Plaintiff v Defendants [2017] VSC 244 | Case summary

Supreme Court of Victoria|2017-05-09|Before: DERHAM AsJ

PROPERTY LAW - Restrictive covenant - Two covenants over land - Construction - Declaration that restriction to 'one shop or shops with or without dwelling house attached' does not preclude construction of one shop and twelve apartments - Alternate application to discharge or modify restrictions in covenants pursuant to the Property Law Act 1958 (Vic), s 84 - Whether discharge or modification will not substantially injure the persons entitled to the benefit - Application refused - Applicable legal principles - Property Law Act , & (2)(b).

1 The plaintiff, Margaret Conlan, applies by further amended originating motion[1] to discharge or modify two covenants under s 84(1)(c) of the Property Law Act 1958 (Vic) ('the PLA') or alternatively, for a declaration pursuant to s 84(2)(b) of the PLA that on their true construction, the restrictions in the covenants do not prohibit the development of a ground floor shop attached to a residential apartment complex.[2]

2 The plaintiff is the sole proprietor of land burdened by the covenants at 15-17 Woodland Street, Essendon, Victoria, in an area of Essendon known as Strathmore. The covenants were created by Instruments of Transfer 1014947, affecting Lot 8 on LP8229,[3] and 1233910, affecting Lot 9 on LP8229 ('the Subdivision').[4] Lots 8 and 9 were consolidated in 1991 to create Certificate of Title Volume 10044 Folio 412 ('the Land').

3 There is a shop erected on the Land with a dwelling attached. The shop appears substantially to occupy what was Lot 8 and the dwelling appears to occupy Lot 9 and the rear of Lot 8. It seems likely from the age of the house erected on the Land that the building happened before the consolidation of Lots 8 and 9.

4 The plaintiff intends to develop the Land by demolishing the existing shop and dwelling and erecting 12 apartments over four levels with a single shop front that spans both lots. The plaintiff is unable to obtain planning approval from the local council due to the two covenants burdening the title to the Land.[5]

5 On the application for a declaration that on their true construction, the covenants do not prohibit the development of a ground floor shop attached to a residential apartment complex, I conclude that:

(a) on their true construction, the covenants restricts the number of dwelling houses that may be built on the land to the number of shops built (the number of shops limits number of dwelling houses); and

(b) accordingly, the proposed development cannot proceed without offending the restrictions imposed by the covenants and it is not appropriate to make the declaration sought.

6 The applications under s 84(1)(c) of the PLA to -

(b) modify the covenants is refused, except insofar as it may be sought to substitute for 'shop' the expression 'retail premises and offices' or 'shop, including retail premises of any kind or office'.

7 The Land is two lots in a 1920's subdivision of 127 Lots, which included 23 shop sites. The balance of the Subdivision, less specified lots as set out below, is subject to single dwelling covenants. The covenants in issue can be described as 'shop and dwelling' covenants. The operative words of the restriction in the covenant affecting Lot 8, are as follows:[6]

... That the said Sarah Searls her heirs executors administrators or transferees shall not at any time hereafter erect or allow to be erected on the land hereby transferred any building other than one shop or shops with or without dwelling house attached...

8 The covenant provided that the benefit of it 'shall be attached to and run at law and in equity with every lot in the said Plan of Subdivision other than Lots 74 and 75, 110 to 112, and 115 to 128 inclusive and the land hereby transferred'.

9 The operative words of the restriction in the covenant affecting Lot 9, are as follows:[7]

... that the said Marguerite Cousens Blair her executors administrators or transferees shall not at any time hereafter erect or allow to be erected on the land hereby transferred or any part thereof any building other than a shop or shops with or without dwelling house attached ...

10 As with the covenant affecting Lot 8, the benefit of the covenant over Lot 9 was specifically attached to all lots in the plan of Subdivision other than the specified lots.

11 The covenants are nearly identical, the difference being that the Lot 8 covenant states 'one shop or shops' whilst the Lot 9 covenant the words are 'a shop or shops'. It was common ground that this gives rise to no difference in meaning.

12 The parent title[8] has noted in hand writing under 'Encumbrances Referred To' the following:

Building Scheme

Affecting all lots in P of S 8229 except lots 74 75 110 to 112, and 115 to 128 both inclusive [and further words that cannot be read on the copy in evidence][9]

13 Neither the plaintiff nor the defendant contended that the requirements for a building scheme were present or established.[10] Nevertheless, some of the features of a building scheme are revealed in the transfers of various lots that are disclosed in the evidence. The current registered proprietors of the lots in the Subdivision that are the subject of evidence (that is not all the lots in the Subdivision ) derive title from a common vendor, Frank Hincks Bateman and, so far as those lots are concerned, the restrictions were intended to be for all the lots sold except for the specified lots. But even those transfers (as are in evidence) show that they were entered into over a lengthy period from 1921 to 1931.

14 By the further amended originating motion,[11] the plaintiff seeks:

(a) to have the restrictions in the covenants discharged;

(b) alternatively, to have the restrictions in the covenants modified by substituting for the relevant words the following:

[The Registered Proprietor] shall not at any time hereafter erect or allow to be erected on the land hereby transferred any building other than one shop or shops with or without dwellings attached... [emphasis added]

(c) alternatively, to have the restrictions in the covenants modified by substituting for the relevant words the following:

[The Registered Proprietor] shall not at any time hereafter erect or allow to be erected on the land hereby transferred any building other than a shop with or without dwellings attached... [emphasis added]

(d) alternatively, a declaration pursuant to s 84(2)(b) of the PLA that upon their true construction, neither restriction prohibits that development of a ground floor shop attached to residential apartment complex on the land.

(a) the construction of the covenants and, in particular, whether they restrict the number of dwelling houses to the number of shops; and

(b) if on the proper construction of the covenants, the number of dwelling houses is restricted to the number of shops, whether the covenants should be modified or discharged so as to permit the construction of one shop and 12 apartments.

16 The application is supported by reports of town planning expert, Robert Walter Easton ('Easton').[12] The defendants, who were joined after the giving of notices of the application, oppose the modification or discharge of the covenants and in doing so, rely on the expert report of Robert Milner[13] and affidavits of several defendants - Peta Shields, Michele Benton, Geoffrey Thomas Hurst, Barry James Hamond, Patricia Fiddes and John Weinber,[14] and Nigel Incoll.[15] The experts were both cross-examined. Shields, Benton, Hurst, Hamond and Incoll were cross-examined on their evidence but not Fiddes nor Weinber as they were unavailable due to illness. Their affidavits were nevertheless accepted into evidence subject to some objections.

17 Easton's reports give a lot of evidence of a planning character, that of Milner less so. Judges regularly hearing applications under s 84 of the PLA commonly set to one side the planning aspects of expert reports that are not relevant or cannot be taken into account. Easton's reports, in particular, do not separate adequately the planning issues from the modification issues in relation to the critical question of whether the ground of modification specified in s 84(1)(c) of the PLA - no substantial injury - has been established.[16] Milner is not free from criticism either, a matter to which I will return.

18 Easton regularly provides expert reports for applications such as these and his reports follow a familiar pattern. Parts of the reports usefully set out relevant searches, plans, photographs and facts in the following subject areas:

(a) the history of the title to the subject land and the Subdivision of which, usually it is a part;

(b) the identification of the beneficiaries of the particular covenants;

(c) the location and situation of the subject land, including the improvements erected on the it and surrounding properties;

(d) changes in the use of, and buildings erected on the subject land and lands in the neighbourhood, with particular attention given to changes in the neighbourhood since the covenants were created; and

(e) the properties that are burdened by similar covenants and which may not comply with the restriction in them; and

(f) usually, the development proposed to be undertaken on the subject land which, if it proceeds, will breach the restriction imposed by the covenant, with plans.

The Location and situation of the Land and Neighbourhood

19 In this section, I set out the material derived from both the First and Supplementary Easton Reports and the Milner Report to describe the history of the title and Subdivision, the location and situation of the Land and the neighbourhood. I also draw upon my unaccompanied view of the Land and its locality (undertaken with the consent of the parties).

20 The Land is a rectangular shaped lot created from the consolidation of Lots 8 and 9 on the Plan of Subdivision. It is located on the southern side of Woodland Street about 55 metres west of its intersection with Pascoe Vale Avenue and Amelia Avenue. It is also about 75 metres west of the Strathmore station. It has a frontage to Woodland Street of 40 feet (12.1m) and a depth of 131 feet 4 inches (40.03m). It has an area of about 5256 square feet (485m²). It is developed with a shop and a single-storey brick dwelling. The shop is a former newsagency now used as a hairdressing salon. The shop is substantially on Lot 8 (but partly on Lot 9) while the house is on Lot 9 and Lot 8 behind the shop. The house is attached to the shop. The site backs on to a laneway 12 feet wide at the rear which provides access to the rear of all the shop sites in Woodland Street.

21 The instruments of transfer containing the covenants were made and registered on different dates. The instrument of transfer in relation to Lot 8[17] was registered on 28 September 1921. It contains handwritten alterations made later on 15 November 1921. As originally composed, the relevant words of restriction in the covenant in the transfer of Lot 8, with the handwritten alterations, were:[18]

...shall not at any time hereafter erect or allow to be erected on the land hereby transferred any building other than one shop or shops to which the said shop or shops may be attached a dwelling house with or without dwelling house attached.

22 The instrument of transfer in relation to Lot 9[19] was registered 16 September 1925. It to contains handwritten alterations made on 14 January 1926. As originally composed, the relevant words of restriction in the covenant in the transfer of Lot 9, with the handwritten alterations, were:[20]

...shall not at any time hereafter erect or allow to be erected on the land hereby transferred or any part thereof any building other than a shop or shops with or without dwelling or dwellings house attached...

23 The Subdivision, of which the Land is a part, covers a large irregular area south of Woodland Street comprising 26 acres and 31 perches. It extends from Hesleden Street in the west to Amelia Avenue in the south and east, and is also bounded to the south by Five Mile Creek. This area was initially subdivided on 22 March 1921 which resulted in 127 lots of varying sizes, including 23 shop sites and 104 house sites. A plan of the Subdivision is set out in Schedule A.

24 In his first report, Easton defines the neighbourhood of the covenants as all of the land originally contained in the Subdivision. He did this in order to determine:

(a) the extent of the changes in the character of the neighbourhood since the covenants were first imposed on the Land (if any);

(b) the range of shops and dwellings and other styles in the neighbourhood to see how the proposal for development of the Land responds to that character;

(c) what constitutes an injury in the context of the covenant; and

(d) if there has been any other precedents within the neighbourhood to vary similar covenants.

25 The shop sites extend along Woodland Street and around the corner into Amelia Avenue. There are 16 shop sites in Woodland Street and seven in Amelia Avenue.

26 In the First Easton Report, there was also material derived from searches into the titles to all the shop sites. That report includes a table summarising the covenants affecting the shop sites in the Subdivision. There was no dispute as to the accuracy of this Table, so it is set it out in Schedule B as a convenient summary.

27 There are a number of significant matters identified in the First Easton Report. Lot 14, 27 Woodland Street was recently developed as a multi-level building containing a hairdressing salon fronting Woodland Street on the ground level and three apartments above it. The development has not been subdivided and remains in one-ownership. As can be seen from the table in Schedule B, the covenant is differently worded from the covenants burdening the Land. The relevant restriction is expressed as follows:

...shall not at any time hereafter erect or allow to be erected on the land hereby transferred or any part thereof any building other than a shop or shops with or without dwelling houses attached...[emphasis added]

28 There has been no modification of this covenant. It seems that the responsible authority has taken the view that the covenant permits any number of dwelling houses to be attached to the shop or shops. Covenants burdening other shop sites that are similarly worded include Lots 1, 2, 6, 13, 15, 16 and 21.

29 Lots 1 and 2, 1-3 Woodland Street, are located on the south west corner of Woodland Street and Amelia Avenue. The covenant burdening these lots is different from the covenants in this case in that it restricts any building on the land to 'a shop or shops with or without dwelling or dwellings attached'. The two lots were the subject of a boundary realignment in 1975 and are now developed with an estate agency which includes an upper level section which may or may not be used as a residence.

30 Lots 10 and 11, 21 Woodland Street, presently contain a hairdressing salon on Lot 11 with an attached dwelling behind it which extends on to Lot 10. It is a mirror image of the building erected on the Land.

31 Lot 12, 23 Woodland Street, was subdivided in 2010 into two lots with a pharmacy located on Lot 1 at the front of the site and a dwelling at the rear of the site, apparently attached to the pharmacy building. It is unclear whether the covenant burdening Lot 12 now burdens both lots, although I consider it reasonable to assume this to be the case. On that assumption, Lot 2 in former Lot 12 is in breach of the covenant.

32 Lot 13, 25 Woodland Street, contains the Strathmore Medical Centre. If a medical centre is not a shop, then this is an instance of a current breach of the covenant burdening this land.

33 Lot 15, 29 Woodland Street, is presently used as a health spa. If such a use is not a shop, then this is another instance of a current breach of the covenant.

34 Lot 18, 61 Amelia Avenue, is located on the corner of Amelia Avenue and the lane at the rear of Woodland Street. It has erected on it what are plainly the remnants of an old shop, no longer in use, with an attached dwelling which extends both beside it and behind it. This part of the Subdivision is now zoned general residential. Under the applicable planning scheme, it is now not be possible to reopen the shop. Nevertheless the covenant remains.

35 Lot 19, 61 Amelia Avenue, is in the same ownership as the Lot 18 and contains a portion of the dwelling which also extends onto Lot 18. It continues to be burdened with the covenant and is now in a general residential zone. There is no shop on Lot 19.

36 Lot 20, 57 Amelia Avenue, contained an old garage or semi-industrial building at the time of the First Easton Report.

37 Lots 21 and 22, 53-55 Amelia Avenue, had erected on them at the time of the First Easton Report a semi-industrial building, used as a motor vehicle repair work shop. The building has since been demolished and approval has been obtained from VCAT, on appeal from the responsible authority, for the erection of four apartments. In the VCAT appeal, some of the defendants in this proceeding were respondents in the appeal.[21] The covenants burdening the land were removed by order of the Court made on 26 October 2012. No owner or mortgagee of land having the benefit of the covenants objected to the discharge of them.[22]

38 Lot 23, 51 Amelia Avenue, has a dwelling house built on it that extends across that lot and onto the adjoining Lot 24, in breach of the covenant which restricts building anything other than a shop or shops 'to each of which shops may be attached a dwelling house', in the case of Lot 23, and 'a shop or shops with or without dwelling [illegible] attached', in the case of Lot 24.

39 Lots 24 and 25, 47 and part of 51 Amelia Avenue, has a part of the dwelling erected on Lot 23 encroaching onto Lot 24 and Lot 25, and is the first of the single dwelling covenanted lots in Amelia Avenue.

40 Lot 105, 35 Woodland Street, is the first standard residential lot adjoining the shopping strip, to its west, and has built on it a single dwelling house owned by Mrs Peta Shields.

41 All of the shop sites fronting Woodland Street appear to have a building that includes a shop front with a residence attached, either above or behind and in some cases (as with the Land) behind and beside the shop. From the laneway behind the shopping strip in Woodland Street, each site appears to have a residential construction at the rear of the site, whether or not they are presently used as residences.

42 The shopping strip in Woodland Street and Amelia Avenue was originally laid out to contain 23 shop sites. There are presently 13 active retail or office premises in those 23 sites and only 10 of these would be classified as shops, at least under the planning definitions.[23]

43 On the other side of Woodland Street, but outside the Subdivision, there is a comparable development at 68-70 Woodland Street, directly opposite the Land where there is an apartment complex above a new café. Further east, there is a substantial apartment development on the corner of Pascoe Vale Avenue and North Avenue.

44 The proposed development is a four-level building that includes a lower ground level car parking area.[24] The ground level would be used as a shop and two apartments with a narrow entrance accessing three upper levels comprising further apartments. Access to the car park area would be from the rear laneway.

45 Attached to the First Easton Report are schematic plans for the development showing a single building with a lower ground level containing seven parking spaces, storage lockers, bicycle racks and rubbish bin area, ground floor showing an entrance-way to a lobby and lift, a shop fronting Woodland Street and two apartments of two bedrooms each, first and second floors each with 4 two bedroom apartments and a third level with 2 two bedroom apartments. That is, a shop and 12 apartments. The building covers 100 percent of the Land.

46 Easton's affidavit,[25] expresses the general opinion, based upon his First Report, that:

(a) having regard to the changing character of the neighbourhood it is appropriate that the Court modify the covenants;

(b) their modification will not substantially injure the persons entitled to the benefit of the restriction, and its continued existence would impede the reasonable use of the land without securing practical benefits; and

(c) it would be a reasonable and proper use of the Land to be developed or used in accordance with the plaintiff's proposal.[26]

(a) identifies the neighbourhood as the area within the Subdivision, despite the fact that the parent title embraced a much larger area described by him as 'Saint Columbians', which includes a large parcel of land on the north side of Woodland Street.[27] Despite the fact that the plaintiff abandoned reliance on s 84(1)(a) of the PLA, the identification of the neighbourhood may be relevant to the precedential effect of any discharge or modification and an assessment of whether other changes in the neighbourhood have already created the precedent. Easton's opinion of the neighbourhood is based on the covenants' reference to the Subdivision and their reach being limited to that Subdivision. This accords with the approach in Prowse v Johnstone,[28] Freilich v Wharton[29] and Morrison v Neil;[30]

(b) refers to changes in the neighbourhood regarding particular properties, and to specific instances where properties have been developed in breach of the covenants burdening them, identified above. He notes that the pattern of the covenants, there being two classes - purely residential covenants and shop and dwelling covenants - and considers that they had the purpose of establishing discrete areas for houses and shops, with the recognition that shops might have a dwelling or dwellings attached. He notes that there is no limitation on the number of shops or their size;[31] and

(c) shows that there were significant differences between the number of dwellings envisaged on the shop sites and the number built. By this, he refers to some shops sites that have been consolidated, or a shop and dwelling has been built across two shop sites, and on other sites no shop has been built, reducing the number of shops and dwellings from that contemplated at the time of the Subdivision. He also expresses the view that the meaning of 'shop' in 1921 had a different meaning from the present specific meanings in the applicable planning scheme. He notes that in the purely residential parts of the Subdivision there has been no change from the concept of one dwelling per lot.[32]

48 Easton identifies the absence of statutory planning controls in suburban Melbourne in 1922, that the present planning scheme recognises the shopping zone along Woodland Street, but not along Amelia Avenue (which is now zoned General Residential). He deals with matters such as an Environmental Audit Overlay applying to 5 of the 7 Amelia Avenue shop sites in recognition of their previous use, for example for motor vehicle repairs, where there is potential for soil contamination from oil or lead, and other planning matters applicable to what can and cannot be built on the shop sites, none of which is relevant to the applications made by the plaintiff. He refers to some uses of shop sites in Woodland Street now falling within the definition of 'retail premises (food and drink premises)' rather than 'shop'.[33]

49 Easton considers that the reference to 'shop' should be upgraded to a reference to 'retail premises and offices' and that the reference to 'dwelling house' in each covenant should be changed to 'dwelling houses'.[34]

(a) the modification of the covenants by replacing 'shop' with 'retail premise or office' is reasonable as it recognises the changes that have taken place over time to the land uses and character in the street. This would align with the Court's discretion under s 84(1)(c) of the PLA as the modification would not cause substantial injury;

(b) the modification of the covenants by the replacing the singular 'dwelling house' with the plural 'dwelling houses' is not reasonable as it would undermine the intent of the covenants to limit the intensity of dwellings in this part of the shopping strip and would potentially result in substantial injury to the beneficiaries of the covenants; and

(c) the proposed variation would create a precedent that would result in substantial injury to persons who enjoy the benefit of the covenants.

51 Milner's conclusions show that he assumes that the intent of the covenants included to limit the density of dwellings in the shop precinct. He considers that at the time of the Subdivision, private car ownership was low and people generally walked around their neighbourhood. Strathmore station would have been the prime means of transport to the city. The small strip of shops adjacent to the station would have offered both convenience to retail users and also value to the businesses established there.[35]

52 Milner's Report also states that in the period between the first and second World Wars, and later until the 1960s, it was common for small business owners or operators to live in a dwelling behind or above their shop premises. He says that this pattern of land use can be observed throughout the inner and middle distance suburbs of Melbourne. He does not say, however, but clearly implies, that this pattern of land use has changed significantly since the 1960s. Milner expresses the view that the intent of the covenant as he understands it - being to limit the number of dwellings to the number of shops - is reflected in the strip of shops and dwellings in Woodland Street, with the exception of 27 Woodland Street, which I refer to below.[36] The result is that the shop strip in Woodland Street retains 'a sense and character of low scale and low intensity of use with a dominance of business activity and land use'.[37]

53 Milner expresses the view that modifying the covenants would create a 'precedent for further change in the immediate context' of the Land, being the shopping strip. He notes, and agrees with, Easton's opinion that the more recent developments in the locality show that people are building to capture city views where available. This, he opines, will lead to further sites being redeveloped for apartment buildings on the basis of the precedent being established, which could lead to a change in the retail mix and local convenience role of the shopping strip.[38]

54 Milner notes that the discharge or modification of the covenants to enable multiple dwellings with a shop or shops 'could' substantially injure those entitled to the benefit of the covenants, including other owners in the shopping strip and in the residential properties to the south. The discharge of the covenants, or their modification as sought, would enable an unspecified scale of development of a different character with 'offsite' impacts including overlooking, overshadowing, more intense traffic, increased demand for street parking and a clash between the built form of the development and the established character of the shopping strip.[39]

55 In other parts of his Report, Milner strays into the task of the Court in construing the covenants and giving a legal opinion, albeit partly as a response to the observations of Easton as to the relevance of planning considerations. In so doing, Milner gives his opinion of the relevance of planning considerations and quotes the observations of Cavanough J in Prowse v Johnstone.[40] Although there was no formal objection to the opinions expressed by Milner that clearly encroach on the Court's functions and role, I cannot and do not take these opinions into account.

56 In his Supplementary Report, Easton responds to the evidence of the defendants' witnesses and to Milner's Report. In relation to Milner's Report:

(a) Easton disagrees that the purpose of the covenant is to establish a defined shopping strip and limit the intensity of residential use. In his opinion, the covenant's primary purpose was to establish the commercial shopping area at the ground level with any housing being an optional extra. There was no limit on the magnitude of any buildings to be constructed;

(b) he disagrees that the proposed development of the Land would substantially injure persons who had the benefit of the covenants. He disputes Milner's assessment that any major impacts of the proposed development, will be on the shopping strip rather than the residential properties relatively remote from it. He does not consider any impact to be substantial, but rather within a reasonable range given the commercial nature of this shopping strip;

(c) in relation to Milner's view regarding the effect of street parking, Easton comments that the parking spaces in Woodland Street include those on the other side of the street and that they serve a far larger catchment than the residential lots within the Subdivision. He observes that the success or failure of all shops and businesses along Woodland Street is partly dependent on a high customer turnover. He agrees that there will be a change of character in the area, but does not see that this is a bad or detrimental. Rather, it is consistent with the growth of any commercial area and Easton finds it difficult to see how an increase in pedestrian activity and visitors to the Land could negatively impact shop-owners in Woodland Street. He also considers that irrespective of the number of dwellings erected on the land, or any other property in the shopping strip, the dominant use is determined by the shops at ground level;

(d) he disagrees that the development of the shopping strip is consistent with the intent of the wording of the covenants.[41] In this regard, he points to the First Easton Report where he identifies the range of uses and covenants,[42] noting that there was no shop on lots 9 or 10 or on lots 18 to 24 and that of the original 23 shop sites, there are only 13 active retail or office premises. He also notes that there are no shops on the shop sites in Amelia Avenue;

(e) in relation to Milner's evidence regarding overlooking, overshadowing, street parking and the built form of the development, he refers to planning considerations; and

(f) in relation to the proposed development of the Land as set out in the First Easton Report, he notes that this proposal is the maximum feasible for the Land and that it would not be appropriate to secure this in a covenant, as it is likely that there will be multiple changes during the planning process.

57 Peta Shields, who lives at 35 Woodland Street, to the west of the Land, gave evidence that she and her husband moved into their home in 1985 after two years of looking. The area was recommended to her by her then boss who highlighted that a feature was the single dwelling covenants. The Shields' found the covenants preserved a pleasant family-friendly environment.

58 The Land was purchased as a part of the North Park Estate and Mrs Shields produced a flyer advertising the sale of lots in the Subdivision in 1920 into 80 sites and 24 shops. She expressed a view that the Land has benefitted from the reciprocal covenants and that the character of the North Park Estate mansion for over 90 years. The area is predominantly large single dwellings with gardens accompanied by a local shopping village. The shops are at the centre of the community and create a village feel and enhance the amenity of the neighbourhood.

59 Mrs Shields expressed her opinions regarding the impact of the development which are beyond her expertise and to which objection has been taken.[43] I uphold those objections. Further opinions expressed in Mrs Shield's affidavit are also inadmissible.[44] She was also concerned that:

(a) if the covenants are discharged or modified, she would suffer real and substantial injury due to an increase in population density that would be detrimental to the neighbourhood's amenity and character;

(b) any changes sought by the plaintiff would be a precedent for other land owners and result in larger developments in the future;

(c) the plaintiff's proposed development backs onto a residential zone and its scale, height and visual bulk is not sensitive to residents. The elevation of the Land will make it appear even larger and it will have more storeys than any other building in the Subdivision;[45]

(d) the increase to 12 apartments will further strain parking: it is already difficult to park on Woodland Street near the shops, the school, church and Strathmore station. Cars occasionally park illegally in front of Mrs Shields' driveway;

(e) the rear right of way giving car access to the proposed development will result in increased noise and lights at night (when it is not currently used) and cause parking and traffic problems that will be audible from her bedroom; and

(f) the collection of rubbish and recycled material would likely occur via the rear laneway, which is too narrow for some trucks. Mrs Shields says that this will be noisy and dangerous. During the construction of 27 Woodland Street, Mrs Shields' rear fence in the laneway was damaged by trucks delivering concrete.

60 Patricia Fiddes has lived at 46 Alfred Road for 52 years, immediately to the south of the rear laneway and near the Land. She is closer to the Land than any other defendant, other than Mrs Shields. Ms Fiddes says the covenants have minimised any potential overdevelopment and safeguarded low density living. She is concerned that:

(a) the plaintiff's proposed development will greatly alter the streetscape and reduce the neighbourhood's appeal due to its visual bulk;[46]

(b) the character of Woodland Street would be altered and create a precedent for future development in the area; and

(c) an increase in traffic in the rear laneway would result in substantially greater noise as her home is proximate to the Land (approximately 20-30m).[47]

61 In 1990, Geoffrey Hurst, and his wife, Christine purchased 14 Alfred Road. It is quite remote from the Land. Mr Hurst gave evidence that he valued the covenants as they help create the community and lifestyle his family values. He has been content with the developments to the Estate with the single dwelling restrictions, and the preservation of backyard privacy. He is concerned the plaintiff's application may undo much of the covenants' benefits as others will change the covenants in the Estate and subdivide their land. This may mean the loss of quiet streets, single dwellings with gardens and the overall community feel.[48]

62 Michele Benton and her husband Michael purchased their house at 28 Alfred Road around 32 years ago, which is fairly remote from the Land. A key reason they purchased it was due to the single-dwelling covenants that were on theirs and their neighbours' land. Mrs Benton considers it is important that the 'feel' of the area should remain intact. She fears the neighbourhood's family-friendly amenity will be lost if additional dwellings are permitted and the proposed development will have a precedential effect.[49]

63 Nigel Incoll lives at 20 Alfred Road which is less remote than the Hursts' property but more remote than Mrs Benton. Mr Incoll credits the presence of the single-dwelling covenants as a key reason for purchase in 2010. Mr Incoll believes that his enjoyment of his home will be substantially negatively impacted due to the aesthetic impact of the development on the streetscape, increased traffic and parking difficulties. He states that the discharge or modification will have a precedential effect, particularly for Alfred Road.

64 Barry and Carolyn Hamond live at 47 Amelia Avenue.[50] Their property is at the edge the former Amelia Avenue shopping strip, 60m from the rear of the Land. Mr Hamond gave evidence that it was important when they purchased that the area had single-dwelling covenants and was surrounded by similar homes with a shopping strip nearby. The Hamonds are concerned that they will be exposed to noise from their balconies that face their back yard and worry that residents may be put at risk as the rear lane is narrow and dangerous if required to be accessed by residents of the proposed development. This will also increase competition for street car parking. The precedential effect may result in construction of large developments that would damage the single-dwelling residential character of the area.

65 John Weinber lives at 8 Amelia Avenue with his wife which is very remote from the Land. When he purchased his home, he believed that the covenant would prevent multi-unit developments in the area and this was a major factor in their purchase. If the proposed development goes ahead, Mr Weinber considers that there will be a material impact on the limited density of dwellings and this will substantially injure his enjoyment of his home and its surrounds. The precedential value of the discharge or modification of the covenants is also worrisome. The proposed development may affect his skyline view, alter the neighbourhood character and create additional noise, traffic, parking and access issues.

66 I have recently set out the relevant principles of interpretation applicable to restrictive covenants in Clare & Ors v Bedelis.[51]

67 In summary, subject to certain qualifications, it is necessary to discover the intention of the parties revealed by the language of the relevant document, giving words their ordinary meaning and construing them in their context, with regard to the purpose or object of the restriction from the eyes of a reasonable reader. If the meaning of the covenant is ambiguous, then it ought be interpreted against the covenantor.

68 The plaintiff relies on s 84(1)(c) of the PLA, and therefore has the burden of proving as a matter of fact,[53] that the proposed discharge or modification will not substantially injure those with the benefit of the covenant. As the person carrying the burden, the plaintiff must prove the negative[54] and the failure by the plaintiff to establish its plans with specificity may result in the Court not being satisfied that the conditions of the section have been fulfilled.[55]

69 The following guiding principles apply to determine whether those entitled to the benefit of the covenant will not be substantially injured:

(a) a substantial injury must be a detriment that is real and not fanciful.[56] The requirement that the injury must be substantial was intended 'to preclude vexatious opposition cases where there is no genuineness or sincerity or bona fide opposition on any reasonable grounds';[57]

(b) the substantial injury relates to practical benefits, being any real benefits to the person entitled to the benefit of the covenant.[58] It is not sufficient for a plaintiff to merely prove that there will be no appreciable decrease in the value of the property that has the benefit of the covenant;[59]

(c) substantial injury may consist of the order for modification of the covenant being 'used to support further applications resulting in further encroachment and in the long run the object sought when the covenant was imposed [being] completely defeated'.[60] This consideration is referred to as the 'precedent value';[61] and

(d) whether there will be substantial injury is to be assessed by comparing:

(i) the benefits initially intended to be conferred and actually conferred by the covenant; and

(ii) the benefits, if any, which would remain after the covenant has been discharged or modified.[62]

70 If the evidence establishes that the difference between the two will not be substantial, the plaintiff has established a case for the exercise of the Court's discretion under s 84(1)(c) of the PLA.[63]

71 In Prowse v Johnstone,[64] Cavanough J considered that in assessing the benefits actually conferred by the covenant, the Court should have regard to 'the realistic probabilities of the plaintiff actually bringing about the "worst" that could be done under the existing covenant.'[65] His Honour was also prepared to 'assume, without deciding' that in assessing the benefits which would remain, if the covenant is removed or modified, the Court could consider the protections afforded to neighbouring properties by statutory planning provisions. It is relevant to consider evidence of statutory planning provisions to the extent it shows what realistically will be the result of the removal or modification of the covenant because 'it would be artificial and wrong to pay no heed at all to the reality of the situation'.[66]

72 In considering whether the plaintiff has satisfied the Court that there will not be substantial injury:

(a) town planning principles are not considered;[67]

(b) the absence of objectors to the discharge or modification of a covenant will not necessarily satisfy the onus of proof;[68] and

(c) each case must be decided on its own facts,[69] and each covenant should be construed on its own terms and having regard to the particular context in which it was created.[70]

73 If the plaintiff satisfies the Court that there will be no substantial injury to the relevant persons, the Court has a residual discretion to refuse the application.[71] The Court exercising its discretion, may take into account town planning principles and the precedent value.[72]

74 Relevantly to the evidence in this case, the subjective views of the individual residents of properties in the neighbourhood having the benefit of the covenant are admissible. Their views as to intangible matters, such as impairment of views, intrusion upon privacy, unsightliness, or alteration to the character or ambience of the neighbourhood, and their subjective tastes, preferences or beliefs, within the limits of reasonableness, may be taken into account in an assessment of the injury, in a relevant sense, to those individuals arising from the discharge or modification of the covenants that is sought.[73]

75 Subject views may also be taken into account in assessing whether the second limb of the ground for modification in s 84(1)(a) of the PLA applies (that the continued existence of the covenant would impede the reasonable user of the land without securing practical benefits to other persons) applies to a particular case.[74] The reliance on that ground for the discharge or modification of covenants involves similar considerations to those applying to the ground under s 84(1)(c) of the PLA relied on in this case. Where an individual with the benefit of the covenants believes they secure 'practical benefits', and the beliefs are objectively reasonable, those beliefs will be taken into account.[75] The identification of 'practical benefits' is similar to the test of whether there is no substantial injury caused by the proposed discharge or modification.[76]

76 The plaintiff submits[77] that the covenants are ambiguous and either restrict development to:

(a) a shop or shops to each of which may have an attached dwelling house (the number of shops limits number of dwelling houses); or

(b) a shop or shops which may be attached to an unlimited number of dwelling houses; or

(c) a shop or shops to which may be attached a single dwelling house.[78]

77 The plaintiff contends that a colloquial meaning ought be given to the covenants so that a residence or dwelling house can be constructed as containing multiple apartments in the proposed development.[79] It submits that the Court can assume that the terms used in the covenants do not restrict a proposed building to a single residence,[80] but rather rely on the authorities that have found that a block of flats constitute a house.[81] Alternatively, the plaintiff points to an another line of authority where a block of flats is neither a single dwelling house nor a collection of dwelling houses.[82]

78 It is the plaintiff's contention that the proposed development can proceed without offending the restrictions imposed by the covenants. The covenants restrict development to one shop, but do not provide any express limitation on the number of dwelling houses attached.[83]

79 The defendants assert[84] that the covenants can be interpreted in two ways:

(a) that one shop or shops may be built on the land, with each shop able to have a dwelling house attached or not attached; or

(b) that one shop or shops may be built on the Land with each shop able to have any number of dwelling houses attached.[85]

80 The defendants pointed to the principles of construction restated in Clare & Ors v Bedelis[86] where the object of interpretation is to discover the parties' intention from the language of the document. Applying those principles, had the parties to the covenants intended to allow any number of dwellings upon the Land, the addition of the plural 'dwelling houses' would have been simple. The Lot 9 covenant was specifically amended to remove reference to multiple dwellings. Properly construed, it can be seen that the covenants burdening the nearby lots are intended to have the same effect as the covenants burdening the Land, namely that any shop constructed may have a dwelling attached. If the defendants' construction is adopted, it can be seen that there is no tension between the various shop covenants.

81 The defendants submit that the cases referred to by the plaintiff concerning a block of flats being one dwelling house provide only limited assistance to the Court, as at the time the covenants were contemplated, it is unlikely that the shopping strip was intended to have unlimited residential apartments.[87]

82 The defendants' submission is that the addition of plural 'dwelling houses' would have been included in the covenants if multiple dwelling houses was intended.[88] To support this, the defendants point to the Lot 9 covenant which was specifically amended to remove any reference to multiple 'dwellings'.[89]

Section 84(1)(c) of the PLA

83 The plaintiff submits that there will be no substantial injury if the covenants are discharged or modified. The benefits intended to be conferred and those actually conferred by the covenants plus the benefits that would remain after the covenants have been modified would show no substantial injury.[90]

84 The plaintiff contends that the purpose of the covenants is to establish a commercial district such as a strip shopping centre. This purpose is achieved as the covenants restrict development to a shop or shops on each lot. Whether a dwelling house is attached is an optional extra.[91] Further, some of the lots on the Land breach their respective covenants as they do not contain a shop.[92]

85 The proposed development would restore the primary purpose of the covenants by ensuring that both Lots 8 and 9 are used as a shop and ensure the predominant purpose of a strip shopping centre is rectified.[93]

86 The defendants point to the onus that rests on the plaintiff to establish that the discharge or modification of the covenants would not substantially injure the persons entitled to the benefit.[94]

87 The defendants contend that the application has significant precedential impact. The defendants say that this may lead to a change in the retail mix and local convenience role of the shopping strip, alter the neighbourhood character, increase the density of housing, causing additional demand to parking spaces and generally inconvenience the beneficiaries of the covenants.[95]

88 The defendants submit that it is not for the Court to consider whether the proposed development will be accepted under town planning principles. Limited reliance should be placed on planning controls to contain the precedential impacts on the modification.[96]

89 There is no real issue about the meaning of 'shop', because the parties are agreed that it may be modified so that it is clear that it refers to 'retail premises or office'. Nevertheless, the Oxford English Dictionary[97] defines a 'shop' as 'a building or room set apart for the sale of merchandize'[98] and colloquially as 'a place of business; the place where one's ordinary occupation is carried on'.[99] The colloquial meaning embraces the uses to which the Land is presently put, or may be put in the future.

90 I consider that making the position clear and to remove doubt would be in the interests of justice. It accords with the evident intent of establishing a shopping precinct or strip that if there is any modification it is to the phrase chosen by the parties ('retail premises or office'), or perhaps to 'shop, including retail premises of any kind or office'.

91 The nature of the 'shop or shops' is not, however, the issue in this case - it is the number of dwelling houses permitted by the covenants.

92 There have been many cases that have considered the meaning of 'dwelling house' or 'house' in varying contexts. In Longo Investments Pty Ltd[100] Osborn J considered some of them. In Prowse Cavanough J reviewed more of them.

93 'Dwelling house' is an ordinary word, composed of two self-explanatory words:[101]

(a) 'dwelling' is 'a place of residence; a dwelling place, habitation, house;[102]

(b) 'house' is 'a building for human habitation, esp. a building that is the ordinary dwelling-place of a family'.[103] A secondary meaning for 'house' in the OED is 'the portion of a building, consisting of one or more rooms, occupied by one tenant or family';[104] and

(c) 'dwelling-house' is 'a house occupied as a place of residence, as distinguished from a house of business, warehouse, office, etc'.[105]

94 In Downie v Lockwood,[106] Smith J considered the meaning of 'dwelling house', albeit in the context of a dispute over leased premises where the use of the premises was limited to use 'only as a dwelling house'. The tenant used the premises as a boarding house. His Honour referred to the phrase 'dwelling house' as having both a wide and a narrower meaning. In its wide meaning, it extends to any building or part of a building used as the place of abode of one or more persons. As to the narrower meaning, Smith J said:

In popular speech the term is commonly used in a narrower sense derived, perhaps, from an abbreviating of the expression 'private dwelling-house'. In this narrower sense it covers, I think, only those places of abode which are either separate structures or else divided from other buildings by vertical walls, and which, in addition, are occupied, or adapted for occupation, by persons living in one household...

95 The plaintiff relies on Tonks v Tonks,[107] where a covenant restricted the erection of 'any building other than a dwelling house'. The plaintiffs wanted to erect more than one dwelling house on the land. His Honour's decision is summed up in the following passage:[108]

If the parties to the original covenant had wished to restrict the number of dwelling houses built on each of these lots they could have done so very simply and definitively by replacing the word "a" in the covenant with the word "one", or by making some similar simple amendment. The true construction of the covenant is that it prohibits the placing of any building on the land unless that building is a dwelling house. Provided that any building constructed can be properly described as a dwelling house there would be no breach of the covenant. The covenant says nothing, in my opinion, as to the number of dwelling houses which might be built. To import a restriction as to the number of houses which might be built on lot 3 into the covenant would extend its effect beyond the words used by the parties without any warrant for doing so.

96 The decision in Tonks Case was referred to by Mukhtar AsJ in Re Hammond[109] where an unopposed application to modify a covenant under s 84(1)(c) of the PLA was considered. The covenant in that case, created in 1912 over land in Brighton, Victoria, restricted the erection of any building on the land other than 'a' private dwelling house. The land in question was a lot in a small subdivision where some covenants burdening other lots referred to 'dwelling houses' (in the plural) and some to 'dwelling house' (in the singular). The relevance of the case to the present circumstances is twofold. First, in the course of considering the question of modification so as to allow two dwellings, his Honour considered the reasoning in Tonks, quoted the passage above, and commented, correctly in my view:[110]

The difficulty in this construction exercise, as in many, is to not beg the question. To say the true construction of the covenant is that it prohibits the placing of any building on the land unless that building is a dwelling house still leaves, I would say, the question whether a dwelling means one dwelling. Tonks says, as do the applicants here, that that the covenant is concerned with type of building and not how many.

97 I consider that Tonks Case provides limited assistance. Here, the parties rightly concede there is no material difference between 'a shop or shops with or without dwelling house attached' and 'one shop or shops with or without dwelling house attached' where they appear in the covenants over Lots 8 and 9, respectively. What the plaintiff says can be taken from Tonks is the proposition that had the parties to the covenant wished to restrict the number of dwelling houses built on each of these lots, they could have done so very simply and definitively by saying 'a shop or shops with or without a dwelling house attached'.

98 This then leads into the second aspect of Mukhtar AsJ's decision in Re Hammond that is material to this case. I note in my summary of the applicable principles of construction in Clare v Bedelis that:

the words of the covenant should be construed not in the abstract but by reference to the location and the physical characteristics of the properties which are affected by it,[111] and having regard to the plan of subdivision and, depending on the evidence, possibly having regard to corresponding covenants affecting other lots in the estate;[112]

99 In Re Hammond, Mukhtar AsJ considered that the covenants burdening other lots in the subdivision could be looked at to assist in the construction of the covenant burdening the subject land. He referred to the restrictions imposed by the High Court decision in Westfield[113] and said:

Legal principle permits, as Tonks recognises, resort to the background facts at the time of making the covenant. But in the Torrens context it is confined to accessible material on the register. In this case I regard the other covenants in this subdivision as informing true intention and enabling justice to be done. The other covenants are akin to pari materia as used in statutory construction. They are objective evidence. They are ascertainable from the register. They concern the same subject matter. They concern something of material common interest to the intended features of this small subdivision; that is, the number of dwellings per lot. The restrictive covenants burdening three of the five lots all used the expression 'any buildings other than private dwelling houses of stone or brick'. In this enclave created by a rather small plan of sub-division in which the parent title comprised an area of about 1.2 acres, that demonstrates objectively that there was no intention to preserve the sub-division with a form of residential development that confined this area to single dwelling developments. The context as I have sought to expose, is a small plan of subdivision in which a significant number of other lots had the freedom to build more than one house which derogates from any presumed intention for no apparent reason that the Hammonds' land had to be confined to one building only. [emphasis added]

100 Care must be taken when referring to the construction of similar words in covenants in other cases. The construction in a particular case can turn on small differences of language or particular context.[114] This is also true of the use to which other covenants in a particular subdivision may be put in the construction of the covenants in this case. In Clare & Ors v Bedelis,[115] the covenant restricted building materials and height, so that the covenantor could not:

... erect or cause to be erected on the said land hereby transferred any dwelling house other than one having walls of brick or stone and such house not to be more than one storey in height and all out buildings to be of similar construction.

101 The question was whether a particular building erected on the land breached the covenant. One question was whether 'brick' meant solid brick or brick veneer. Some covenants burdening lots transferred out of the parent title had 'brick' and others use 'brick veneer' without any discernible pattern or strategy. Approximately half the lots allowed for construction of a dwelling with brick veneer walls. I did not take into account the wording of the other covenants, saying:

It is, in my view, a very dangerous course to take to compare a covenant entered into between two parties pursuant to a contract of sale of land with a covenant entered into between two different parties in relation to a different parcel of land under a different contract.[116] In forming that conclusion, I am doing no more than giving effect to the notion that the object of the construction is to arrive at the intention of the parties to the covenant. Unless there is some admissible evidence[117] that all the covenants were imposed by the same vendor according to some scheme, or that the parties to the covenant applicable in this case were aware of the covenants made previously in respect of other properties in the neighbourhood, there is no proper basis to have regard to the manner of expression of the building materials element of the covenants in other cases.

102 This case is different. Here, there is something akin to a building scheme. Although the parties were agreed that the requirements for a building scheme were lacking, nevertheless there is a pattern that emerges from the several shop covenants, a matter to which I return below.

103 The plaintiff also relied on the decision in Natraine Nominees Pty Ltd v Patton.[118] That case concerned a claim by a purchaser under a contract of sale of land to rescind the contract for misrepresentation.[119] The misrepresentation was that, subject to Council approval, the land could be developed with two units. There was, however a covenant on the property that restricted the construction on the land so that no building 'may be erected on the...land except a brick building to be used exclusively as a residence or dwelling house only'. Smith J's first impression was that the covenant sought to confine development to a single brick building which contained within it a single residential unit. On further consideration, however, after considering the authorities, he reached a different conclusion.[120] He remained of the view that the reference to 'a residence' was intended as a reference to a single residential unit, but concluded after reviewing the authorities that:[121]

...[T]he 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 layout and structure of the building... [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 ordinarily refers to an accommodation unit in a building or group of buildings.

I am unable to point to anything in the restrictive covenant itself which would suggest that the words "dwelling house" should be read down from what appears to have been accepted for many years to be the ordinary meaning of the words. On the contrary, as counsel for the defendants has pointed out, to construe "dwelling house" so as to confine it to a single residence would render the reference to "a residence" superfluous. I also note that the covenant does not qualify the words "dwelling house" with words such as "one", "single" or "private".

104 The plaintiff submitted that it cannot be said in this case that the phrase 'dwelling house' as it is used in the covenants is a synonym for a structure or a building because the dwelling house or houses, if built, must be attached to another structure, namely, a shop. Accordingly, it can be assumed that the term as used in the covenant is not restricted to a building comprising a single residence.

105 The plaintiff also referred to another line of authority starting with Rogers v Hosegood,[122] in which the House of Lords held that a block of flats 'is not one messuage or dwelling house, but several. The case was followed in the Supreme Court of NSW in Re High Standards Constructions.[123] It has been applied in determining what a dwelling house means as a matter of statutory interpretation. In R v Tahau,[124] Yeldham J, drawing on the reasoning in High Standards, held that a dwelling house for the purposes of the Crimes Act 1900 (NSW) embraced each flat within a particular building 'as opposed to the block ... of flats as a whole.' In Uratemp Ventures Ltd v Collins,[125] the House of Lords held that a dwelling house included a bedsit even if there were no separate kitchen facilities. Earlier in Yorkshire Insurance Co v Clayton[126] separate dwellings 'one above the other' could each be regarded as houses for the purposes of assessing rates. In Estate of Purcell,[127] Higgins J held that 'a block of flats would, in a colloquial and ordinary sense, constitute more than one house.'

106 The plaintiff contended that the covenants here, unlike that in Prowse, permit a dwelling house or houses in the nature of an apartment or apartments, that is, as living quarters separate from but part of a larger built structure (to include a shop or shops) all housed under the one roof. While one of the covenants restricts development to 'one' shop or shops, neither provides any express limits on the number of dwelling houses to which the shop or shops are attached. Accordingly, the proposed development could proceed without offending the restrictions imposed by the covenants.

107 The scheme of the covenants in the Subdivision shows two classes of covenant, one restricting development to single dwellings on each lot, the other restricting development to a shop or shops with or without a dwelling or dwellings attached, speaking generally. It seems obvious from the location of the shop sites that these were thought to be servicing the neighbouring properties in the Subdivision comprising single dwellings. The proximity of the Strathmore station to the shopping precinct and the hinterland comprising single dwellings suggests a strong relationship between them. At the time the Subdivision was planned, motor vehicle transport was less prevalent. The dominant form of transport was by train, tram, bicycle and on foot. It is an easy walk from the Strathmore station to the shops in Woodland Street and then to homes in the Subdivision behind the shopping strip or elsewhere west and north of Woodland Street. It seems plain that changes in both the mode of transport available to residents in the area as well as changes in retail shopping outlets has dramatically affected the available shops in Woodland Street. It is reasonable to suppose that once there was a full range of shops. Some shops remain but small shop keepers are less prevalent due to large supermarket chains and malls.

108 The juxtaposition of the words of the covenants burdening the Land that are important to its interpretation are 'any building other than one shop or shops' and 'with or without dwelling house attached'. There must be a shop or shops and may be a dwelling house attached. That is, 'attached' to the shop or shops.

109 To give to these words the meaning that the reasonable reader would give them requires reading the whole phrase 'any building other than one shop or shops with or without dwelling house attached' in one run, so to speak. When this is done, it is clear enough that the singular 'dwelling house' is in fact a potential plural, depending on the number of shops, because otherwise the word 'attached' has little work to do. The evident intent is that there must be a shop or shops and there may be a dwelling attached. If there are two shops, each may have a dwelling attached. This collocation of words should be read distributively so that whether there is one or more shops will determine whether there is one or more dwellings, one dwelling per shop. The 'with' and 'without' may also indicate that the dwelling house or dwelling houses are merely ancillary to the primary form of development, namely a shop, as the defendants submit.[128]

110 This construction is also supported by the scheme of the Subdivision of which the Land is a part and the location and physical characteristics of the Land. The fact that the Lots 8 and 9 are two shop sites in a strip of shops sites and that each shop site is quite narrow (20' or 6.096 metres wide) limits the number of shops in contemplation at the time the Subdivision was created. No doubt with ingenuity and the presence of great demand, two shops could be built on each shop site, or perhaps, even more shops depending on layout. Realistically, however, the limit to the number of shops is the width of the frontage of each shop site to Woodland Street. The shops in Woodland Street demonstrate that limitation. The fact that Lots 8 and 9 were both used to build one shop and one dwelling house, the latter being both behind and beside the shop, and then consolidated, illustrates the practical limitation imposed by the size of the shop sites. If the development of the Land had not been done in this way, across both Lots 8 and 9, then it is likely the dwelling house would have been above the shop on one of the Lots, as is the case on other sites in Woodland Street.

111 The fact that the dwelling house is 'attached' to a shop points to the dwelling being a place of living for those associated with operating or owning the shop. That in turn points to the evident purpose of the covenants being to permit each shop to have its attached dwelling, but no more.

112 The words of the covenants, when read against the background of the scheme of lots and covenants in the Subdivision, point to the purpose or object of the covenants being twofold. First, to require that a building on the shop site comprises a shop or shops, as a minimum. Second, to limit the number of residences to the number of shops.

113 The development of 27 Woodland Street with one shop and 3 apartments fits within the literal reading of the covenant burdening that land, but not the construction I would have adopted. I consider that the intention of the covenants here are to restrict the number of dwelling houses to the number of shops on the Land.[129]

114 The test for an application under section 84(1)(c) of the PLA is whether the discharge or modification of the restriction would substantially injure a person entitled to the benefit, a burden that rests with the plaintiff. The provision requires a comparison between the benefits intended to be, and those actually conferred by the covenants.

115 The primary impact of the proposed modification would be on the precedential impact of the application; that is, the modification of the covenants would create a precedent for further change in the shopping strip. The evidence of Milner supported this effect and Easton acknowledged that every shop along the Woodland Street shop frontage could be developed in a similar way to the proposed development on the Land.[130] The plaintiff contends that there is significant precedent for development from 27 Woodland St and accordingly, the proposed developments does not provide a precedent for similar developments.[131]

116 The plaintiff submits that the covenants do not substantially injure those with the benefit of the restriction as the intention of the covenants can be evidenced in part by what they do not say - there is no restrictions on size, building coverage or building envelope.[132] However, this argument takes insufficient account of the wording of the covenant. The construction which I prefer limits the number of dwelling houses to the number of shops. That gives rise to practical limitations on sites with the dimensions of the two Lots in this case. In theory, a single dwelling house might be built with 3, 4 or 5 storeys on top of a single shop and that would not breach the covenants. But as Cavanough J said in Prowse:[133]

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.

117 The realistic probability is that the Land is developed in a relatively modest way consistent with a shop and dwelling house 'attached' so as not to disturb the ambience of the neighbourhood. Here, the prevailing feature of the covenants is that they feed the development of a shopping strip to serve a residential neighbourhood compromising a single dwelling on each residential lot. The overall feature of the Subdivision is the limitation on the number of dwelling houses and this is well understood to be a means of limiting the density of the population in the neighbourhood so as to establish and preserve a reasonably peaceful, quiet atmosphere, that would provide a tranquil, quiet existence. In the shopping strip itself, that tranquillity must be tempered with demands of suburban trade and commerce; and 'suburban' trade or commerce may be, as the ambience of the Woodland Street shopping was as I experienced it on the view I undertook, quiet, peaceful and pleasant. But a great influx of people occupying 12 apartments above a shop, with the consequent traffic and parking issues, is likely to adversely affect that peace and tranquillity

118 The defendants point to Re: Mourhivitas[134] where Mukhtar AsJ held that the purpose of a single dwelling covenant is to maintain building density and ambiance and multiple dwellings could result in added use, more tenants, cars, movement noise and issues with rubbish collection.[135] The defendants submit that, much like Mourhivitas, the proposed development in this proceeding:

...will be a conspicuous part of the neighbourhood. It will be the only apartment block in the neighbourhood. The scale of the project and its departure from the scale of any existing residential developments in the neighbourhood means that if it does not of itself create the sort of notorious problems of higher density living as I have identified them, it will in my judgment be the beginnings of altering the character of the neighbourhood.[136]

119 The lay evidence demonstrates how individuals with the benefit of the covenant expect the proposed development to affect them subjectively. I do not need to repeat the accounts of the evidence set out above. The defendants' subjective views as to intangible matters, such as impairment of views, intrusion upon privacy, unsightliness, or alteration to the character or ambience of the neighbourhood, are objectively reasonable, and thus may, and should, be taken into account in an assessment of the injury to them arising from the discharge or modification of the covenants that is sought.

120 The matters considered by the defendants to be injurious are:

(a) an increase in population density that is detrimental to the neighbourhood's amenity and character;

Plaintiff v Defendants

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