Longo Investments Pty Ltd [2003] VSC 37 (27 February 2003)

Supreme Court of Victoria|2003-02-27|Before: OSBORN J

RESTRICTIVE COVENANT - Application for modification - "Dwelling house" - Whether modification will not substantially injure the persons entitled to the benefit of the restriction - Property Law Act 1958,s.84.

This is an application for a declaration stating the effect of a restrictive covenant or in the alternative for modification of that covenant pursuant to the provisions of the Property Law Act . The applicant owns and operates an existing hostel which provides residential accommodation for the aged. The hostel is located on Lot 1 of lodged plan 206628U, being land which fronts Ash Road, Leopold. The applicant wishes to extend the existing hostel building and provide further residential accommodation upon the adjoining lot being Lot 2 on the same lodged plan.

Lodged plan 206628U is five lot plan of subdivision comprising:

- four rectangular lots fronting the west side of Ash Road each having an area a little in excess of 3,000 square metres; and

- a fifth lot of 1.430 hectares (Lot A) located to the west of the four lots referred to above, and which has been further subdivided into 16 smaller lots generally in the order of 600 to 700 square metres in area located around Greenbank Court.

The two plans of subdivision were approved for registration at the Titles Office on the same day (29 December 1987). Each of the lots on both plans with the exception of Lot 1 on lodged plan 206628U was encumbered by a restrictive covenant when transferred which provides that the transferees:

"(a) ... will not erect or cause or suffer to be erected or placed upon the said lot more than one main dwelling house together with the usual out-buildings such main building containing a floor area of not less than 1400 square feet within the outer walls thereof calculated by excluding the area of all carports, garages, terraces, pergolas and verandahs and such main building having external walls made principally of stone, brick or brick veneer. (b) ... will not use or permit or suffer any such main building to be used for other than residential purposes."

The plans of the proposed extension to the hostel demonstrate:

(a) that there can be no doubt that the proposed use is for a residential purpose;

(b) that the building proposed will comprise a floor area of more than 1400 square feet as defined by the covenant; and

(c) that the building is intended to comprise a series of individual bedrooms with ensuite facilities together with communal activity areas.

I suspect the covenant contained in (a) is badly expressed. The initial prohibition of "not ... more than one main dwelling house" means that the subsequent provisions as to the components of "such main building" are, if read literally, components of a building of a type not more than one of which may be constructed. It is unlikely that this was the intention of the draftsperson but the covenant does not satisfactorily express independent requirements as to size and external materials. There is an obvious problem if the covenant is interpreted in accordance with the long accepted rule of construction that:

"... the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no further."[1]

These considerations give rise to a threshold difficulty with the interpretation and application of the covenant.

Putting this threshold difficulty to one side, there is in my opinion much to be said for the view that the proposed development constitutes a "dwelling house". It will consist of a large dwelling and the word "house" is sufficiently broad to encompass it.

In Bakes v Huckle[2] Barry J stated:

"Whether particular premises are a dwelling is a question to be decided on the facts of each case ... In deciding that question the test is whether at the material time the premises possessed the characteristics ordinarily found in buildings used or let for human habitation as homes."

In Downie v Lockwood[3] Smith J said:

"The word 'dwelling house' is capable of a wide meaning in which it extends to any building or part of a building used as the place of abode of one or more persons. It has been used in this sense in the criminal law and in relation to parliamentary franchise: cf Thompson v. Ward (1871) LR 6 CP 327, at pp.358-9; Hollyhomes v. Hind [1944] KB 571; [1944] 2 All ER 8. It has been so used in bankruptcy law: see Re Hecquard (1889) 24 QBD 71 at pp.75-6. It has been held to apply to buildings not of a private character. Thus in South-West Suburban Water Co. v. St. Marylebone Guardians [1904] 2 KB 174, it was held to cover residential workhouse schools occupied by children and by those in control of them. And in London County Council v. Davis (1897) 77 LT 693, it was held to cover a hotel for poor men which was a public building. It has also been held applicable to a building comprising a number of separate dwellings: see Kilpatrick v. Maxwelltown Town Council [1912] SC 228; Hollyhomes v. Hind [1944] KB 571; [1944] 2 All ER 8. The use of the word in its wide sense is illustrated by Lord Atkinson's statement in Lewin v. End [1906] AC 299 at p.304, that by the term 'dwelling-house' he understood 'a house in which people actually live or which is physically capable of being used for human habitation.' In popular speech the term is commonly used in a narrower sense derived, perhaps, from an abbreviating of the expression 'private dwelling-house'. In this narrower sense it covers, I think, only those places of abode which are either separate structures or else divided from other buildings by vertical walls, and which, in addition, are occupied, or adapted for occupation, by persons living in one household. But for premises to be used 'only as a dwelling-house', in this narrow sense of the word, it is not necessary that the person residing therein should be members of the one family, or related to each other. For example, if half a dozen students rented a house such as I have described and made it their place of abode, living in it in one household, they would be using it as a 'dwelling-house' even in this narrower sense."

The meaning to be attributed to "dwelling house" in the present case is, in my view, the colloquial one. In Ex parte High Standard Constructions Ltd[4] Harvey CJ in Equity stated:

"The question then with which I must deal is the meaning of the first covenant that only 'one house' shall be erected upon the land. This matter has to be considered in the light of the decisions of the English Court of Appeal in Rogers v Hosegood ([1900] 2 Ch 388); Kimber v Adams ([1900] 1 Ch 412); and of Swinfen Eady J in Ilford Park Estates Ltd v Jacobs ([1903] 2 Ch 522). Those cases appear to me to show that the language of the covenant is to be interpreted in a colloquial and ordinary sense and not in any technical or legal sense, and that primarily it is a question of the interpretation of the particular covenant before the Court which must be searched to see if the context throws any light on the meaning of the words."

In Uratemp Ventures v Collins[5] Lord Steyn stated:

"The starting point must be that 'dwelling-house' is not a term of art. It is an ordinary word in the English language. While I accept that dictionaries cannot solve issues of interpretation, it nevertheless is helpful to bear in mind that dwelling house has for centuries been a word of wide import. It is often used interchangeably with lodging. It conveys the idea of a place where somebody lives: see Dr Johnson's Dictionary, sv 'dwelling-house' and Murray's Oxford English Dictionary, sv 'dwelling-house' and 'lodging'. In ordinary parlance a bed-sitting room where somebody habitually stays is therefore capable of being described as a dwelling house. So much for generalities. The setting in which the words appears in the statute is important. It is used in legislation which is intended to afford a measure of protection to tenants under assured tenancies. This context makes it inappropriate for the court to place restrictive glosses on the word 'dwelling'. On the contrary, as counsel appearing as amicus curiae accepted, the courts ought to interpret and apply the word 'dwelling-house' in s 1 of the 1988 Act in a reasonably generous fashion."

The other members of the House of Lords expressed similar reasons and held that a bedsitting room without permanent cooking facilities but occupied within a hotel on a long term basis was a dwelling house within the meaning of the Housing Act 1988 (UK).

In the present case if the hostel is not properly regarded as a dwelling house at all there would be no breach of the covenant. A breach might, however, occur (depending on the view taken of the threshold difficulty of interpretation referred to above) if the individual bedrooms were regarded as comprising separate "dwelling houses". In my view the combination of individual bedrooms and communal facilities creates one dwelling house and this situation is to be distinguished on its facts from those cases in which bedsitting rooms which are individually occupied have been regarded as separate dwelling houses. The proposed building is designed and intended to operate as one "household" in the terms of Smith J in Downie v Lockwood[6].

It follows that I am of the view that the proposed development will not result in a breach of the covenant relating to dwelling houses because:

(a) if the threshold difficulty of interpretation is resolved in accordance with the literal meaning of the covenant there will on any view be no more than one "main" dwelling house erected;

(b) furthermore, the proposed development will, in my opinion, not result in more than one dwelling house.

"(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."

It is a necessary corollary of this section that the responsible authority must where relevant form a view as to the effect of a restrictive covenant. The process of forming such view may not be straightforward or free from difficulty in a case such as the present.

In the present case I have therefore concluded that it would be desirable to modify the existing covenant because:

(a) it is undesirable to seek to frame a declaration with respect to a hypothetical development which has as yet not received planning approval and which may undergo some modification in form during the course of such approval process; and

(b) it is in the interests of justice that the effect of the covenant with respect to the proposed development be clarified so as to remove doubt prior to the finalisation of the planning approval process.

Mr. Porter has submitted to me that the covenant might be modified pursuant to the provisions of s.84(1)(a) or (c) of the Property Law Act 1958. These relevantly provide as follows:

"(1) The Court shall have power from time to time on the application of any person interested in any land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon by order wholly or partially to discharge or modify any such restriction (subject or not to the payment by the applicant of compensation to any person suffering loss in consequence of the order) upon being satisfied - (a) 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; or ... (c) that the propose discharge or modification will not substantially injure the persons entitled to the benefit of the restriction ..."

In the present case I am satisfied that the basis for relief stated in s.84(1)(c) has been made out. In forming this view I have applied the notion of "substantial injury" as stated by Gillard J in Re Cook[7]:

"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 benefits so discovered."

This test is further discussed by Eames J in Greenwood & Anor v Burrows & Ors[8].

I have formed the view that modification of the covenant should take the form of a proviso which makes clear that development having a form generally in accordance with the proposed extension does not contravene the covenant (cf Re Roseblade and the Conveyancing Act[9]; Re Markin and Re Roberts[10]; and Re Ulman[11]).

I am satisfied the parties entitled to the benefits of the restriction will not be substantially injured by such a modification because:

(a) the owner of the abutting property to the south, being that property having the benefit of the covenant which will be most affected by the proposed development, consents to the making of such an order;

(b) no other person entitled to the benefit of the restriction has objected to the modification of the covenant and the evidence establishes that full and appropriate notice was given of the intention to seek modification of the covenant;

(c) the evidence before me including the plans of the proposal and its context does not suggest any likelihood of substantial injury to persons entitled to the benefit of the restriction as a result of the development facilitated by its modification;

(d) the modification proposed to the covenant is one of degree rather than of substantial character cf Re Robinson[12]; and

(e) the modification proposed is properly characterised as one of clarification only.

For the above reasons and subject to anything further counsel may wish to submit, the covenant will be modified by the addition of the following words to paragraph (a):

"Provided always for the avoidance of dispute that the erection of a residential building for the purposes of the accommodation of the aged generally in accordance with drawings numbers 1229.5.2 sheets 1, 2, 3, 4 and 5 prepared by J.F. Bufton Architect and dated June 2000 (annexed hereto) having minimum setbacks from the southern, eastern and western boundaries of the lot equivalent to or greater than those shown on such drawings, shall be deemed to not contravene this covenant."

[1] Grey v Pearson [1857] VI HLC 106 per Lord Wensleydale

[8] [1992] Vic Conveyancing Reports 54-444

[11] [1965] Vic Conveyancing Reports 54-178

At a glance

Court

Decision date

Before

Source

Judgment (52 paragraphs)