PINK v CUMMINGS

PARTIES : Frederick Thomas Pink & Anor v Russell Ralph Cummings & Anor JUDGMENT OF : Master Macready at 1

COUNSEL : Mr K. Morrissey for plaintiffs Mr J.A.. Trebeck for defendants SOLICITORS : Turnbull Hill Lawyers, for plaintiff Attwaters, Newcastle for defendants CATCHWORDS : Real Property. Restrictive covenants. Application under s 89 of the Conveyancing Act. Whether proposed modifications to the front of a house will reduce the views enjoyed by the next door property which has the benefit of the covenant. Held that there would be an impairment. Cross claim dismissed. Re Alexandra (1980) VR 55 at 57; TZ Developments P/L v Rickman P/L unreported 27.8.93; In Re Ghey and Galton's Application (1957) 2QB 650; Stannard v Issa (1987) AC 175 at 187; Heaton v Loblay (1960) SR (NSW) 332; CASES CITED : Morpath Pty Ltd v ACT Youth Accomm. Group Inc 1987 16 FCR 325 at 338; Webster v Bradac 5 BPR 97430; Re Stani (SC Vic) Full Court 7.12.76; Coles Myer NSW Ltd v Dymocks Book Arcade Pty Ltd unreported 28.6.96;; Heaton v Loblay (1960) SR (NSW) 332 at 335; Morpath P/L v ACT Youth Accommodation Group Inc 1987 16 FCR 325; Durack v De Winton 9 BPR 97721. DECISION : Para 37

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4877/1999 FREDERICK THOMAS PINK & ANOR v RUSSELL RALPH CUMMINGS & ANOR

JUDGMENT 1 MASTER: This is the hearing of proceedings which originally commenced by way of a Summons seeking to restrain the carrying on of certain building work said to be in breach of a restrictive covenant. That part of the proceedings was resolved by giving undertakings and thereafter the substantive part of the proceedings concerned a cross claim by the defendants seeking a variation of a covenant which affects the property owned by the defendants at 10 Hanly Street, Redhead, a suburb of Newcastle. The whole of the proceedings have been referred to a Master for hearing by a Judge of the Court. 2 The covenant in question burdens the property at 10 Hanly Street, Redhead and is for the benefit of the adjoining property, known as 32 Collier Street, Redhead. The covenant was contained in a transfer dated 6 May 1968 and is in the following terms:- "And the transferee doth hereby for the benefit of the adjoining land of the transferor being Lot 1 of Section 30 in DP 3109 covenant with the transferor that no building or portion of any building shall be erected within 43" of the eastern alignment of Hanly Street and it is hereby declared that the person having the right to release, vary or modify this restriction shall be the owner for the time being of the said Lot 1 of section 30 in DP 3109." 3 On 26 February 1973 the covenant was varied by a deed between the plaintiffs and the then owners of 10 Hanly Street. The variation was to permit a patio to be built not closer than 42 feet 6 inches to the eastern alignment of Hanly Street and steps leading to the patio no closer than 34 feet. The property in Hanly Street has been built within those confines. In September 1998 the defendants discussed with the plaintiffs a proposal to build a covered deck on the front of their house where it fronts Hanly Street to which the plaintiffs indicated they were opposed. During 1999 a building application for the proposal was lodged by the defendants and in August of that year the application was approved. After waiting for some months the defendants commenced building in accordance with the approved plans and that triggered the plaintiffs commencing these proceedings. On 2 December 1999 notice of the application contained in the cross claim to vary the restrictive covenant was given to the plaintiffs' mortgagee, the local council and it also has been advertised. The matter has been debated before me by the two parties to the proceedings. 4 The proposal for the extension is set out on a number of plans and for ease of reference I will attach a reduced copy of part of Annexure A of the affidavit of Mr Taylor, the surveyor for the plaintiffs. By reference to that plan one can see the two properties in question, namely, the property burdened in Hanly Street and the property having the benefit of the easement which has a Collier Street address. The plan does not depict completely the whole of the building in Hanly Street. In order to appreciate the typography one has to realise that the Collier Street property is higher than the Hanly Street property and enjoys extensive views to the south, south west and west. The south western views look straight out to the ocean while the southern views look down to the lower houses in Hanly Street and their gardens. The proposed extension is shown on the plan. There is also shown on the plan an area marked with the words "verandah". The north south part of that part is the patio on the first floor level of the Hanly Street property and the balance of it where the letters "Verand" appear, are the steps down to the ground floor level of the house. The steps are the access from the ground floor to the main entrance of the Hanly Street property which is on the first floor. 5 Two proposed extensions are shown. There was a northern extension and a southern extension. Both of these involve a deck at the first floor level of the Hanly Street property with a Colorbond or metal roof over the extension in part or in whole. The Hanly Street property has on its north western corner a kitchen and small dining room which is used as a sitting room. On the south western corner there is a living room which fronts on to the patio. Behind that room is an area described in the evidence as a family or rumpus room which extends along the rest of the southern side of the house. The outlook from the Collier Street property to the south is partially blocked by the roof of Hanly Street. However, from the eastern most end of the verandah to the western end of the property, the views are extensive and are not interfered with by the present position of the Hanly Street property, its patio or steps. Some of the views which give an understanding of the typography can be seen in the photographs which are attached to Annexure A. 6 The provisions which apply to the application are contained in se 89 of the Conveyancing Act. Relevantly sections 89(a) and (c) provide as follows:- "89.(1) Where land is subject to an easement or to a restriction arising under covenant or otherwise as to the user thereof, the court may from time to time, on the application of any person interested in the land, by order modify or wholly or partially extinguish the easement or restriction upon being satisfied - (a) that by reason of change in the user of any land having the benefit of the easement or restriction, or in the character of the neighbourhood or other circumstances of the case which the court may deem material, the easement or restriction ought to be deemed obsolete, or that the continued existence thereof would impede the reasonable user of the land subject to the easement or restriction without securing practical benefit to the persons entitled to the easement or to the benefit of the restriction, or would, unless modified, so impede such user; or ……… (c) that the proposed modification or extinguishment will not substantially injure the persons entitled to the easement, or to the benefit of the restriction."

7 As has been pointed out in Re Alexandra (1980) VR 55 at 57 to 58 by Menhennitt J subsection (a) contains two independent sets of provisions. This view of the section has been approved by the Court of Appeal in this State in TZ Developments Pty Limited v Rickman Pty Limited unreported 27 August 1993 and thus in order to found jurisdiction it is necessary for the applicant to fit within one of the following three alternatives:-

1. By reason of change of user of land having the benefit of the covenant or in the character of the neighbourhood or other circumstances of the case the covenant ought to be deemed obsolete.

2. The continued unmodified existence would impede the reasonable user of the land subject to the covenant without securing practical benefit to the persons entitled to the covenant.

3. The modification will not substantially injure the person entitled to the covenant. 8 In their submissions the cross claimants sought to found their relief upon paragraphs 2 and 3 above. I turn to each of these matters.

2. The continued unmodified existence would impede the reasonable user of the land subject to the covenant without securing practical benefit to the persons entitled to the covenant. 9 There are two elements to this ground upon which the Court may extinguish the covenant. The first is that the continued existence would impede the reasonable user of the land subject to the covenant. There is a substantial difference of opinion on the authorities upon the meaning of this part of the section. In New South Wales a number of decisions have adopted the view expressed by the Court of Appeal in England. In Re Ghey and Galton's Application (1957) 2QB 650 at 663 the Court indicated the meaning as "that the continuance of the unmodified covenant 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." This view has recently been approved again by the Court of Appeal in Stannard v Issa (1987)AC 175 at 187. 10 In Heaton v Loblay (1960) SR (NSW) 332 at 335 His Honour Mr Justice Myers pointed out that it is not sufficient to show that what the applicant proposes to do is a reasonable use of the land rather it is necessary to show that no reasonable use of the land is possible unless the restriction is extinguished or modified. 11 The alternative view appears from a series of A.C.T. and Northern Territory cases dealing with a slightly different section. The authorities are dealt with by His Honour Mr Justice Beaumont in Morpath Pty Ltd v A.C.T. Youth Accommodation Group Inc 1987 16 FCR 325 at 338 and following. His Honour followed the A.C.T. and Northern Territory cases and held that it is not necessary to show that the land would be sterilised unless the restriction was lifted. The ground for jurisdiction would be made out where the applicant can point to the existence of a reasonable user of the land which is prohibited by the restrictive provision. In TZ Developments Pty Limited v Rickman Pty Limited to which I have referred the Court of Appeal in this State noted the difference but found it unnecessary to decide which of the approaches were correct. 12 It is clear that if the stricter test were to be applied there would be no jurisdiction to modify the covenant. Clearly the land can be used for its existing purpose which is carried on in the present buildings. 13 It should be borne in mind that the legislation under consideration in Morpath was somewhat different in that it was a provision concerning alteration of use restrictions in Crown leases. 14 In Webster v Bradac 5 BPR 97430 McLelland CJ on 21 June 1993 followed Stannard v Issa and a number of Victorian decisions. His Honour does not seem to have been referred to Morpath. The case concerned a restriction to a use as a private dwelling. The desired use was that of a church. His Honour held that consistent with the maintenance of the restriction the lot could continue to be reasonably used in the manner it had been used since the plaintiffs acquired it in 1976, namely, as a dwelling. The same can be said of the present case. His Honour referred to Re Stani (SC Vic) Full Court 7 December 1976 unreported. It appears that the Victorian Full Court has adopted as applicable the English test. Recently Simos J in Coles Myer NSW Ltd v Dymocks Book Arcade Pty Ltd unreported 28 June 1996 preferred the English approach to that put forward in Morpath because of the difference in the statutory provisions and the fact that the decision of Meyer J in Heaton v Loblay has stood since 1959. Einstein J in Durack v De Winton 9 BPR 97721 has also taken this approach. In these circumstances I think I should follow New South Wales authority which is supported by the Court of Appeal in England and the Victorian Full Court. 15 As the cases make clear it is a question of fact. Notwithstanding a desire for expansion, in my view, there is no reason why the land subject to the burden cannot be continued to be used in the manner in which it has been used since it was acquired by the plaintiff. 16 In case I am wrong on this matter I turn to the second element, namely, whether the continued existence would be "without securing practical benefit to the persons entitled to the easement". The cases have adopted a number of different words to describe this element. For example, Farwell J in Henderson's Conveyance (1940) Ch 835 at 845 said:- "If a case 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."

17 In TZ Developments Pty Limited v Rickman Mr Justice Sheller, after referring to the above comments of Farwell J, said the following:- "While I accept that there is always a danger in attempting an exposition of a section by replacing the Parliamentary language with other language I think the use of the word 'reasonable' does not more than recognise that an easement usually involves reasonable use and enjoyment in an ascertained way; see Clifford v Hoare (1874) LR 9 CP at 370 per Lord Coleridge CJ. In Stannard v Issa Lord Oliver of Aylmerton at 186 quoted from Carey JA's dissenting judgment in the Jamaican Court of Appeal, a judgment preferred by the Privy Council to that of the majority. Carey JA said that if the evidence indicates that the purpose of the restriction is still capable of fulfilment the onus on the applicant for modification has not been discharged. If the question is posed whether reasonable use and enjoyment of the right of way over the servient tenement or the disputed section of it is still capable of fulfilment the answer in accordance with Bryson J's findings of fact must be in the affirmative. Accordingly in my opinion the appeal on this ground must fail." 18 In the present case there is at least one practical matter which goes to this question and that is the enjoyment of the views. For the reasons which I express later, I am satisfied that there is a practical benefit which is secured to the plaintiffs by the covenant.

3. The modification will not substantially injure the person entitled to the covenant. 19 In Webster v Bradac (1993) 5 BPR 12,032 at 12035 His Honour McLelland CJ has said the following when discussing the injury referred to:- "The kind of injury contemplated in para (c) is injury to the relevant person in relation to his ownership of (or interest in) the land benefited. The injury may be of an economic kind, for example, reduction in the value of the land benefited, or of a physical kind, for example, subjection to noise or traffic, or of an intangible kind, for example, impairment of views, intrusion upon privacy, unsightliness, or alteration to the character or ambience of the neighbourhood. These arbitrary categories, whilst serving to illustrate the ambit of the concept of injury for the purposes of the paragraph, are neither mutually exclusive nor necessarily exhaustive, and what I have described as injuries of a physical or intangible kind could well also affect the value of the land in question. However, it is clear that a person may be "substantially injured" within the meaning of para (c) notwithstanding that the value of his land would be unaffected or even increased by the proposed modification. It is also clear, particularly in the case of injuries of what I have called an intangible kind, that the subjective tastes, preference or beliefs of particular individuals may, within limits of reasonableness, give rise to injury in the relevant sense to those individuals. If, however, particular persons do not after due notice assert any claim to injury to them on purely subjective grounds of this kind, then it may be open to the court to infer that there is no injury of that kind to those persons, although the absence of objection does not remove from applicants for relief under s 89(1) the onus of establishing their case." 20 There were three areas that emerged in the evidence in which it was said there was substantial detriment which would be caused to the plaintiffs if the covenant was modified as proposed by the defendants. These were:-

1. A decrease in the view available to the plaintiffs from their property.

2. A decrease in the amenity due to increased noise from use of the new deck.

3. Loss in value of the plaintiff's home. 21 The second defendant freely conceded in cross examination that if the alterations were approved and went ahead it would be likely that the kitchen area would be opened out on to the decking and that such area would be used outside for ordinary living purposes. After this evidence and at about 2.00 pm on the first day of the hearing before me the defendants announced a change in the nature of the application which they were making. Previously they had merely sought a modification to permit their proposed extensions as detailed in the approved council plans. At 2.00 pm they deleted from the proposal that part of the decking and the roof which can be described as the northern most part of the proposed modifications. That was the part to the north of the steps down from the entrance to the house. Presumably the modified steps included in the proposal remained. 22 Evidence was given on behalf of both parties by valuers. On the defendants behalf, Mr G.D. Dick, who is an architect and valuer, gave evidence which addressed the total proposal before its modification. He took a number of photographs which included a simulation of the area which would be occupied by the proposed extension. The simulation outlined the areas in bunting which were able to be seen from the photographs which he took. In particular the photographs taken from inside the plaintiffs' property were taken from a seated position in the lounge area and the breakfast bar. His principle views were:-

1. That the verandah and roof would not have any detrimental effect on the Pink's views.

2. The location of the verandah, and in particular its roof, would limit the possibility of transference of voices to the adjoining property.

3. There would be increased privacy as a result of the proposed roof.

4. That the verandah and roof proposed by the defendants would have no effect upon the likely property value of the Pink's residence. 23 Mr Cubis gave evidence for the plaintiffs He adopted a report that had been prepared by another valuer in his company. Mr Cubis appears to have extensive experience in valuation. He valued the property at $250,000 in its present state and after the proposed works on the defendants' property, he valued the plaintiffs' property at $225,000. This was a diminution in 10% off the value and, of course, was in respect of the whole proposal put forward by the defendants. When he gave evidence orally after the defendants' amendment of their application, he indicated that the extent of the diminution in value would be somewhere between 5% and 10%. 24 Not surprisingly, he had different reasons for coming to this conclusion. The three main matters were:-

1. The construction would impinge upon the existing view corridors. 2. Increase noise. 3. Loss of privacy. 25 In his report he referred to the fact that his difference was made by reference to comparable sales evidence although this evidence did not appear in his report and to the extent elaborated upon in cross examination it seemed to be a reference to his experience in valuing properties. 26 Mr Cubis' valuation was criticised on a number of bases. These included his reference in his final comments to the value being on the basis that the addition was not council approved and the development was not undertaken. Clearly that is not a significant matter as it was cumulative in any event it probably follows some other precedent. 27 He made reference to recent tree planting within the corridor which he said was in breach of the spirit of the covenant. That does not seem to be a major part of his reasoning although his report is not expressed clearly in this respect. Given that one is dealing with the value at this stage and that relevant tree planting on the defendants' property is in its infancy, the matter is not of great significance. 28 The further criticisms relate to his perception of the three main matters that I have referred to and to an extent it is my decision on these factual matters which will lead me to prefer his approach or the approach of Mr Dick. 29 I turn to the question of views. Mr Cubis in his report referred to "view corridors" and this was echoed in the plaintiffs' evidence. It is perfectly apparent that there are substantial views of what might be described as the distant variety. They encompass the ocean to the south west and that is clearly an important part of the view. 30 It is the view to the south which is described as a "corridor view" looking down Hanly Street which falls away below the plaintiffs' property which is the real matter of contention. That view can be enjoyed from the kitchen, breakfast bar and lounge of the plaintiffs' property. There are in evidence, exhibits 4 5 and 6, in contrast to Mr Dick's photographs which are exhibits 2A, 2B, 2C and 2D. These show views from a standing position inside the plaintiffs' property. With the benefit of these views and if one takes into account the outline of the proposed extension which appears in exhibit B to Mr Taylor's affidavit, it is perfectly apparent that from the breakfast bar area there will be a substantial reduction in the view of the foliage and the gardens of the houses which are on the other side of the defendants' property. There is also said to be an impact on the main expansive distant views because that foliage frames the distant views. It seems to me that the proposal, in a practical sense, is an interruption to the existing view corridor when one is walking in the breakfast bar area of the plaintiffs' house. 31 I turn to the other areas which can be described in general terms as amenity but which really have two aspects being increase in noise and loss of privacy. It became perfectly apparent from the cross examination of Mrs Cummings that they were intending to have people out on the balcony and intended to use the part of the balcony which is closest to the plaintiffs' property. Given the location of the remaining part of the balcony as being outside the living room, it seems to me that there is a least an opportunity for there to be further use of this area particularly as the existing patio or verandah was for a very limited purpose. It would be a natural extension of the living room and is not too far from the kitchen to be able to be serviced from the kitchen. These two aspects, namely noise and privacy, seem to be real and I think probably would be the one of most concern. 32 In evidence Mr Cubis described the difference in the views to the south and those to the south west which are the distant views to the oceans in these terms:- "Q. The part of the locality obstructed by the proposed modified construction is surely a minimal interruption of the views? A. Photo 2 shows a green area that frames - the ocean is being blocked out Q. Which green area? A. The general - you asked earlier about ocean views. In a general sense if you have got an ocean view say cut at the horizon over the top roof, that has not got the quality of an ocean view that has got a dressing of greenery around it. It is more pleasant to look across greenery than it is to look at a roof of a deck. Q. This smaller roof depicted on photograph 2 on the modified proposal, you are saying is a specific detriment to their view? A. A detriment. Q. It is certainly not a detriment which would cause any financial detriment to the market value of the Pinks' property? A. Yes, it would." 33 In my view although the major part of the views still remain unimpeded there is an affect on part of the existing views. In these circumstances, it seems to me that the views of Mr Cubis are to be preferred and the clear economic loss is thus demonstrated. 34 Even if I were wrong on this aspect one has to bear in mind that the plaintiffs themselves advanced the loss of views and the loss of amenity as matters with which they were concerned. As I have indicated earlier, the subjective views of those having the benefit of the restrictive covenant are relevant to the extent that they are within the limits of reasonableness. I note that in considering whether the injury is substantial one looks at it in the sense of whether the injury is "real or appreciable". See Einstein J in Durack v De Winton at 16439 at line 31. It was suggested in submissions that the real concerns of the plaintiffs were the loss in value of their house and that the matters such as loss of views and amenity were the matters used to support the loss in value. Having regard to the evidence of the plaintiffs I am not of that view. It seemed to me that their concerns about the loss are real. They are elderly persons and they spend a substantial amount of their time in the breakfast bar and lounge area of their home. They are both retired. Accordingly, I am satisfied that benefits of an intangible kind, namely, views, privacy and noise, will be affected by the modified proposal. 35 For the reasons which I have expressed it is appropriate that the cross claim be dismissed and that orders be made in accordance with the present interim regime governed by undertakings. 36 Accordingly, the orders which I make are:-
   1. I dismiss the cross claim.
   2. I restrain the defendants from erecting any building or portion of a building within 42 feet 6 inches from the eastern alignment of Hanly Street on the property lot 2 section 30 in deposited plan 309 and known as 10 Hanly Street, Redhead in the State of New South Wales.
   3. Order the defendants to pay the plaintiffs' costs of the proceedings.

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