The decision of the responsible authority is varied. A permit is granted for the construction of a covered entry and carports at 12 Galbraith Way, Marengo generally in accordance with the endorsed plans and subject to the conditions contained in the Notice of Decision to Grant a Permit No PP226/04 issued by the responsible authority on 25 May 2005 modified by:

The plans to be endorsed and which will then form part of the permit are the plans submitted with the application other than the landscaping plan.

4(a). Before the development starts, a landscape plan to the satisfaction of the responsible authority must be submitted and approved by the responsible authority. When approved, the plan will be endorsed and will then form part of the permit. The plan must be drawn to scale with dimensions and three copies must be provided. The landscaping plan must be prepared by a suitably qualified landscape architect and must show substantial landscaping with canopy trees around the whole of the building (but not necessarily so as to obscure views from the existing residence and units) so as to soften the outline and visual bulk of the existing and proposed building.

4(b) Before use of the development starts or by such later date as is approved by the responsible authority in writing, the landscaping works shown on the endorsed plans must be carried out and completed to the satisfaction of the responsible authority.

4(c) The landscaping shown on the endorsed plans must be maintained to the satisfaction of the responsible authority, including that any dead, deceased or damaged plants are to be replaced.

The responsible authority is directed to issue a permit in accordance with this order under the provisions of section 85(1)(b) of the Planning and Environment Act 1987.

1 This is an application to review the council's decision to grant a permit for a large carport and covered entrance to an existing two storey building comprising three dwellings. The existing building is very bulky and the carport and covered entrance will add to the scale of development. The objectors say the existing building and proposed development contravene a single dwelling covenant which applies to the Heathfield Estate and is contrary to the planning scheme.

2 I have found that there is no covenant affecting the land hence the grounds relied upon by objectors for opposing the permit based on contravention of a restrictive covenant cannot be sustained. The existing development may not be aesthetically pleasing to many objectors and the use for three dwellings would not be allowed under current planning controls, but that is no reason to refuse a permit for the carport and covered entrance. The opportunity to provide appropriate landscaping will improve the existing situation.

3 The subject land is located in the Heathfield Estate in the northern part of the Marengo township, which is located just to the south of Apollo Bay on the Great Ocean Road. The land is located on the north east corner of Ocean Park Drive and Galbraith Way and has an area of 4000 square metres. It is separated from the Great Ocean Road by a 45 metre wide reserve and the foreshore is located on the otherside of the Great Ocean Road.

4 The land is developed with three attached dwellings set towards the Galbraith Way frontage. The dwellings have verandahs and balconies looking out towards the ocean. The building is a large two storey, flat roofed structure with no softening landscaping.

5 The proposal basically comprises a substantial covered verandah which incorporates two carport areas and a covered entry/portico area located on the Galbraith Way side of the building. The southern carport area will accommodate four cars and is enclosed by walls and glazing. The northern carport area is really a portico entry to the existing double garage. It could also function as an area for tandem parking. It is not enclosed by walls. The two carport areas are connected by a continuous roofline with two clerestory features. This creates a verandah extending across the existing driveway, providing a covered drive through entry area adjacent to the front doors to the buidling itself. A water feature is also proposed in the covered entry area.

6 The land is located in a Low Density Residential Zone under the Colac Otway Planning Scheme. It is subject to three overlay controls: the Airport Environs Overlay, which does not trigger the need for a permit; the Land Subject to Inundation Overlay, which does trigger the need for a permit; and the Erosion Management Overlay, which also triggers the need for a permit for buildings and works.

7 A planning permit for the use and development of three attached dwellings was issued in 1998. At that time the land was located within a Rural Residential (Airport Environs) Zone. Under the planning scheme at that time, 'flats' was a section 2 use. The permit application was assessed on that basis and the permit was granted. The land was subsequently developed pursuant to that permit.

8 Since introduction of the new format Colac Otway Planning Scheme and inclusion of the land in a Low Density Residential Zone, use of the land for three dwellings is a section 3 (prohibited) use.[1]

9 Clause 32.03- 2 requires a permit for buildings and works associated with a section 2 use. As the current use is not a section 2 use, the need for a permit is not triggered by the zone provisions.

10 The need for a permit arises under clause 63.05 of the planning scheme which deals with existing uses. It provides that a use in section 2 or 3 of a zone for which an existing use right is established may continue provided no building or works are constructed or carried out without a permit. Decision guidelines are set out in clause 63.12, which provides:

Before deciding on an application under Clause 63.05, 63.08 or 63.10, in addition to the decision guidelines in Clause 65 and any other requirements of the Act, the responsible authority must consider the extent to which compliance can be achieved with all scheme requirements that can reasonably be met.

11 The application for review is made on the basis of the following grounds:

•

The property has a restrictive covenant that prevents this application.

•

The application is in breach of current zoning.

•

The current building contravenes the covenant and zoning.

12 I will deal with the issue of the restrictive covenant shortly. With respect to the grounds of application relating to a breach of zoning by the proposal and the current building, they cannot be sustained. As outlined above, the current use of the land for three dwellings would not be permitted under the current zone but the land enjoys existing use rights, which are protected under the Planning and Environment Act 1987 and clause 63 of the planning scheme. Clause 63.05 enables a permit to be granted for buildings and works in connection with a section 3 use subject to certain criteria. There no basis therefore to reject the proposal on these grounds.

13 The main ground upon which the objectors relied was a restrictive covenant which they say affects the subject land. They say that the proposed development would breach this covenant and consequently the provisions of section 61(4) of the Planning and Environment Act 1987 would prohibit a permit from being granted. Section 61(4) provides as follows:

(4) If the grant of a permit would authorise anything which would result in a breach of a registered restrictive covenant, the responsible authority must refuse to grant the permit unless a permit has been issued, or a decision made to grant a permit, to allow the removal or variation of the covenant.

14 The first stage of the Heathfield Estate, including the subject land, was subdivided in 1992. At the time of sale, lots in the estate were encumbered by restrictive covenants which were in a common form. A section 173 agreement was also executed in respect of the whole estate. The agreement imposed obligations on the owners in relation to construction of a road and development within building envelopes, but the agreement was not lodged with the Registrar of Titles and has not been registered on the title to any land, including the subject land.

15 When the subject land was first sold following the 1992 subdivision, it was sold subject to a similar form of covenant to that which affects other lots in the subdivision. The covenant was contained in Instrument of Transfer S833459D, which was a transfer from Esanda Finance Corporation (as mortgagee) to Phillip Rompotis and Sia Kikirikos, dated 1 December 1993. The covenant in the transfer was in the following form:

The transferees for themselves their heirs executors administrators and transferees the registered proprietor or proprietors for the time being of the land hereby transferred ("the said land") and every part thereof DO HEREBY and as separate covenants with the transferor its successors assigns and transferees and other the registered proprietor or proprietors for the time being on each of the lots comprised in plan of subdivision number 221748X (other than the said land) that the transferees shall not:

A. Erect construct or cause to be erected or constructed on the said land:

(i) any part or the whole of any dwelling (excluding decks pergolas and the like) outside the building envelope designated on the development plan attached as figure two to the agreement made between Australian Pacific Properties Pty Ltd and the President, Councillors and Ratepayers of the Shire of Otway or on a development plan prepared by a registered architect, and approved by the responsible authority;

(ii) any building (excluding garage carport or outbuildings) other than one private dwelling house having an area of not less than 148.5 square metres (excluding the area of any garage, carport or outbuildings whether or not attached to the dwelling or house or under its roofline);

(iii) any dwelling house or garage carport or outbuildings other than those having exterior walls substantially of brick, brick veneer, stone or western red cedar.

B. Move place or erect on the said land any building that has previously been erected or stood on other land.

C. Allow the open swale drains on the said land to become blocked or clogged by vegetation or otherwise.

AND it is hereby agreed that these covenants shall appear on the certificate of title to issue for the said land and run with the land.

16 When Instrument of Transfer S833459D was registered and endorsed on the title to the land, the covenant was not recorded on title. In various items of correspondence from the Registrar of Titles, including a letter dated letter dated 5 February 2004 from the Registrar of Title to Secombs (solicitors for the land owners) this omission is acknowledged as an error: "It is undisputed that there was an error in this office."

17 Sia Kikirikos became the sole proprietor of the land on 8 March 1996. By transfer dated 17 April 1997, Sia Kikirikos transferred the land to the current owners, George John Duca and Denise Joy Duca.

Reasons for decision about restrictive covenant

18 At no time has any restrictive covenant been registered or recorded on the title to the land.

19 There is a handwritten notation on the back of the Certificate of Title below the entry recording Phillip Rompotis and Sia Kikirikos as joint proprietors which states: "Cov't. endorsed with TFR." However, this notation does not constitute the registration of a restrictive covenant. It is uncertain who made the notation but it is not a notation made by the Registrar of Titles under the Transfer of Land Act 1958 for the purpose of the Act.

20 Section 88(1) of the Transfer of Land Act 1958 provides that the Registrar shall have power to "on the folio of the Register for land subject to the burden of a restrictive covenant make a recording of such covenant and of any instrument purporting to create or affect the operation of such a covenant". On the face of the original Certificate of Title to the land, under the heading "Encumbrances referred to", there is no mention of the covenant in Instrument S833459D. In the computer folio, which has replaced the paper folio, under the heading "Encumbrances, Caveats and Notices", again there is no reference to a covenant. This is the place where any official record of a covenant affecting the land would be recorded.

21 It is well established that at common law and in equity a purchaser of the freehold interest is not bound by a restrictive covenant if he is a bona fide purchaser for value of the legal estate without notice of the covenant.[2] The land owners say they had no notice of the covenant when they bought the land. On this basis alone they would not be bound by the covenant. The objectors attempted to establish there was constructive notice by reference to old signs that used to stand on the subject land stating "protected by covenant", but I find that the evidence about these signs cannot be construed as constructive notice even if notice of this sort was relevant. Such notice is not relevant because it is not lack of notice that results in the covenant in transfer S833459D not restricting the current proprietors. The land owners/applicants do not need to rely upon common law or equitable doctrines but on the clear provisions of the Transfer of Land Act 1958 and the fundamental premise of the Torrens system of land title that the registered proprietor of land shall, except in cases of fraud, hold such land subject to such encumbrances as are recorded on the relevant folio of the Register but absolutely free from all other encumbrances whatsoever.[3]

22 Gillard J in the Supreme Court in Fitt and Anor v Luxury Developments Pty Ltd[4] examined in considerable detail the principles applying to restrictive covenants when enforcing the burden and benefit by and against subsequent owners. His words in that case are particularly apposite to the present case. In particular he said:

[163] But in the present matter the lots of land owned by the relevant parties are held under Torrens Titles. The object of that system is to enable a person to purchase land and rely upon the information in the register kept pursuant to the Transfer of Land Act and to free him of a concern of equitable interests unless notice was given by the information in the Register of Land.

[164] Under the Torrens system the change in legal ownership is effected by registration of the instrument of transfer and not upon the execution of that instrument. Under the system registration is everything and registration cures any defects in the instrument registered. The object of the system and the legislative scheme was summarised by the Privy Council in Gibbs v Messer[36][5] -

"The main object of the Act, and the legislative scheme for the attainment of that object, appear to them to be equally plain. The object is to save persons dealing with registered proprietors from the trouble and expense of going behind the register, in order to investigate the history and their authors' title, and to satisfy themselves of its validity. That end is accomplished by providing that everyone who purchases in bona fide and for value, from a registered proprietor, and enters his deed of transfer or mortgage on the register, shall thereby acquire an indefeasible right, notwithstanding the infirmity of his author's title."

[165] If any person claimed any interest in land which was registered pursuant to the Act, then it was necessary to give notice of that fact in the register.

[166] The Torrens system provided that trusts and equities were not to be recorded in the register (see s.37) and in order to deal with difficult questions relating to notice of equitable interests the Act expressly provided that save in a case of fraud, no person dealing with the registered proprietor was to be affected by notice. See s.43. Further equitable interests were not included in the lists of interest to which a Certificate of Title was subject. See s.42.

[167] It followed that in the absence of fraud the registration of any transfer extinguished any equitable interest to which the land was previously subject.

[181] In my opinion where the Court is concerned with enforcing a restrictive covenant relating to land under the Torrens system, the person seeking to enforce the covenant has to prove that at the time of registration of the transfer concerning the burdened land, the new proprietor had notice through the Register of Land that the covenant burdened the land - see Forestview v Perpetual Trustees WA, [40][6] Pirie v Registrar-General[41][7].

[182] If there is no information in the Register of Land concerning the restrictive covenant, then a transferee on registration would not be bound by the restrictive covenant except in the case of fraud. See ss.42 and 43 of the Act.

23 There is no information in the Register of Land concerning the restrictive covenant in instrument S833459D and therefore by virtue of this there is no registered restrictive covenant affecting the land. The handwritten notation does not constitute a recording of such a covenant, and this is also the view of the Registrar of Titles who said in a letter to Secombs, (solicitors for the landowners/applicants), dated 5 February 2004:

It is quite clear that the covenant in transfer S833459D does not affect your clients' land, because the error in my office led to your clients' registration as proprietors who were not parties to the covenant and without notice of the covenant. This is a very fundamental point that should not elude any lawyer practising in property law.

It appears that your point about section 61(4) of the Planning and Environment Act 1987 is simply incorrect. Section 88(1) of the Transfer of Land Act 1958 contemplates that covenants will be recorded on the folio and not anywhere else. The covenant has never been recorded on the folio for Volume 10068 Folio 926.

24 The objectors attempted to argue that in fact the covenant was registered when the Registrar of Titles registered the transfer of land number S833459D on 23 December 1993. It was submitted that:

No matter what has happened since then, it remains incontrovertible that the restrictive covenant has been registered and remains registered_._

25 This is simply not so. There has been no recording of the covenant on the title as required by section 88(1) of the Transfer of Land Act and the argument misconceives the principle that the Torrens system of land title is 'title by registration not registration of title'.

26 The objectors' other argument was that section 42 of the Transfer of Land Act, and the principle of 'bona fide purchaser for value without notice' are simply not applicable to section 61(4) of the Planning and Environment Act 1987. They submitted that the fact that the covenant is not currently recorded on the title should not result in it being excluded from the definition of 'restriction' in the Subdivision Act 1988 because:

... Parliament clearly and specifically intended that the protections in the Planning and Environment (Restrictive Covenants) Act 2000 should extend to restrictive covenants that are not currently recorded on title. Whilst it would have been a simple thing for the Vicotrian [sic] Parliament to include, there is simply no provision that states that section 61(4) does not apply if a permit applicant can establish that they are bona fide purchasers for value without notice of the covenant. Furthermore, section 61(4) of the Planning and Environment Act 1987 was enacted after section 42 of the Transfer of Land Act, and therefore to the extent of any inconsistency between the sections, section 61(4) should prevail.

27 Effectively, the objectors are arguing that the restrictive covenant created in Instrument S833459D is a 'registered restrictive covenant' within the meaning of section 61(4) based on the definition of this term in the Planning and Environment Act 1987, which in turn refers to the Subdivision Act 1988.

28 Section 3(1) of the Planning and Environment Act 1987 provides:

"registered restrictive covenant" means a restriction within the meaning of the Subdivision Act 1988;

29 Section 3(1) of the Subdivision Act 1988 provides:

"restriction" means a restrictive covenant or a restriction which can be registered, or recorded in the Register under the Transfer of Land Act 1958;

30 The objectors' arguments turn on the definition of 'restriction' in the Subdivision Act. They say that it means a restrictive covenant which can be registered or recorded in the register under the Transfer of Land Act, but which may not presently be registered. In support of this interpretation they refer to the comments of Mr Clark during the second reading debate of the Planning and Environment (Restrictive Covenants) Bill who, in commenting on the recommendations in the Montebello report[8] about the definition of 'registered restrictive covenant', said:

It seems to have the odd result that the defined term 'registered restrictive covenant' will refer to restrictive covenants or restrictions which can be registered or recorded in the register under the Transfer of Land Act 1958, with emphasis on the word 'can'. There may be, in fact, a restriction which is not registered but which falls within the definition of a registered restrictive covenant.

31 I do not consider this comment can be used to support an interpretation that, by necessary implication, would undermine the principle of indefeasibility of title by registration which is embodied in the Transfer of Land Act 1958. I consider this could be done only by the most explicit statutory expression of intent.

32 The Montebello report was a report prepared for the Minister for Planning in relation to submissions received in respect of the Planning and Environment (Restrictive Covenants) Bill 2000. It contained a recommendation based upon a submission by the Law Institute of Victoria that the definition of registered restrictive covenant as then included in the Bill may need to be redrawn to ensure that a restriction on a plan of subdivision under the Subdivision Act 1988 is included within the definition of a registered restrictive covenant. The report said on this point:

Under the Subdivision Act 1988, it is possible to create obligations on lots in a plan of subdivision by creating a restriction on the plan of subdivision. The restriction is usually imposed by the developer who might think that the restriction benefits the subdivision in some way. Sometimes the responsible authority imposes a permit condition requiring the creation of the restriction. A restriction is different to a restrictive covenant in form because its basis is found within the Subdivision Act 1988. Whilst a covenant is created when the land is sold, a restriction on a plan is created at the time the land is subdivided. However, both instruments have a similar effect.[9]

33 Based on these comments, I consider that the intent of the proposed amendment to the Bill, which was being debated at the time Mr Clark made his comments regarding the definition of registered restrictive covenant, was to ensure that it also covered restrictions created under the Subdivision Act 1988, not only restrictive covenants, and that such restrictions would be subject to the provisions of section 61(4).

34 In my view, the correct interpretation of the way in which the definition of restriction in the Subdivision Act 1988 should be read is:

•

a restrictive covenant; or

•

a restriction which can be registered, or recorded in the register under the Transfer of Land Act 1958.

The second leg of the definition deals with restrictions that are not restrictive covenants but that can be registered or recorded under the Transfer of Land Act 1958.[10]

35 The Montebello report supports this interpretation. Member Rickards in Van Der Heyden v Mansfield Shire Council[11] also appears to support such an interpretation where she says:

[27] A restriction is a limitation placed on the use or enjoyment of land in this respect a restriction is not dissimilar to a restrictive covenant. The reference to both a restrictive covenant and a restriction in the definition under the SD Act is considered to separate a restrictive covenant which is a restriction that is privately entered into between two parties and the instance of a restriction created by or under a statutory power. ...

36 I acknowledge that alternative interpretations of the definition of restriction in the Subdivision Act have been considered by the Tribunal. For example:

A restriction is a restrictive covenant or restriction which can be:

s registered; or

s recorded in the Register under the Transfer of Land Act.

A restriction is a restrictive covenant or restriction which can be:

s registered; or

s recorded;

in the Register under the Transfer of Land Act.

A restriction is a restrictive covenant or restriction which can be:

s registered; or

s recorded in the Register;

under the Transfer of Land Act.

37 Under the first two interpretations, the words "under the Transfer of Land Act" describe the Register (that is, describe the noun, not the verbs). Under the third interpretation, the words "under the Transfer of Land Act" would refer to the Act pursuant to which the restriction is registered or recorded.[12] However, I consider that none of these alternative interpretations suggest that a restrictive covenant or a restriction which can be registered or recorded in the Register under the Transfer of Land Act, but which is not so registered or recorded, is contemplated by the definition. If such was the intent of the legislation, it is more likely that the word 'may' rather than the word 'can' would have been used. I agree with the Tribunal in Plentie Pty Ltd v Banyule CC[13] that the reference in the definition to the word 'can' in the context of describing 'restriction' identifies the source of the entitlement to registration. It does not impute the meaning that restrictive covenants or restrictions with a potential to be registered or recorded but which are not requested or recorded are included in the definition. To so hold would open up the prospect that people would need to go the trouble and expense of going behind the Register in order to investigate whether there were any unregistered restrictive covenants, which is exactly what the Transfer of Land Act 1958 was set up to avoid.[14]

38 My conclusion with respect to the issue of the restrictive covenant is that there is no registered restrictive covenant that affects the subject land. Therefore the existing development and the proposed development are not in breach of a registered restrictive covenant and section 61(4) of the Planning and Environment Act 1987 does not prevent a permit from being granted.

39 On this basis it is not necessary to examine whether the proposal would offend the restrictive covenant if there was one, although I tend to agree with the council that it would not.

40 Turning now to the planning merits of the proposed development, there is no reason having regard to the objectives of the Land Subject to Inundation Overlay and the Erosion Management Overlay why a permit should not be granted for the proposed development. It is therefore necessary to consider whether a permit should be granted pursuant to clause 63(5) of the planning scheme.

41 The objectors' main grounds for opposing the development on planning grounds related to its large visual bulk, which will add substantially to a building that is "already the largest and most visually intrusive building in the area".

42 Having regard to the matters set out in clause 63.12, I do not consider that the development is contrary to the purposes of the zone or any of the other relevant provisions of the scheme. It is sited on the side of the building fronting Galbraith Way, not the Great Ocean Road, so it will not intrude further into views from the Great Ocean Road. The size and bulk of the existing building is not relevant when considering the new development: it is the effect of the new development that must be assessed. Although the extensions are large and will add to the overall size of the building, I consider that the development has the potential to ameliorate the bulk of the existing building by adding some articulation to it when viewed from Galbraith Way and Ocean Park Drive. I do not consider that concerns expressed by objectors about the potential to enclose the carports and convert them to more units are relevant. Future applications will be dealt with on their own merits.

43 The establishment of landscaping around the building as a whole will help to soften its outlines, reduce its apparent visual bulk and improve the amenity of the area. A landscaping plan should be prepared by a qualified landscape architect and provide for something more than the minute shrubs which are currently designated as 'landscaping' on the plans. Canopy trees are required so that ultimately the building will be seen against a backdrop of greenery. I believe that a good landscape plan could improve the apperance and amenity of the building without interfering with its valued sea views.

44 For these reasons a permit should be granted on conditions.

[1] In the Low Density Residential Zone dwelling is a section 1 use, subject to certain conditions which include that the dwelling must be the only dwelling on the lot. If those conditions are not met, dwelling becomes a section 2 use, again subject to certain conditions which include that there are no more than two dwellings on the lot. If those conditions are not met, dwelling becomes a section 3 (prohibited) use.

[2] See for example, Fitt and Anor v Luxury Developments Pty Ltd [2000] VSC 258 at para 159

[3] See section 42(1) of the Transfer of Land Act 1958

[4] [2000] VSC 258

[6] [40] [1998] HCA 15; (1998) 193 CLR 154 at 163 and 165

[7] [41] (1962) 109 CLR 610 at 627-8

[8] Report to the Minister for Planning on the submissions to the Planning and Environment (Restrictive Covenants) Bill 2000, prepared by Terry Montebello, Maddock Lonie and Chisholm, Lawyers (17 August 2000)

[10] It has been held by the Tribunal that a section 173 agreement is not a restriction within the meaning of the Subdivision Act 1988 because it is not registered under the Transfer of Land Act 1958 but under the Planning and Environment Act 1987 - see Van Der Hayden v Mansfield SC [2003] VCAT 102; Weiler v Casey CC [2004] VCAT 740; Plentie Pty Ltd v Banyule CC [2003] VCAT 750

[11] [2003] VCAT 102

[12] These interpretations were put by way of submission by Mr Morris in the case of Plentie Pty Ltd v Banyule City Council [2003] VCAT 750 in the context of submissions about whether a section 173 agreement came within the definition of restriction. In the event, the Tribunal decided that "the proper interpretation of the definition of 'restriction' in s.3 of the Subdivision Act... rests on the word 'can' as identifying the source of the entitlement to registration. The definition requires that that entitlement must arise under the Transfer of Land Act 1958...." The Tribunal did not consider the alternative interpretation which I have adopted above.

[13] [2003] VCAT 750

[14] See Gibbs v Messer (1891) AC 245 at 254 quoted in Fitt and Anor v Luxury Developments Pty Ltd [2000] VSC 258 at para 164 referred to above.