SUBJECT LAND: 21 Outlook Drive, Dandenong North

MEDIUM NEUTRAL CITATION: [2002] VCAT 469

Decision of the Responsible Authority made on 22 August 2001 refusing to grant permits for variation of registered restrictive covenant and development of subject land affirmed.

1. This is a written revision of the oral reasons for decision given by the Tribunal on 26 June 2002.

2. The applicants are the owners of land at 21 Outlook Drive, Dandenong North ("the subject land"). The subject land was created in 1967 by Plan of Subdivision 77269.

3. There were two applications before the Tribunal. The first was an application for review of a decision of the Responsible Authority refusing to vary a registered restrictive covenant. The second (which depended on the success of the first) was an application for review of a decision of the Responsible Authority refusing a permit for the development of the subject land by the addition of two detached single storey dwellings.

4. The applicants were represented by Mr John Murphy. The Responsible Authority was represented by Mr Loudon Luka who presented a submission in opposition to the proposed amendment. Robert Kassell and Michael and Marilyn Howlett were joined as parties, without objection from Mr Murphy and Mr Luka.

5. The covenant is embodied in an instrument of transfer dated 1 July 1969 and is in the following terms:

"AND THE TRANSFEREE with the intent that the benefit of the following covenant shall be attached to and run at law and in equity with each and every lot on the aforesaid Plan of Subdivision (other than the lot hereby transferred) and that the burden of this covenant shall be annexed to and run at law and in equity with the land hereby transferred DOTH HEREBY for himself his heirs executors administrators and transferees COVENANT with the Transferor and its Transferees and other [sic] the registered proprietor or proprietors for the time being, of the lots on the aforesaid Plan of Subdivision (other than the lot hereby transferred) that the Transferee his heirs executors administrators and Transferee shall not at any time construct or build or cause to be erected constructed or built or allow to remain erected constructed or built on the land hereby transferred or any part thereof any building other than a dwelling house in brick or brick veneer (apart from the necessary outhouses and garages) and it is intended that the above covenant shall appear as an encumbrance on the Certificate of Title to issue in respect of the land hereby transferred."

6. Plan of Subdivision 77269 created 28 residential lots with frontages to Outlook Drive and Oxford Court, Dandenong North.

7. Senior Member Byard was asked to determine, as a preliminary issue, the meaning of the expression "other than a dwelling house in brick or brick veneer". It was submitted on behalf of the applicants that the covenant permits the construction of more than one dwelling house on the subject land, so long as each dwelling house is "in brick or brick veneer". Senior Member Byard concluded, however, that the covenant prohibits the construction of more than one dwelling house.

8. Accordingly, the applicants sought to have the covenant varied by substituting for the words "a dwelling house" the words "three single storey dwelling houses".

9. Section 60(5) of the Planning and Environment Act 1987 ("the Act") provides:

"The responsible authority must not grant a permit which allows the removal or variation of [a registered restrictive covenant] unless it is satisfied that -

(a) the owner of any land benefited by the restriction (other than an owner who, before or after the making of the application for the permit but not more than three months before its making, has consented in writing to the grant of the permit) will be unlikely to suffer any detriment of any kind (including any perceived detriment) as a consequence of the removal or variation of the restriction; and

(b) if that owner has objected to the grant of the permit, the objection is vexatious or not made in good faith."

10. Senior Member Byard ruled further that the owners of the other 27 blocks shown on Plan of Subdivision 77269 are the beneficiaries of the covenant. He rejected an argument that the beneficiaries include Robert and Dorothea Kassell and Michael and Marilyn Howlett, the owners of land in Somerset Drive to the rear of the subject land.

11. None of the beneficiaries has consented in writing to the grant of a permit for variation of the covenant.

12. We construe paragraph (b) to be a reference to a beneficiary who has made objection in the manner prescribed by the Act. In a ruling made on 15 March 2002, Senior Member Byard considered the position of Mrs Rosaline Neale of 19 Outlook Drive, Dandenong North. Senior Member Byard found that Mrs Neale had received notice of the application for variation of the covenant, but did not object within the time limited by the Act. She subsequently wrote to the Tribunal requesting leave to lodge a late objection. Senior Member Byard was not convinced that there was any procedure by which she could become an objector. However, he caused the Registrar to write to her informing her that she was nonetheless entitled to make application pursuant to s.60 of the Victorian Civil and Administrative Tribunal Act 1998 to be joined as a party to the proceedings. Mrs Neale was informed that she would have an opportunity to make such an application at the commencement of the preliminary hearing which had been set down for 5 March 2002. Mrs Neale did not respond to the Registrar's letter nor did she appear on 5 March 2002.

13. In the circumstances, we do not treat Mrs Neale as a beneficiary who has objected to the grant of the permit. There being no other objectors who are beneficiaries, paragraph (b) does not apply to this application.

14. The fact that none of the beneficiaries has objected to the variation application does not relieve the Tribunal of its duty to give full force and effect to the requirements of subsection (5)(a). The scope of this paragraph was considered by this Tribunal in C Carabott & Ors v Hume City Council and T Scuderi [Application No. 1997/77561 22AATR 261 (and a related application dealt with at the same time.] The decision was given on 9 August 1998, the Tribunal being constituted by his Honour Judge Wood, Deputy President Macnamara, Senior Member Byard and Member Moles.

15. After a careful consideration of paragraph (a) the Tribunal distilled the following propositions (we paraphrase and extrapolate as appropriate):

1. It is for the Tribunal to determine whether it is satisfied on the balance of probabilities that any covenant beneficiary "will be unlikely to suffer any detriment of any kind if the variation is permitted." In other words it is not a question of whether the Tribunal is satisfied there will be detriment: the Tribunal must be affirmatively satisfied that there will be none.

2. Compliance with planning controls does not, of itself, and without more, establish that a covenant beneficiary will be unlikely to suffer any detriment of any kind. Consideration of a proposal from a planning perspective often requires a balancing of competing interests. There is no such balancing exercise involved in the consideration of the issue which arises under paragraph (a). The nature of the enquiry is fundamentally different.

3. The mere assertion of the existence of a detriment is not sufficient to demonstrate its existence. On the other hand, loss of amenity will constitute a detriment, and in this regard amenity includes "an appeal to aesthetic judgment, which is difficult to measure, however the notion of `perceived detriment' specifically contemplates that this consideration is relevant to the enquiry".

4. The determination must be made on the evidence before the Tribunal "including the appeal site and its environs".

5. It is not necessary for an affected person to assert detriment. This is so for two reasons: first, because the Tribunal must be affirmatively satisfied of a negative, namely that there will probably be no detriment of any kind; secondly, the Tribunal is entitled to form its own views from the evidence.

16. The Tribunal has been provided with a description and photographs of the subject land and environs. Outlook Drive is part of an attractive, undulating, well-timbered subdivision described by one of the parties as "the jewel of Dandenong". Most of the lots are larger than normal house blocks. The subject land is 1,503 sq m and is the largest lot in the subdivision. It is an irregular pentagonal shaped block with a frontage of approximately 16.6 m to Outlook Dive, broadening at the rear. There is an existing single storey brick veneer dwelling. It is proposed to add two additional single storey brick veneer residences at the rear of the property.

17. The precise details of the proposal are of only marginal relevance, in our view. The application before us is to vary the covenant so as to permit three single storey brick or brick veneer dwellings. If that were to be done, the amended covenant would run with the land and it would be irrelevant for the purposes of the covenant what precise form the three dwellings took, so long as they were single storey and brick or brick veneer. The landscaping proposed as part of the development is similarly of marginal relevance. Once the covenant is amended, it will have no bearing on future landscaping decisions.

18. When these issues were brought to the attention of Mr Murphy he canvassed the possibility of amending the variation application so as to bring the covenant in line with the development proposal. We discouraged him from so doing because we think there are considerable difficulties in expressing a covenant in terms of, say, an approved plan. If a covenant is expressed as requiring development of land to occur in accordance with an approved plan, what will be the position in the future? Can the built form be altered without yet another application for variation of the covenant? Could it be altered by an approval under Section 73 of the Act, thus by-passing the provisions of Section 60 (5)? The problem is exacerbated if the approved plan includes landscaping.

19. Registered restrictive covenants must be expressed in terms which are crystal clear to those affected by them and those entitled to their benefit. They must also be capable of achieving their intended purpose in perpetuity. A registered restrictive covenant expressed in terms of an approved plan is, we think, a recipe for trouble. Thus discouraged, Mr Murphy did not pursue the matter.

20. Mr Kassell made a short presentation. The Tribunal was mindful of the fact that he is not entitled to the benefit of the covenant and therefore has no justiciable interest in its variation. On the other hand, the Tribunal found his contribution helpful because of his local knowledge. In particular, Mr Kassell was able to produce excellent colour photographs of the environs. He also produced a statement which purports to have been signed by Richard M Lawrence and Rhonda J Lawrence, who live in a residence opposite the subject land. The applicants were, obviously, taken aback by the emergence of this statement and the Tribunal is therefore reluctant to rely upon it in the absence of Mr and Mrs Lawrence, who are apparently overseas. We record that Mr and Mrs Lawrence's statement did not affect the outcome of this application, one way or the other.

21. The stringency of paragraph (a) is perhaps not universally appreciated. It sets the bar extraordinarily high. The existence of any detriment of any kind (including any perceived detriment) is sufficient to defeat an application to vary a covenant. "Perceived detriment" is a curious expression. We are by no means sure what it means. In Carabott the Tribunal opined that it contemplates that "an appeal to aesthetic judgment" is relevant to the enquiry. We agree that "perceived detriment" would include any loss of amenity in the form of diminution of aesthetic quality. Aesthetics is, of course, a subjective concept: perhaps this is what is meant by "perceived detriment". We do not however, think it necessary to further examine the concept for the purpose of these reasons.

22. It might be thought in some quarters that "any detriment of any kind" means "any appreciable detriment" or "any significant detriment". It does not. It means what it says. Moreover, as we are at pains to emphasise, it is not a matter of whether detriment can be demonstrated. What must be demonstrated is the complete lack of it.

23. This construction is borne out by paragraph (b), the effect of which is that the mere presence of an objection by a relevantly interested person is fatal unless the Tribunal is satisfied that the objection is vexatious and not made in good faith. Although (b) does not apply in the circumstances of this case, it underscores the near impossible task faced by an applicant for variation or removal of a covenant who has not procured the consent of those entitled to its benefit. This is further underscored by the words of the Minister introducing the provision in 1993:

"In relation to covenants, or title restrictions, in place before 25 June 1991, Clause 15 [section 60] ensures that permits are not granted to remove or vary those covenants unless any owner of land benefiting from the covenant will not suffer detriment of any type and unless any objection by an owner is not brought in good faith. That tightens the provision in relation to covenants in place before that date when s.60 (2) of the principal Act commenced.

The effect of the clause is that permits should be granted only for "dead wood" covenants if no owner benefiting from the covenant objects to its removal or variation. The alternative avenue to remove or vary a covenant remain in place, being application to the Supreme Court under the Property Law Act 1958 and the preparation of a planning scheme amendment."

24. This is not a dead wood covenant. It is likely that every block on this subdivision is burdened by a similar covenant. It is likely that these blocks were marketed and acquired as prime home sites - as indeed they are. It is likely that the belief and intention of those who acquired them was that the estate would be developed in precisely the way it has been: substantial brick or brick veneer houses, separation between buildings, abundant trees and attractive gardens. The introduction of three dwellings on a block intended for one is likely to increase vehicular traffic in the street and across the footpath, increase noise audible to those in adjacent houses, decrease the ratio between built form on the one hand and trees and gardens on the other and decrease the aesthetic quality of the rear gardens of adjoining properties.

25. Mr Murphy tackled these issues in an eloquent yet, we think, misconceived way. He argued that the covenant in its present form would not prevent someone building a large and unattractive garage, or allowing a garden to fall into disrepair, or cutting down trees. He argued that careful management of the development would produce attractive buildings with adequate trees and gardens.

26. The fact that the covenant does not prevent someone building an ugly garage does not mean it should be further devalued so as to permit the construction on a particular block of more than one dwelling. Likewise, the fact that the proposed development, if completed, would incorporate an appropriate amount of foliage would not prevent removal of that foliage in years to come. Once the benefit currently conferred by the covenant is gone it is gone forever.

27. Given that we must be affirmatively satisfied of the lack of any detriment, and having regard to the stringency of the test imposed by sub-paragraph (a), we think this is almost a case of res ipsa loquitur: the facts speak for themselves. As a general proposition we think it almost impossible to contend, in the case of this sort of covenant on this sort of subdivision, that would be no detriment of any kind to any beneficiary if a limit of one dwelling per block was increased to three dwellings per block.

28. For these reasons we have not reached the level of satisfaction required by subsection (5)(a). The decision of the Responsible Authority refusing to vary the covenant must be upheld. Section 61(4) requires the Tribunal to refuse the grant of a permit for the development of the subject land if the development would result in a breach of a restrictive covenant. Accordingly, the refusal of the Responsible Authority to grant the development permit must also be affirmed.