Plaintiff v Defendants

Supreme Court of Victoria|2012-01-11|Before: CAVANOUGH J

REAL PROPERTY - Restrictive Covenant - Construction - Application for modification - Proceeding dismissed - Property Law Act 1958, s 84.

1 The plaintiff is the registered proprietor of the land at 191-193 Wattletree Road, Malvern, on which there presently stands a double-storey Edwardian house surrounded by a garden. The property was the plaintiff's family home for many years. It falls within an area known as the Coonil Estate. The Coonil Estate was originally owned by the Langmore family. In 1886 they constructed a mansion on the western portion of it. The Estate was subdivided into 63 allotments in 1910. Lot 1, a site of some three acres on which the mansion stood, was retained. In 1919 Lot 1 was acquired by the Sisters of Mercy and the mansion was used by them as a private hospital until 1948. Thereafter Lot 1 was taken over by another order of Sisters associated with the worldwide Cabrini Association. They founded a new hospital, Cabrini Hospital, which evolved and expanded and is now one of Melbourne's leading hospitals. There has also been a lawn bowling club within the Coonil Estate for many years. Otherwise, since its establishment, the Estate has generally consisted of good quality residential properties presenting as detached houses together with, from time to time, the odd vacant allotment. The plaintiff's property comprises Lots 7 and 8 of the original subdivision. The Edwardian house is built mostly on Lot 7, encroaching only slightly onto Lot 8.

2 The plaintiff now proposes that the house be demolished and that a three-storey building comprising 18 residential apartments, together with a basement car park for 36 cars, be erected on the property. A restrictive covenant applicable to the property stands in the way of the proposal. So, in this proceeding the plaintiff seeks orders under s 84(1) of the Property Law Act 1958 ("the Act") to modify the restrictions imposed by the covenant so far as necessary to enable the proposal to be put into effect.

3 Further, as a related matter, the plaintiff seeks a declaration, under s 84(2) of the Act or under the Court's general powers, that a particular restriction arising under the covenant - namely a prohibition against the erection of 'more than one house' on each of the two lots comprising the property - would not be breached by the proposed development. The claim for a declaration was only included at a very late stage. Logically, however, it falls to be determined before the application under s 84(1), although there is some overlap between them.

4 Until just before the hearing there were 32 defendants. Each of those defendants owned a property in the Coonil Estate. Each was entitled to the benefit of the restrictive covenant.[2] Two former defendants[3] were removed because they recently sold their jointly owned property.[4] The remaining 30 defendants oppose all of the relief sought by the plaintiff.

5 In my opinion the declaration sought should not be made, the application under s 84(1) should be refused and the proceeding should be dismissed.

6 Section 84 of the Act provides:

(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

(b) that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the restriction whether in respect of estates in fee-simple or any lesser estates or interests in the property to which the benefit of the restriction is annexed have agreed either expressly or by implication by their acts or omissions to the same being discharged or modified; or

(c) that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction:

Provided that no compensation shall be payable in respect of the discharge or modification of a restriction by reason of any advantage thereby accruing to the owner of the land affected by the restriction unless the person entitled to the benefit of the restriction also suffers loss in consequence of the discharge or modification nor shall any compensation be payable in excess of such loss; but this provision shall not affect any right to compensation where the person claiming the compensation proves that by reason of the imposition of the restriction the amount of consideration paid for the acquisition of the land was reduced.

(2) 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."

(3) The Court may before making any order under this section direct such inquiries (if any) to be made of any local authority or such notices (if any) whether by way of advertisement or otherwise to be given to such of the persons who appear to be entitled to the benefit of the restriction intended to be discharged, modified or dealt with as, having regard to any inquiries, notices or other proceedings previously made given or taken the Court thinks fit.

(4) Any order made under this section shall be binding on all persons whether ascertained or of full age or capacity or not then entitled or thereafter capable of becoming entitled to the benefit of any restriction which is thereby discharged, modified or dealt with and whether such persons are parties to the proceedings or have been served with notice or not.

(5) An order may be made under this section notwithstanding that any instrument which is alleged to impose the restriction intended to be discharged, modified or dealt with has not been produced to the Court, and the Court may act on any evidence of such instrument as it thinks fit.

(6) This section shall apply to restrictions whether subsisting on the thirty-first day of December One thousand nine hundred and eighteen, or imposed thereafter and whether the land affected thereby is registered or not, and in the case of registered land the registrar shall if the restriction has been noted on the register give effect on the register to the order when made.[5]

7 So far as the application under s 84(1) is concerned, the plaintiff relies principally on s 84(1)(c) whereby she alleges that the proposed modifications will not "substantially injure" the persons entitled to the benefit of the restriction. There being no consent, she makes no claim under s 84(1)(b). She does maintain claims under both limbs of s 84(1)(a), but she has supported them only faintly.

8 The land in the Coonil Estate has at all relevant times been Torrens system land. As indicated above, the Plan of Subdivision (no 5320) was lodged in 1910 and comprised 63 lots. The plan is recorded on the parent title (volume 3442 folio 352). The restrictive covenant burdening the plaintiff's property was contained in an instrument of transfer no 683810 dated 11 May 1912. The instrument of transfer was registered on 14 May 1912. As mentioned already, the land transferred, being the land now in question, comprises Lots 7 and 8 on the Plan of Subdivision. At the time of the registration of the instrument of transfer and the issue of the certificate of title for the property in question (volume 3607 folio 399), there were 39 lots then remaining untransferred out of the parent title. Those 39 lots thus became entitled to the benefit of the restrictive covenant. Twenty-one of those lots, in turn, are now represented amongst the holdings of the defendants.

9 The restrictive covenant is expressed in the following terms:

AND the said William Durham Leslie doth hereby for himself his executors and administrators covenant with the said Jane Langmore and Arthur Charles Langmore Registered Proprietor or Proprietors for the time being of the untransferred part of the land in the said Certificate of Title their executors and administrators that he the said William Durham Leslie his executors administrators or transferees will not at any time or times hereafter quarry on the said land or cart or carry away any stone gravel soil or sand therefrom or make any excavations therein except such as may be necessary for laying the foundation of any building on the said land AND FURTHER that he or they will not erect more than one house on each of the said Lots and that any house so erected shall be of stone or brick or brick and stone with roof of slates or tiles on the main portion thereof at a cost of not less than six hundred pounds each exclusive of stables and outbuildings and that such building shall not be used for any trade or business AND FURTHER that the said William Durham Leslie his executors administrators or transferees will not subdivide either of the said Lots into smaller allotments nor reduce the frontage thereof to a smaller frontage than appears on the said Plan of Subdivision AND the said William Durham Leslie hereby requests that the above covenants may appear as an encumbrance on the Certificate of Title to be issued in respect of the land hereby transferred and run with the land.

10 Substantially similar restrictive covenants burdened almost every other lot transferred out of the Coonil Estate, although some have since been removed or modified.[6] As with the covenant over Lots 7 and 8, the benefit of each other covenant lay only with the land that had not yet been transferred out of the parent title as at the time of each transfer.

11 It is common ground, and I am satisfied, that there has been sufficient advertising of the plaintiff's intention to apply for the relief she seeks and that the present proceedings have been sufficiently served on, or notified to, affected persons.

12 From the outset the plaintiff's plans have involved the demolition of the current Edwardian house and the clearing of the remainder of the property. This would leave a vacant site comprising Lots 7 and 8. They are contiguous rectangular allotments, each having a frontage to the north side of Wattletree Road of approximately 18.29 metres (60 feet) and a combined frontage therefore of approximately 36.58 metres (120 feet). The total site has a depth of approximately 45.72 metres (150 feet). The total site area is thus approximately 1,672 square metres (18,000 square feet).[7]

The course of the proceeding and the varying terms of the originating motion and of the proposal

13 This proceeding was commenced by originating motion on 12 March 2010. At that stage the plaintiff sought the discharge of the covenant in its entirety. The accompanying affidavit of the plaintiff referred to her proposal to develop the property by constructing a three storey building with a basement car park. Plans of the development were exhibited. The plans referred to the proposal as a "mixed use development". These original plans showed two commercial units, 16 apartments and a 36 car basement garage. In her affidavit, having referred expressly to the prohibition in the restrictive covenant on erecting more than one house on each lot and to the prohibition on subdivision (among other provisions), the plaintiff stated that the proposal was "incapable of implementation whilst the covenant remains in place".

14 The originating motion was amended on 3 June 2010, 11 June 2010 and again on 11 October 2010 such that it then sought, in the alternative to a complete discharge, an order pursuant to s 84(1)(a) or s 84(1)(c) of the Act that the restrictions imposed by the covenant be modified by discharging specified parts of them[8] - curiously, not including the restriction on excavation[9] - and replacing the discharged parts with a restriction in accordance with the following wording:

Will not construct on the said land any building other than one which is generally in accordance with the plans annexed hereto and marked "A" for identification or a detached house.

15 On 25 November 2010, a further affidavit of the plaintiff was filed abandoning the two commercial units and substituting two additional residential units. Reliance was placed on new architectural plans dated 5 November 2010.

16 In mid-June 2011, one week prior to the first scheduled hearing day, the plaintiff foreshadowed a further amendment to the originating motion so as to seek a declaration that the development proposed in the plans of 5 November 2010 did not contravene the covenant. On that view, no discharge or modification would have been necessary.

17 On the opening day of the hearing (21 June 2011), the plaintiff orally abandoned the application to discharge completely the restrictions imposed by the restrictive covenant,[10] although that claim remains in the originating motion.

18 Revised plans of the proposed development were produced by the plaintiff on the second day of the hearing, with two pedestrian walkways deleted from the Wattletree Road elevation of the proposed building. This was apparently done because of a recognition by the plaintiff's legal representatives that separate entrances for the apartments tended strongly against the contention that the building represented no more than one house.[11]

19 On the third day of the hearing, the defendants filed their written opening submissions, which included contentions to the effect that the proposed development could not comply with the existing covenant because what was proposed represented more than one house on each lot, because it was proposed to subdivide the lots into smaller allotments, and because it was proposed to excavate other than for foundations.

20 On the fourth day of the hearing (24 June 2011), arrangements were made for a view of the property and the surrounding area to be had on 18 August 2011, and the further hearing of the proceeding was otherwise adjourned until 22 and 23 August 2011. The view duly took place. Under s 54 of the Evidence Act 2008 I may draw any reasonable inference from what I saw, heard or noticed during the view. However, I have not drawn any inferences as a result of the view. The view has merely enabled me to understand the evidence and the issues better.

21 The plaintiff having had time to consider the defendants' written opening submissions during the adjournment, she ultimately sought and, on 23 August 2011 she obtained, leave to file a fifth amended originating motion in which the declaration sought was expressed in a more limited fashion, as follows:

A declaration that the development of Lots 7 and 8 on Plan of Subdivision No. 5320 being the land more particularly described in Certificate of Title Volume 3607 Folio 399 ("the subject land") generally in accordance with the plans prepared by Rachcoff Vella Architecture Pty Ltd Drawing No. SD02 Revision No A dated 5 November 2010 and Drawing Nos SD01 Revision No B and SD03 Revision No B dated 21 June 2011 ("the plans") would not contravene that part of the restrictions created by Instrument of Transfer Registered number 683810 which prohibits the erection of more than one house on each of the said Lots.

The fifth amended originating motion is the current, final version. Hence, so far as declaratory relief is concerned, the plaintiff now seeks, in substance, a declaration that a development generally in accordance with the current architectural plans would not contravene that part of the restrictive covenant which prohibits the erection of more than one house on each of Lots 7 and 8. In the alternative, the plaintiff seeks an order under s 84(1)(a) or (c) of the Act modifying that particular restriction. Further, the plaintiff seeks an order under s 84(1)(a) or (c) modifying the restrictions relating to excavation, building materials, subdivision and frontages. Taken together, the modifications sought are modifications that would permit the construction of a building generally in accordance with the current architectural plans.

The point and purpose of the application for the declaration

22 At the hearing, the plaintiff's senior counsel, Mr Wright QC, acknowledged that the plaintiff was now proceeding on the basis that the proposal would not conform with that part of the covenant which restricts excavation.[12] Further, he acknowledged that the proposed apartments could not be sold off individually without a strata subdivision and that the restrictive covenant (unless modified) would stand in the way of achieving a strata subdivision.[13] In these circumstances, I asked Mr Wright what was the point of applying for a declaration in respect of the "one house" restriction only.[14] He replied that if the plaintiff were found to be entitled to that declaration she would overcome her major problem and her position would be significantly strengthened in relation to her claims under s 84(1) of the Act for modifications to the other relevant restrictions. He submitted, in effect, that the starting point in that regard would be different. In particular, the starting point would be that the erection of a three-storey block of 18 apartments would not, of itself, infringe the covenant. As to excavation, the principal question would become whether, for the purposes of s 84(1)(c) of the Act, modifying the restriction on excavation so as to permit the construction of a car park beneath the apartment block would, of itself, "substantially injure" the persons entitled to the benefit of the covenant. Likewise, as to subdivision, the principal question would become whether modifying the prohibition on subdividing the lots would, of itself, "substantially injure" the persons entitled to the benefit of the covenant in circumstances where, by hypothesis, they would already be facing the prospect of a block of 18 apartments which could at least be rented out to tenants. In other words the principal question would become whether a conversion from leasehold to freehold interests would, of itself, "substantially injure" the persons entitled to the benefit of the covenant. Mr Wright also said that, strictly speaking, with the benefit of the declaration the plaintiff could choose to go away and construct the apartment block (with or without the basement car park, depending on the outcome of her application in that regard), rent out the apartments, and leave the question of strata subdivision to another day.

23 As to the prohibition on the reduction of frontages, Mr Wright submitted that the proposal would not infringe it. The frontages of the lots would remain the same. The front boundary of the development would be common property, he asserted. Modification of the 'frontage' restriction was being sought merely out of caution.

24 As to the restriction on building materials, Mr Wright submitted that a modification of it to allow the use of modern materials should be uncontroversial if the plaintiff were found to be entitled to the declaration and the other relief she seeks.

25 It may be thought that in some or all of these ways the plaintiff is seeking to "divide and conquer". The defendants do not accept that it is legitimate for the plaintiff to do so. They say that the "one house" restriction is not a freestanding restriction. They say that it is merely a part of a complex of inter-related restrictions. I will return to this matter shortly.

Jurisdiction in relation to the claim for a declaration

26 As indicated above, the declaration is sought under s 84(2) of the Act or under the Court's general or inherent jurisdiction and powers, including under s 36 of the Supreme Court Act 1986. It would necessarily be a declaration as to a situation or position that has not yet arisen, in that the development is merely proposed. It is very doubtful whether s 84(2) of the Act would authorise the Court to make a declaration of that kind.[15] The plaintiff acknowledged this during oral submissions and thereafter placed principal reliance on the Court's general or inherent jurisdiction.[16] I accept that that jurisdiction may extend to future questions, and that it is available in this case.[17] The jurisdiction is apparently no less ample than any jurisdiction under s 84(2) of the Act.[18] So it is not necessary to decide finally whether jurisdiction under s 84(2) of the Act also exists.

Should the Court entertain the application for the declaration?

27 The exercise of the declaratory jurisdiction is discretionary. The defendants submit that this is not a proper case for the exercise of the discretion, on two grounds. First, they say that the plaintiff's proposal is too vague, uncertain and variable to be a proper subject for a declaration. Second, as already mentioned, they say that the Court should not consider whether the proposal complies with the "one house" restriction as a separate or freestanding restriction within the covenant.

28 By their first ground, the defendants assert that the Court is being asked, in effect, to speculate about the nature of the building that would ultimately be constructed. It is true that, in essentially uncontested expert evidence, the plans have been described as "extraordinarily rudimentary", "preliminary" and "schematic".[19] I accept also that a number of design details have yet to be added, such as the internal layout of rooms in the apartments, the location of the letterboxes and the relationship of the basement to the ground level; and that changes might be made to the design through the Stonnington Council's consultation process, or through any subsequent review by the Victorian Civil and Administrative Tribunal ("VCAT") or through the building and structural assessment process under the Building Act 1993; and that additional changes are routinely made to a development throughout the course of construction.[20]

29 In Longo Investments Pty Ltd[21] Osborn J said that 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.

However, his Honour said this after considering the substance of the proposal against the language of the restrictive covenant and finding that the proposal was likely to comply. In those circumstances his Honour determined that, instead of making a declaration, the safer course was to make an order under s 84(1) of the Act modifying the restrictions so as to permit the proposal to go ahead "generally in accordance with" the developer's plans as they then stood.

30 In the present case the plaintiff submitted that if the Court came to the view that the result would turn on a particular, readily adjustable feature of the proposal which was not clearly specified in the plans - the positioning of the letterboxes was asserted to be an example - then the Court could make the declaration sought subject to an appropriate condition.[22] The plaintiff further submitted that if the Court were "concerned about the detail" the appropriate course would be "to defer until those details have been resolved because they can be resolved without difficulty"[23]. At a later stage of the hearing, however, when asked whether the Court should regard as unalterable certain features which were said to favour the plaintiff, namely the single driveway and the single front entrance (as shown in the revised plans), the plaintiff's counsel submitted that alterations or further alterations to those features were simply not proposed and that the Court "should deal with what is proposed"[24]. I accept that the Court should deal with what is proposed, but that applies equally whether the feature in question tends in favour of or against the plaintiff.[25]

31 The plaintiff carries the burden of proof and the risk of non-persuasion on the application for the declaration. The defendants are not precluded from relying upon any gaps or uncertainties in the plans in support of their argument that the plaintiff has failed on the merits to make out her case for a declaration. However, like Osborn J in Longo Investments Pty Ltd, I have thought it right to consider the substance of the plaintiff's proposal against the terms of the restrictive covenant. Having done so, I have concluded, for reasons to which I will come, that the plaintiff's proposal would clearly not comply with the restrictive covenant. As will become apparent, my conclusion does not turn on any readily adjustable particular feature of the proposal nor upon uncertainty about mere matters of "detail". In these circumstances, neither the problem adverted to by Osborn J in Longo Investments Pty Ltd nor any of the situations postulated by the plaintiff arise. My conclusion on the substance of the matter can be given effect by an appropriate order, that is to say, by an order simply dismissing the application for the declaration. It follows that the first matter relied upon the defendants does not establish that the Court should not entertain the application for the declaration.

32 The second ground advanced by the defendants is that the specified restriction is not truly freestanding as asserted by the plaintiff. In my opinion this point has merit, but, once again, it is not really in the nature of a preliminary point. In any event, as will be seen, my conclusion would be the same regardless of whether the specified part of the covenant can properly be treated as freestanding. So I am not persuaded on this account, either, that the Court should not entertain the application for the declaration.

The plaintiff's submissions on the application for a declaration

33 On the first day of the hearing, the plaintiff handed up and adopted a detailed written submission in support of her claim for a declaration. In it she contends that the proposed development is properly characterised as one house. However on the third day of the hearing she (for the first time) foreshadowed,[26] and in her closing submissions she advanced,[27] an alternative argument, namely, that if the development does not constitute one house then it is not a house at all; and that if it is not a house at all then it does not contravene the restriction which prohibits the erection of more than one house on each of the Lots.

34 In support of her original, principal contention, the plaintiff argues that the prohibition on the erection of more than one house is directed to built form, not the use of the building. She submits that the critical words are "erect" and "one house". She argues that there is no restriction on the use of the house by more than one family or for more than one household. She says that the only restriction on use is the restriction relating to trade or business.

35 The plaintiff submits that the meaning of a restrictive covenant is a "question of fact to be determined by the language and context of the actual document in which it appears";[28] and that the phrase not erect more than one house must be given its ordinary and everyday meaning.

36 As to the meaning of the word house in particular, the plaintiff submits, by reference to dictionary definitions, that it is of wide and varied import and that, therefore, the meaning of the word in any particular case will depend on the context in which it appears. In the present case, she says the context is dictated by the verb erect, and she says that this indicates that house is to be understood as a structure or building suitable for human habitation. "It is not confined to a building where a single person or single household lives", she submits.[29]

37 Next the plaintiff contends that the word house itself must be construed in its "ordinary everyday sense".[30] She cites passages from four cases in this regard, namely Re Marshall and Scott's Contract[31] where Mann CJ stated that in construing a covenant "words are given their meaning in common vernacular use and not regarded as terms of art to be given some special meaning"; Ex Parte Belling; re Woollahra Municipal Council[32], where Davidson J said that in order to decide what constitutes a dwelling house "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"; Uratemp Ventures Limited v Collins,[33] where Lord Irvine of Lairg LC said: "Dwelling is not a term of art, but a familiar word in the English language, which in my judgment in this context connotes a place where one lives, regarding and treating it as home."; and Longo Investments Pty Ltd[34] where, as the plaintiff fairly summarised him, Osborn J accepted that the term "dwelling house" is not a term of art but an ordinary word that conveys the idea of a place where somebody lives.

38 Then the plaintiff refers at some length to each of six additional authorities. Of these, the first three are English cases - Attorney-General v The Mutual Tontine Westminster Chambers Association Ltd[35] which was decided in 1876; Kimber v Admans[36] which was decided in 1900; and Ilford Park Estates Ltd v Jacobs[37] which was decided in 1903. The plaintiff observes that Kimber and Ilford "were decided at about the same time the covenant in this case was created". The fourth authority is a 1929 case from New South Wales - Ex parte High Standard Constructions Ltd.[38] The fifth and sixth are decisions of this Court of more recent vintage, namely Natraine Nominees Pty Ltd v Patton[39] decided by Smith J in 2000, and the abovementioned decision of Osborn J in Longo Investments Pty Ltd,[40] decided in 2003. I will return to these six authorities.

39 Relying on the principles and authorities referred to and the revised architectural plans, the plaintiff submits:[41]

18. What is proposed in this case is the erection of one house.

(a) It is a single building, albeit a large one but no larger than is often found in an affluent suburb.

(b) It will clearly present as a house as commonly understood. It will look like a house from every angle.

(c) It will have a single driveway from Wattletree Road to a basement carpark enjoyed in common by all residents.

(d) It will have a single entrance from Wattletree Road to a lobby. Access to individual units will be from the common internal lobby.

In essence it will be no different from any other single building in which more than one family or household resides.
In the circumstances it is submitted that the development proposed will not breach the covenant.

40 In the alternative, the plaintiff says that if the proposed building is not properly characterised as a house then she is content to accept the characterisation proffered by the defendants,[42] which is an apartment block or a block of units. She submits that, on the proper construction of the covenant, a building which is not a house is not prohibited. She says that the covenant must be construed according to the words used in the document; that the words used prohibit the erection of "more than one house"; and that they do not prohibit the erection of one house, or of a building which is not a house.

41 The plaintiff submits that the wording of the covenant is unusual in that it departs from the conventional form of a covenant of this type. She says that the usual form of covenant prohibits the erection of any building other than one dwelling house. Indeed, she acknowledges that if this covenant had been in the usual form she would not have been able to advance her alternative contention. She attaches to her final written submissions an appendix containing extracts from numerous covenants considered in decisions of this Court and VCAT, to support her submission that the wording of the covenant presently in question is unusual.

42 Finally, in support of her contention that if the development is not a house it is not prohibited, the plaintiff refers again to Longo Investments Pty Ltd. She notes that Osborn J was considering a proposed extension of a hostel for the aged on land subject to a covenant that the proprietors "will not erect or cause or suffer to be erected or placed upon the said lot more than one main dwelling house ...". Osborn J said:[43]

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.

The plaintiff submits that those words apply precisely here.

43 The declaration should not be made because I am far from satisfied that the proposed development would not breach the restrictive covenant. In fact, I consider that the proposed development would clearly breach the covenant, as the defendants submit.

44 I turn first to the plaintiff's principal contention in respect of the claim for a declaration.

45 I do not agree that the proposed development is properly characterised as one house within the meaning of the expression not erect more than one house as those words appear in this covenant.

46 It may be that, at least if read literally, the prohibition on the erection of more than one house is directed to built form, not the use of the building. Hence, it may be that the covenant would not be breached by the mere fact that, after a building was erected on the land, the building was occupied or otherwise used by more than one household or family simultaneously. But that does not determine the present issue. For the purposes of this covenant, there is, I think, a significant difference between the actual use of a building after it has been erected and its design. Indeed, I understand the plaintiff to concede that, unless it be not evident from outside the building (as erected) that it was designed to accommodate separately more than one household or family, then to erect a building so designed would be a breach of the covenant. The plaintiff's abovementioned decision to take out the separate entranceways in the revised plans is consistent with her having made that concession. So also is her submission that the letterboxes could be located internally.[44] Consistent, too, is her submission that the building "will clearly present as a house as commonly understood".[45] Finally, the plaintiff's particular reliance on the six additional authorities mentioned above (to which I will come) is likewise consistent.

47 Contrary to the plaintiff's claim, I am not at all satisfied that it would not be evident from outside the building (as erected) that it was designed to provide separate accommodation for more than one household or family. Quite the contrary. I think it would be obvious to any casual outside observer that the development consisted of apartments designed to be separately occupied. I accept the thrust of the defendants' submissions in this regard. As they submit, the development would in fact present as an apartment block. This would be evident from one or more of, or the combined effect of, the following features (as shown on the revised plans[46] and/or as established by uncontested evidence):

(a) the building's bulk (Three storeys, a pitched roof, a large basement and a footprint that would extend over 85% to 90% of the site);

(b) the building height (About 14.5 metres, some 5 metres higher than the existing two-storey Edwardian family home);

(c) the number of external doors (The precise number of external doors is not ascertainable from the plans, but it can be assumed that there would be at least one external door or French window for each of the eleven apartments above the ground floor, because each has a balcony; and it seems likely that there would be at least one external door or French window for each of the seven ground floor apartments, because in the plans each has been allocated some private open space);

(d) the number of windows (Again, not precisely ascertainable, but obviously very many, probably over a hundred);

(e) the number of balconies (There would be 11 external balconies - one for each of the 11 elevated apartments and, significantly, it would be obvious from outside that each balcony was separate);

(f) the underground car park (The car park would have 33 marked spaces for residents and 3 marked spaces for visitors, with two lifts into the building. It extends across 85% to 90% of the site. These details may not be fully evident from the street, but there would be a two-lane driveway ramp down into the car park and a correspondingly wide entry/exit point for vehicles. The plaintiff's contention that the building will look like a house "from every angle"[47] would certainly not be true if the view from the basement were taken into account. In any event, any casual passer-by could readily see that the basement car park was very large);

(g) the general design and layout (From outside, the building would look just as many apartment blocks look. I note that for the purposes of her alternative argument the plaintiff is prepared to accept that the building could appropriately be characterised as an apartment block).

48 The defendants also relied on the number of mail boxes and rubbish bins that would be present after construction. However I do not take those matters into account for present purposes. The plaintiff asserts, and I accept, that the mail boxes may be able to be hidden from public view in the design of the proposed building. It is hard to imagine that anyone travelling along Wattletree Road past the building on rubbish collection morning would be in any doubt about the building's true nature, but strictly speaking the appearance of the rubbish bins would be evidence of use, rather than part of the "built form". For the same reasons I do not take into account for present purposes the fact that the neighbours would see many more vehicles regularly entering and leaving the basement car park than would regularly enter and leave a building designed for a single household or family.

49 If the plaintiff did in fact make the concession which I understand her to have made, and if that concession be correct, then the factual findings I have just set out, without more, dispose of her principal contention in support of the claim for a declaration.

50 However, in case the plaintiff's apparent concession was not truly intended or was somehow too generous to the defendants, and because I still need to deal with the plaintiff's alternative contention (being a contention that raises a pure question of construction of the covenant), it is desirable at this stage to go to the relevant legal principles and authorities and, in that light, to say a little more about the terms and effect of this particular covenant. In fact, for reasons I will explain, I consider that the plaintiff's apparent concession was not too generous to the defendants. Indeed the true position is, in my view, that on its proper construction this covenant prohibits the erection of any building designed for separate occupancy by more than one household or family, regardless of how it "presents". As to the plaintiff's alternative contention, for reasons which I will also explain, I consider that the covenant prohibits the erection of any building other than a "house"[48] as the main building on either lot.

51 To the extent that questions of construction of the covenant arise, on what principles are they to be decided?

52 The parties seem to be in agreement about two general propositions relating to the construction of restrictive covenants, each of which I accept. First, the words of a restrictive covenant are generally to be given their meaning "in common vernacular use"[49], that is to say, they are generally to be interpreted in their "colloquial or ordinary sense, not in any technical or legal sense".[50] In other words, as the plaintiff submits, the words of a restrictive covenant are generally to be given their "ordinary and everyday meaning". Second, the words of a restrictive covenant must always be construed in their context and upon a reading of the whole of the instrument.[51]

53 It will be recalled that the plaintiff adds a gloss to the two propositions mentioned so far, in that she submits that the meaning of a restrictive covenant is a "question of fact". For this she cites the judgment of Herring CJ in Re Bishop and Lynch's Contract[52]. However, what Herring CJ actually said in the passage referred to was that whether there has been a breach or not is a question of fact to be determined according to the facts of the case and in the light of the actual language in which the restrictive covenant is framed. Generally speaking, the proper construction of an instrument intended to have legal effect is a question of law, not fact.[53] On the other hand, the meaning of a particular word or expression in such an instrument may be a question of fact, particularly where the court has already determined as a matter of construction that the word or expression is used in its ordinary and natural meaning.[54]

54 A third matter of principle relating to the construction of restrictive covenants concerns the extent to which decisions upon an expression in one instrument are useful in relation to another. The plaintiff's position in this regard is not entirely clear. Her counsel have made no express submission about it, although they do refer to quite a few decisions relating to the interpretation of expressions contained in other instruments, while at the same time they urge me to look "first and foremost" at the words used in this particular instrument.[55] The defendants, on the other hand, rely on the statement of Hamilton J in Ferella v Otvosi[56] to the effect that, because words in an instrument must always be construed in their context and upon a reading of the whole of the instrument, decisions relating to other instruments are of "very dubious utility". I would accept that great caution must be exercised in considering what, if any, use should be made of interpretations adopted in other cases in relation to other instruments.[57] I note that in In Re Marshall and Scott's Contract[58], Mann CJ observed that small differences of language can be of great importance and that the decision often turns on them.

55 A fourth matter of principle has caused me considerable difficulty, although in the end I need not resolve it. The defendants advance the following submission:[59]

The general principles regulating the interpretation of restrictive covenants do not differ from those regulating the construction of other documents. The object of interpretation is to discover the intention of the parties as revealed by the language of the document in question.

These two sentences are taken directly from the third edition (2011) of Bradbrook and Neave's Easements and Restrictive Covenants by Bradbrook and MacCallum. No authority for the proposition contained in the first sentence is given in the book or in the defendants' submissions. However in 2003 Bongiorno J expressed himself to the same effect in Tonks v Tonks.[60] Two references are given in support of the proposition contained in the second sentence, namely part of the speech of Lord Wensleydale in Grey v Pearson[61] and part of a judgment of Gibbs J in Australian Broadcasting Commission v Australian Performing Right Association Ltd.[62] Neither case related to a restrictive covenant. Although Lord Wensleydale spoke of instruments generally, Grey v Pearson itself concerned a will. ABC related to a commercial contract. Further, the judgment of Gibbs J in ABC was a dissenting one. In any event, Bradbrook and MacCallum proceed to refer in some detail to the objective theory of contractual interpretation which prevails in Australia,[63] and they treat restrictive covenants as indistinguishable from other contracts in that regard. The theory admits that where there is ambiguity in the terms of a written contract the court may have regard to the factual background against which the contract was made for the purposes of interpretation.[64]

56 In the present case, the defendants say:[65]

It is submitted that the intention of the parties as expressed in the Covenant was to provide a high standard of residential development consistent in its form, spacing and density. The prohibition on the further subdivision of land and the production of the frontage is important in understanding the objective of ensuring this consistent level of built form and density - a standard that has overwhelmingly been maintained since the Covenant's creation.

The defendants here use a capital 'C' for Covenant, meaning to refer to the fact that there are numerous similar covenants applicable to most of the land within the Coonil Estate. Although the defendants refer to the "intention" of the parties, I understand that, like Bradbrook and MacCallum, the defendants would treat restrictive covenants as being subject to the objective theory of contractual interpretation. As mentioned above, the plaintiff urges me to look at the words of the covenant "first and foremost", but she has not submitted that the Court cannot have regard to the matters referred to by the defendants in the submission set out above. Indeed, in an exchange with the Court, Mr Wright QC expressly accepted that for the purposes of construction it was relevant to take into account that the instrument was executed as part of a residential subdivision; and that the Coonil Estate covenants were imposed (over a period of about 10 years) with a view to establishing a residential estate of a particular character.[66]

57 Nevertheless, my own research suggests that the extent to which background material may be taken into account to construe restrictive covenants affecting Torrens system land may be more limited than in the case of contracts generally. In Westfield Management Limited v Perpetual Trustee Company Limited,[67] a decision of the High Court on appeal from New South Wales concerning the construction of an easement set out in a registered instrument, it was held that the easement should be construed in accordance with its terms; that the rules of evidence assisting the construction of contracts inter partes, of the nature explained by Codelfa, did not apply to the construction of the easement; and that establishing the intention or contemplation of the parties to an instrument registered under the Real Property Act 1900 (NSW) by reference to material extrinsic to the instrument would be contrary to the principles of the Torrens system. It is true that Westfield related to an easement rather than a restrictive covenant; that the High Court did not expressly refer to restrictive covenants; that there are considerable differences between the two; and that there are differences between the relevant Torrens system provisions of New South Wales and of Victoria.[68] However, the High Court's reasoning was not expressly confined to the case of easements under the Torrens legislation of New South Wales. Indeed the Court referred to "fundamental considerations" concerning the operation of the Torrens system of title by registration, being considerations which involved "the maintenance of a publicly accessible register containing the terms of the dealings with land under that system".[69] The Court also referred with apparent approval to the Victorian case of Riley v Pentilla[70] as being a case in which the importance of the principle of indefeasibility for the construction of easements was duly recognised. The full implications of Westfield are still being worked out.[71] However Westfield has been recognised as a significant case not only for New South Wales,[72] but also for the ACT,[73] Tasmania,[74] Queensland,[75] and Western Australia.[76] In Ryan v Sutherland,[77] Black J of the Supreme Court of New South Wales treated it as applicable to restrictive covenants. In Big River Paradise Limited v Congreve,[78] the Court of Appeal of New Zealand referred to Westfield as a case relating to both easements and restrictive covenants, although the Court said that it was open to question whether Westfield should be followed at all in New Zealand. Until now, no Victorian case has addressed its possible significance for the interpretation of restrictive covenants affecting Torrens system land in Victoria. The point is not squarely addressed by Bradbrook and MacCallum,[79] nor in the recent final report (2010) of the Victorian Law Reform Commission on Easements and Covenants.[80] Neither side made any reference to Westfield in the present case.

58 In these circumstances, I have considered whether or not to relist the hearing of this case for further submissions, in order to give the parties an opportunity to address the questions raised by Westfield. Ultimately, however, I have determined not to do so. This case has already involved six hearing days, a view and many opportunities for amendments and submissions. More expense would be involved, and I think that the expense would be wasted. In Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council,[81] Campbell JA (with whose reasons Spigelman CJ agreed) pointed out that the unavailability of extrinsic evidence to construe a grant of an easement was not complete.[82] The High Court itself had said that sometimes extrinsic evidence may be necessary to make sense of that which the Register identifies by the terms or expressions found therein, for example surveying terms and abbreviations appearing on the deposited plan. Further, Campbell JA emphasised[83] that the High Court judges had stated that it was the rules of evidence assisting the construction of contracts inter partes, of the type referred to in Codelfa Constructions Pty Ltd v State Rail Authority of NSW,[84] that did not apply to the construction of an easement. Campbell JA continued:

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.

The Court of Appeal of New South Wales had determined soon after Westfield was decided that Westfield allowed regard to be had to "the material in the folio identifiers, the registered instrument, the deposited plans and the physical characteristics of the tenements".[85] In the present case, the plan of subdivision is referred to in the covenant itself. A copy of the plan of subdivision is obtainable from a search of the register in that it is recorded on the parent title (Lot 1). I gather from the affidavit evidence and the submissions in this case that the corresponding covenants affecting other lots in the Coonil Estate can all be found by searching particular parts of the register. So the rationale of Westfield would not be offended by taking into account the matters which Mr Wright concedes I can take into account. In any event, even if the Court were required to shut its eyes to everything except the bare words of the instrument containing the restrictive covenant, in this case the result would be no different. Those bare words, in combination, sufficiently reveal the relevant object of the covenant. They show that the declaration sought should not be made. Anything additional would only assist the defendants, not the plaintiff. So, there will be no injustice to the plaintiff in not relisting the hearing.

59 Returning, then, to the very words of the covenant, the party bound promises, among other things, that he or they "will not erect more than one house on each of the said Lots and ... will not subdivide either of the said Lots into smaller allotments nor reduce the frontage thereof to a smaller frontage than appears on the said Plan of Subdivision ... ". The party bound also promises that the house will be built with certain materials and at a cost of no less than a specified amount and that the building will not be used for any trade or business.

60 Although "house" can have various meanings, its primary meaning, according to the Oxford English Dictionary,[86] is:

1. A building for human habitation, esp. a building that is the ordinary dwelling place of a family.

The first meaning for "house" given in the New Shorter Oxford Dictionary[87] is:

A building for human habitation, a dwelling, a home; especially a self-contained unit having a ground floor and one or more upper stories (as opp. to a bungalow, or flat, etc.).

A part of a building occupied by one tenant or family.

61 On reading the words of this restrictive covenant, there is every reason to interpret "house" as meaning a residence designed for occupation by one household or family. It is an ordinary and everyday sense of the word. It is a meaning that readily springs to mind. It is a meaning which corresponds with the synonyms "dwelling" and "home" given in the dictionaries, whereas a whole block of flats does not. A person living in a flat within a block of flats would usually not give his or her 'home' address without specifying the flat number or letter. He or she would not refer to the whole block of flats as "my home", much less as "my house".

62 This impression is further strengthened by the context. For example, the prohibition on trade or business use applies to "such building", which in turn refers to the "house". So any "house" to be erected is surely required to be something designed for a use other than trade or business. All this strongly suggests a requirement that it be designed for private residential use. Further, the promise is to erect "not more" than "one" house. Only something that is single can be erected. This is spelt out clearly, presumably for emphasis. Singleness is achieved by erecting a building designed for occupation by one household or family. It is much less obviously achieved by erecting a block of 18 apartments, even if they are built under the one roof and even if there is only one pedestrian entry point and only one vehicle entry point from the street. A fortiori, where the building still "presents" as an apartment block, as this one would. The prohibitions on subdivision and frontage reduction are also part of the context. Hence, on any view, they may inform the interpretation of "one house", whether or not they should otherwise be regarded as independent restrictions.[88] As it happens, they further strengthen the original impression. The individual lots are not to be cut up between different owners nor are their frontages to be reduced. Each lot-owner is to have one entire lot.

63 At least one object emerges plainly from reading the covenant as a whole. That object is to constrain the likely population density on the two lots. That object is advanced by interpreting "house" to mean a residence designed for occupation by one household or family. It is not advanced by interpreting "house" to include a block of 18 apartments.

64 Accordingly, I would understand "house" in this covenant to refer to a residence designed for occupation by one household or family, unless authority requires me to decide otherwise. This brings me to the cases on which the plaintiff relies.

65 The plaintiff refers first to Attorney-General v The Mutual Tontine Westminster Chambers Association Ltd[89]. There Jessel MR held, for the purposes of a statute imposing inhabited house duties, that a building in Victoria Street, Central London consisting of several internally divided, self-contained apartments or offices was a "house"; and that duty was payable accordingly. There were seven such buildings altogether. Each was held to be a house. Jessel MR said that "they differed slightly, no doubt, from ordinary inhabited dwelling-houses, but not materially; because externally they were exactly like seven ordinary dwelling-houses built onto the street with ordinary windows, rooves etc". This was the key point. It is a point that has influenced several later cases. It explains the plaintiff's approach in this case. However, as indicated above, she fails on the facts in this regard.

66 In any event, it is a wonder that the Westminster Case has had any continuing influence. As mentioned above, it was decided in 1876. Twenty-four years later, in Grant v Langston[90] the Earl of Halsbury LC said:

With the most sincere respect for the authority of Sir George Jessel, I cannot help thinking that his reasoning in the Westminster Case is unsatisfactory. No-one will doubt the soundness of the maxim which he quotes as the basis of his judgment, but as usual it is the application of it which raises the difficulty. Indeed, I think it is true to say that the judgment to which I refer proves too much for the purpose of its final conclusion. It establishes undoubtedly that the word "house" is an ambiguous word; it shews that you must search otherwise than in the word itself what is the meaning in which the legislature has used it, since the natural and ordinary meaning of an ambiguous word cannot be ascertained without the context. Now, the instances to which the learned judge referred, such as the two Temples constituting one house or houses, such as Christ Church, Oxford, have as little to do with structure, architecture, form of building, or occupation as with the complexion of the inhabitants. "House" in the sense thus referred to means simply a community, ecclesiastical or secular, having common revenues, common objects, and, in pre-Reformation times, vows or obligations common to those who joined it. Accordingly, the word "house" has no common or ordinary meaning so fixed and definite that by the mere use of the word you can determine in what sense the Legislature has used it.

I think the original idea of an inhabited house was that of a building inhabited by one person (with his family) responsible for the tax, who was himself the inhabitant of the whole of the house.[91]

67 Even before Grant v Langston, it was said by Farwell J in Rogers v Hosegood,[92] a restrictive covenant case, that "a rating case such as [the Westminster Case]" could have "little bearing" on the construction of any particular restrictive covenant.[93] Farwell J also observed that although in the Westminster Case the Court had held that the whole block was a house, it observed "that each set of chambers might be a house also".[94] In Rogers v Hosegood the party bound had covenanted that "no more than one messuage or dwelling-house, with such suitable outhouses and stabling (if any) as it might be thought fit to erect in connection therewith, should at any one time be erected or be standing on [the plot in question], and that such messuage should be adapted for and used as a private residence only, and that no trade or business should at any time be carried on in or upon that plot".[95] Farwell J said[96]:

In my opinion, a large building which is to be used as 30 or 40 separate residential flats does not answer the description of a messuage to be used as and for a private residence. But if the whole structure could be regarded as a private residence only, it is difficult to see how 30 or 40 different families in establishments can find place therein, unless the owner of the entire messuage is carrying on the trade of letting apartments.

On 5 July 1900 the Court of Appeal delivered a judgment accepting the conclusion of Farwell J that the buildings which the defendant proposed to erect would involve a breach of the relevant covenants.[97]

68 The next case relied on by the plaintiff is Kimber v Admans[98]. It related to a building estate in London consisting of four plots. The plaintiffs owned two plots and had built a house on each. The defendant owned the other two plots. There was a covenant that "no house shall be erected on any part of the four plots of less value than 500 [pounds]"; and that "not more than ten houses shall be erected on the said four plots". The defendant proposed to erect four blocks of flats on his two plots. Each block in turn was to contain four flats - two on the ground floor and two on the first floor. The plaintiffs sought an injunction. The decision at first instance was given ex tempore by Cozens-Hardy J. His Honour said that he was required to consider what is the meaning of the word "house" in a deed or document " where there is no context to cut down or to alter its popular interpretation".[99] His Honour said that on that point he had the authority of Sir George Jessel in the Westminster Case:

... where he said that a building of this nature is, both in ordinary parlance and in legal meaning, a dwelling-house, although it may also be for certain purposes regarded as a number of separate messuages. He illustrated the proposition by saying that any one of the buildings in the Temple or Lincoln's Inn which, as we all know, are divided into separate chambers, is nevertheless one house.

Cozens-Hardy J distinguished the judgment of Farwell J in Rogers v Hosegood because of the added context supplied in that case by the more elaborate language of the covenant, including the limitation on the use of the building. His Honour refused the injunction.

69 There was an appeal to the Court of Appeal which was heard on 16 February 1900 and determined on that same day. Lindley MR delivered the first judgment. It was very brief. Lindley MR said that he had no hesitation in saying that the judgment of the learned judge was right. He continued[100]:

A property was sold in lots according to a plan for building purposes, and each lot was subject to a covenant that not more than one house should be built upon it. What does that mean? Does it refer to the mode in which the building to be erected is to be subdivided or let, or does it refer to the aggregate of the rooms or whatever the contents of the building may consist of? I think that the latter is the meaning. The house is the whole amalgamation. We know, of course, that a portion of a house may for some purposes, such, for example, as rating and franchise, be a house; but when the word is used in connection with a covenant of this description, I cannot agree that that is the meaning. It applies, not to the interior portions of the building, but to the whole building. The appeal must be dismissed.

Rigby LJ simply agreed. Vaughan Williams LJ also agreed in the result. However, his Honour said this[101]:

I assent to the argument in support of the appeal to this extent: that I think one must, in construing this restrictive covenant, ask oneself what was the object of the covenant, and if I found myself in such a position that I could see no object in the covenant if it was simply limited to the bricks and mortar erection, I should have been disposed to put upon the word "house" a meaning which would cover the user of the house as distinguished from the physical erection. But I do not find myself in that position, and I do not think that anyone who is familiar with building estates in London would have any difficulty in ascertaining the objective of this covenant, if we construe it as a covenant in which the word "house" means the physical erection and not the interior arrangement.

70 I give little weight to Kimber v Admans. The judgments in it were not reserved. The decision at first instance, which Lindley MR had "no hesitation" in endorsing, relied on the judgment of Sir George Jessel in the Westminster Case, including in particular the illustration relating to the Temple or Lincoln's Inn. Three months after the decision of the Court of Appeal in Kimber v Admans, the Earl of Halsbury LC described the reasoning of Sir George Jessel in the Westminster Case as unsatisfactory and criticised in particular the analogy with the Temple. In any event, both Cozens-Hardy J and Vaughan Williams LJ acknowledged that the result might be different where the context revealed a different object in the covenant. Further, there was no discussion in Kimber v Admans about the external appearance of the proposed blocks of flats whereas even in the Westminster Case, and also in each other case that the plaintiff relies upon, the external appearance of the building was apparently considered to be important.

71 In the next case referred to by the plaintiff, Ilford Park Estates Ltd v Jacobs,[102] it was held that a building structurally divided into two tenements on different floors, with no internal communication, common staircase, or common front door, constituted two houses within the meaning of a covenant not to erect more than one house on the site. The plaintiff apparently submits that this case is authority for the proposition that where there is a block of flats with internal communication, a common staircase and a common front door, it will amount to one house for the purposes of a covenant like the present. However, I find the case of little persuasive value. Counsel for the objector conceded in their argument that a block of flats may constitute a house (citing Kimber v Admans), though not a private residence (citing Rogers v Hosegood). The judgment was again given on the same day as the hearing. Both counsel and the judge referred to Grant v Langston, but not to the speech of the Earl of Halsbury LC.

72 The three remaining cases referred to by the plaintiff are Australian cases. Judges in Australia seem less ready than English judges to accept that a block of flats may fall within the ordinary and everyday meaning of "house". In Ex parte High Standard Constructions Ltd,[103] each of the English cases to which I have so far referred was cited to Harvey CJ in Eq. Having referred to some of those cases, his Honour drew from them the general principles mentioned above, namely that the language of the covenant is to be interpreted in a colloquial and ordinary sense and that it is primarily 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. The relevant restrictive covenants were in the following terms: "(a) that only one house shall be erected upon the land hereby transferred;" and "(c) that no building erected upon the land shall be used as a shop or factory or for any noxious or offensive trade or purpose which shall be a nuisance or annoyance to the owners or occupiers of adjoining property or the neighbourhood". Harvey CJ in Eq said[104]:

In the present covenant it is clear that "house" is not used as a synonym for building. The erection contemplated is a house as the main building with possibly subsidiary buildings. Looking at the restrictions on the use of the buildings I think that an ordinary layman would conclude that by "house" in this covenant was meant a dwelling house. The primary meaning of the word "house" I take to be a dwelling house for a family and the use of the word to describe office buildings such as the familiar Challis House or Wingello House in Sydney is a secondary use of that word. In my opinion the question whether a building occupied as several residential flats can or cannot be properly described as one dwelling house depends upon the nature of its construction.

When there is no common front door or staircase, no internal communication, when the residential units are structurally separate in every respect they must, in my opinion, be regarded as separate dwelling houses within the meaning of a simple covenant such as the present. On the other side of the line would be the not uncommon case of an ordinary two-storey dwelling house let as two flats, one lessee having the ground floor and the other the staircase and the upper floor, and both using the same entrance hall. Such a building is built as one dwelling house and one dwelling house it remains for the purpose of a covenant not to build more than one dwelling house. The borderline case is where a house is erected with a common front door opening onto the street, common entrance hall and staircase leading to various self-contained flats each closed by one door of its own. It may be that in the absence of any controlling context such a building would not be offensive to a covenant only to erect one dwelling house.

73 Ex parte High Standard Constructions Ltd does not assist the plaintiff much. Harvey CJ in Eq took the primary meaning of the word "house" to be a dwelling house for a family. As indicated above, I would do much the same. Further, to say that the present case falls within the "borderline" category referred to by his Honour is hardly compelling. In any event, what his Honour said was that it may be that in the absence of any controlling context a building in the borderline category would not be offensive to a covenant only to erect one dwelling house. As I have already indicated, in my opinion there is a controlling context here that would preclude this proposed development from complying with the covenant, either simply because it would be a block of flats, or alternatively because, notwithstanding the single entrance and internal communication, it would present as a block of flats.

74 In Natraine Nominees Pty Ltd v Patton[106] Smith J needed to consider the interpretation of a restrictive covenant in order to determine whether its effect had been misrepresented in the course of a sale of a property in East Brighton. The covenant provided that "no building may be erected on the above described land except a brick building to be used exclusively as a residence or dwelling house only". The question was whether the property could be used for the construction of a two unit development. Smith J stated that his initial impression was that the covenant sought to confine development to a single brick building which contained within it a single residential unit. However, on further consideration, and having considered the authorities, his Honour reached a different conclusion.[107] His Honour then referred to most of the authorities mentioned above (not including Grant v Langston) and one additional authority, Re Marshall and Scott's Contract[108] to which I will come. Smith J then said[109]:

It seems to me that the critical point that emerges from these authorities is that the words "dwelling house" in their colloquial and ordinary meaning can include a building in which there is more than one residential unit depending upon the lay out and structure of the building. ... But applying the same analysis, a building that for exterior purposes appears to be one house containing a single entrance could contain within it two residential units and not offend the restrictive covenant. The word "unit" in this content [sic] ordinarily refers to an accommodation unit in a building or group of buildings.

Smith J concluded that a single building could be erected containing two units without breaching the covenant.[110] However, Natraine is distinguishable because the covenant in that case did not qualify the words "dwelling house" with words such as "one", "single" or "private". Smith J noted this specifically[111]. The case is also distinguishable because Smith J considered that the word "residence" in the covenant meant a single residential unit and that this indicated that the expression "dwelling house" in the same sentence must have a wider meaning. No such complication arises here.

75 The final case relied upon by the plaintiff is Longo Investments Pty Ltd[112]. In that case Osborn J was considering an application under s 84 of the Act for modification of a restrictive covenant. The covenant provided that the party bound would not erect on the land "more than one main dwelling house together with the usual outbuildings ... " and further provided that any such main building should not be used for other than residential purposes. The land was being used to operate a hostel which provided residential accommodation for the aged. The applicant wished to extend the existing hostel building. In the passage relied upon for present purposes by the plaintiff, Osborn J stated[113]

... 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.

76 In my opinion, Longo does not assist the plaintiff in this regard. Quite the opposite. Osborn J referred to the judgment of Smith J in Downie v Lockwood,[114] in which Smith J had said that the expression "dwelling house", though capable of a wide meaning extending to any building or part of a building used as the place of abode of one or more persons, including a public building, was more commonly used in popular speech in a narrower sense. In the narrower sense it covered "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".[115] Osborn J considered that the meaning to be attributed to "dwelling house" in Longo was this narrower, colloquial one.[116] The hostel in question was comprised of individual bedrooms and communal facilities. It was designed and intended to operate as one "household". This was to be distinguished from those cases in which bedsitting rooms which were individually occupied had been regarded as separate dwelling houses.[117]

77 In the result, I see nothing in the six cases relied upon by the plaintiff that would prevent me from giving effect to my understanding of the ordinary, everyday meaning of the words of the covenant - in particular, that for a building to be "one house" within the meaning of the covenant it must be designed for occupation by one single household. Indeed, there are additional cases which tend to confirm that my interpretation is at least open.

78 In Cobbold v Abraham[118] the owner of a suburban property, who was bound by a covenant not to build more than one house or dwelling on the property, proposed to erect a building comprising four residential flats intended for occupation by separate households. Lowe J held that the erection of the building would constitute a breach of the covenant and granted an injunction accordingly. However the parties and the Court concentrated on the meaning of the word "dwelling" rather than the word "house", the latter being at least no narrower than "dwelling". On the other hand Lowe J said that the general notion of a "dwelling" was plain; that the word signifies a place of abode; and that it is sometimes used as equivalent to "house".[119] His Honour had been referred to many of the cases mentioned above. His Honour drew from those cases that one building may contain more than one dwelling - for example a terrace or a building in which separate dwellings are superimposed one above the other. His Honour continued:

I think the authorities show that the crucial test is the degree of separation of the parts of the building in question. In my opinion, where one portion of the building is structurally so separated from the rest of the building as to be capable of occupation by a separate family or household it may constitute a separate dwelling. I am satisfied on the evidence in the present case that the building proposed will be constructed in such a manner that different portions of it will be capable of occupation by separate families, and that it will constitute "more than one dwelling".

79 His Honour added that if it were necessary to consider not only the structure of the building but also the purpose for which it was to be used, he was satisfied that the purpose for which this building was to be erected was for occupation for purposes of residence as four separate dwellings. Therefore the plaintiffs had established that the defendant intended to commit a breach of the covenant. In Munns v Watson[120] Lowe J was apparently persuaded that his earlier decision in Cobbold v Abraham was distinguishable, because in that case the covenant related to the purpose for which the structure was to be used, whereas in Munns v Watson the emphasis was on the structure proposed to be erected and not on its use or purpose. The terms of the restrictive covenant were that "no building shall be erected by the covenanting parties on the said lot except a double-fronted house with outbuildings for residential purposes". The respondent did not oppose the application. In a two sentence judgment, Lowe J said that the building of the two villas proposed to be erected would not be in violation of the restrictive covenant. The report of Munns v Watson is so brief that little can be gained from it, although I note that it was referred to by Smith J in Natraine.

80 When dealing with Natraine I mentioned that Smith J had analysed Re Marshall and Scott's Contract[121] and that I would come back to that case. There the restrictive covenant provided that there should not be built on the land "any building save one dwelling house". A villa containing two flats was erected on the land. It was held that this constituted a breach of the covenant. Mann CJ said that he had come to this conclusion after some consideration and not without reluctance. His Honour observed that the building clearly comprised two dwellings, each structurally complete, separated by a wall preventing access from one to the other, and under one roof. His Honour continued:

So far as external appearances are concerned the building appears to be of the kind usually referred to as a house. But I am not concerned only with the external appearance of the building. I have to determine its actual nature. I think it is a mistake to split up the phrase "dwelling house", and construe it as referring first to a "house", and then construing the adjective "dwelling" as limiting it to a "house to be dwelt in". It should be construed as a composite phrase.

The Chief Justice observed that there was much to be said for the view that there was no dwelling house at all. He noted that in Ex Parte High Standard Constructions Ltd Harvey CJ in Eq had favoured the view that the phrase "dwelling house" meant a house designed and constructed as a house to be dwelt in by one family. The building in question in the instant case was different. It comprised two dwellings. So, it was not a single dwelling house nor two dwelling houses. Mann CJ said that Kimber v Admans was not really applicable, because it decided that a building containing several flats is one house whereas the question before Mann CJ was whether the building was a dwelling house. On the other hand, Mann CJ noted that in Ex Parte High Standard Constructions Ltd Harvey CJ in Eq had interpreted "house" as "dwelling house" and had given his decision on the meaning of "dwelling house".[122] Mann CJ made no adverse reference to this. Indeed, he based his decision in part on Ex Parte High Standard Constructions Ltd.[123]

81 High Standard Constructions and several other of the restrictive covenant cases to which I have referred were the subject of consideration by Yeldham J in R v Tahau,[124] a criminal case decided in 1975. The accused was charged under s 196 of the Crimes Act, 1900 (NSW) with maliciously setting fire to a certain dwelling house, certain persons being then in the said dwelling house, to the knowledge of the accused. There was evidence that the accused had set fire to some portion of the interior of one flat in a residential flat building, at a time when other persons were in the adjoining flat; but there was no evidence that, at the time when the fire was lit, there was any person, other than the accused, in the first flat. On an application for a verdict by direction of not guilty on this charge it was held that the definition of "dwelling house" in the Act, while clearly wide enough to include individual residential flats, did not extend to an entire structure which contained within itself a number of individual flats. Yeldham J came to this conclusion after considering several of the cases referred to above, being cases which mainly related to restrictive covenants. Yeldham J said[125]:

I would have thought that, if the ordinary man in the street was asked his reaction to the question whether an entire block of flats, perhaps containing a large number of flats, was a dwelling-house, his answer would be in the negative. This, of course, by no means concludes the matter, but it does, I think, corroborate my view that the ordinary meaning of "dwelling-house", whilst clearly wide enough to include individual residential flats, does not extend to an entire structure which contains within itself a number of individual flats. Whether it applies to a guest house, or a lodging house, is not here in issue, although I think the answer to that is probably in the affirmative.

In Grant v Langston the Lord Chancellor, the Earl of Halsbury said, and his Lordship, of course, was speaking in 1900: A hundred years ago there was not much difficulty in saying what was a "house", but builders and architects have so altered the construction of houses, and the habits of people have so altered in relation to them, that the word "house" has acquired an artificial meaning, and the word is no longer the expression of a simple idea; but to ascertain its meaning one must understand the subject-matter with respect to which it is used in order to arrive at the sense in which it is employed in a statute.

Yeldham J then went on to refer to certain other parts of the speech of the Earl of Halsbury LC which I have already mentioned. Then, consistently with what I have said about the plaintiff's reliance in the present case on Kimber v Admans, Yeldham J said:

Although in Kimber v Admans it was held that a building containing several residential flats constituted only one house within the meaning of the word "house" in a covenant not to erect more than a certain number of houses, unless there is some context which cuts down or alters the popular interpretation of the word, the Court in that case relied upon something which Sir George Jessel had said in [the Westminster Case] which had been said by the House of Lords in Grant v Langston to be incorrect.

Yeldham J then noted[126] that in Ex Parte High Standard Constructions Harvey CJ in Eq had said that the primary meaning of the word "house" he took to be a dwelling-house for a family. Next Yeldham J observed[127] that in Re Marshall and Scott's Contract the then Chief Justice of Victoria had held that the erection of a building divided into two dwellings by a brick wall was in breach of a covenant requiring one dwelling house only to be built upon the land, and had said that he did not consider that such a building could be described in ordinary language as one dwelling house: either it was two houses under one roof or a composite building which required some other word or phrase to describe it.

82 In the end, and bearing in mind the principles of construction applicable to a penal statute, Yeldham J said that he was "far from persuaded that the ordinary meaning of 'dwelling house' would include a block of residential flats as a whole, as distinct from individual flats in that block".[128]

83 In 1991, in In the Estate of Purcell[129] Higgins J (as his Honour the Chief Justice of the ACT then was) was required to determine the meaning of "house property" in a will. His Honour referred[130] to Grant v Langston, Ex Parte High Standard Constructions, and R v Tahau and observed[131] that "a block of flats would, in a colloquial and ordinary sense, constitute more than one 'house'". The relevant paragraphs of the judgment of Higgins J in Re Purcell, including the statement that a block of flats would, in a colloquial and ordinary sense, constitute more than one "house", were recently reproduced with apparent approval by White J in another will construction case in which the phrase "house property" needed to be interpreted, namely The Trust Company Limited v Zdilar[132].

84 Finally, in Tonks v Tonks,[133] the restrictive covenant was in the following terms:

... (The registered proprietor for the time being) will not erect or cause or permit to be erected on the land hereby transferred or any part thereof any building other than a dwelling house. ...

The question to be decided, as a matter of construction of the restrictive covenant, was whether the operative part of it prohibited the construction of more than one house on the block in question. That question in turn depended upon whether the indefinite article "a" appearing before the expression "dwelling house" in the covenant indicated that the covenant prohibited more than one house being built on the lot. The same covenant applied to other lots on the relevant plan of subdivision. Bongiorno J said[134]:

The task of construction commences with a determination of the purpose for which the covenant was inserted in the original contract. In this case there appear to be two possible answers to this inquiry. The covenant could be directed to ensuring that Lot 3, and for that matter the whole subdivision, was maintained as a residential area without restriction on the number of dwelling houses conducted on each block. Alternatively, the purpose of the covenant might have been not only to maintain the residential character of the area but also to restrict the number of dwelling houses to one on each block.

85 Having considered arguments about the context in which the covenant was created, Bongiorno J concluded that the covenant did not restrict the number of dwelling houses that could be built on each lot. However, his Honour said that this could have been done "very simply and definitively by replacing the word 'a' in the covenant with the word 'one', or by making some similar simple amendments"[135]. In the case presently before me, of course, the word "one" does appear before the word "house". Accordingly, Tonks v Tonks provides some support for the proposition that the purpose or object of the covenant in the present case was "not only to maintain the residential character of the area but also to restrict the number of dwelling houses to one on each block".[136]

86 I am not in any real doubt that the proposed development cannot be properly characterised as "one house" within the meaning of the expression "not erect more than one house" as those words appear in this covenant. However, before parting with this aspect of the case, I note that in Ferella v Otvosi,[137] Hamilton J held 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. Bradbrook and MacCallum take the same view.[138]

87 For the reasons given above, I would not accept the plaintiff's principal contention in respect of the claim for a declaration.

88 This brings me to the plaintiff's alternative contention in this regard. It can be disposed of relatively briefly.

89 The plaintiff argues that if the proposed development is not properly characterised as one house then it is not prohibited. In my view the plaintiff's alternative construction of the relevant part of the covenant would turn it on its head. It is an artificial and unreal construction. It involves the corollary that anything can be built on either lot except something that amounts to more than one house. On that basis, a vast range of things could be erected, even if buildings designed for trade or commerce were excluded. At the very least, any kind of building designed for private recreational purposes could be erected. Examples might include a private menagerie or aviary or fowl house. Or it might be a private sporting facility, such as a squash court. Moreover, on the plaintiff's alternative approach, the building would be free of the requirements as to building materials and minimum cost. Those requirements apply only to "any house so erected". By hypothesis, the plaintiff's proposed block of flats, not being a house or one house, could be constructed of weatherboards or any other building material, however cheap. That would have been so in 1912 and at all times since.

90 I cannot read the covenant in the way suggested by the plaintiff. If the parties had been quite content that some kind of building other than one house could be erected,[139] it is difficult to understand why they bothered to prescribe in such detail the required building materials and the required minimum cost. I put this point to Mr Wright during the hearing, and he had no real answer to it.[140]

91 The plaintiff relies heavily on Longo. However the covenant in question in Longo was a little different in that there was no regulation of the minimum cost of the permissible building. Further, the verbal link between the principal restriction and the other requirements was not as close as in the present case. In Longo the expression "dwelling house" is used only as part of the principal restriction whereas the expression "such main building" is used in respect of the further requirements. By contrast, in the present case the principal restriction is that the party bound will not erect more than "one house" on each lot, and that is immediately followed by the statement that "any house so erected" shall be as prescribed.

92 In any event, the statement in Longo that if the hostel were not properly regarded as a dwelling house at all then there would be no breach of the covenant was not necessary to the decision in that case. Indeed, there is no indication that the matter really arose as an issue in that case or that it was argued. I note that there was no opposition to the applicant's application in Longo. No-one appeared for any respondent.

93 Putting aside Longo, the plaintiff does not suggest that her present contention, or anything like it, has ever been advanced, much less accepted, in any comparable case relating to a restrictive covenant. It may well be that the covenant in the present case departs from the usual wording, as the plaintiff submits by reference to Appendix 1 to her final written submissions. However a perusal of that appendix itself throws up nine cases (including Longo) in which the wording of the covenant is comparable with the wording of the covenant presently in question. Despite this, apart from Longo, there is no case in which the equivalent of the plaintiff's present argument was raised either by a party or by the court or tribunal.

94 I do not accept the plaintiff's alternative contention.

95 For these reasons, the application for the declaration will be refused.

The application for modification under s 84 of the Act

96 The plaintiff having failed to obtain the declaration she seeks, she needs in her application under s 84(1) of the Act to get rid of all of the relevant restrictions, including the one house (single dwelling) restriction. She faces a formidable task. The starting point is not what she may have hoped it would be. Rather, she confronts a restrictive covenant, indeed a web of restrictive covenants, with a clear purpose or object indistinguishable from the purpose or object identified by the Full Court in Re Stani[141] in respect of a similar covenant, namely to ensure that "one residence only was to be erected on each block so that there would be a reasonable density of population giving a reasonably quiet residential atmosphere, attractive in that it would provide a tranquil, quiet existence". Similarly, in Re Miscamble's Application[142] McInerney AJ said of a comparable covenant that its purpose was

to prevent the erection on the subject land of more than one dwelling house, and thereby to preserve the area in question ... as an area of spacious homes and gardens ... .

Likewise in Greenwood v Burrows[143] Eames J said that the objective of another comparable covenant was "the maintenance of reduced population numbers in the area".

Legal principles concerning application under s 84(1) of the Act

97 In Vrakas v Registrar of Titles,[144] Kyrou J said:

[23] The principles that govern an application to discharge or modify a restrictive covenant under s 84 of the PL Act may be summarised as follows.

[24] Section 84(1)(a) has two limbs. In essence, the first limb is that, due to changes in the character of the property or neighbourhood or other circumstances, the covenant is obsolete, and the second limb is that the covenant's continued existence would impede the reasonable user of the land without practical benefits to other persons. Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 7; Re Alexandra [1979] VR 55, 57-8; Greenwood v Burrows (1992) V ConvR 54-444, 65,192 ("Greenwood"). An applicant need only establish one of these limbs in order to have a right to a remedy under s 84(1)(a), subject to the court's residual discretion (see below).

[25] In relation to the first limb of s 84(1)(a), what is the "neighbourhood" must be determined as at the date of the hearing, rather than the date of the covenant. Re Miscamble's application [1965] VR 596, 597, 601 ("Miscamble"); Re Pivotel Pty Ltd (2001) V ConvR 54-635; [2000] VSC 264, [29] ("Pivotel"). What is the "neighbourhood" is a question of fact. Miscamble [1965] VR 596, 602; Greenwood (1992) V ConvR 54-444, 65,196.

[26] A covenant is "obsolete" if it can no longer achieve or fulfil any of its original objects or purposes or has become "futile or useless". Miscamble [1965] VR 596, 597, 601; Re Markin [1966] VicRp 69; [1966] VR 494, 496; Re Robinson [1971] VR 278, 281; Greenwood (1992) V ConvR 54-444, 65,196 - 65,197; Pivotel (2001) V ConvR 54-635; [2000] VSC 264, [31]-[33]. A covenant is not obsolete if it is still capable of fulfilling any of its original purposes, even if only to a diminished extent. Miscamble [1965] VR 596, 597; Greenwood (1992) V ConvR 54-444, 65,197. The test is whether, as a result of changes in the character of the property or the neighbourhood, or other material circumstances, the restriction is no longer enforceable or has become of no value. Greenwood (1992) V ConvR 54-444, 65,196. See also Miscamble [1965] VR 596, 601. If a covenant continues to have any value for the persons entitled to the benefit of it, then it will rarely, if ever, be obsolete. Re Robinson [1971] VR 278, 282; Greenwood (1992) V ConvR 54-444, 65,197. A covenant could be held to be not obsolete even if the purpose for which it was designed had become wholly obsolete, provided that it conferred a continuing benefit on persons by maintaining a restriction on the user of land. , 65,197 - 65,198.

[27] Strictly speaking, the inquiry is as to whether the restriction of user created by the covenant is obsolete, rather than as to whether the covenant itself is obsolete. Greenwood (1992) V ConvR 54-444, 65,194.

[28] In relation to the second limb of s 84(1)(a), to establish that a covenant would impede the reasonable user of the land, it must be shown that "the continuance of the unmodified covenants hinders, to a real, sensible degree, the land being reasonably used, having due regard to the situation it occupies, to the surrounding property, and to the purpose of the covenants". Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 8; Re Alexandra [1979] VR 55, 58; Pivotel (2001) V ConvR 54-635; [2000] VSC 264, [34]; Bevilacqua v Merakovsky [2005] ANZ ConvR 504; [2005] VSC 235, [23] ("Bevilacqua"). Whether this is so is essentially a question of fact. Re Alexandra [1979] VR 55, 58.

[29] 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. Miscamble [1965] VR 596, 602-3. The applicant must show that the restriction will impede all reasonable uses. See the cases referred to in Stanhill Pty Ltd v Jackson [2005] VSC 169; (2005) 12 VR 224, 233 [17] fn 15 ("Stanhill").

[30] "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. Re Robinson [1971] VR 278, 283; Pivotel (2001) V ConvR 54-635; [2000] VSC 264, [36].

[31] It must be established that the covenant is not necessary for any reasonable purpose of the person who is enjoying the benefit of it. Re Alexandra [1979] VR 55, 59; Pivotel (2001) V ConvR 54-635; [2000] VSC 264, [35]; Bevilacqua [2005] ANZ ConvR 504; [2005] VSC 235, [23].

[32] If a relaxation of the restriction imposed by a covenant would be likely to lead to further applications of a similar nature, resulting in a detrimental change to a whole area, this "precedential" effect may be relevant in determining whether the restriction secures any practical benefits. Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 9-10.

[33] Whether there are any practical benefits to other persons is a question of fact. Re Alexandra [1979] VR 55, 59.

[34] In relation to s 84(1)(c), the test for whether a discharge or modification of a covenant would "substantially injure" a person entitled to the benefit of the covenant is similar to that in relation to "practical benefits" in the second limb of s 84(1)(a). Re Robinson [1971] VR 278, 284; Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 10; Pivotel (2001) V ConvR 54-635; [2000] VSC 264, [37]; Bevilacqua [2005] ANZ ConvR 504; [2005] VSC 235, [24].

[35] Section 84(1)(c) 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 discharged or modified - if the evidence establishes that the difference between the two (that is, the injury, if any) will not be substantial, the ground in s 84(1)(c) is made out. Re Cook [1964] VicRp 106; [1964] VR 808, 810-11; Fraser v Di Paolo [2008] VSC 117, [36] ("Fraser").

[36] The injury must not be unsubstantial, and must be real and not a fanciful detriment. Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 10; Greenwood (1992) V ConvR 54-444, 65,199.

[37] It is not enough for the applicant merely to prove that there will be no appreciable injury or depreciation in value of the property to which the covenant is annexed. Re Cook [1964] VicRp 106; [1964] VR 808, 810.

[38] A lack of specific plans makes it more difficult for an applicant to show that there will be no substantial injury to persons entitled to the benefit of a covenant. Stanhill [2005] VSC 169; (2005) 12 VR 224, 246 [69]; Bevilacqua [2005] ANZ ConvR 504; [2005] VSC 235, [22].

[39] The prospect that, if the application for the discharge or modification of a covenant were granted, that might be used to support further applications in a similar vein, may be relevant. Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 11; Greenwood (1992) V ConvR 54-444, 65,200; Fraser [2008] VSC 117, [49]-[57]. Such "precedent value" may, in an appropriate case, of itself be a factor demonstrating that an applicant fails to establish the requirements in s 84(1)(c). Greenwood (1992) V ConvR 54-444, 65,200.

[40] Whether a person entitled to the benefit of the covenant would be substantially injured within the meaning of s 84(1)(c) is a question of fact. Re Alexandra [1979] VR 55, 60.

[41] Town planning principles and considerations are not relevant to the Court's consideration of whether an applicant has established a ground under s 84(1). Re Robinson [1971] VR 278, 285; Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 6; Greenwood (1992) V ConvR 54-444, 65,198; Pivotel (2001) V ConvR 54-635; [2000] VSC 264, [50]; Bevilacqua [2005] ANZ ConvR 504; [2005] VSC 235, [22].

[42] The applicant has the onus of establishing the matters set out in a limb of s 84(1)(a), or in s 84(1)(c), upon which he or she relies. Re Cook [1964] VicRp 106; [1964] VR 808, 809, 812 (in relation to s 84(1)(c)); Re Markin [1966] VicRp 69; [1966] VR 494, 496 (in relation to s 84(1)(a)); Re Robinson [1971] VR 278, 281; Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 7; Greenwood (1992) V ConvR 54-444, 65,192; Pivotel (2001) V ConvR 54-635; [2000] VSC 264, [28]. In relation to s 84(1)(c), this means that the applicant must effectively prove a negative. Re Cook [1964] VicRp 106; [1964] VR 808, 812-13; Greenwood (1992) V ConvR 54-444, 65,199; Bevilacqua [2005] ANZ ConvR 504; [2005] VSC 235, [24].

[43] The absence of objectors to the discharge or modification of a covenant will not, in itself, necessarily satisfy the onus of proof. Re Cook [1964] VicRp 106; [1964] VR 808, 812.

[44] Each case must be decided on its own facts. See Fraser [2008] VSC 117, [43], [58].

[45] Even if the matters set out in a 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. Re Cook [1964] VicRp 106; [1964] VR 808, 810; Re Robinson [1971] VR 278, 285-6; Re Stani (Unreported, Full Court of the Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 7; Greenwood (1992) V ConvR 54-444, 65,192, 65,200; Stanhill [2005] VSC 169; (2005) 12 VR 224, 239 [40].

[46] Town planning principles and considerations may be relevant to the exercise of the Court's residual discretion. Greenwood (1992) V ConvR 54-444, 65,200 - 65,201; Bevilacqua [2005] ANZ ConvR 504; [2005] VSC 235, [22]. "Precedential" issues similar to those discussed above may also be relevant in the exercise of that discretion. Greenwood (1992) V ConvR 54-444, 65,201.

[47] In Stanhill Pty Ltd v Jackson, Morris J, after considering the ordinary grammatical meaning of s 84(1), the history of the provision and the provision's policy basis, departed from what he described as the narrow traditional approach to s 84(1) in favour of a more "robust" interpretation of the provision and indicated that, in his view, "some of the restrictions adopted in earlier cases are without justification". [2005] VSC 169; (2005) 12 VR 224, 231 [13], 239 [41]-[42]. In essence, his Honour held: in relation to the first limb of s 84(1)(a), that "obsolete" should be given its ordinary meaning of "outmoded" or "out of date" (rather than meaning something that is futile or wholly unable to achieve its original purpose); in relation to the second limb of s 84(1)(a), that "the reasonable user of the land" means a user of the land acting reasonably, with what is reasonable to be gleaned from current attitudes and circumstances (including town planning issues), "impede" means to retard, obstruct or hinder (and does not mean "prevent"), and "practical benefits" are actual benefits having substance rather than purely theoretical or trifling benefits; and, in relation to s 84(1)(c), that it must only be shown that any harm caused to a person entitled to the benefit of a covenant would not be of real significance or importance. In the recent decision of Fraser v Di Paolo, Coghlan J referred to, but found it unnecessary to express a settled view about Morris J's comments. [2008] VSC 117, [26]-[28], [32]-[36].

[48] In this case, I apply the longstanding principles to the interpretation of s 84(1). I note, however, that had I applied Morris J's interpretation of s 84(1) (which has much to commend it), the result would have been the same.

98 I gratefully adopt Kyrou J's comprehensive summary of the relevant legal principles, subject only to the following qualifications and additions.

99 I say nothing about whether, as a matter of planning policy or other public policy, there is anything to commend Morris J's interpretation of s 84(1) in Stanhill Pty Ltd v Jackson,[145] insofar as Morris J departed from the long standing principles relating to the interpretation of that provision. In my view, the long standing principles should be followed by single judges of this Court unless and until the Court of Appeal or the High Court rules otherwise.[146] To the extent that Morris J relied upon the decision of the Full Court of the Federal Court in Morpath Pty Ltd v ACT Youth Accommodation Group Inc[147], I do not consider that his Honour was justified. The subject matter and the language of the statute in question in Morpath was quite different from that of s 84 of the Act. The statute related to leases in the ACT. It permitted the Supreme Court of the ACT to vary any provision, covenant or condition of a lease in relation to the purpose for which the land subject to the lease might be used. It provided that no such variation should be made unless the court were 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". There was no direct equivalent of the additional requirement contained in s 84(1)(a) of the Act that the continued existence of the restriction would not secure practical benefits to other persons.

100 During final oral submissions, I had a discussion with Mr Wright QC about the status of the judgment of Morris J in Stanhill. During that discussion Mr Wright said at first[148] that the plaintiff's case:

is based essentially and primarily upon s 84(1)(c), namely that the modification will not substantially injure the persons entitled to the benefit of the restriction. So the case does not really call for your Honour to make a decision as to whether Stanhill is good law and should be followed, in preference to earlier authorities.

101 Indeed, Mr Wright proceeded to say[149]:

We don't invite the Court to follow Stanhill in preference to the established line.

Nevertheless I sought further clarification from Mr Wright QC, because I understood that Morris J had departed from traditional principles and established authority not only in relation to s 84(1)(a) but also in relation to s 84(1)(c), in that Morris J had held that it is sufficient for an applicant to show that the proposed discharge or modification will not cause harm to the persons entitled to the benefit of the restriction which could be regarded as being "of real significance or importance".[150] I put to Mr Wright that that test understated the burden on the applicant as expressed in the decision of the Full Court in Re Stani[151] (not unsubstantial, a real and not a fanciful detriment) and as expressed more recently by the Queensland Court of Appeal in Averono v Mbuzi[152]:

It is to be emphasised that, in this context, "substantial" injury is not an injury which is large or considerable but one "which is real and which has a present substance".

102 In response, Mr Wright initially submitted that there may be no real difference between the tests. I expressed the view that there was a real difference. Ultimately Mr Wright said that, if I took that view, the plaintiff would "have to rely on the Stanhill test" (in relation to substantial injury).[153] So, in the end, to that extent, the plaintiff does not abandon the approach of Morris J in Stanhill. Otherwise she does.[154]

103 Turning to another aspect of s 84(1)(c), in Vrakas Kyrou J rightly said that the provision requires a comparison between the benefits initially intended to be conferred and actually conferred by the covenant, and the benefit, if any, which would remain after the covenant has been discharged or modified. However, a question has arisen in the present case which is not expressly dealt with by Kyrou J. The question is: what situation should be compared with the situation that will result from the discharge or modification of the covenant? The plaintiff submits that the relevant comparator is or may be a hypothetical one, namely the situation which would obtain if full advantage had been taken or were now to be taken of such liberty as is allowed to the proprietor of the burdened property under the existing covenant. For example, if the existing covenant would not have prevented, or would not now prevent, a three storey, single house being built on the site as close as possible to all four boundaries, then, according to the plaintiff, any objection based on bulk, loss of views, overlooking or the like is to be assessed as though such a house were now standing or could now be built on the burdened property. On the other hand, the defendants submit that the court should look at the actual present physical state of the burdened property (and of the benefited properties) and then take into account the realistic prospects or chances of alterations to the burdened property in the foreseeable future under the existing covenant.

104 In my view, the true position lies between these two approaches. As Coghlan J said in Fraser v Di Paolo,[155] the injury which must be looked at is injury to the benefit of the restriction. If that is to be established, the comparison must be between the benefit originally enjoyed and the effect that the modification will have upon it. In Re Ulman[156] McGarvie J observed that:

The proper approach is to compare what the covenant before modification permits to be done on the land which it binds with what it would permit to be done after modification.

Indeed, in a New South Wales case referred to by McGarvie J, Re Mason and the Conveyancing Act,[157] Jacobs J said, albeit in connection with issues arising under the equivalent of s 84(1)(a) rather than s 84(1)(c), that the applicant

is entitled to approach the matter by taking, as it were, the worst that could be done under the restrictions imposed by the covenant and to compare that with the effect that the proposed block of home units would have ... .[158]

On the other hand, as Jacobs J himself recognised in that very case, the benefit of a restrictive covenant is a right of property and can be very valuable, and there is no general power given to the court to extinguish such rights.[159] A comparable point was made by the High Court in Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd [160] in relation to the interaction of town planning provisions and rights under restrictive covenants. In that light, it seems to me that it would be artificial and wrong to pay no heed at all to the reality of the situation.[161] So, even though the plaintiff is entitled to ask the Court to take into account the "worst" that could be done under the existing covenant, the defendant is also entitled to invite the Court to consider the realistic probabilities of the plaintiff actually bringing about the "worst" that could be done under the existing covenant.

105 Turning to other relevant principles, I note the statement of Kyrou J that town planning principles and considerations are not relevant to the court's consideration of whether an applicant has established a ground under s 84(1). His Honour cites five Victorian cases in that regard. I agree that those cases make it clear that it is no part of the Court's function to consider whether a proposed development would or would not be desirable or acceptable under town planning principles and considerations. However, in the present case the plaintiff seeks to make use of statutory planning provisions in a slightly different way. She says that those provisions include protections for neighbouring properties. She says that this is potentially relevant for the purpose of assessing substantial injury. I am prepared to assume, without deciding, that planning provisions of that kind may be relevant in that way. However, as will be seen, the provisions upon which the plaintiff seeks to rely in the present case do not sufficiently avail her in any event.

106 Finally, in relation to substantial injury, I would add that the court applies a subjective test and is prepared to take into account intangibles.[162] Thus in Frasers Lorne Pty Ltd v Burke[163] Brereton J referred with approval to an earlier decision[164] in which it was said that the injury might be of an intangible kind, for example impairment of views, intrusion upon privacy, unsightliness, or alteration to the character or ambience of the neighbourhood; and that the subjective tastes, preferences or beliefs of particular individuals may, within the limits of reasonableness, give rise to injury in a relevant sense to those individuals.

107 As mentioned above, the plaintiff hardly pressed her claim under the first limb of s 84(1)(a), pursuant to which she was required to establish 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 restrictions ought to be deemed obsolete. The inquiry is as to whether the purpose of the restriction can no longer be achieved. As mentioned above, one purpose, at least, of the restriction is to ensure that there would be only one residence on each block, so as to control the density of population in the neighbourhood. Notwithstanding the presence of Cabrini Hospital on the western side of the Coonil Estate and the influx of people and traffic associated with the Hospital, it is clear that the covenant still has a role to play in achieving its object. There remain a very large number of single dwellings on large allotments in the neighbourhood. At present, there is a complete absence of blocks of units within the Coonil Estate, in contrast to surrounding areas.[165]

108 The objections of the defendants are set out in the various affidavits sworn by them. They are summarised in their written outline of submissions as follows[166] -

(a) Loss of character of the residential estate being an estate with large single dwelling family homes and substantial gardens;

(b) Loss of privacy and overlooking into neighbouring private outdoor living areas and gardens;

(d) Loss of large, spacious Edwardian family home on the burdened land and surrounding mature trees and established garden;

(e) Loss of family neighbourhood with front and rear garden;

(g) Construction of a three-storey building with basement car parking over virtually the entire site in conflict with the prevalent single dwelling residential character of the area;

(h) Additional noise, traffic, parking and access issues associated with 18 units and 33 [actually 36] basement car spaces;

(i) This is the "thin end of the wedge" and the precedent effect of the removal of a covenant for the construction of a large unit development would be very significant;

(j) The character of the Coonil Estate has been maintained for over 90 years and should be preserved;

(k) Much of the Coonil Estate is a recognised heritage overlay area which should be preserved;

(l) The proposed development will be an isolated "eye sore" in stark contrast to the many period and heritage homes surrounding the burdened land; and

(m) The plaintiff's land was purchased as part of the Coonil Estate, and has benefited from the reciprocal covenants given by others.

109 I accept that these are all admissible objections, though some are stronger than others. They are relevant to show that the covenant is not obsolete. They are also relevant for other purposes, to which I will come. The covenant is not obsolete. The purposes of the covenant are still being achieved throughout the Estate and on the burdened land, with a contribution in that respect from the covenant on the burdened land.

Impeding the reasonable user of land without securing practical benefits

110 The plaintiff clearly cannot succeed under the second limb of s 84(1)(a). The covenant does not preclude all reasonable use of the burdened land. The land has been used as a family home for many years and there is no reason why this cannot continue indefinitely into the future.

111 Further, the covenant plainly does continue to secure practical benefits for other persons, including the defendants. The list of the defendants' objections set out above are relevant under this heading as well.

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