. It is said that if it were otherwise and the test could be satisfied by any 'reasonable' use of the land which was prohibited by the covenant, the 'reasonable user' test would be rendered meaningless.
151 In reply, the Plaintiffs submit that the Defendants have incorrectly approached s 84(1)(a) on the basis that it requires impediment to 'any or all reasonable use'. It is said that the Defendants' position places an unwarranted gloss on the statutory language and is not supported by authority, including Re Stani. Furthermore, it is said that the Defendants, and the authorities upon which they rely, misconstrue the source and derivation of the expression 'any reasonable use'. That is said to be Re Miscamble's Application,[123] in which case McInerney AJ quoted the view of Farwell J in Re Henderson's Conveyance as saying that '[t]here must be some proper evidence that the restriction is no longer necessary for any reasonable purpose of the person who is enjoying the benefit of it.'[124] The Plaintiffs submit that this passage focuses on whether the beneficiary continues to enjoy the restriction, not whether the person with the burden cannot make use of their land without its removal.[125]
152 Once again, there is a conflict among the authorities to which I was taken, but it is not necessarily the conflict on which the parties addressed me.
153 First, I accept the Defendants' submission that the decision in Re Stani does not expressly deal with the question or foreclose the approach to reasonable user taken in Vrakas, among other cases. Indeed, it is entirely consistent with the passage from Re Ghey and Galton's Application quoted in Re Stani that the Court consider whether the covenant hinders any reasonable use of the land, as opposed to a hindrance on only a reasonable use. However, I find the passage from Re Ghey and Galton's Application too ambiguous in this regard to be of assistance. What is said about Re Ghey and Galton's Application in Stanhill is dealt with below.
154 The Plaintiffs are clearly correct to point out that the passage from Re Henderson's Conveyance cited by McInerney AJ in Re Miscamble's Application refers to 'any reasonable purpose' of a beneficiary to the covenant. There was some conflation of this point with the issue of what 'the reasonable user' of land is in the Third and Fourth Defendants' submissions, which I do not accept. The passage in Re Henderson's Conveyance addresses the purpose and benefits conveyed by a covenant to beneficiaries, and is relevant to the second element of the second limb of s 84(1)(a), but is not relevant to the construction of the expression 'impede the reasonable user of the land'. The Court is not concerned with a general interpretation of the term 'reasonable' divorced from its statutory context.
155 However, the decision of McInerney AJ in Re Miscamble's Application is of some assistance. After citing Re Henderson's Conveyance as above, his Honour went on to cite and apply the observation of O'Bryan J in Re Hyett and Allen's Application, according to which '[i]t is not sufficient to show that [the covenant] will impede a particular reasonable user which is proposed by the applicant.'[126] McInerney AJ expressed his findings according to that approach as follows:
I think this is all the applicant succeeded in doing; he showed that a reasonable user of the land would be for flats, and that the continued existence of the restriction would impede such user. The evidence did not show that it was impossible to use the land as a family home, or that it is impossible to sell it for use as such. It merely showed that the applicant had been unable to sell at the price he asked.
... the applicant failed, therefore, to show that the continued existence of the restriction would impede the reasonable user of the land.[127]
157 In Stanhill, Morris J took a different view, considering that the decisions in Re Hyett and Allen's Application and Re Miscamble's Application:
... narrows the general words used by Lord Evershed in Re Ghey Galton's Application; and, more importantly, seems to effect a departure from the plain words used in the statute itself.
158 His Honour preferred the 'more liberal' approach of the Full Court of the Federal Court of Australia in Morpath Pty Ltd v ACT Youth Accommodation Group Inc.[132] In that case, the Full Court overturned a decision of the Supreme Court of the Australian Capital Territory in respect of a provision which Morris J considered to be in similar terms to the second limb of s 84(1)(a) of the PLA, whereby it was held that it was necessary to show that no reasonable use of the land was possible unless the covenant was modified. The Full Court held that the 'more liberal' interpretation, that the applicant need only show that their particular reasonable use is impeded, accords with the ordinary meaning of the words used in that section.[133]
159 In Fraser v Di Paolo Coghlan J referred to Stanhill and to a 'debate' as to the appropriate test for the second limb of s 84(1)(a), but found it unnecessary to decide whether to adopt Morris J's approach.[134] Similarly, in Vrakas, Kyrou J considered that Morris J had 'departed from what [Morris J] described as the more narrow traditional approach to s 84(1)'.[135] Kyrou J applied the 'longstanding principles' including that drawn from Re Miscamble's Application and others, but commented that the approach in Stanhill 'has much to commend it'.[136]
160 However, in Prowse [2012], Cavanough J had the occasion to consider whether Stanhill should be followed. His Honour declined to do so, on the basis that Morris J had impermissibly departed from 'long standing principles' while sitting as a single judge of this Court, and that his Honour was not justified in his reliance on Morpath.[137] In respect of that case, Cavanough J pointed out that 'the subject matter and language of the statute in question in Morpath was quite different from that of s 84 of the Act', as it permitted the Court to vary any provision, covenant or condition of a lease where the Court was satisfied that there were 'such circumstances existing as in the opinion of the court make it desirable to vary the provision, covenant or condition in order that the reasonable user of the land should not be impeded'. The relevant legislation also contained no equivalent to the additional requirement in s 84(1)(a) that the continued existence of the restriction not secure practical benefits to other persons.[138] His Honour preferred to follow the 'long standing principles', and approached the second limb of s 84(1)(a) on the basis that it requires 'all reasonable use of the burdened land' to be precluded by the covenant.[139]
161 I respectfully agree with Cavanough J's approach to Stanhill. On this basis, I also agree with the Plaintiffs' submission that Morris J in Stanhill misconstrued the meaning of Re Miscamble's Application, though this does not assist the Plaintiffs in any way. Rather, I am satisfied that the established authority, including Re Miscamble's Application and more recently Vrakas and Prowse [2012], require that I interpret the expression 'impede the reasonable user' as 'impede any and all reasonable user', and that Re Stani does not require otherwise.
Section 84(1)(a): Securing practical benefits, and s 84(1)(c) causing substantial injury
162 The parties accepted that the tests of whether the continued existence of the covenant secures 'practical benefits to other persons', in s 84(1)(a) of the PLA, and whether the proposed discharge or modification 'will not substantially injure the persons entitled to the benefit of the restriction' are 'similar'.[140] The parties also generally agreed in relation to the fundamental principles governing each test. These can be briefly stated.
163 Whether the covenant 'secures a practical benefit', or its modification would 'cause substantial injury', are questions of fact requiring consideration of the purpose of the Covenants and benefits originally and presently conferred by the Covenants, against the impact of the proposed modification upon those benefits.[141] As Gillard J put it in Re Cook,[142] in respect of the assessment of 'substantial injury' under s 84(1)(c):
Such injury can only be properly assessed by a comparison between the benefits intended to be conferred and actually conferred by the covenant initially on the persons entitled thereto and the resultant benefits if any remaining to such persons after the covenant has been modified. If from the evidence it appears that the difference between the two will not be substantial, then the applicant will have established a case for the exercise of the court's discretion under paragraph (c). In order to make this comparison it is proposed to consider what benefits the covenant over the subject land may have conferred upon the persons entitled thereto, and then to assess whether the modification of such covenant would or would not substantially diminish the benefit so discovered.[143]
164 The injury must be 'real', in the sense that it is not unsubstantial or fanciful, in order to be 'substantial'.[144] Similarly, 'practical benefits' within the meaning of the second limb of s 84(1)(a) are any real benefits to a person entitled to the benefit of a restrictive covenant and are not limited to the sale value of the land benefited by the covenant.[145] A wide variety of matters including noise, privacy, accessibility of properties and other matters of amenity may be considered in appropriate cases.[146] As is suggested in the passage cited above from Re Cook, it is necessary to show that the 'practical benefits' or 'substantial injury' are properly related to the benefits afforded by the covenants, in the sense that the 'practical benefits' derive from the covenant or the 'substantial injury' derives from the proposed modification.[147]
165 In respect of s 84(1)(a), it must be established that the covenant is not necessary for any reasonable purpose of the person who is enjoying the benefit of it.[148]
166 Further, the Court may consider the 'precedential' effect of a proposed modification leading to similar applications within the estate or neighbourhood, resulting in a more widespread detrimental change.[149]
167 It was not submitted that the expression 'other persons' in s 84(1)(a) applied more widely than to beneficiaries of the covenant, and in any event there was no evidence put before me about the practical benefits to any other person or group of persons. The parties proceeded on the basis that the relevant enjoyment of practical benefits would be by any of the beneficiaries to the Covenants.
168 The parties also accepted that, if the matters set out in the second limb of s 84(1)(a), or in s 84(1)(c), are proved by the applicant, the Court has a discretion to refuse the application.[150]
169 Town planning principles and considerations may be relevant to the exercise of the Court's residual discretion. 'Precedential' issues similar to those discussed above may also be relevant in the exercise of that discretion.[151]
170 It may be that 'matters of equity and fairness' such as those raised in the Second Milner's Report are relevant to the exercise of the Court's discretion. However, what must be borne in mind is that the discretion is not at large, and cannot overcome the statutory conditions to its exercise in s 84(1). In other words, while the Court has a discretion to refuse to grant an application notwithstanding that one or more of those conditions is satisfied, the Court has no power to grant an application unless those conditions are met.
171 There was a dispute as to whether the intention of an applicant under s 84(1) and, in particular, whether they were motivated by profit, is relevant in respect of either ss 84(1)(a) or (c), or in respect of the Court's residual discretion.
172 The First and Second Defendants pointed to the evidence in respect of the Plaintiffs' interest in the Property and its development, discussed in paragraphs 49-55 above, in support of a contention that the Court will not grant a modification of a covenant sought for commercial or private profit. The First and Second Defendants took me to Re Cook, in which Gillard J referred with approval to the remarks of Farwell J in Re Henderson's Conveyance:
Speaking for myself, I do not view this section of the Act as designed to enable a person to expropriate the private rights of another purely for his own profit. I am not suggesting that there may not be cases where it would be right to remove or modify a restriction against the will of the person who has the benefit of that restriction either with or without compensation, in a case where it seems necessary to do so because it prevents in some way the proper development of the neighbouring property or for some such reason of that kind; but in my judgment this section of the Act was not designed, at any rate prima facie, to enable one owner to get a benefit by being freed from the restrictions imposed upon his property in favour of a neighbouring owner merely because in the view of the person who desires the restriction to go it would make his property more enjoyable or more convenient for his own private purposes. I do not think the section was designed with a view to benefitting one private individual at the expense of another private individual. At any rate primarily, that was not in my judgment, the object of this section. If a case is to be made out under this section, there must be some proper evidence that the restriction is no longer necessary for any reasonable purpose of the person who is enjoying the benefit of it, or that by reason of a change in the character of the property or the neighbourhood, the restriction is one which is no longer to be enforceable or has become of no value.[152]
173 The First and Second Defendants further submit that in Re Cook Gillard J concluded that the only party to benefit from the proposal in that case was the applicant, who would know of the covenant; and that his Honour refused the application despite having evidence only in support of the application.[153] They submit that the Plaintiffs' proposal underlying the present application is a wholesale commercial exploitation of a subdivisional profit opportunity and should not be allowed.
174 The Plaintiffs submit that the consideration of intention or profit motive forms no part of the statutory test in s 84(1), and that it could not sensibly form part of that test as the removal of single dwelling covenants is generally for a profit motive. Further, the Plaintiffs submit that the comments of Farwell J were made in the context of the English system of land title preceding the introduction of the Torrens system.[154]
175 I accept the Plaintiffs' submissions in this regard. There is no reference in s 84(1) to the interests or intentions of the applicant other than their 'reasonable user', and in relation to the impacts of the applicant's proposal on other persons. In respect of Farwell J's comments in Re Henderson's Conveyance, in Re Cook Gillard J acknowledged that his Honour was discussing s 84(1)(a) but that the comments were also relevant to s 84(1)(c). Gillard J went on to describe the assessment of injury to a beneficiary as a result of a modification of a covenant in respect of subsection (c).[155] That their Honours were concerned with the 'practical benefit' and 'substantial injury' conditions in s 84(1) is also tolerably clear from Farwell J's observation that the section was not 'designed with a view to benefitting one private individual at the expense of another private individual.'[156] While the significance of the Plaintiffs' submission that his Honour was speaking in the context of a pre-Torrens system of title was not explained to me, nevertheless I do not think that Re Henderson's Conveyance stands for the approach set out by the First and Second Defendants.
176 Further, I reject the First and Second Defendants' submission that Re Cook was decided on the basis of the application of such an approach, whether as a result of the statutory tests or by way of the Court's residual discretion. It is true that, in Re Cook, Gillard J was faced with evidence only in support of the application to modify the covenant, including the approval of council, the consent of a number of beneficiaries, and a statement of an estate agent indicating that there would be no injury.[157] However, it is not the case that his Honour accepted that evidence but nonetheless decided the application on the basis of a principle against the modification of a covenant for the benefit of the applicant. Rather, his Honour considered that the approval of council was of no great weight as its powers to refuse to seal the plan were limited; and that statements of opinion from neighbours and the estate agent were of little assistance, as they were 'bald statements' repetitive of the language of s 84(1)(c).[158] In particular, they did not identify the benefits of the covenant in respect of which injury is to be assessed. As a result, Gillard J concluded that the applicant had not met the onus of establishing that the modification will not substantially injure the persons entitled to the benefit of the covenant.[159] That is a simple application of the onus and standard of proof imposed by the terms of the statute. Although Gillard J went on to say that, had the onus been sustained, he was not satisfied that he should exercise his discretion in the applicant's favour, that is a comment made obiter and gives little substance to the claim that an applicant's profit motive is relevant or determinative.
177 For my part, I do not think that the applicant's intention or profit motive will generally be relevant even as a matter of discretion, as I cannot contemplate a circumstance in which an applicant under s 84(1) would not seek to benefit from their proposal.
178 The Plaintiffs ran their Modification Applications by dealing first with the s 84(1)(a) Application and then the s 84(1)(c) Application in the alternative. This is consistent with the Originating Motion.
179 Nonetheless, in terms of dealing with the evidence, submissions and my analysis in respect of the Modification Applications, I have found it convenient to deal with the s 84(1)(c) Application first, before turning to the s 84(1)(a) Application, primarily as a means of avoiding repetition and duplication. That is not to say that I have ignored or overlooked the fact that the s 84(1)(c) Application is put in the alternative to the s 84(1)(a) Application; rather, given my conclusions in respect of the s 84(1)(a) Application, all matters raised were better discussed through the former rather than the latter.
Consideration of witnesses who attended to give oral evidence
180 I consider Mr Jia and Ms Bao to be generally honest witnesses. Mr Rogers impressed me as a reliable and independent expert witness, willing to express a view while remaining aware of the boundaries of his professional expertise.
181 Mr Milner, the Plaintiffs' town planning expert, at times appeared to put a gloss on his evidence, seemingly to portray matters supporting the Plaintiffs' position in a more favourable light. For example, Mr Milner contended that it was 'speculative' that the existence of five dwellings on the Land was likely to result in more people occupying the Land, compared to a single dwelling.[160] Further, and in respect of the same line of cross‑examination by the Third and Fourth Defendants, Mr Milner contended that the impact of the Plaintiffs' proposed modifications may be more limited as it is 'possible' that more than one of the subdivided lots could be purchased by one person and developed into a single larger dwelling. I do not disagree that it is possible, however this came across as an attempt to minimise the impact of the proposal. I do not consider that every part of Mr Milner's evidence was so affected, however it is a factor to take into account when weighing Mr Milner's evidence and opinion against other evidence, including the other town planning experts.
182 I will briefly address an issue which arose in respect of Mr Milner's evidence concerning whether the Covenants are obsolete. That is a question raised in the first limb of s 84(1)(a) of the PLA. The letter of instruction to Mr Milner from the Plaintiffs' solicitors dated 24 October 2019[161] stated that the Plaintiffs sought to develop and subdivide the Land into five or six individual lots, and that they intended to apply to this Court for a removal or modification of the Covenants under s 84(1(c) of the PLA. The letter also stated that Mr Milner was to give advice and an expert opinion to be used in support of the application. Although his instructions did not then include the first limb of s 84(1)(a),the First Milner Report addressed the question of whether the Covenants are obsolete. On cross-examination, Mr Milner said that he had addressed this question because he felt that there was "as compelling a case" under the first limb,[162] on the basis that from a town planner's point of view, it provided a clearer appreciation for him of what was relevant in this matter.[163]
183 The Defendants submitted that Mr Milner's evidence regarding obsolescence was entirely irrelevant and inadmissible,[164] and also said that Mr Milner had improperly strayed into advocacy on behalf of the Plaintiffs and that his evidence was thereby impugned. I do not accept either of these submissions. Firstly and importantly, the originating motion as originally filed sought orders for the modification of the Covenants on the basis of the first limb of s 84(1)(a). While this was later abandoned such that the Plaintiffs no longer sought orders on the basis of obsolescence, inclusion of this issue in at least the First Milner Report was hardly surprising. Second, although Mr Milner's subsequent reports continued to discuss obsolescence even after the first limb was no longer relied upon, evidence going to that question may be relevant to the second limb of s 84(1)(a) or even s 84(1)(c). Further I do not consider that Mr Milner offering his opinion to the Plaintiffs on that question at the time they were formulating their application was improper.
184 The evidence of Mr Dudakov, the Plaintiffs' valuation expert, as to his valuation approach and the considerations informing valuation was given in a straightforward manner, however he had a tendency to supplement that evidence with statements of opinion as to the impact of the Plaintiffs' proposal which were conclusionary and in some cases unsupported by his own evidence. Therefore, such opinions will be given little weight.
185 Mr Rogers was called by the Plaintiff to give expert evidence as to arboricultural matters regarding the subject Land, and did so in a straightforward manner.
186 Mr Barnes and Mr Negri, the town planning experts called by the First and Second Defendants and Third and Fourth Defendants respectively, gave coherent and reliable evidence and made limited concessions where appropriate.
187 The First and Second Defendants' valuation expert, Mr Schuh, also struck me as a straightforward witness seeking to give evidence within his areas of expertise. Mr Schuh conceded that his ultimate conclusion as to the valuation impact of the Plaintiffs' proposal was substantially based on his experience, rather than the product of direct research, but I accept that this concession was appropriate and honestly done. Similarly, Mr Brown (the valuation expert called by the Third and Fourth Defendants) gave clear evidence as to his valuation methodology including where matters of impression and professional opinion were significant.
188 Mr Raworth was called as an expert architectural historian and conservation consultant by the First and Second Defendants. He gave clear evidence in respect of those matters, and sought not to stray into opinions on other matters.
189 Mr Stapleton was called by the Third and Fourth Defendants as an expert in built‑form shadow visualisation, and gave clear and direct evidence as to those matters and his methodology.
190 David Prior, the Third Defendant, struck me as an honest witness. He tended to express his own opinions from time to time, but did so in a transparent manner, which made it possible to assess when he strayed into advocating his own case.
Purpose and original benefits of the Covenants
191 Mr Raworth gave evidence that he was unable to identify any sales notices, advertisements or other documentation relating to the sale of the Beaulieu Estate, its subdivision, or the specific intent in respect of the Covenants.[165]
192 Nevertheless, the original purpose of the Covenants is largely common ground. It is set out in the First Milner Report as follows:
(64) In my opinion, the original purpose and intent of the Covenants was to establish and protect a new neighbourhood, distinguished by a range of substantially sized and proportioned lots and a commensurate density of housing, including grandly proportioned and styled residences set in spacious grounds and garden settings.[166]
193 The basis upon which Mr Milner reached this view is set out in his report:
(65) The Covenants were executed in the early part of the 20th Century when the Parent Title was being progressively subdivided for the first time.
(66) The appeal and amenity of the Land and the Parent Title for a spacious residential neighbourhood was at that time influenced by both a direct and special relationship with Toorak House, and by other large and elaborate mansions existing and establishing in the surrounding neighbourhood.
(67) Toorak House, which had reverted to a private residence by 1912, had given its name to the suburb and as one of the first Italianate houses in the colony and the previous home of the Governor, influenced and lent status to the style of houses built in the area.
(68) The purpose and intent of the Covenants are also to be interpreted having regard to the timing of their execution and the absence of land use planning controls to:
manage land use and development; or
protect a particular neighbourhood character within a new subdivision and emerging area.
(69) It was not uncommon for restrictive covenants to be applied to land being subdivided for the first time. They served as an early form of town planning seeking to secure a particular land use, quality of neighbourhood and character for a new residential estate.
(70) In this instance. the consistency of substantially similar covenants applied to land in the southern part of the Parent Title makes clear an intention for the southern portion of the estate[167] to be used and developed to reflect a sense of residential spaciousness and grandeur not diminished by threat of encroaching non-residential activities as the area was progressively settled and established.
(71) The intention of the Covenants in my opinion accordingly conferred upon beneficiaries an expectation about the quality of residential character and amenity of the affected land that was appealing to wealthy landowners seeking to settle and develop land in Toorak.
(72) I place no weight on the fact that the Parcel C Covenant [ie. The Minor Covenant] did not restrict residential land use. Its area, dimensions (being no more than approximately 3 metres wide) and composition as part of the Land was likely to have resulted from incremental adjustments to the original subdivision pattern and associated access network.[168]
194 Mr Barnes and Mr Negri substantially agree with this approach.[169] Mr Negri notes that the Covenants do not include any control in relation to amenity matters such as site coverage, building height, width and form, overlooking and overshadowing, and so on; but it appears to be agreed by all of the town planning expert witnesses that the restrictions on the number and value of a dwelling on the Land have practical implications for the nature of development of the site.
195 Mr Raworth relevantly adds that, in his opinion:
The requirement for no more than one dwelling per allotment, constructed at a cost of not less than £1500 pounds, exclusive of all architect's fees and the cost of erecting any outbuildings and fences, seems directed to ensuring a minimum quality of construction and the maintenance of an open garden context, ie detached houses within a landscaped garden context. This can be seen to be a measure to ensure multiple small houses of cheap construction are not introduced to the lot and broader area, lessening the amenity associated with the original mansion allotments and the subdivisions that are being made. This in turn can be seen as something that would ensure the value of the lots in question, protecting each lot from 'inappropriate' development on adjoining lots that would diminish the amenity and character of the subdivision or area.
...
Toorak was an area in which the size of subdivided lots, the required minimum cost of construction, and the prestige of neighbours and surrounding mansion lots, was more or less incomparable within the Melbourne context. The covenants in this area were one mechanism by which vendors and residents sought to maintain its relatively august profile and expensive land values within the broader suburban setting of Melbourne in the early 20th century. In my view, a key purpose of such covenants was to establish and subsequently maintain a certain character, ie an expansive, gardenesque landscape of substantial detached houses.[170]
196 Notwithstanding the agreement as to the purpose of the Covenants, the parties were in disagreement as to the benefits initially and now conferred by the Covenants.
Subsequent developments within the Beaulieu Estate
197 The Plaintiffs submit that there has been 'universal' subdivision of the lots within the Beaulieu Estate. The Defendants dispute this as a matter of characterisation but, as will be seen, there is no dispute as to the facts in respect of subdivision and development within the Beaulieu Estate.
198 The subdivision of the Beaulieu Estate between 1912 and 1915 resulted in twelve substantial residential lots, including the subject Land.[171] From 1915 to the present, and primarily in the late 1950s to 1960s, the majority of those lots were further subdivided, leaving 14, 16 and 18 St Georges Road substantially undisturbed and only 16 St Georges Road entirely undisturbed.[172] Subdivision of large mansion estates, with covenants applied to control the quality of development and use, was a typical pattern of development in the 20th Century.[173] By the time this proceeding was commenced, the twelve residential lots had been subdivided into 48 residential lots in a network of cul-de-sacs from St Georges Road and Heyington Place.[174]
199 Three of the original lots subject to covenants in a similar form to the Major Covenant were subject to declarations pursuant to s 84(2) of the PLA that those covenants did not affect those lots, and were subsequently subdivided:
(a) Transfer 673900, of the land which is now 10 St Georges Road and 2, 3 and 4 Teringa Place, contained a covenant which was declared not to affect the land by order of Smith J dated 20 April 1959, in Randerson.[175]
(b) Transfer 674618, of the land which is now 12 St Georges Road and the southern half of 5&6 Teringa Place, contained a covenant which was declared not to affect the land, by order of Gavan Duffy J dated 8 October 1959, in Trustees.[176]
(c) Transfer 756553, of the land which is now 11 Heyington Place and 2 and 3 Heymount Close, contained a covenant which was declared not to affect the land, by order of Hudson J dated 14 August 1962, in Curtis.[177]
200 A further three lots subject to covenants in a similar form to the Major Covenant were subject to orders modifying the covenants to permit subdivision:
(a) Transfers 674494 and 682598, of the land which is now 8 and 8A St Georges Road and 1, 2 and 3 Greenknowe Court, contained a covenant which was modified to allow five dwellings to be built on the land by order of Smith J dated 15 December 1964. His Honour was satisfied that the continued existence of the covenant would impede the reasonable user of the land without securing practical benefits to the beneficiaries ('Knox Modifications').[178]
(b) Transfer 674180, of the land which is now 5 Heyington Place and 1, 2 and 3 Glendye Court, contained a covenant which was modified to allow four single-storey dwellings to be built on the land by order of Smith J dated 16 December 1964. His Honour was again satisfied that the continued existence of the covenant would impede the reasonable user of the land without securing practical benefits to the beneficiaries.[179] The covenant was the subject of a further application in 1986 for a declaration that the covenant did not affect the land, and for modification to allow for an existing dwelling which, unusually, was in doubt as to whether it was a single-storey dwelling. By order dated 20 October 1986, Master Brett modified the covenant such that that the existing dwelling was not in contravention of the covenant, but declined to make the declaration sought.[180]
(c) Transfer 778752, of the land which is now 13 Heyington Place and 1, 2 and the majority of 3 Crestmont Court, contained a covenant which was modified to allow five dwellings to be built on the land by order of Master Brett dated 29 October 1968. Master Brett was satisfied that the proposed modification would not substantially injure the beneficiaries.[181]
201 There has been some subdivision of lots subject to covenants in a similar form to the Major Covenant, which did not involve applications to this Court:
(a) A portion at the rear of 14 St Georges Road was excised and transferred to 5&6 Teringa Place. As the excised land has been used for a tennis court for the property at 5&6 Teringa Place, and not for a further dwelling, this subdivision was permissible under the terms of the covenant.
(b) The land which is now 1 St Catherines Lane was excised from 18 St Georges Road in 1994 pursuant to a variation of the covenant by Planning Permit No 94/4, permitting no more than two dwellings on the land as it existed prior to the excision.[182]
(c) Transfers 725237, in respect of the land at the corner of Toorak Road and Heyington Place; and 744670 in respect of the land between Heymount Close to the north and Glendye Court to the south, were each subject to covenants which restricted development to one dwelling house for every 100 feet of frontage.[183] In the latter case, the development of cul-de-sacs along the north and south boundaries allowed for its further subdivision.
202 The figure below was prepared by Mr Milner for his First Report, and modified by the Plaintiffs. It is an aerial photograph of the neighbourhood, overlaid with the cadastral survey map for residential lots in the Beaulieu Estate, and with shading representing the boundaries and status of the covenants affecting the eleven lots originally transferred out of the Beaulieu Estate.[184] I note that it does not show covenants arising out of subsequent transfers, such as the transfer of 18 St Georges Road and 1 St Catherines Lane, and the properties around the northern part of Crestmont Court. 18 St Georges Road and 1 St Catherines Lane are subject to a covenant in a similar form to the Major Covenant.[185] There was no evidence as to whether the Crestmont Court properties were subject to a similar covenant. Nevertheless the figure clearly demonstrates the current pattern of development within the Beaulieu Estate and also gives an indication of the pattern of development in the wider neighbourhood.
Aerial photograph of neighbourhood, overlaid with cadastral plan of present lots originally forming the Beaulieu Estate, and shading indicating status of covenant (Red - covenant imposed on transfer out of the Beaulieu Estate; Yellow Stripes - caveat declared not to affect the land; Blue Stripes - caveat modified)
203 Mr Milner also prepared a more focussed aerial photograph of the Land's immediate neighbourhood overlaid with the cadastral plan of present lots and labelled with the street addresses and features of surrounding properties.[186]
Aerial photograph of neighbourhood, overlaid with cadastral plan and labelled with street addresses and features of properties surrounding the Land
204 Mr Milner and Mr Barnes agreed that the circumstances of the Beaulieu Estate in 1912 and in the present were 'substantially different' in terms of the size and density of lots and built form, and the pattern of lots.[187] Mr Negri agreed that, at very least, there are more smaller lots of around 800-1000 square metres in the neighbourhood than in 1912, and that there are now more of such smaller lots than there are larger lots within the estate.[188]
205 To sum up this evidence, it is fair to say that there has been considerable change in the pattern of development within the Beaulieu Estate since the creation of the Covenants, though not all of this has been by way of modification or discharge of similar covenants; that a very significant part of these changes has occurred by the creation of cul-de-sacs, especially along Heyington Place; that only 14, 16 and 18 St Georges Road remain substantially undisturbed in terms of lot size and use; and that only 16 St Georges Road remains entirely undisturbed in terms of lot size.
Present character of the Land and neighbourhood
206 The aerial photograph above describes in a general way the size and orientation of lots within the Beaulieu Estate. It is clear from this that the Land interfaces most immediately with the properties at 14 St Georges Road and 5&6 Teringa Place to the south, and 18 St Georges Road and 1 St Catherines Lane to the north across St Catherines Lane. There is also an interface with properties in Crestmont Court to the east across St Catherines Lane, and a shared access to or interface with St Catherines Lane with 18 St Georges Road, 1 St Catherines Lane, St Catherine's School, 5&6 Teringa Place and properties in the western portions of Crestmont Court and Heymount Close.
207 St Catherines Lane is six metres wide, with no pedestrian walkways and designated parking only on the western side of the portion running north-south at the rear of the Land. It is bounded on all sides by high walls and fences, including some pedestrian and motor gates and cross-overs. It terminates in a cul-de-sac at its southern end.
208 18 St Georges Road is currently vacant land, on which a large single dwelling is under construction. The Court was taken to the architectural plans for the dwelling at 18 St Georges Road, and I will not repeat every detail of those plans here. It suffices to say that the dwelling comprises two stories and a basement, with the first and especially second floors oriented around a central courtyard space, occupying a little less than half of the total available area and positioned towards the St Georges Road frontage with a setback of approximately 15 metres. There will be minimal setbacks of around 2 metres from the boundary at ground level on the southern end, though it appears that it is intended that the current wall will be retained. The dwelling appears to be intended for use for a single family, albeit with support staff and with substantially more and larger amenities than the average single dwelling. 18 St Georges Road is primarily accessed from St Georges Road, however a crossover and entrance to St Catherines Lane is shared by it and 1 St Catherines Lane towards the rear of the property.
209 14 St Georges Road comprises a single large two-storey dwelling in a landscaped garden setting. The dwelling is positioned roughly in the middle of the lot, with a driveway and gardens at the St Georges Road frontage and gardens, a pool, and other amenities at the rear of the property. Properties to the south of 14 St Georges Road, and in particular the three-storey dwelling at 12 St Georges Road and the two-storey dwelling at 7 Teringa Place, overlook the rear gardens and amenities.
210 5&6 Teringa Place comprises a single dwelling, apparently a single storey, at the Teringa Place frontage of the lots, with open space including a tennis court at the rear of the property towards the subject Land. The property interfaces with St Catherines Lane, and appears to have a pedestrian access gate to the lane. There was no evidence of road access to St Catherines Lane from 5&6 Teringa Place.
211 St Catherine's School occupies a very large lot primarily accessible from Heyington Place, and has a rear gate access at the bend of St Catherines Lane. School officers gave evidence that St Catherines Lane is used regularly for services such as waste pickup, catering and other deliveries, and access by contractors such as cleaners. The lane is also used for access to St Georges Road, including for pedestrian traffic from the bus stop at the front of the Land and some motor traffic including for some staff parking on school premises.
212 3 and 4 Crestmont Court are immediately to the rear of the Land across St Catherines Lane. Both properties are oriented to Crestmont Court with gardens to the rear towards St Catherines Lane. Ms Mitrakas, the proprietor of 3 Crestmont Court, gave evidence that she primarily accesses the property from St Catherines Lane.[189]
213 Ms Mitrakas also gave evidence that properties in Heymount Close, Glendye Court and Teringa Place with rear access to St Catherines Lane also use St Catherines Lane for road access. There was no other specific evidence in relation to properties in the cul-de-sacs along Heyington Place.
214 Mr Barnes and Mr Negri each emphasised that the character and amenity of the First and Second and Third and Fourth Defendants' land, respectively, and any impacts from the Plaintiffs' proposal, are concentrated on St Georges Road, and that the pattern of development along Heyington Place is far less relevant.[190] This was on the basis that the Land and neighbourhood are practically experienced from street level or from parts of the neighbouring land, and not from a bird's-eye view.
Character and changes in the wider neighbourhood
215 The parties also addressed circumstances beyond the Beaulieu Estate.
216 In particular, Toorak House, now the Swedish Church, looms large in the evidence concerning the context and purpose of the Covenants. The Plaintiffs submit that it was a specific purpose of the Covenants that each beneficiary within the network of covenants shares the benefit of a fuller association with Toorak House, in order to gain 'respectability and prestige'. The Defendants also acknowledged it as a relevant contextual landmark.
217 The evidence is that Toorak House was the residence of the Governor of the Victorian colony from 1853 to 1874, when the Governor moved into the present Government House at Kings Domain. Mr Buckley acquired Beaulieu in 1863 and acquired significant surrounding parcels of land in the following years, which estate was subdivided and the network of covenants created between 1912 and 1915.[191] Mr Milner was cross‑examined by senior counsel for the Third and Fourth Defendants on what was perceived to be a discrepancy between the date at which the Governor departed Toorak House and the prestige apparently attached to proximity to that dwelling.[192] Mr Milner's evidence was that the prestige or value arose from the memory and historical association with the Governor, and the continuing existence of a large house and garden on the site.[193] I note that the written reports of Mr Milner and Mr Raworth appear to agree that, notwithstanding the departure of the Governor in 1874, there remained at the time of creation of the Covenants a prestige value associated with Toorak House directly, and that Toorak House had established a certain character which was replicated in the substantial lots created in the various subdivisions of the surrounding estates, and the architectural form of the dwellings built on those lots.[194] Mr Milner stated that the former kind of prestige value was 'diminishing as we subdivide off, but it hasn't disappeared.'[195]
218 There has since been subdivision and development along the St Georges Road frontage of the Toorak House property, and the house is no longer clearly visible from St Georges Road.[196]
219 There has also been some subdivision and change in pattern of development in the broader area around the Land. For the reasons given at paragraph 143, it is not necessary for me to define parameters of the 'neighbourhood' in a precise way, nor did any of the parties place any real weight on changes in developments beyond the Beaulieu Estate and Toorak House.
Potential impacts of a single dwelling on the Land
220 The parties all accepted that it is appropriate, when assessing the impacts of the Plaintiffs' proposal for up to five dwellings on the Land and any potential injury, to consider what is currently permitted by the Covenants. This is because it cannot be said that the Plaintiffs' proposal would cause substantial injury to beneficiaries if a single dwelling in compliance with the Covenants would have a substantially similar impact in respect of those matters over which the Covenants confer a benefit. The Court will consider the 'worst-case' outcome for permissible development on the Land in terms of impact on the beneficiaries, as well as 'the realistic probabilities of the plaintiff actually bringing about the "worst" that could be done under the existing covenant.'[197]
221 The parties' experts were generally in agreement as to the standards controlling even a 'worst-case' development, as a result of the Land's location in a General Residential Zone Schedule 8 under the Stonnington Planning Scheme. As set out by Mr Barnes, these include:
(a) Front setback - Minimum of 9 metres and maximum of 1/3 of the depth of the site (in respect of the Land, 35 metres);
(b) Setback from St Catherines Lane- minimum of 2 metres;
(c) Building height - Maximum of 12 metres or three storeys;
(d) Garden area - Minimum of 35% of the site area;
(e) Site coverage - Maximum of 60% of the site area;
(f) Permeability - Minimum of 20% of the site area;
(g) Side and rear setbacks - Minimum of 1 metre, increasing with the height of the building. Walls on boundary are possible in certain circumstances.[198]
222 Requirements also exist in relation to daylight to habitable windows on adjoining lots and the Land, solar access to north facing windows on adjoining lots, overshadowing of private open space on existing lots, overlooking of habitable room windows and private open space. It was not disputed that, with the exception of building height, these standards were generally 'variable' upon application,[199] though it was not said how or on what basis they could be varied.
223 Mr Milner did not seek to define the reasonable worst-case single dwelling, but expressed the opinion that, in general, the impacts of five dwellings may be no greater than that of a single large dwelling. Mr Milner observes that the Covenants do not guarantee any particular orientation, height, bulk or architectural style of a dwelling on the Land so as to avoid overshadowing, overlooking or visual intrusion. Similarly, Mr Milner points out that the Covenants provide no guarantee as to landscaping or vegetation on the Land. Mr Milner says that the addition of at least two new crossovers on St Georges Road would have no material impact on the streetscape or traffic, given that large dwellings such as the one at 18 St Georges Road commonly have return circular driveways with two crossovers.[200] Further, Mr Milner says that in the scenario of a large single dwelling extending deep into the Land, at least one immediate neighbour among 18 and 14 St Georges Road would be presented with limited landscaping and garden areas due to the siting of such a dwelling.[201] While he did not say so, I apprehend that a very deeply sited single dwelling on the Land may similarly affect 5&6 Teringa Place.
224 Mr Barnes outlined a 'possible worst-case scenario' as well as a 'more realistic outcome'. The 'possible worst-case scenario' was modelled after the largest footprint of any house in the street on a similarly sized lot. It is substantially the same as the dwelling previously on the Land, with site coverage of 29%, but with the minimum statutory setbacks and with three storeys in some parts, dual car access from St Georges Road and St Catherines Lane, and elevated north-facing windows overlooking 18 St Georges Road. Mr Barnes' 'more realistic outcome' was for a dwelling maximising its northern aspect and frontage with significant setbacks from St Georges Road and St Catherines Lane, of generally two storeys with the possibility of three storey elements.[202] Mr Barnes estimated that a single large dwelling would have six bedrooms and might accommodate 4.9 people, based on available population density statistics.[203]
225 Mr Negri takes the view that the dwelling under construction on 18 St Georges Road provides guidance as to the potential footprint and built form of a single dwelling on the Land.[204] Mr Negri also refers to 'quite large dwellings' in the broader neighbourhood, at 29-31 and 39-41 St Georges Road, as examples of the potential scale of a single dwelling on the Land. The Third and Fourth Defendants relied primarily on the reference to 18 St Georges Road as a comparator.
226 In response, Mr Milner suggests that Mr Barnes' description of the 'possible worst‑case scenario' in conjunction with the examples put forward by Mr Negri are 'useful references for assessing the potential injury arising from the form and siting of development.' However, Mr Milner disputes Mr Barnes' characterisation of a realistic scenario as less than the worst-case, and says that even Mr Negri takes the view that 'development would be to the fullest extent possible within a nominated building envelope'. [205] On this footing, Mr Milner sought to establish a worst-case scenario for a single dwelling by reference to the planning standards set out in paragraph 22[206] above.206
227 I do not accept that a realistic worst-case scenario for a single dwelling on the Land would have a footprint and built form to the greatest extent permissible under the planning scheme. Mr Negri's comment to that effect was in relation to the footprint and built form of a dwelling on a smaller lot according to the Plaintiffs' Proposed Envelope, not in relation to a lot the size of the subject Land. It is entirely unrealistic and impractical to suggest that an owner of the Land would build a dwelling with a footprint of 60% of the Land, and to three storeys. However I also consider that Mr Barnes' suggested scenarios understate the potential for a single-dwelling with a much greater impact than the dwelling previously on the Land. The dwelling under construction on 18 St Georges Road appears to me to be such a dwelling, and is a useful reference for considering a realistic 'worst-case' for a permissible single dwelling in terms of its impacts on the benefits of the Covenants.
228 18 St Georges Road is also a useful reference for matters outside of the footprint and built form of a realistic 'worst-case' single dwelling on the Land. I accept that a realistic siting and orientation of such a dwelling would be similar to that of 18 St Georges Road, or perhaps further to the centre of the site. Under the planning scheme it could not be set back from St Georges Road any further than 35 metres. Further, I consider that even a 'worst-case' would realistically have some landscaped garden and open space at the rear of the property.
229 I accept Mr Milner's observation that a single dwelling on the land could be of any of a wide variety of architectural styles, settings, colours, finishes and built and roof form. The realistic worst-case is that only one of many styles would be selected.
230 A realistic worst-case single dwelling may have its primary living areas, such as a living room and bedrooms, located anywhere in the house, and would not necessarily be set out in the same way as 18 St Georges Road. However, while Mr Milner said and Mr Barnes accepted that such a dwelling could 'potentially' cater for the same number of persons as three or four smaller dwellings, and result in similar traffic, noise and other amenity impacts as several smaller dwellings,[207] I consider that the apparent intended use of 18 St Georges Road is indicative of a realistic worst-case scenario in terms of population density and use of a large single dwelling for a single, possibly extended, family, and support staff, with facilities for entertaining much larger groups from time to time.
231 Mr Milner opines that the changes in neighbourhood character, including the pattern and size of lots and the diversity of housing stock, suggest that the purpose and benefits of the Covenants are 'severely diminished'.[208] On this basis Mr Milner says that the Covenants are obsolete, or in the alternative the further subdivision in accordance with the Plaintiffs' proposal would 'complement rather than detract from the more diverse character of the area' and would not compromise the special character of the area.[209] Mr Milner also says that 'matters of equity and fairness' support the modification on the basis that the beneficiaries are not similarly burdened by restrictions[210] - although Mr Milner acknowledged on cross-examination that he had not been instructed that 18 St Georges Road was the subject of a similar covenant, such that he had not known that 18 St Georges Road was burdened by a single dwelling covenant. [211]
232 Mr Milner gave the following evidence in response to a question put by senior counsel for the Third and Fourth Defendants:
MR GOBBO: So would you agree that it's still an expectation of people who live in Toorak and enjoy the benefit of this covenant that they should have those elements, spaciousness, quality of residential character, amenity, and the capacity to appeal to wealthy landowners to live in the area?
MR MILNER: I think the four items you have there I would agree with you on three. I think they have foregone the expectation of spaciousness by the extent of small lot subdivision that has occurred on large spacious blocks.[212]
233 Mr Milner nonetheless opines that the site layout in the Proposed Envelope is consistent with a 'spaciously proportioned' residential neighbourhood with reasonable setbacks and 'generous' garden settings, and that matters such as site coverage, overshadowing, overlooking, building height and bulk and vegetation could be appropriately managed within the scope of the Proposed Envelope to mitigate any impacts.[213] It is said that this management could occur in the design and planning approvals process.[214]
234 Mr Milner also emphasises the removal and separation of the Land's northern and western neighbours by St Catherines Lane and their orientation away from the Land.[215] He says that noise and traffic impacts would likely be experienced only by these neighbours and would be consistent with both the residential character of the Land, including the realistic worst-case scenario for a single dwelling, and consistent with the 'vehicle orientated environment' of St Catherines Lane.
235 Mr Milner expressed the above views in respect of a proposal with no particular height limit, on the basis that the Covenants were obsolete and that no substantial injury would be caused. I note that Mr Milner maintained these views in the context of his Second Report, which addressed the second limb of s 84(1)(a) and included a recommendation of a 9 metre height limit. The recommendation was made on the basis that it would grant the beneficiaries a further opportunity to control development on the Land, and as three-storey dwellings are not generally representative of the character of the area.[216]
236 Mr Milner also said that the Proposed Envelope gave beneficiaries assurances as to where dwellings would be located, and that beneficiaries could 'reasonably influence other matters' through the necessary town planning approvals processes.[217] Mr Milner acknowledged that no building permit would be required for the dwellings on the subdivided Land given that the subdivided lots will be greater than the threshold for a permit under the relevant scheme.[218] Instead, Mr Milner sought to clarify that influence over matters such as window placement, setbacks, fence height and even requirements for a tree reserve could be exercised in the subdivision permit stage.[219]
237 Each of Mr Barnes and Mr Negri dispute Mr Milner's assertions, and outlined their view on impacts in general and in respect of the First and Second Defendants, and the Third and Fourth Defendants, respectively. Both experts referred to photomontages depicting the full extent of built form within the Proposed Envelopes from the relevant properties, which were also in evidence in the Wilkinson Report and Stapleton Report, respectively.
238 Mr Barnes opines that, in the context of the neighbourhood, the proposal would reduce diversity of lot and housing stock by producing more of the smaller and more conventional lots which are now widespread in the area. Mr Barnes considered that a realistic outcome under the Plaintiffs' proposal would be for detached dwellings, notwithstanding the Proposed Envelope providing for a continuous built form for the two dwellings with St Georges Road frontage, on the one hand, and the three dwellings at the rear of the Land, on the other.[220] Mr Barnes considered it likely that the dwellings would generally have two storeys, would have a site coverage of between 37% and 45% of the subject Land as a whole with close to the minimum setbacks allowed in the Proposed Envelope, and would be occupied by an average of 3.3 people each. On this basis it is said that around 17 people would occupy the Land in a five-dwelling scenario, compared to around five people in a single large dwelling.[221] According to Mr Barnes, five dwellings on the Land would likely extend the visual bulk of development on the Land along the full depth of the site other than the setback at the St Georges Road frontage, and there would be limited opportunity for vegetation screening along the northern boundary given the relatively narrow 6 metre setback at that boundary.[222] Similarly, Mr Barnes says that it is likely that the rear three dwellings, in particular, would have north-facing windows with overlooking and a consequent loss of privacy over the garden space at the rear of 18 St Georges Road.[223] Mr Barnes also observes that those three rear dwellings would 'transform' St Catherines Lane into a 'particularly narrow one sided residential street' due to the provision of primary frontage into that lane.[224]
239 Mr Barnes also observes that other areas along St Georges Road where smaller lots exist are characterised by a reduced sense of spaciousness and higher density of built form, reduced level of vegetation, and maintenance and upkeep activity being conducted from or visible from the street.[225] Mr Barnes described his overall opinion of the impact of the Plaintiffs' proposal as 'both tangible and intangible and ... real and substantial', in particular with respect to the loss of spaciousness, vegetation and landscaping, and associated overlooking and overshadowing, in addition to an increased level of activity from people and cars.[226]
240 Finally, Mr Barnes disputes the capacity for the beneficiaries to affect the design and layout of dwellings on the Land otherwise than by enforcement of the Covenants. According to Mr Barnes, it is common practice for subdivision approvals to be conducted on the basis of a proposed plan of subdivision similar to the Proposed Envelope, and there is no requirement for detailed plans of proposed construction.[227] Mr Barnes says that the Defendants could provide objections to Council and apply to the Victorian Civil and Administrative Tribunal in respect of the subdivision permit,[228] but does not provide any evidence as to the matters which might be controlled in a subdivision permit or the degree to which the Defendants could exercise control or have an influence over those matters.
241 Mr Negri says that there remains a 'grand home' character between 14, 16 and 18 St Georges Road which the Plaintiffs' proposal would challenge. Mr Negri further considers that 14 St Georges Road and 5&6 Teringa Place would be impacted by the visual bulk, overshadowing and overlooking, and increased activity and noise as a result of the proposal. Mr Negri says that owners of the subdivided lots on the Land would be incentivised by the land value to build to the fullest extent of the Proposed Envelope, leading to an 'unbroken mass' to the north of 14 St Georges Road and 5&6 Teringa Place. It is said that this would have substantial impacts on visual amenity, illustrated by photomontages of blocks representing buildings to the extent of the Proposed Envelope overlaid onto photographs taken from the rear areas of 14 St Georges Road and 5&6 Teringa Place. It is also said that there will be inevitable associated overlooking and overshadowing, and corresponding loss of privacy and enjoyment of the rear open space, illustrated by the same photomontages and shadow massing diagrams.[229] Mr Negri considers that the mid-winter shadow when the sun is far to the north would cause substantial injury.[230]
242 Mr Negri also opines that the overlooking and loss of privacy for 14 St Georges Road would be exacerbated not only as a result of the presence of built form across the full extent of the Land, but as a result of the interface with three dwellings rather than one. Mr Negri says that it is unlikely that a single dwelling would occupy the rear of the Land interfacing with 5&6 Teringa Place, whereas under the Plaintiffs' proposal that is a certainty.[231]
243 The Plaintiffs and First to Fourth Defendants led evidence concerning the impact of the Plaintiffs' proposal on the value of those Defendants' land. No evidence was led in respect of impacts on value of other land, including the land owned by the Fifth to Seventh and Ninth to Fifteenth Defendants.
244 Mr Dudakov, the Plaintiffs' valuation expert, referred to Mr Milner's First Report for an outline of the Covenants and changes to and present status of the neighbourhood, and noted the unique attributes of the Land as part of the prestige residential market and the challenges in predictive valuation as a result of the COVID-19 pandemic. Mr Dudakov noted that it is 'difficult to find evidence of properties sold in Toorak which only abut large allotments and therefore can be used as a basis of comparison with other properties sold'.[232] Nevertheless Mr Dudakov conducted an analysis of twelve recent sales, including the sale of 18 St Georges Road in July 2017, to seek to identify any impact on value as a result of proximity to more or less intense development. Mr Dudakov concluded:
... review of the aforementioned sales included in Section 5 indicates that there is no discernible difference in value achieved for those properties in close proximity to more intense development as opposed to those properties not so impacted. The fact that properties have a 'Toorak' address and more particularly are within premier locations such as the St Georges Road precinct, more than counterbalances any perceived detriment arising from being located in close proximity to more intense development.
Accordingly, in my opinion the proposed subdivision of the Applicant Land into five lots and any development thereon would have no greater or lesser impact on the value of the adjoining properties than if the Applicant Land were developed as currently permitted.[233]
245 When asked about this methodology on cross-examination, Mr Dudakov said that he had not sought to compare properties with more intense neighbouring development with properties without such neighbouring development, in order to determine whether those two categories of sale prices were 'out of step'.[234] In a general sense, Mr Dudakov accepted that neighbouring development, including the density and architectural style, is relevant to value, but said that the Land in the premium area of St Georges Road would be highly sought after 'come what may'.[235]
246 Mr Schuh gave evidence in respect of 18 St Georges Road and 1 St Catherines Lane. He expresses the view that the value of 1 St Catherines Lane would not be affected; however, the value of 18 St Georges Road would be substantially affected, possibly by an estimated reduction in the range of 10%-15%.[236] Mr Schuh broadly agreed with Mr Dudakov that it is difficult to find concrete and determinative sales data reflective of the circumstances in question, and instead bases his approach on his experience and observations in the market, and on what he called 'market fundamentals'. This includes the likelihood that owners of subdivided lots on the Land will maximise the scale and height of their dwellings given the high prevailing land values and the proposed $4 million minimum construction costs; the likely reduction in privacy in the rear of 18 St Georges Road; and the likely reduction of overall prestige in the row of six grandiose estates beginning with 14 St Georges Road and heading north. Mr Schuh says that these are significant matters which a purchaser in the prestige residential real estate market would not overlook due to the mere fact of a Toorak address. Mr Schuh also considers that the proposal would result in traffic and noise in St Catherines Lane. Overall, Mr Schuh says that 'more selective' buyers of 18 St Georges Road would be excluded by the Plaintiffs' proposal, limiting demand and competition and thereby impacting the market value.[237] Mr Schuh further observes that this would be the case whether or not the five dwellings were built on the Land at the time of the next sale of 18 St Georges Road, as a purchaser would make inquiries as to what changes could occur on the Land.[238]
247 While Mr Schuh gave the estimate of 10%-15% reduction in value to 18 St Georges Road, he acknowledged that this was an estimate only. However, he suggests that in regards to an indicative minimum sale price for 18 St Georges Road of around $25 million, and an indicative maximum of around $40 million, any impact as a result of the Plaintiffs' proposal is likely to be substantial in dollar terms.
248 Mr Schuh also disputed Mr Dudakov's methodology, noting that on his kerbside inspection many of the properties used for comparison were not overlooked by apartment projects; and that the affected properties were either materially distinct in terms of location, and/or were not in the same prestige residential market as 18 St Georges Road.[239]
249 Mr Brown gave evidence in respect of 14 St Georges Road and 5&6 Teringa Place. Mr Brown assessed a number of prestige residential property sales to determine an appropriate value per square metre inclusive of improvements for those properties. This resulted in an indicated market value of approximately $34 million for 14 St Georges Road and $28.5 million for 5&6 Teringa Place.[240] Mr Brown then outlined the factors to be considered when assessing the impact of a neighbouring development on the value of a property as follows:
i) The prestige and streetscape associated with an individual property.
ii) Noise, amenity and traffic issues associated with adjoining development.
iii) The visual bulk associated with adjoining construction.
iv) Overlooking considerations.
v) Overshadowing considerations.[241]
250 Mr Brown expressed the view that the prestige and streetscape value would be reduced, particularly for 14 St Georges Road, and amenity impacts resulting from noise, traffic, visual bulk, overlooking and overshadowing would impact both properties' value.[242] Mr Brown agreed that it was difficult to precisely identify equivalent sales data in order to determine the magnitude of these impacts, and while he referred to sales affected by changes in neighbouring development whereby declines of between 14.2% and 40.33% occurred, he acknowledged that those sales were affected by other matters including the location, condition of the market, and the timing of the sale.[243] Nevertheless, Mr Brown estimates that the impact of the Plaintiffs' proposal on the value of the properties is likely to be in the order of 20% for 14 St Georges Road (with an impacted value of approximately $27 million), and 15% for 5&6 Teringa Place (with an impacted value of approximately $24 million).[244]
251 Mr Dudakov's Second Report responds to Mr Schuh and Mr Brown. Briefly, Mr Dudakov disputes Mr Brown's analysis of affected sales and says that any impact in value of the assessed properties can be explained by the superiority or inferiority of the relevant land; and notes that his commentary as to the overlooking of apartment projects into neighbouring properties 'related to streetscape rather than immediate overshadowing and privacy issues', in part because he did not conduct any internal inspections of any properties.[245] Mr Dudakov maintained his view that the Plaintiffs' proposal will not substantially impact the value of the adjoining lots.
252 From the evidence led by the parties, it appears that the only issue concerning the impact of traffic is the potential impact in St Catherines Lane.
253 There was expert evidence from Ms Dunstan, led by the First and Second Defendants, in respect of the likely traffic impacts resulting from the Plaintiffs' proposal. Ms Dunstan took the view that the subdivided lot on the land located at the corner of St Georges Road and St Catherines Lane would be primarily accessed from St Catherines Lane, and the three rear lots would be accessed from St Catherines Lane only.[246] On this basis, Ms Dunstan estimated an increase in traffic of 32 vehicle trip ends per day and three vehicle trips in the commuter peak hours in St Catherines Lane, representing an increase of 24 vehicle trip ends per day and two vehicle trips per commuter peak hour over a single dwelling on the Land using St Catherines Lane.[247] Ms Dunstan estimated that the daily environmental traffic capacity of St Catherines Lane is between 300 and 1000 vehicles per day, and 30 to 100 per commuter peak hour.[248] Ms Dunstan also expressed the view that loading activities would be relatively low, and - though she acknowledges that she is not a waste management consultant - anticipates that household waste would be collected from St Georges Road such that waste bins would be transferred from the rear properties to St Georges Road.[249]
254 Ms Mitrakas, of 3 Crestmont Court, gave evidence that her family uses St Catherines Lane as a primary access point for the four vehicles owned by her family, and that exiting St Catherines Lane is 'often difficult'.[250] There was also evidence from officers of St Catherine's School recited at paragraph 211 above, concerning the use of St Catherines Lane for school purposes. The town planning and valuation experts have also offered their views as to traffic impacts. Mr Barnes additionally gave evidence that, from his observations when inspecting the area, much of the school traffic takes place on Heyington Place and that he did not observe significant use of St Catherines Lane even at peak school traffic times of 8-[251] and 3pm.251
255 The Plaintiffs led evidence from Mr Rogers concerning the location and condition of trees on the Land and immediately neighbouring it. Mr Rogers observed that the trees on the southern boundary of the Land were in good health and that, in particular, the seven large linden trees at the interface with 14 St Georges Road were not yet fully mature and would have the potential to reach 20 metres in height and provide good screening, especially when in leaf. Mr Rogers opined that similar trees could be planted in the open space around the Proposed Envelope to provide further screening.[252] Mr Rogers took the view that no trees of arboricultural significance on the Land would be affected, and no trees on the neighbouring properties would be materially affected.[253] Mr Rogers also expressed the view, on cross-examination, that a new tree of 1-2 metres tall would take approximately ten years to grow to 12 metres tall.
256 There was also evidence from the proprietors and occupants of benefitting land.
257 Mr Prior of 14 St Georges Road gave evidence that he had placed value on the Covenants when purchasing his property, in respect of the prestige attached to the large dwellings at 14, 16 and 18 St Georges Road, and the sense of spaciousness and privacy at the rear of his dwelling.[254] Mr Prior said that the latter was the 'main reason'[255] he had purchased the property, and said that he was concerned about the capacity for overlooking, overshadowing, and visual intrusion in the private garden and facilities to the rear of his home by the Proposal. He accepted that there was some risk of those matters occurring in respect of a single large dwelling on the Land, but said that five dwellings would overlook, overshadow, and impose a visual bulk to a greater extent.[256] Mr Prior gave evidence that he bought 14 St Georges Road for $23,250,000 in 2014 and would not have paid that much had he known that the Covenants, and especially the single dwelling covenant applying to the Land, could be removed or modified or that the Land would be able to be redeveloped for multiple dwellings, particularly with dwellings at the rear of the Land overlooking the rear private open space of his property.[257] Mr Prior also acknowledged existing overlooking and visual impact from the large single dwellings at 12 St Georges Road and 7 Teringa Place to the south, and said that he and his family 'were not happy about it'.[258] When Mr Prior was asked whether he could plant a tall hedge to block the view of the development on the Land, Mr Prior observed that this would also detract from the sense of spaciousness, and add 'weight' and 'density'.[259]
258 Ms Mitrakas, of 3 Crestmont Court, also gave evidence that she had placed value on the existence of the Covenants when purchasing her property, as they contribute to a special character and afford her a sense of openness and spaciousness at the rear of her property.[260] Ms Mitrakas also expresses concerns about traffic in St Catherines Lane, as discussed above; and concerning the impact of the construction of the three rear dwellings on the Land on the viability of St Catherines Lane.[261]
259 Mr Washington, of 4 Crestmont Court, gave similar evidence that he had placed value on the spaciousness, low density and special character of the neighbourhood when purchasing his property. He says that the rear of his dwelling abutting St Catherines Lane, including the master bedroom, will be exposed to overlooking and a loss of privacy from the dwelling at the most easterly subdivided lot, and to additional traffic and domestic noise.[262]
260 The Plaintiffs submit that the Covenants, at their creation, conferred the benefit of a neighbourhood of single mansion houses on 1 to 2 acre lots. The Plaintiffs did not agree that the Covenants provided any protection from overlooking, population, built form bulk or height, noise, or traffic, or impose any positive obligation concerning vegetation.
261 The Plaintiffs submit that the changes in the neighbourhood character are a matter of consensus among the experts and are such that the Covenants no longer confer the benefit of living within a neighbourhood of stately homes on substantial landscaped blocks. It is said that the overall density, layout and configuration of lots, and the eclectic nature of the housing stock, have established a 'new character' for the Beaulieu Estate, and that the 'special mood' of the area established by proximity to Toorak House and Beaulieu has long since dissipated. Similarly, a relevant precedent is said to have been established for the modification of Covenants within the Beaulieu Estate for subdivision in the manner proposed by the Plaintiffs. It is said that the purpose and benefit of the Covenants, to ensure a neighbourhood of stately homes on 1 to 2 acre lots, is not now able to be realised.
262 Further, the Plaintiffs submit that a critical feature of the changes in the neighbourhood character is that a sense of spaciousness and grandeur of homes and gardens are no longer benefits conferred by the Covenants. On this basis, it is said that the high value housing stock to be constructed on the subdivided lots, on land equivalent in size to many of the lots in the Beaulieu Estate, is entirely consistent with any other purported benefits conferred by the Covenants being quality of residential character, amenity and appeal to wealthy landowners. The Plaintiffs submit that the photomontages of built forms to the extent of the Proposed Envelopes prepared by Mr Wilkinson and Mr Stapleton are of little assistance in assessing the impact of the Plaintiffs' proposal, as the high value housing stock will present articulated and finished facades, inclined roofing, and other features which will ultimately minimise the imposition of the built form.
263 The Plaintiffs dispute that many of the injuries alleged by the Defendants are relevant injuries at all, let alone substantial injuries. It is submitted that the Covenants do not protect a neighbouring landowner from glimpsing built form on the Land, nor from any degree of overlooking or overshadowing. Nevertheless, the Plaintiffs emphasise that a single dwelling on the Land could be very substantial in size and generate as much activity, noise, traffic, overlooking and overshadowing as the five smaller dwellings. Further, the Plaintiffs submit that the 9 metre height control in the Proposed Envelope is a better outcome for neighbouring residents than a potential 12 metre high single dwelling. The Plaintiffs adopt the view that the dwelling under construction on 18 St Georges Road is an indicative worst-case scenario for a single dwelling on the Land, and also suggest that the dwelling at 18 St Georges Road will 'swamp' any impacts flowing from modification of the Covenants in respect of the Land.
264 The Plaintiffs submit that traffic is not a matter protected by the Covenants, and is incidental in the sense that even a single-dwelling covenant provides no guarantee as to how many vehicles will access the property. Again, the Plaintiffs point to the dwelling at 18 St Georges Road, with a planned underground garage with capacity for 20 to 30 cars, as an illustration. It is said that a single large dwelling on 16 St Georges Road would continue to use St Catherines Lane for vehicle access.
265 In respect of valuation, the Plaintiffs rely on Mr Dudakov's view that there would be no impact on the value of surrounding properties, in part because of the $4m minimum construction cost and in part because of the prestigious environs of St Georges Road. The Plaintiffs submit that Mr Schuh's evidence should be disregarded as it was not based on any empirical evidence; and that Mr Dudakov's evidence should be preferred over Mr Brown's for the reasons explained by Mr Dudakov, namely that the differences in sale prices of comparable properties are wholly explicable by other factors such as location, aspect, size and improvements.
266 In respect of 18 St Georges Road, the Plaintiffs submit that the plans for the dwelling to be built on that site indicate that it is oriented inwards towards an internal courtyard, and is in any event separated from the Land by St Catherines Lane, two substantial masonry walls, and a 4 to 6 metre setback on the Land. This is said to substantially mitigate any concerns regarding overlooking or visual impact.
267 In respect of 14 St Georges Road and 5&6 Teringa Place, the Plaintiffs emphasise that a single large dwelling could have the same or greater impact, and said that a dwelling to the scale of the one under construction on 18 St Georges Road would present the owners of those properties with the same concerns regarding overlooking, overshadowing and visual bulk. In respect of overshadowing, in particular, the Plaintiffs disputed the utility of the shadow massing diagrams led by the Third and Fourth Defendants on the basis that any large dwelling would cast a shadow, and that the diagrams are misleading as to the existence of shadows from existing buildings and trees. Further, the Plaintiffs suggest that the Court may be minded to order thick vegetation screening on the southern boundary of the Land, to a suggested height of six metres, as a condition of modification of the Covenants. The Plaintiffs also point out that Mr Brown had not attributed any loss in value to 14 St Georges Road as a result of the three-storey house at 12 St Georges Road.
268 In respect of the balance of the Defendants, the Plaintiffs submit that their separation from and orientation away from the Land means that the proposal could not cause substantial injury to them.
269 In the face of this, the Plaintiffs submit that there are no matters which would cause substantial injury to the Defendants or which secure practical benefits for them, and that there were no matters warranting the exercise of the Court's discretion to refuse the application.
270 The Defendants are on all fours in respect of their general submissions as to substantial injury, and also made submissions regarding the particular injuries said to be sustained by them.
271 The Defendants say that the benefits conferred by the Covenants at their creation are broader than as identified in the Plaintiffs' submission. The First and Second Defendants described the Major Covenant's control over the number and quality of dwellings as the 'big ticket item' from which flow a series of practical benefits. The Third and Fourth Defendants put the benefits as follows:
(a) the sense of spaciousness associated with only single mansion dwellings being constructed on large lots, and a high quality of built form;
(b) the high standard of amenity associated with only single dwellings being constructed on large lots - that is a low level of and limited capacity for overlooking, overshadowing, visual bulk, noise, and traffic;
(c) to constrain population density in the area;
(d) the prestige and 'special mood'[263] of the area as a result of all of these factors; and
(e) the maintenance of a high market value as a result of all of these factors.
272 The Defendants acknowledge that there have been changes in the neighbourhood character, both within and without the Beaulieu Estate, and that these changes have had an effect on the nature and extent of benefits afforded to beneficiaries of the Covenants. However, each of the Defendants insist that they continue to enjoy benefits conferred by the Covenants, even if some of those benefits are diminished from their fullest extent under a previously undisturbed network of Covenants and consistent broader neighbourhood. The fact that a covenant fulfils at least part of its purpose, 'even if only to a diminished extent',[264] is sufficient to establish a practical benefit. Moreover the Defendants submit that they would suffer a substantial injury in respect of the enjoyment of those benefits as a result of the Plaintiffs' proposed modification of the Major Covenant.
273 The First through Fourth Defendants submit that the great majority of changes in the pattern of development, size of lots, and other factors which might diminish the overall efficacy of the Covenants at a neighbourhood level have occurred on Heyington Place and in the cul-de-sacs accessible from Heyington Place. These Defendants submit that lots on or accessible from Heyington Place have no interface with lots on St Georges Road except for St Catherines Lane, which is very limited; and that the frontages and main users of each side of the Beaulieu Estate are distinct and oriented away from one another, such that the subdivision and smaller size of lots along Heyington Place is not readily apparent to the users of St Georges Road. As such it is said that the subdivision of lots along Heyington Road is irrelevant or of limited relevance as it has had little to no impact on the First through Fourth Defendants.
274 By contrast the First through Fourth Defendants emphasise that their land, along with the subject Land, remain substantially undisturbed. The First and Second Defendants submit that the modification of the covenant in respect of 18 St Georges Road to permit the creation of 1 St Catherines Lane is very minor and 18 St Georges Road retains most of the full length of its interface with the Land. The Third and Fourth Defendants submit that the subdivision at the rear of 14 St Georges Road to provide land for a pool and tennis court at the rear of 5&6 Teringa Place has had little to no impact on the character of the neighbourhood, and instead generally maintains that character by the presentation of the St Georges Road frontage of 14 St Georges Road and the maintenance of a single dwelling with a private, open space to the rear of each block.
275 These Defendants also point to the significant interface and relationship between their properties and the subject Land. The First and Second Defendants submit that they are a direct neighbour with an interface of the whole of the southern boundaries of their land, which is experienced as the Covenants intended. The Third and Fourth Defendants similarly submit that the whole of their northern boundaries interface with the Land and that they will be the beneficiaries most directly affected by the Plaintiffs' proposal.
276 The Defendants, including the First and Second Defendants, were each content to treat the dwelling currently under construction on 18 St Georges Road as an indicative 'worst-case' scenario for a single dwelling permissible under the Covenants. Moreover, the Defendants emphasised the differences between a single dwelling on the Land, whether similar to 18 St Georges Road or even more substantial, and five dwellings on the Land in accordance with the Proposed Envelope. In particular, it is submitted that a single large dwelling would:
(a) most likely be positioned toward the front or in the middle of the Land, similarly to the dwelling previously on the Land, and to the dwelling on 18 St Georges Road and 14 St Georges Road. In any event it could not be positioned everywhere in the Land such that any impacts of a single large dwelling would be diffused to each neighbour in the manner which the Defendants submit is characteristic of the Plaintiffs' proposal for five dwellings. That is, a single large dwelling could have only one position in the Land, and have consequent overlooking, overshadowing and other amenity impacts in respect of only some of the neighbouring land;
(b) not realistically extend along the depth of the Land in the manner of the Proposed Envelope;
(c) have a much more substantial garden area;
(d) most likely be occupied by a single cohesive household, with one household's associated traffic, noise, waste and activity; and
(e) have a coherent architectural form and style, and be more 'stately' than five dwellings.
277 The Defendants also generally submit that the Plaintiffs have not provided sufficient evidence to discharge their onus under s 84(1)(c) of the PLA. The Defendants put weight on the fact that the Plaintiffs have not proposed any plans or details for the dwellings to be built under their Proposal, and it is submitted that without these the Court cannot assess whether there will be substantial injury.[265] Similarly, the Defendants submit that Mr Milner's evidence as to further controls which might be imposed through the subdivision permit rises no higher than a suggestion as to what might be the case, and does not answer the question whether there will not be substantial injury. The Defendants also submit that the substantive evidence as to the impacts of the Plaintiffs' proposal, including the majority of town planning and valuation experts and the visual evidence (eg of shadow massing or visualisations of built form), indicate that there will be substantial injury to the Defendants, and that the Plaintiffs ultimately rely on the conclusory statements of opinion of Mr Milner and Mr Dudakov.
278 The Defendants submit that Mr Milner's evidence should be given little weight, for a variety of reasons. Each of the Defendants submit that his evidence is internally contradictory, and the First to Fourth Defendants additionally submit that his evidence is affected by improper advocacy on the part of the Plaintiffs. The latter submission is put partly on the basis that Mr Milner appeared to change his position over time (including the recommendation of a 9 metre height limit in the Second Milner Report, where Mr Milner had given evidence that no substantial injury would arise in the First Milner Report); and partly on the basis of Mr Milner's proposition of or support for unrealistic scenarios. It is also pointed out that Mr Milner was given wrong instructions in respect of whether 18 St Georges Road had the burden of a similar covenant, which had infected his opinion.
279 The Defendants submit that Mr Dudakov's evidence is substantially based on Mr Milner's evidence, and for that reason (as well as the methodological issues outlined above at paragraphs 248 and 249 above) should also not be accepted. In particular, it is said that he relies heavily on Mr Milner's conclusionary opinions. The First to Fourth Defendants rely on the valuation evidence of their respective experts, and say that even if the Court is not inclined to accept the specific valuations given by those experts, there will be some impact which in dollar terms will be substantial or, in the alternative, the Plaintiffs have not established that there will be no substantial injury. It is submitted that Mr Dudakov acknowledged that many if not all of the material impacts of the Plaintiffs' proposal on the neighbouring land, such as overlooking, overshadowing, visual bulk, amenity impacts and loss of prestige, are relevant to value, and his conclusion that there would be no impact on value of neighbouring properties is therefore unsupported.
280 The First through Fourth Defendants objected to suggestions in the course of the hearing, including on cross-examination of the Third Defendant and Mr Rogers, that they could substantially mitigate any overlooking and visual intrusion impacts by additional vegetation screening. These Defendants submit that they are not obliged to take steps to mitigate the adverse impacts, their capacity to mitigate any impacts of the Plaintiffs' proposal ought to be given little to no weight in the assessment, and that to the extent the Plaintiffs insist on this position they concede that there will be injury to the First to Fourth Defendants.
281 In addition to the above general submissions the First and Second Defendants placed particular weight on three aspects of the Plaintiffs' proposal which they said would cause substantial injury to them. The impact on 18 St Georges Road was of particular significance to these Defendants.
282 First, the prospect of overlooking and loss of privacy in the private garden area to the rear of the dwelling being constructed on 18 St Georges Road, as a result of the three proposed dwellings to the rear of the subject Land. It is said that those dwellings are almost certain to maximise the height of the Proposed Envelopes, and to seek to maximise their northerly aspect by positioning prominent rooms and windows at the north of the dwellings. These windows would overlook the lane and boundary wall and intrude upon the privacy of the users of 18 St Georges Road. The First and Second Defendants say that a single large dwelling would not be positioned across the whole of the area of the three rear dwellings in the Proposed Envelope, and would also not be designed or occupied in such a way as to mean that 18 St Georges Road would be so intensively overlooked.
283 Second, the visual bulk and loss of visual amenity and spaciousness, resulting from the development of five dwellings across substantially the whole of the subject Land. The First and Second Defendants say that the entirety of the southern aspect would be occupied by the five dwellings, which will be a significant difference to a realistic worst-case single dwelling in terms of overall physical presence. This is said to be injurious to the First and Second Defendants in terms of visual intrusion, reduction in spaciousness, and loss of character resulting both from the size, diversity and lack of architectural coherence of the five dwellings. This is because the Plaintiffs propose to subdivide then sell the five lots, so that five individual owners would then be able to build, in whatever style they choose, on their own lots.
284 Third, the noise, traffic, waste and other activity-related impacts of five dwellings. The First and Second Defendants submit that there was no challenge to Ms Dunstan's evidence as to traffic, parking and waste impacts. It is also submitted that five dwellings will inevitably generate more noise than even a very large single dwelling. The First and Second Defendants refuted that either the intervention of St Catherines Lane, or their proximity to St Catherine's School, significantly offset any noise and activity impacts.
285 The First and Second Defendants submit that it is telling that all of the immediate neighbours to the Land have appeared to make submissions and call detailed evidence. It is said that this alone conveys the substantial impact the Plaintiffs' proposal would have. I cannot accept this submission, at least not to the degree to which it was made. The Court is tasked with determining whether s 84(1)(c) is satisfied, which task is not determined by the objection of beneficiaries alone or the number of them.[266]
286 The Third Defendant relied on his own evidence as to his enjoyment of the benefits of the Covenants, and the great value he placed on these benefits in the purchase and use of his property. He particularly emphasised the impacts in terms of privacy, overlooking, overshadowing and visual intrusion and spaciousness at the rear of his property, as well as the sense of prestige associated with the large single dwellings on large lots at 14, 16 and 18 St Georges Road, when viewed from St Georges Road. It is submitted that the Plaintiffs' proposal would result in a loss of spaciousness and visual amenity at the rear of 14 St Georges Road due to the greater extent to which built form would be visible; and that the three dwellings at the rear of the Land would overlook his private space. The Third Defendant also relies on the photomontage and shadow massing diagrams to illustrate that his property, and in particular his garden, will suffer a significant loss of sunlight in winter months.
287 In addition to the general submissions concerning vegetation screening, the Third Defendant also submits that he would be aware of structures behind any hedge, and be visually intruded and overshadowed by the vegetation itself, and would therefore feel added 'weight and density' in the environment. Further, it is submitted that the loss of the existing, deciduous linden and other trees along the boundary which permit light to penetrate in winter, and their substitution with evergreen vegetation to screen the development on the subject Land, would also be injurious. Similarly, the Third and Fourth Defendants submit that the overshadowing of deciduous trees is very different in nature to the overshadowing of dwellings built out to the likely extent of five dwellings.
288 In respect of the Fourth Defendant, it is submitted that the Plaintiffs have largely overlooked the impacts on 5&6 Teringa Place and have not sought to challenge any of the evidence in respect of those impacts. It is submitted that even the realistic worst-case scenario for a single dwelling would not be positioned at the rear of the Land and therefore overlook, overshadow or impose any visual bulk over 5&6 Teringa Place. For this reason the Fourth Defendant submits that he will suffer those impacts, as well as impacts related to noise and activity, in the private garden and facilities at the rear of the property in a manner which would not occur if the Major Covenant was maintained.
Fifth to Seventh and Tenth to Fifteenth Defendants' submissions
289 The Fifth to Seventh and Tenth to Fifteenth Defendants accept the evidence of Mr Barnes and Mr Negri upon which the First to Fourth Defendants base their distinction between the St Georges Road and Heyington Place portions of the Beaulieu Estate. Further, they accept that the character of the Heyington Place portion of the estate, including the cul-de-sacs along Heyington Place, has changed in a way that the St Georges Road portion has not. However, these Defendants place greater emphasis on the common usage of St Catherines Lane and the 'intangible' benefits enjoyed by them as a result of the single-dwelling restriction in the Major Covenant, including enjoyment of the character of St Georges Road and St Catherines Lane.
290 More particularly, for the Sixth and Seventh Defendants, it is submitted that approval of this application would pose the realistic prospect of overlooking of their private open space, the intrusion of visual bulk at the rear of their properties, and the noise impacts that follow an increase of activity in St Catherine's Lane and at the rear of the subject Land, in circumstances where such impacts are most unlikely at present.
291 For the Fifteenth Defendant, it is submitted that approval of the application would deprive it of the quieter and hence safer accessway for staff, students and other visitors of St Catherine's School caused by the increased activity in St Catherines Lane.
292 I accept the parties' agreed position as to the original purpose for the Covenants, and in particular the Major Covenant. In doing so, it is immediately apparent that the intended benefits of the network of stately homes in large garden settings, to be built within the Beaulieu Estate, is not limited to the mere existence of those homes on broadacre lots. That follows from the outline of the purpose and intention of the Covenants given by Mr Milner and Mr Raworth, and from the observation of Kyrou J in Vrakas that the assessment of substantial injury:
... requires a comparison between the benefits initially intended to be conferred and actually conferred by the covenant, and the benefits, if any, which would remain after the covenant has been modified.[267]
293 The purpose and benefits of the Covenants ought not be conflated with the particular image of a neighbourhood which the parties to the Covenants may have had at the time of their creation. Likewise the Covenants cannot be read down to impose only such a purpose or a benefit, when their terms are broader. That would offend the very same principles upon which the Plaintiffs seek to rely in support of their Declaration Application.
294 I consider that the Third and Fourth Defendants' formulation of the benefits initially conferred by the Covenants and said now to be enjoyed by the beneficiaries is appropriate. Matters such as spaciousness between properties and within the private spaces of properties, control of population density, and the associated amenity benefits concerning overlooking, overshadowing, traffic and noise are all evidently benefits which were conferred by the Covenants at their creation, as they follow directly from the purpose and effect of the Covenants in contributing to a network of stately homes on large allotments. They are benefits actually conferred by the Covenants at their creation, and are said to be conferred at the present. Although some may be intangible benefits, they are nonetheless real benefits amenable to the Court's assessment of injury.
The extent to which the Defendants continue to enjoy the benefits of the Covenants
295 Considerable attention was given to the question whether changes in the character and pattern of development in the neighbourhood meant that the benefits conferred by the Covenant were still enjoyed. I accept that this is relevant to an assessment of substantial injury under s 84(1)(c) of the PLA, though I note that the Court is not limited to consideration of injury framed by changes in neighbourhood character. Likewise the Plaintiffs are not required to show that the Covenants are obsolete or confer no benefit, though many of their submissions were directed to a similar point. What must be shown is that the difference between the position of beneficiaries to the Covenants at the present and in the likely circumstances of the Plaintiffs' proposal, having regard to the benefits conferred by the Covenants at their creation and at present, will not be a substantial difference to the detriment of one or more beneficiaries.[268] The Court is directed to the question whether modification of the Covenants in respect of the subject Land will cause substantial injury, to which changes within the network of covenants at large may or may not be significant.
296 Further and relatedly, whether a beneficiary shares the burden of a similar covenant is not immediately relevant to whether a modification of a covenant will cause a substantial injury to the beneficiaries. To the extent matters of equity and fairness were sought to be brought into the assessment of substantial injury, they are rejected. The extent to which a network of covenants is maintained or modified will be relevant only indirectly, by way of facilitating material developments in the neighbourhood which have the effect of diminishing the degree to which beneficiaries continue to enjoy benefits from the covenant in question.
297 The evidence does not support the Plaintiffs' sweeping assertions that subdivision and change within the Beaulieu Estate has been 'universal'. I accept that the subdivision on Heyington Place and the cul-de-sacs accessible from Heyington Place has been comprehensive, and that there has been subdivision along the southern part of St Georges Road and its cul-de-sacs as well. However, the nature of the changes at 18 St Georges Road/1 St Catherines Lane and 14 St Georges Road/5&6 Teringa Place is far from the kind of wholesale subdivision into small residential lots which characterises the Heyington Place side of the Beaulieu Estate. Rather, 18 St Georges Road remains an even more substantial lot than the subject Land, while 14 St Georges Road remains a very substantial lot with only a tennis court carved from the rear of the property, which subdivision is all but invisible from the street. Each property has or will have a very large single dwelling set in generous gardens. Further, to the south, 12 and 10 St Georges Road present from St Georges Road as being large homes, although it is apparent that their garden areas are small. To the north of 18 St Georges Road, there remain a number of very large stately homes (noting that the latter were not part of the Beaulieu Estate and do not have the benefit of the Covenants). Nonetheless, they contribute to the sense of spaciousness along St Georges Road from 14 St Georges Road and on to the north.[269]
298 I accept the Defendants' submission that, in general, the greater degree of subdivision along Heyington Place has had a limited effect on the enjoyment of the benefits of the Covenants by beneficiaries along St Georges Road, and of 14 and 18 St Georges Road in particular. The difference in orientation and points of access between the two portions of the Beaulieu Estate, and their physical separation from the St Georges Road properties, is significant in assessing whether the First through Fourth Defendants continue to enjoy the benefits of the Covenants and will suffer substantial injury as a result of their modification.
299 In general, I consider that the Plaintiffs make slightly too much of the intervention of St Catherines Lane in terms of the degree of impact the Plaintiffs' proposal will have on beneficiaries bounded by the lane. I acknowledge that it is relevant that there is some separation by distance and by the masonry walls and tall fences along the whole of the lane. But, in the end, St Catherines Lane is a narrow lane and all of the benefits which the Defendants enjoy are capable of being enjoyed to a substantial extent from across the lane. By the same token, the Plaintiffs' proposed modification is capable of causing substantial injury to neighbours across the lane.
300 I am prepared to accept that the subdivision along Heyington Place has substantially increased the level of use and activity in St Catherines Lane, though the evidence is somewhat thin in that regard. As I understand it, Ms Dunstan's evidence regarding a daily environmental traffic capacity is a measure of estimated capacity, rather than an assessment of average actual use. Ms Dunstan gives evidence that there are currently eleven residential properties with vehicle access from St Catherines Lane. Ms Mitrakas' evidence suggests that her household alone accounts for four vehicles using the lane, and that there are other active users of the lane among the properties adjoining it from Crestmont Court, Heymount Close and Glendye Court. While St Catherine's School is not and was never burdened by a similar covenant, I am prepared to accept that the level of activity in St Catherines Lane related to the school will have increased over time and that this is also relevant to the 'background noise' against which any injury to the beneficiaries to the Covenants will be assessed. The evidence suggests that St Catherine's School makes a regular and at times intensive use of the lane, including by students, but that the primary points of access to the school are on Heyington Place.
301 There has evidently been subdivision on St Georges Road, including the frontage previously occupied by Toorak House and within the cul-de-sacs accessible from St Georges Road. However, I consider that within the immediate environs of 14 and 18 St Georges Road that subdivision is less prominent than in other areas of St Georges Road. 20 St Georges Road, adjoining 18 St Georges Road to the north, presents as a single grand dwelling to St Georges Road with a significant setback, notwithstanding the subdivision and construction of a second dwelling behind it at 20A St Georges Road. 12 St Georges Road and the other properties to the south of 14 St Georges Road are less consistent with the original intention of the Covenants, more so as one travels south towards Toorak Road. Nevertheless, I consider that there has not been such change in the surrounds of 14 and 18 St Georges Road and 1 St Catherines Lane, and to a lesser extent 5&6 Teringa Place, to suggest that those properties do not enjoy the benefits of the Covenants.
302 I do not make much of the direct association or frontage with Toorak House as a benefit conferred by the Covenant, or the corresponding loss of that association. The uncontested evidence is that Toorak House had ceased to be the Governor's residence nearly 40 years before the Covenants were created. While it was and remains a grand house on a large property, it was at the time of the creation of the Covenants a private dwelling of historical interest which had made some impression on the local architectural styles and grand character of the neighbourhood. Much of this character is in the nature of background to the creation of the Covenants and is only indirectly related to the benefits conferred by the Covenants in terms of spaciousness, value and character of built form and gardens, and other amenity considerations. In other words, those benefits were part of the purpose and set of benefits conferred by the Covenants, in part because of an historic association with Toorak House; but those benefits were not conferred by the proximity or association with Toorak House to a significantly greater extent than they were conferred by the proximity or association with Beaulieu or other stately homes within the neighbourhood. I accept that there may have been an historical interest in Toorak House which may have attracted purchasers at the time, but I do not consider that this to be a particularly important purpose or benefit of the Covenants as compared with the more general elements of amenity referred to above. In my view, the Plaintiffs made far too much of the proximity of the Beaulieu Estate to Toorak House at the time of the creation of the estate and more particularly at the time the Covenants were created when the Beaulieu Estate was subdivided in around 1912. I think it highly unlikely that proximity to a residence last occupied by the Governor some 150 years ago which is now not even visible from St Georges Road is likely to attract purchasers in the current day.
303 Therefore, I consider that the First to Fourth Defendants continue to enjoy all of the benefits of the Covenant, to a substantial degree. I accept that the extent to which this is the case is somewhat reduced - in respect of 18 St Georges Road, by the increased activity in St Catherines Lane and from St Catherine's School in particular; and in respect of 14 St Georges Road, by the overlooking and loss of privacy resulting from the properties at 12 St Georges Road and 7 Teringa Place. But those benefits are by no means wholly or substantially diminished. Rather, the evidence suggests that these properties continue to enjoy a significant sense of spaciousness, prestige, privacy, amenity and high property value associated with the Covenants. It is fair to say that the extent to which the Fourth Defendant enjoys the benefit of the Covenants is likely to be less than that enjoyed by the First, Second and Third Defendants, although I do not consider that it is non-existent or de minimis.
304 It is apparent that the Fifth to Seventh and Tenth to Fifteenth Defendants enjoy somewhat fewer benefits from the Covenants due to their separation and configuration, as well as the effect of the subdivisions along Heyington Place on the overall spaciousness, density of population and built form, and prestige value. I am prepared to accept that it is a benefit to each of these Defendants that they be able to stroll past the Land and enjoy its character as a broadacre lot with a single mansion dwelling on it, but I would not give that much weight. Generally speaking, the capacity for each of these Defendants to gain a benefit from the Covenants diminishes as their separation from the Land increases.
Whether the Plaintiffs have shown that the Defendants will not suffer substantial injury
305 I accept much of the Defendants' critique of the evidentiary basis for the Plaintiffs' application. I acknowledge that the Plaintiffs are in the position of seeking to prove a negative, and in that respect it is understandable that they devoted much of their attention to challenging the Defendants' evidence as to injury. However, in general, I do not accept the Plaintiffs' challenges to that evidence and prefer the evidence of the Defendants' experts to the Plaintiffs' where they are in conflict.
306 As Kyrou J in Vrakas observed, it will be more difficult to establish that there will be no substantial injury as a result of a modification to a covenant if there are no detailed plans of the proposal to be undertaken following the modification.[270] That is not to say that detailed plans are a requirement in an application for modification of a covenant. But it is clear that an applicant may be on unstable ground in respect of discharging its onus if it is not able to characterise the outcome of its proposed modification with sufficient particularity.
307 That is an issue which affects the Court's assessment of whether beneficiaries will not suffer substantial injury. It also affects the other evidence adduced on that question. Without plans proposed by the Plaintiffs, the Defendants cannot be criticised for addressing the proposal on the basis of an unarticulated block in the form of the Proposed Envelope. All parties acknowledge that the ultimate outcome will not be such an unarticulated block, but there is no evidence as to where the architectural treatments and articulations will be applied in order to mitigate the impacts of the proposal. The Court is simply invited by the Plaintiffs to guess, and to assume that the impacts will be mitigated to a significant extent.
308 Nor do I accept that the concerns identified (such as overlooking and overshadowing, for example) by the Defendants can be swept away or answered by saying that these can be addressed when the Plaintiffs apply for a subdivision permit, as the Plaintiffs attempted to do. First, there was no evidence before me as to whether the Defendants would be able to intervene in that process or what that may entail. Second, and more importantly, it is simply no answer to an application which seeks to affect the Defendants' proprietary rights in respect of the Covenants.
309 The absence of particular plans for the Plaintiffs' proposal also affects the evidence of the Plaintiffs' experts. For example, Mr Milner gave the following evidence on cross‑examination:
MR NORTH QC: So automatically we know that there are obviously a significant difference in the utilisation of the land by one lot development or a single dwelling and a lot where there are five, and we see that in the building envelope, the use of the land would significantly increase having regard to five single residence owned by five separate subdivided parts?
MR MILNER: Well, I suppose it depends on use as to how many people are on the site.
MR NORTH QC: Yes?
MR MILNER: It doesn't follow that you get five times as many people doing five times as much activity.
MR NORTH QC: Yes?
MR MILNER: As you might do in one large household.
MR NORTH QC: Yes. It might be more than likely to have increased the population density in the subject land by having five dwellings rather than one?
MR MILNER: It could do, but that is again speculative because as I put in my report particularly with the unusual sorts of houses that get built in this part of Toorak you can end up with quite large populations even within what appears to be a single dwelling.[271]
310 Mr Milner's suggestion that it is 'speculative' that five dwellings on the Land would represent a higher population density than a single dwelling must be treated with some caution. I find it highly unlikely that five substantially sized homes would house the same or a smaller number of people in aggregate as a single large dwelling. However, even if Mr Milner's suggestion is accepted it does not assist the Plaintiffs, as it does not establish a basis upon which the Court can be satisfied that there will be no substantial injury to the Defendants. Mr Milner's opinion that many of the impacts 'could be appropriately managed' within the context of the Proposed Envelope, and by conditions imposed in the subdivision permit, similarly provide no real evidence that there will be no substantial injury to the Defendants. Much of Mr Milner's evidence rises no higher than the expression of an opinion that the Plaintiffs' proposal might not cause substantial injury, which is not sufficient.
311 In contrast, Mr Barnes draws upon a statistical basis for the view that population density is likely to be greater in five dwellings than in one. That evidence is supported by the evidence of Ms Dunstan in respect of the associated traffic, parking and waste. Similarly, Mr Negri draws upon the shadow massing diagrams of Mr Stapleton to support the contention that significant overshadowing of the lots to the south of the subject Land is likely in the winter months. The Plaintiffs' objection to that evidence on the basis that the diagrams are drawn on a static aerial photograph and therefore do not show corresponding shadows from existing structures and trees is noted, but does not displace the very compelling evidence of Mr Negri and Mr Stapleton in respect of overshadowing. Although the Defendants do not have any onus to discharge, they have presented concrete evidence as to the likely outcome and injuries to be suffered as a result of the Plaintiffs' proposal.
312 I broadly accept the Defendants' submissions as to the likely built form and usage outcomes for the five proposed lots. That approach accords with the proposed minimum cost per dwelling in the Plaintiffs' application and a commonsense view, informed by the town planning experts, as to how a lot owner would seek to maximise value and amenity for themselves. That is, it is likely that each will be developed into a single dwelling occupying substantially the whole of the Proposed Envelope, comprising two storeys and with minimal additional setbacks. It is likely that there will be some architectural articulation, especially at the roofs and in terms of wall features and renders, which will mitigate to some degree the visual bulk, imposition and overshadowing aspects of the development. It is likely that the dwellings will be built to a high quality, but will not share a particular architectural style. It is likely that the three rear dwellings will place significant domestic spaces, in particular bedrooms, at the north and south ends of the second storey of the dwellings in order to access light and views. It is likely that each dwelling will be occupied by a single, relatively standard, household with the associated traffic, noise, waste and other activity.
313 To this will be compared a realistic worst-case scenario for a single dwelling on the Land, in compliance with the Covenants and the relevant planning requirements. As noted I consider that the dwelling under construction at 18 St Georges Road is a useful example of such a realistic worst-case scenario, though I have approached the comparison with a degree of flexibility as to the siting, configuration, built form and other aspects of the hypothetical single dwelling.
314 A comparison between the likely outcome under the Plaintiff's' proposal, and the realistic worst-case scenario for a single compliant dwelling, will be conducted in respect of each Defendants' property to the extent appropriate. As a general observation, however, I accept that the total site coverage of built form in the two scenarios, expressed as a percentage of site area, may be similar. Mr Barnes' estimate of site coverage under the Plaintiffs' proposal, of between 37% and 45%, is not out of the question for a single very large dwelling on the Land. Nevertheless there are important differences in the distribution and configuration of built form on the Land, its height and bulk, and the use of the dwelling or dwellings on the Land.
315 In respect of valuation, Mr Dudakov says that it is 'difficult' to identify property sale data which can be used as a basis of comparison with the subject Land and the Defendants' land. There was substantial agreement between the valuation experts on this point, though there was some conflict as to the relevance and treatment of available data. Mr Dudakov conceded that he had not assessed properties affected by neighbouring intense development on the basis of a 'before and after' analysis, as Mr Brown had sought to do in respect of 2 St Georges Road at least. Instead, Mr Dudakov's analysis of the sales data he collected appears to me to proceed on the basis of whether he considered that the price per square metre achieved for the various properties was reasonable or in line with his expectation, given the lot size, location, improvements and other factors. This methodology does not seek to isolate the impact of intense neighbouring development on value, and goes no further than an expression of Mr Dudakov's opinion as to whether a certain sale price was affected by neighbouring development.
316 Given the evidentiary challenges, it is appropriate to consider the Defendants' valuation evidence with some caution as well. Mr Schuh very clearly acknowledged that his opinion was impressionistic and based on his expertise, rather than on research conducted for the purposes of his report. While Mr Brown undertook to analyse the impacts of intense neighbouring development on 2 St Georges Road on a 'before and after' basis, he properly concedes that several factors are relevant in the analysis of that sale. Likewise Mr Dudakov's critiques of Mr Brown's conclusions, as being based on properties which are not comparable to the Defendants' land and being entirely explicable by matters such as location, lot size, market conditions and improvements to the land, have some force. However that does not assist the Plaintiffs. Rather, it points to the gap in concrete and empirical evidence in assessing the valuation impact of the Plaintiffs' proposal.
317 Ultimately, each of the valuation experts were in agreement as to the fundamental principles to be applied and factors to be considered in determining a valuation, and in assessing the impact of neighbourhood factors on value. Based on this, the experts also appear to agree that intense neighbouring development will have some impact on the value of a property. Indeed, Mr Dudakov's conclusion that a 'Toorak address' and the 'premier location' of the Defendants' land 'more than counterbalances any perceived detriment arising from being located in close proximity to more intense development'[272] proceeds on the basis that there will be a detriment perceived in the market. That may be consistent with an assessment of whether the Defendants could achieve considerable value for their properties upon a sale, but it is not consistent with Mr Dudakov's final statement that there would be no difference in value if the Land is developed with five dwellings as compared to a single dwelling. That statement is not supported by the evidence and is therefore speculative. Further, Mr Dudakov's opinion is heavily reliant upon the conclusions set out in Mr Milner's reports, as is evident from Mr Dudakov's reports, and I do not consider that to be a sufficient basis for the conclusions as to valuation reached by Mr Dudakov.
318 I would treat Mr Schuh's and Mr Brown's estimates as to difference in value with some caution and will not make a finding as to the particular loss in value likely to be incurred by any of the First to Fourth Defendants as a result of the Plaintiffs' proposal. This is primarily because I do not consider there to be sufficient reliable evidence to enable me to make such a specific finding, though I am satisfied that there is likely to be a decline in value. However I accept their approach to the assessment of value, and in particular Mr Brown's formulation of the factors to be taken into account at paragraph 249 above. I note that they are substantially the same as the benefits generally conferred by the Covenants. To that extent, where I find that there will be impacts on the Defendants in respect of their enjoyment of those benefits, I will consider whether the cumulative effect of those impacts indicates that there may be a substantial impact in value terms.
319 Finally, the Plaintiffs rely on the Rogers Report concerning the current distribution and condition of trees on and adjoining the Land, and an assessment of the impact of the Plaintiffs' proposal on them. Mr Rogers largely confined his evidence to matters of arboricultural value and encroachment of the Proposed Envelope on the tree protection zone, but also offered an opinion as the procedures undertaken by a developer when seeking to remove trees or plant new trees. To paraphrase his evidence, a great deal depends on the approach taken by a council arborist and planning officers in consideration of permits to remove trees, on further and more detailed assessments of trees, on the precise parameters and design of buildings encroaching on the trees, and the particular preferences of the developer and occupier of the Land. Mr Rogers also said that the Defendants would have no opportunity to intervene in the planning process in respect of trees. The density or quality of vegetation on the Land is not, in itself, a benefit conferred by the Covenants, but may be related to amenity benefits such as overlooking, overshadowing and visual bulk, and perhaps to the 'special mood' of the neighbourhood insofar as 'substantial garden settings' are maintained in the Estate. At most, the amount and type of vegetation on the Land may be an indirect benefit of the Covenants. In this context, Mr Rogers' evidence as to the likely fate of specific trees carries limited weight.
320 It remains to assess the evidence in respect of each of the Defendants' properties. The above general observations concerning the evidentiary foundation of the Plaintiffs' application are made to reinforce the point that the onus rests with the Plaintiffs. The task before the Court is to determine whether there will be no substantial injury, and it is not required that the Defendants establish, on the balance of probabilities, that there will be a substantial injury. Nevertheless the Defendants will succeed if I am satisfied that there is likely to be a substantial injury.
321 I am satisfied that the First Defendant, and to a lesser extent the Second Defendant, are likely to suffer substantial injury as a result of the Plaintiffs' proposal. The evidence in respect of 1 St Catherines Lane by itself is quite slim, and all parties have treated it pragmatically as a part of 18 St Georges Road. I am content to do so and note that the analysis is substantially the same if assessed from the perspective of a standalone lot.
322 The First and Second Defendants continue to enjoy substantial benefits from the single-dwelling restriction in the Major Covenant, in terms of spaciousness and low built form density, limited overlooking and overshadowing, and low population density and associated amenities such as more limited noise and traffic. According to the plans for the dwelling at 18 St Georges Road, the First Defendant will not make significant use of St Catherines Lane for vehicle access. That access likely will still be required for 1 St Catherines Lane. The First and Second Defendants also enjoy the high prestige and property values associated with the location and the above benefits.
323 If the Plaintiffs' application were to be successful, and subject to subdivision permit approval, there would be three dwellings of two storeys each, facing and with upper storey north-facing windows overlooking the rear garden of 18 St Georges Road. The prospect of overlooking is mitigated but not entirely diminished by the intervention of St Catherines Lane and the boundary walls. Obversely, from the rear garden of 18 St Georges Road, the southern aspect would be obscured by three large dwellings of likely incoherent architectural style. Mr Wilkinson's visualisations demonstrate that even at a height of 9 metres, and allowing for some further articulation of the dwellings, the three rear dwellings on the Land would be very prominent. When compared with the realistic worst-case scenario for a single dwelling, I consider that there is a likely and significant increase in the prospect of overlooking from the Land and of the visual bulk and corresponding loss of spaciousness when viewing across the Land at the rear of 18 St Georges Road.
324 I accept that the size and configuration of the dwelling under construction at 18 St Georges Road is likely to mitigate the effects of overlooking and visual bulk when viewed from the dwelling. However that has little relevance to the impacts to be experienced from the rear garden. I do not accept that it is incumbent on the First and Second Defendants to screen their southern boundaries with vegetation to mitigate any impacts from the Plaintiffs' proposal.
325 While the First Defendant may not be directly substantially affected by the increased traffic in St Catherines Lane according to the current plans for the dwelling on 18 St Georges Road, it is likely to experience an increase in noise as a result of that traffic. I also accept that there may be a more limited impact on the First and Second Defendants in terms of noise given the proximity to St Catherine's School, but note that five dwellings on the Land are more likely to generate noise outside of school hours, and particularly at night. There was little direct evidence as to any increase in noise.
326 I consider that the First and Second Defendants are likely to experience a loss in the overall prestige at a streetscape level as a result of the two dwellings proposed to be constructed at the St Georges Road frontage of the Land. This is particularly the case given that they will likely be separately owned and designed, such that there is no guarantee, for example, that they will present from St Georges Road as a single unified building or as coherent side-by-side dwellings. This and the impacts described above - in particular, the overlooking and corresponding visual intrusion in respect of the private space in the rear of 18 St Georges Road - are impacts which are likely to impact the value of the First and Second Defendants' land. I decline to make a finding as to the likely magnitude of impact but accept the Defendants' general submission that, in the context of the prestige residential property market in Melbourne and the high value of the property, any small impact in percentage terms will be substantial in dollar terms.
327 The Third and Fourth Defendants similarly enjoy all of the benefits of the Covenants, and in particular the sense of spaciousness and privacy in the rear of their properties. I accept Mr Prior's evidence that he placed great value on the private use of his garden when purchasing the property at 14 St Georges Road, and continues to place value on that aspect. As noted, there is no evidence that either of the Third or Fourth Defendants derive any benefit from the use of St Catherines Lane.
328 The Plaintiffs' proposal is likely to result in a significant reduction in spaciousness, visual amenity and privacy at the rear of the Third and Fourth Defendants' land. The prospect of overlooking and visual intrusion is greater than for the First and Second Defendants, due to the immediate proximity of the Third and Fourth Defendants to the Land. Further, due to the orientation of the lots, the Third and to a lesser extent Fourth Defendant are likely to experience substantial overshadowing of their properties in the winter months.
329 I consider that these impacts are likely to be substantially greater than similar impacts from a realistic worst-case single dwelling, which is likely to have a significantly smaller total footprint and built form bulk and could be positioned in only one location on the Land. To the extent that it was positioned precisely adjoining the Third Defendant's private space (which is unlikely), the impacts on the Fourth Defendant would be substantially less than the impacts of the Plaintiffs' proposal. In the very remote scenario that a single large dwelling were located adjoining the Fourth Defendant's land, the same is true as for the Third Defendant.
330 The Third and Fourth Defendants are likely to experience an increase in noise from five lots adjoining their properties. I do not accept that the large dwelling at 18 St Georges Road will offset any of the noise from those dwellings, considering the remoteness of the Third and Fourth Defendants from 18 St Georges Road and the intervention of the row of two storey dwellings on the Land.
331 The same observations concerning prestige and overall value made in respect of the First Defendant may be made in respect of the Third and Fourth Defendants. The impact on the Third and Fourth Defendants' privacy and visual amenity to the rear of their land and the diminution of the overall character of the neighbourhood, in the context of Melbourne's prestige residential market, is likely to have a negative impact on the value of the Third and Fourth Defendants' properties. As already noted, even a small percentage reduction in value is significant in dollar terms.
Fifth to Seventh and Tenth to Fifteenth Defendants
332 The Sixth and Seventh Defendants, and to a lesser extent the Fifth Defendant, are immediately across St Catherines Lane to the subject Land, and are oriented away from the Land. However, their private rear space and, in the case of the Sixth and Seventh Defendants at least, bedroom windows face the lane and the rear of the Land. They thereby enjoy the benefit of open and unoccupied space at the rear of the Land, as well as a more limited use of St Catherines Lane.
333 It is more likely than not that there will be significant injurious impacts to these Defendants in terms of their use of St Catherines Lane for vehicle and pedestrian access. While it is difficult to determine, at the very least the Plaintiffs have not satisfied me that there will not be such a substantial injury. It is likely that there will be increased noise in St Catherines Lane, especially out-of-school hours.
334 The prospect of overlooking from the rear dwelling in the subdivided lots on the Land is slightly more limited than the prospect in respect of the First to Fourth Defendants, but is nonetheless real. Likewise the imposition of visual bulk and loss of a sense of spaciousness when viewing across the Land from the Fifth to Seventh Defendants' properties is less than in respect of the First to Fourth Defendants, but is real.
335 The Fifteenth Defendant, St Catherine's School, is also relatively proximate to the Land, but its primary complaint concerns the use of St Catherines Lane. To the extent that the Major Covenant is relevant to the level of activity in the lane, I accept that the Fifteenth Defendant enjoys the benefit of more convenient and safe transit of staff, students and other persons to and from the School. It is possible that the School will suffer injury as a result of the diminished utility and overall safety of the lane arising from the increase in traffic. On its own, I do not consider the potential injury to St Catherine's School in this regard to be substantial.
336 The Tenth, Eleventh and Fourteenth Defendants own properties in cul-de-sacs off Heyington Place with access to St Catherines Lane to the south of the subject Land. As noted, there is very limited evidence as to their current use of St Catherines Lane, such that it is difficult to determine to what extent these Defendants derive a benefit from the Major Covenant in terms of the activity in St Catherines Lane. While I am prepared to accept that there is some benefit so enjoyed, I am not satisfied that the impact of the Plaintiffs' proposal would be substantial.
337 The Twelfth and Thirteenth Defendants are proprietors of 15 Heyington Place, at the northern corner of Heyington Place and Crestmont Court. The property is separated from the Land by St Catherines Lane, the crook of Crestmont Court, and two other properties. It has no access to St Catherines Lane or St Georges Road. While I accept that these Defendants may gain a general benefit from the Covenant in terms of neighbourhood character, there is little to indicate that they enjoy any material benefits. I do not consider that the Plaintiffs' proposal would cause them substantial injury.
338 For the reasons given above, I am not satisfied that there will be no substantial injury to any of the Defendants as a result of the Plaintiffs' proposal. As a consequence, the s 84(1)(c) Application will be refused.
339 Before moving on, I wish to say something further about the way that the Plaintiffs put their case in respect of the Modification Applications, and it is convenient to do so here. The Plaintiffs clearly made a decision to pursue the Modification Applications without providing detailed drawings or plans of their proposal; rather, the detail of the proposal was confined to the Proposed Envelope. That was their choice, and they were entitled to run their case that way if they saw fit. As noted earlier, having made that choice, they then have to bear the consequences of it in terms of not being able to clearly articulate the changes which may occur and whether they will be substantially injurious to the Defendants.
340 Similarly, the Plaintiffs also clearly made a decision to pursue the modifications without an explicit height limit for the proposed new dwellings. Instead, they relied on the limitation in the relevant planning scheme of 12 metres. Their own town planning expert, Mr Milner, recommended a height limit of 9 metres rather than 12 metres. After receiving the Second Milner Report containing this recommendation, in December 2020 the Defendants attempted to have the Plaintiffs clarify their position as to what height limit they were proposing, and invited them to amend the originating motion to reflect a 9 metre height limit. The Plaintiffs refused to do so. Unsurprisingly and understandably, the Defendants had their experts opine on the impact of the proposal at both height limits, including the provision of drawings and photo montages. The Plaintiffs opened their case and presented their evidence at trial without stating in clear terms that their proposal was based on a 9 metre height limit. Under cross-examination by the Plaintiffs' Senior Counsel, Mr Barnes was asked why he had included an opinion based on a 12 metre height limit when he 'understood that [the Plaintiffs] were advancing Mr Milner's evidence of nine metres high'.[273] Not only was that implied criticism of the witness unfair in the circumstances, it also lacked a proper foundation as there was no evidence at all that the Plaintiffs had accepted that recommendation. It was also not particularly fair to the Plaintiffs' own witnesses: at the conclusion of Mr Milner's evidence, I asked him whether his opinion that there was no substantial injury would be different if the height limit was 12 metres rather than 9 metres, to which he responded that the issue was not 'black and white' but that the recommendation of 9 metres provided a 'greater level of comfort' to the Defendants.[274] Mr Horgan then remarked that the Plaintiffs 'rely upon' Mr Milner's evidence 'and always have', and that if I were to accept Mr Milner's evidence 'that would result in a height limitation'.[275]
341 While the Plaintiffs relied on Mr Milner's evidence, it was far from clear at the outset and during presentation of their case that they had adopted the 9 metre height restriction. Mr Horgan's comment to me as set out above was leaving open the prospect of there being no height limitation expressed in the modified covenant. It seemed to me that the Plaintiffs were trying to have a bet each way. The Court and the Defendants can only approach the Plaintiffs' application in the manner in which it is put, which at that time did not include any express limitation on height. It was not until just prior to the Third and Fourth Defendants presenting their evidence that the Plaintiffs nailed their colours to the mast and indicated that they intended to seek leave to amend the originating motion to include a 9 metre height limit. This was because Mr Gobbo stated that the Defendants were entitled to know the case they were responding to before adducing evidence, a proposition which is hardly surprising.
342 In respect of both the lack of detailed plans or drawings and the failure to be clear about a height limit, the Plaintiffs effectively approached the Modification Applications by coming to the Court to see what they could get. That is all very well, but having cast their net wide, their applications have to be assessed on that basis and not on what changes may be able to be made to the Proposal to possibly make it more palatable.
Whether the Covenants impede the reasonable user of the Land
343 As I have already discussed, the first part of the second limb of s 84(1)(a) of the PLA requires that the Plaintiffs show that the Covenants impede any and all reasonable user of the Land. It may be accepted that the Plaintiffs' proposal is 'reasonable' as a use of land at large, but this is not wholly relevant to whether the Covenants 'impede the reasonable user of the Land' for the purposes of s 84(1)(a) of the PLA.
344 Mr Milner conceded that 'the continued existence of the restriction would not impede the user of [the Land] from using the Land for a single dwelling'.[276] Mr Milner expressed the view that the restriction would nonetheless impede the development of the Land in a manner similar to that permitted in other parts of the estate, and that 'matters of fairness and equity' weigh in favour of modification to align with those other, reasonable, users of their own land.[277] Mr Barnes and Mr Negri each opine that the use of the Land for a single dwelling is not unreasonable, especially in light of the many other substantial single dwellings on large lots in the neighbourhood and the fact that the Second Plaintiff will have purchased the Land with knowledge of the restriction.[278]
345 Mr Negri also refers to and exhibits a planning permit obtained by or on behalf of the Second Plaintiff in 2018, for the proposed construction of a large single dwelling on the Land with a swimming pool, tennis court and outbuilding for a proposed cost of $19.8 million.[279] The First and Second Defendants further tendered as an exhibit the drawings of the proposed dwelling to be built pursuant to that permit.[280] While the Second Plaintiff was uncertain about the permits and other procedures, she confirmed that at the time the Land was purchased she had intended to live there in a large single dwelling.[281]
346 The Plaintiffs rely substantially on their submissions as to the proper construction of the First Limb of s 84(1)(a), which I have rejected. The Defendants' submissions are in agreement that in the circumstances of the neighbourhood and the many large single dwellings on broadacre lots, the use of the Land for a single large dwelling is not an unreasonable one. For that reason, it is said that the Covenants do not impede the reasonable user of the Land for the purposes of s 84(1)(a).
347 The Plaintiffs refer to the Knox Modifications, outlined at paragraph 200(a) above, and make the following submissions:
(a) In SCV Ref 1964 No M5087 the applicants successfully argued in relation to, relevantly, a single dwelling covenant in respect of what is now 5 Heyington Place and 1-3 Glendye Court, that its existence impeded the reasonable use of the land without securing practical benefit. The applicant succeeded on the basis of the following evidence:
(i) Valuation evidence from Gerald Letts, real estate agent and valuer, that the cost of maintenance involved in a single residence on a block of that size often led to neglect; there was no demand for blocks of the size of the land except for sub-division or flats, but there was a large demand for smaller blocks; that the covenant was obsolete and oppressive, was "not calculated to preserve the present character of the area and in terms prevent[ed] its proper development", and was unreasonable; that to modify the covenant to permit four dwelling houses would preserve the character and amenity of the neighbourhood.[282]
(ii) Valuation evidence from Henry Seddon, real estate agent, that the subdivision would "enhance the value of the land in the surrounding area" and would not detrimentally impact the amenity of immediately adjoining land.[283]
(b) In SCV Ref 1964 No 5089, the applicant successfully argued in relation to, relevantly, a single dwelling covenant in respect of what is now 8 and 8A St Georges Rd and part of Greenknowe Court, that its existence impeded the reasonable use of the land without securing practical benefit. The applicant succeeded on the basis of the following evidence:
(i) From Mr Seddon, that there was "practically no market" for a single dwelling on a lot of that size, it would be extremely costly to maintain, there was large demand for smaller allotments, houses on such large blocks in the area were an "anachronism", and the proposed subdivision would preserve the character of the area in that "every such development ... establishes more firmly the character of the area as it now is".[284]
(ii) From Mr Letts, that the covenants were "obsolete and ... oppressive" and were "not calculated to preserve the present character of the area and in terms prevent its proper development;" and the subdivision would not affect the amenity of nearby land.[285]
348 It is apparent that the evidence of Mr Letts and Mr Seddon in the Knox Modifications concerning the burden of upkeep of the substantial lots, and the market for those lots, was designed to address the question of whether the covenants impede the reasonable user of the land. It is apparent that the evidence also concerned the elements of practical benefit and substantial injury in ss 84(1)(a) and (c) respectively.
349 There is no evidence of the reasons for the Court's decision to modify the covenants in either case, including whether the Court accepted that the covenants impeded the reasonable user of the land. Where there is also evidence on the file in relation to the lack of substantial injury in modification of the covenants, the inference that the evidence concerning reasonable user was accepted or was determinative is questionable and I decline to draw it.
350 In any event, it is unnecessary for me to speculate. That is because there is no evidence in this case of an equivalent nature to the evidence in the Knox Applications concerning the burden of the existing large lot comprising the Land or the non‑existence of a market for such a lot. I accept the evidence given by the valuation experts that the market for such a lot is limited, at least in the sense that there are few prospective purchasers with the means and intention to purchase residential land at the scale and in the context of 16 St Georges Road. There is nonetheless such a market. Moreover, the saleability of the Land is not the only relevant use to which s 84(1)(a) directs attention.
351 In the circumstances of this case, the Second Plaintiff acquired the Land with a large single dwelling on it, with the intention of living in a large single dwelling and did in fact occupy that large single dwelling for a brief time.[286] She subsequently demolished that dwelling and there were plans drawn up for her to build and occupy another large single dwelling. It is also evident from the large single dwelling under construction on 18 St Georges Road, commenced after its purchase in 2017 by the First Defendant, and the many large single dwellings in the wider neighbourhood, that occupation of a single large dwelling in this neighbourhood is not unusual, and by no means unreasonable. The Second Plaintiff herself and the Plaintiff's own expert were forced to concede as much. There can be no suggestion that the single dwelling restriction in the Major Covenant impedes the reasonable user of the Land for the purposes of s 84(1)(a) of the PLA.
Whether the Covenants do not confer practical benefits
352 It is not necessary to address this question due to my conclusion that the Plaintiffs have not established that the presence of the Covenants impede the reasonable user of the Land. However, for the reasons given in respect of the s 84(1)(c) Application, I consider that the Covenants do confer practical benefits on the same Defendants who would suffer substantial injury, which practical benefits would be significantly impacted upon by the Plaintiffs' proposal.
353 For these reasons, I do not accept that the Covenants impede the reasonable user of the Land or that the Covenants do not confer practical benefits on their beneficiaries. Accordingly, the s 84(1)(a) Application will be refused.
354 For all of the reasons given above, I will dismiss the Plaintiffs' Originating Motion, as I have refused:
(a) the Declaration Application;
(b) the s 84(1)(a) Application; and
(c) the s 84(1)(c) Application.
355 The proceeding will be listed for hearing and the making of orders to give effect to this Judgment, and in respect of costs and any other matters, on 24 June 2022. The parties are invited to confer and agree on a form of order and provide it to my Chambers in advance of that hearing. If agreement cannot be reached, then each party should provide to my Chambers their preferred form of order and a short submission of no more than three pages in respect of costs. In either scenario, the proposed form of order and (if there is no agreement) written submissions should be provided to my Chambers by 12.00pm on 22 June 2022.
JESHING PROPERTY MANAGEMENT PTY LTD (ACN 617 076 338)
[1] The Plaintiffs relied only on part of an exhibit to this affidavit, being one page located at CB240, such that this was the only part of the Third Jia Affidavit which was tendered at trial.
[2] Counsel for the First and Second Defendants also provided a written closing submission at the time of making oral closing submissions.
[3] First Jia Affidavit [3] (Court Book reference p 48 ('CB')); Exhibits AJ-1 (CB52) and AJ-2 (CB54).
[4] First Jia Affidavit [4]-[5] (CB48); Exhibits AJ-3 (CB57) and AJ-4 (CB63).
[7] First Jia Affidavit, Exhibit AJ-1 (CB52).
[8] Raworth Report [21] (CB1479). Beaulieu remains standing on what is now the site of St Catherine's School, the property of the 15th Defendant, and is called 'Sherren House'.
[9] See Raworth Report, annexure 10 (CB1606).
[10] Raworth Report [27]-[28] (CB1481).
[12] First Jia Affidavit, Exhibit AJ-7 (CB76).
[13] First Jia Affidavit [10] (CB49).
[14] First Jia Affidavit, Exhibit AJ-8 (CB86). The plan drawn in the margin illustrates a portion of the Beaulieu Estate, with Parcel B coloured in red.
[15] First Jia Affidavit, Exhibit AJ-9 (CB92). The plan drawn in the margin illustrates a portion of the Beaulieu Estate, with Parcel C coloured in red.
[16] See First Milner Report [20] Figures 5 and 6 (CB153).
[17] Fifth Jia Affidavit, Exhibit AJ-17 (CB1177); Barnes Report [24] (CB1381).
[18] First Jia Affidavit, Exhibit AJ-7 (CB78).
[19] I note that the Originating Motion does not recite the exact terms of the Major Covenant, as it excludes the terms 'shall be erected on the said land and' following 'one dwelling house'; however that is immaterial to the present application, as it would be struck out if the Plaintiffs were successful.
[20] First Milner Report [60] (CB170).
[23] I will say more about this issue later in these reasons.
[26] First Jia Affidavit, Exhibit AJ-2 (CB54).
[27] First Milner Report [24]-[26] (CB155).
[28] Affidavit of Xiao Yan Bao affirmed 30 September 2021 [5]-[7] (CB1318).
[29] Order of Derham AsJ in Re Jeshing Property Management Pty Ltd (Supreme Court of Victoria, S ECI 2020 00998, 7 August 2020); Fourth Jia Affidavit [4]-[6].
[32] Negri Report [54]; Cincotta Affidavit, Exhibit TLC-1.
[33] Second Jia Affidavit, Exhibit AJ-12.
[35] Bao Affidavit [5]-[8] (CB1318); Transcript of proceedings, Re Jeshing Property Management Pty Ltd (S ECI 2020 00998, Matthews AsJ, 15-18, 23-24 February 2022) ('Transcript') 131.3-26, 132.17-18.
[39] See R_e Dennerstein_ [1963] VicRp 93; [1963] VR 688, 695-6; the notification of restrictive covenants as encumbrances on the Register not creating a legal or indefeasible status to such covenants. See also Fitt v Luxury Developments Pty Ltd [2000] VSC 258 at [178] (Gillard J); Randell v Uhl [2019] VSC 668 at [51] (Derham AsJ); cf Gosford RSL Club Ltd v. Gosford Race Club Ltd (unreported Supreme Court of New South Wales, Bryson J, 18 December 1997) 28-31.
[40] [1843-60] All ER Rep 9. See also Equity, Doctrines and Remedies, Heydon Leeming and Turner (5th Ed) at [44‑050].
[41] Re Royal Victoria Pavilion, Ramsgate [1961] Ch 581, 588-9 ('Re Royal Victoria Pavilion, Ramsgate').
[42] Re Royal Victoria Pavilion, Ramsgate, 588-9.
[43] cf s 78 of the 1928 Act which is annotated with the genesis of its provision to be found in the Conveyancing Act 1915 (Vic), s 64. See also Morrells of Oxford Ltd v Oxford United Football Club Ltd [2001] Ch 459, [12]-[13] ('Morrells').
[44] Prowse v Johnstone [2012] VSC 4 at [52] (Cavanough J) ('Prowse [2012]').
[49] Westfield [40]-[41], see also [44]-[45].
[50] [2010] NSWCA 64 ('Phoenix Commercial Enterprises').
[52] Morrells [17], [28] and [29].
[53] Citing Prowse v Johnstone [2015] VSC 621 [149]-[160] ('Prowse [2015]').
[55] Fifth Jia Affidavit, Exhibit AJ-13 (CB1139-40).
[56] Baliviera Affidavit, Exhibit GB-3 (CB333-365).
[57] Baliviera Affidavit, Exhibit GB-3 (CB366-394).
[58] Baliviera Affidavit, Exhibit GB-3 (CB395-426).
[60] Arcade Hotel, 277-8 (Lowe J, with whom Gavan Duffy J agreed).
[62] [2000] VSC 258 ('Fitt').
[64] [2015] VSC 125 ('Blue Concept').
[65] [2021] VSC 166 ('Re Ferraro').
[66] [2013] VSC 286 ('Pollard').
[67] The cases cited by the Third and Fourth Defendants are Conlan v Benton [2017] VSC 244 ('Conlan v Benton'); Rosenwald v Hogg [2015] VSC 199 ('Rosenwald v Hogg'); Freilich v Wharton [2013] VSC 533 ('Freilich v Wharton'); Re Comdain Homes Pty Ltd [2013] VSC 487 ('Re Comdain Homes'); and Langdale Pty Ltd v Sollas [1959] VicRp 83; [1959] VR 634.
[68] [2006] VSC 463; (2007) V ConvR 54-733 ('Vrakas v Mills').
[69] Relevantly, the Fifth to Seventh and Ninth to Fifteenth Defendants also cite Bohn v Miller Brothers Pty Ltd [1953] VicLawRp 3; [1953] VLR 354, 357; Re Dennerstein [1963] VicRp 93; [1963] VR 688; Re Comdain Homes [7]; Oostemeyer v Powell [2016] VSC 491 [16]; Randell v Uhl [2019] VSC 668 [7]; and Stockfeld v Hendon s [2021] VSC 133 [5].
[70] The first of these materials was referred to by Ginnane J in Prowse [2015] [40]-[41], [153].
[71] These submissions are implicitly relied upon by the First and Second Defendants in respect of certain of their submissions.
[75] Phoenix Commercial Enterprises [158].
[78] Fitt [65] and [75] (citations omitted), citing Forestview Nominees Pty Ltd & Silkchime Pty Ltd v Perpetual Trustees WA Ltd [1998] HCA 15; (1998) 193 CLR 154, [23].
[81] Phoenix Commercial Enterprises [162].
[82] Phoenix Commercial Enterprises [162].
[87] Deguisa [58] and [72]; See also Prowse [2012] [58].
[88] Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337.
[89] Phoenix Commercial Enterprises [158] (citation added).
[90] Phoenix Commercial Enterprises [158].
[92] Although Ginnane J's decision in Prowse [2015] predated Deguisa, his Honour's references to such material are clearly references in respect of submissions only, and his Honour did not give any weight to that material in his analysis.
[94] Prowse [2012] [86]; citing Ferella v Otvosi [2005] NSWSC 962; (2005) 64 NSWLR 101 ('Ferella').
[95] Tonks v Tonks [2003] VSC 195; (2003) 11 VR 124 [8] ('Tonks').
[98] Prowse [2012] [54]; Ferella [17]; Tonks [13].
[99] The matters of Conlan v Benton Rosenwald v Hogg; Freilich v Wharton; Re Comdain Homes and Vrakas v Mills involved covenants in a similar form, but were applications for modification of the covenants only. The matter of Re Dennerstein [1963] VicRp 93; [1963] VR 688 was decided on the basis of whether the covenant was appropriately notified on title, rather than the construction of the covenant.
[100] For example, in Freilich v Wharton, the covenant appeared to be in a substantially similar form to the present covenant, however there was no challenge to whether it benefitted or burdened the land.
[101] Prowse [2015] [151], [159]; Blue Concept [12]. See also Oostemeyer v Powell [2016] VSC 491 [16]; Randell v Uhl [2019] VSC 668 at [7]. In Stockfeld v Hendon [2021] VSC 133, Hetyey AsJ considered the distinct case of an application under s 84(2) of the PLA in respect of whether a clause in the covenant requiring approval by a certain agent caused the whole of the covenant to fail.
[106] Bohn v Miller Brothers Pty Ltd [1953] VicLawRp 3; [1953] VLR 354 at 357; Langdale Pty Ltd v Sollas [1959] VicRp 83; [1959] VR 634.
[107] Phoenix Commercial Enterprises [158].
[108] Deguisa, 645 [4] citing Westfield 531 [5].
[110] Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 8 ('Re Stani').
[111] [1957] 2 QB 650, 663 ('Re Ghey and Galton's Application').
[112] Re Ghey and Galton's Application, 663; hereafter I will refer to this as 'the test cited in Re Stani'.
[113] [2013] VSC 284 [32] ('Suhr').
[114] Re Alexandra [1980] VicRp 7; [1980] VR 55, 59 ('Re Alexandra').
[116] [2005] VSC 169; (2005) 12 VR 224 [28] ('Stanhill').
[118] Suhr [32]. At n 81, his Honour makes clear that he approached this as a matter of construction. His Honour was taken to Re Stani and to Re Alexandra, though not in respect of this point.
[120] Citing Fraser v Di Paolo [2007] VSC 381; (2008) V ConvR 54-741 [33] ('Fraser v Di Paolo'); Vrakas v Registrar of Titles [2008] VSC 281 at [28] ('Vrakas'). The Plaintiffs also point to the discussion as to 'reasonable use', in the different context of common law water rights, in ICM Agriculture Pty Ltd v Commonwealth [2009] HCA 51; (2009) 240 CLR 140, [109] (Hayne, Kiefel and Bell JJ): a riparian owner could make reasonable use of the water in a stream and what was reasonable depended upon whether the natural flow of the stream was diminished.
[121] Vrakas [29] (Citations omitted). His Honour cited Re Miscamble's Application [1966] VicRp 81; [1966] VR 596, 602-3 ('Re Miscamble's Application') and the authorities cited at paragraph [17] of Stanhill.
[122] [1940] Ch 835 ('Re Henderson's Conveyance').
[123] Re Miscamble's Application, 602-3.
[124] Re Henderson's Conveyance, 846.
[125] It is submitted that Vrakas and Stanhill, on which the Defendants rely, similarly misunderstand what was said in Re Miscamble's Application.
[126] Re Miscamble's Application, 603; citing Re Hyett and Allen's Application (unreported, O'Bryan J, 14 July 1965).
[127] Re Miscamble's Application, 603.
[129] [2000] VSC 264 [34]-[35].
[131] See for example Prowse [2012] [97]; Rosenwald v Hogg [36]; Freilich v Wharton [17]; Suhr [21].
[132] (1987) 16 FCR 325 ('Morpath').
[133] Morpath, 341; cited in Stanhill [20].
[134] [2008] VSC 117 [32]-[33]. At [33], his Honour said that he was not satisfied that the proposal in that case 'is a reasonable use of the land', but went on to say at [33]-[34]: 'Perhaps more importantly I am satisfied that the continued existence of the covenant to prevent the erection of five dwellings does secure practical benefits to the surrounding landholders, including the plaintiffs. I have said earlier that this case really turns upon the question as to whether or not this particular modification, "will not substantially injure persons entitled to the benefit of the restriction".'
[139] Prowse [2012] [102] n 154 and [110].
[140] See Re Stani, 10; Vrakas [30], [34]; Bevilacqua v Merakovsky [2005] VSC 235; [2005] ANZ ConvR 504 [24]-[25].
[141] Re Alexandra, 60; Vrakas [35]; Suhr [41].
[142] [1964] VicRp 106; [1964] VR 808 ('Re Cook').
[144] Re Stani [10]; Vrakas [36].
[145] Vrakas [30] and cases cited at n 18.
[146] See generally Re Robinson [1972] VicRp 28; [1972] VR 278, 283 ('Re Robinson').
[148] Re Henderson's Conveyance, 846; Re Alexandra, 59; Vrakas [31].
[149] Re Stani, 9-10; Vrakas [32].
[150] Re Cook, 810; Re Stani, 7; Vrakas [45].
[152] Re Henderson's Conveyance, 846; cited in Re Cook, 810.
[154] See the Land Registration Act 2002 (UK).
[156] Re Henderson's Conveyance, 846 (emphasis added).
[161] Exhibit 1 - Letter of instructions to Robert Milner 24 October 2019.
[164] In their objections to evidence filed prior to trial, this objection was frequently made in respect of mentions of obsolescence in Mr Milner's reports.
[166] First Milner Report [64] (CB173).
[167] Mr Milner defines this as 'generally south of St Catherines Lane': First Milner Report [70] n 13 (CB173).
[168] First Milner Report [65]-[72] (CB172-3).
[169] Barnes Report [25]-[27] (CB1383); Negri Report [148] (CB2442).
[170] Raworth Report [18], [20] (CB1477-8).
[171] First Milner Report [17] (CB151); Raworth Report [25] (CB1481). Including the land at 18 St Georges Road which was later transferred out of the residual estate purchased by Mr MacKinnon, there were twelve lots; however, Sir Robert Knox purchased two of the lots pursuant to transfers 674494 and 682598 (CB1088 and CB1108).
[173] First Milner Report [50] (CB163-164); Raworth Report [39]-[40] (CB1491).
[174] First Milner Report, Figure 13 (CB166). Mr Milner records 'at least 45' residential lots at [56] (CB167), however a count of the lots as drawn in the cadastral map at CB166 produces 48, excluding the lots at the north end of St Catherine's School which, as I understand it, form part of the school and are not residential.
[175] Baliviera Affidavit, Exhibit GB-3 (CB364).
[176] Baliviera Affidavit, Exhibit GB-3 (CB393).
[177] Baliviera Affidavit, Exhibit GB-3 (CB401).
[178] Baliviera Affidavit, Exhibit GB-3 (CB565-6). The order was not endorsed on the instruments of transfer until 23 February 1966: Fifth Jia Affidavit, Exhibit AJ-5 (CB1089) and AJ-7 (CB1108).
[179] Baliviera Affidavit, Exhibit GB-3 (CB496-7).
[180] Baliviera Affidavit, Exhibit GB-3 (CB645-6).
[181] Baliviera Affidavit, Exhibit GB-3 (CB631-2).
[183] Fifth Jia Affidavit, Exhibit AJ-12 (CB1135) and Exhibit AJ-13 (CB1139).
[184] First Milner Report, 25 (CB169).
[185] Fifth Jia Affidavit, Exhibit AJ-16 (CB1174).
[186] First Milner Report, 14 (CB158).
[187] Transcript 174.23-26 (Milner); Transcript 329.22-26, 335.22-27 (Barnes).
[188] Transcript 525.17-21, 526.12-14.
[189] The proprietors of 4A and 5 Crestmont Court, also at the rear of the Land, are no longer defendants.
[190] Barnes Report [34]-[37] (CB1388-9);
[191] Raworth Report [21], [28] (CB1479, 1481).
[196] This did not appear to be contested matter, see Raworth Transcript 400.27-401.5. My observations during my site visit were consistent with this.
[198] Barnes Report [40] (CB1390-1).
[199] Barnes Report [40] (CB1390-1).
[200] First Milner Report [86]-[92] (CB 176-7).
[201] Third Milner Report, 9 (CB1270).
[202] Barnes Report [38]-[46] (CB1391-2).
[205] Third Milner Report, 6 (CB1267).
[206] Third Milner Report, 5-7 (CB1266-8).
[207] See Transcript 363.23-364.26. I note that the transcript appears to be in error insofar as it identifies Mr North as putting the question to Mr Barnes, where I recall it was Mr Horgan on cross-examination of Mr Barnes.
[209] First Milner Report [92] (CB177).
[210] Second Milner Report, 6 (CB1015).
[213] First Milner Report [92] (CB177).
[214] Second Milner Report, 7 (CB1016).
[215] First Milner Report [91] (CB176).
[216] Second Milner Report, 6-7 (CB1015-6).
[219] Transcript 207.15-23; 218.29-219.28.
[223] Barnes Report [73]-[74] (CB1398).
[225] Barnes Report [81] (CB1401-2).
[227] Barnes Report [99]-[103] (CB1404).
[229] Negri Report, 6.7 [163]-[192] (CB 2443-2452).
[231] Negri Report [187]-[192] (CB2451-2).
[236] Schuh Report [22]-[26] (CB1824-5).
[239] Schuh Report [92]-[99] (CB 1848-51).
[240] Brown Report [108]-[114] (CB2621).
[242] Brown Report [122] (CB2625-2638).
[243] Brown Report [123]-[138] (CB2638-2645).
[244] Brown Report [143], [145]-[146], [148] (CB 2646-7).
[245] Second Dudakov Report, 1 (CB1227).
[246] Dunstan Report [7.3] (CB1424).
[247] Dunstan Report [8.6] (CB1425-6).
[248] Dunstan Report [8.11] (CB1426).
[249] Dunstan Report [9]-[10] (CB1426-7).
[250] Mitrakas Affidavit [18]-[22] (CB2772).
[252] Rogers Report [1.44]-[1.45] (CB1248). See also Transcript 243.2-15.
[253] Rogers Report [1.48] and appendix 3 (CB 1248, 1253).
[254] Prior Affidavit [10]-[11] (CB2316).
[255] Prior Affidavit [30] (CB2318).
[256] Prior Affidavit [10]-[18], [20], [22], [24]-[29] (CB2316-2318); Transcript 448.2-21, 452.14-31.
[260] Mitrakas Affidavit [11]-[15] (CB2771).
[261] Mitrakas Affidavit [24]-[27] (CB2773).
[262] Washington Affidavit [9]-[10], [13]-[14] (CB 2766).
[263] See Hivance Pty Ltd v Moscatiello & Ors [2020] VSC 183 [21].
[266] Cf Re Cook, 813, in which Gillard J considered that the fact that the only beneficiaries to respond to the proposal were in favour of it was of 'little assistance' in circumstances where their evidence was in the form of 'bald statements' of consent.
[267] Vrakas [35] (emphasis added).
[269] These observations of 10 and 12 St Georges Road and the area to the north of 18 St Georges Road were made by me during my site visit.
[272] First Dudakov Report, 22 (CB736).
[276] Second Milner Report, 5 (CB1014).
[277] Second Milner Report, 5-6 (CB1014-5).
[278] Barnes Report [117]-[120] (CB1407); Negri Report [149]-[156] (CB2442).
[279] Negri Report, Exhibit MN-2 (CB2470-1).
[280] Exhibit 2 - drawings of proposed dwelling
[282] Exhibit GB-3 to the Baliviera Affidavit, pp 145-147 [4]-[8] (CB477-479).
[283] Exhibit GB-3 to the Baliviera Affidavit, pp 150-151 [4]-[7] (CB482-473).
[284] Exhibit GB-3 to the Baliviera Affidavit, 217-221 [3]-[5], [8]-[10], [12] (CB549-553).
[285] Exhibit GB-3 to the Baliviera Affidavit, 224-225 [6]-[7] (CB556-7).
Jeshing Property Management Pty Ltd & Anor
Yang & Ors [2022] VSC 306
(2007) 233 CLR 528
(2020) 268 CLR 638
(1998) 193 CLR 154
(1971) 124 CLR 73
(1982) 149 CLR 337
(2005) 64 NSWLR 101
(2003) 11 VR 124
(2005) 12 VR 224
(2009) 240 CLR 140
(1987) 16 FCR 325