Plaintiffs v Defendants

1 The plaintiffs are the registered proprietors of the land at 26-28 Dellas Avenue, Templestowe, Victoria (Land).[1] The title to the Land is encumbered with two restrictive covenants that, amongst other restrictions, prevents the erection of more than one dwelling house on the Land. The plaintiff has applied to the Court pursuant to s 84(1)(c) of the Property Law Act 1958 (Vic) (PLA) to modify the Covenants affecting the Land to the allow the erection of two dwellings on the Land.

2 There are two covenants encumbering (burdening) the Land because the Land is comprised of the whole of Lot 13 on plan of subdivision LP19064 (Subdivision) and part of Lot 12 in that Subdivision. Each lot was burdened with a covenant created by instruments of transfer 2327741, dated 8 August 1950 (Lot 12 Covenant), and 2420525 dated 30 October 1951 (Lot 13 Covenant). That part of the Land comprising former Lot 13 on the plan of subdivision is marked as lot 1, whilst the part of Lot 12 in the title is marked as lot 2, as depicted on the title plan (Title Plan) below:[2]

3 The defendants claim, and the plaintiffs deny, that there is a building scheme affecting the plaintiffs' Land. That affects who has the benefit of the Covenants, as on the usual analysis not all the named defendants are entitled to that benefit. In summary, I am satisfied that a building scheme was established but the notification of it was not sufficient because a search of the title of the Land by the plaintiffs did not, and would not, reveal the existence of the scheme either directly or indirectly by reference to any instrument referred to in the search of the title.

4 In relation to the plaintiffs' application pursuant to s 84(1)(c) of the PLA to modify the Covenants to the allow the erection of two dwellings on the Land, I am satisfied that no substantial injury will be suffered by any of the defendants having the benefit of the Covenants if they are modified to allow the erection on the Land of two dwelling houses after the Land is re-subdivided so that the two lots of which it is comprised are of approximately equal size.

5 The essential terms of the covenants are almost the same, and restrict the development on Lots 12 and 13 of more than one dwelling house having walls of brick stone or concrete with a roof of tiles or slates (in the case of the Lot 12 Covenant) or having walls of brick stone or concrete with a roof other than iron (in the case of the Lot 13 Covenant) and containing an area of not less than twelve hundred square feet. Nevertheless, the whole of the covenants need to be set out because there is a dispute as to whether the original subdivider established a building scheme, otherwise known as a scheme of development, so that each covenant is for the benefit of each other lot in the Subdivision.

6 The parties agreed that despite the dispute as to the existence of a building scheme, it was not efficient or cost effective to determine as a preliminary question whether such a scheme was validly established as the evidence to be given, including evidence by those who may not have the benefit of the Covenants, was not extensive and could be taken into account by the Court in the application to modify the Covenants even though the witness might not have the benefit of the Covenants.

I, DONALD BERNARD of Templestowe in the State of Victoria Farmer being registered as the proprietor of an estate in fee simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of THREE HUNDRED AND FIFTY POUNDS paid to me by EDWARD JOHN PHILBRICK of 31 Roseberry Avenue Preston Draper DO HEREBY TRANSFER to the said Edward John Philbrick All my estate and interest in so much of such parts as lie above the depth of fifty feet below the surface of ALL THAT piece of land being Lot 12 on Plan of Subdivision No. 19064 lodged in the Office of Titles and being part of Allotment A in the Town of Templestowe Parish of Bulleen County of Bourke and being part of the land comprised in Crown Grant Volume 6316 Folio 1263141 and I, the said Edward John Philbrick with the intent that the benefit of this covenant shall be attached to and run at law and in equity with every Lot on the said Plan of Subdivision other than the Lot hereby transferred and that the burden of this covenant shall be annexed to and run at law and in equity with the said Lot hereby transferred DO HEREBY for myself my heirs executors administrators and transferees COVENANT with the said Donald Bernard his heirs executors administrators and transferees registered proprietor or proprietors for the time being of so much of the land comprised in the said Crown Grant as constitutes the Lots on the said Plan of Subdivision (other than the Lot hereby transferred) that the said Edward John Philbrick will not erect on the said Lot more than one dwelling house having walls of brick stone or concrete with a roof of tiles or slates and covering an area of not less than twelve hundred feet. [emphasis added] (Covenant version 1)

X I, DONALD BERNARD of Templestowe in the State of Victoria Farmer being registered as the proprietor of an estate in fee simple in the land hereinafter described subject to the encumbrances notified hereunder in consideration of the sum of THREE HUNDRED POUNDS paid to me by EDWARD JOHN PHILBRICK of 42 Lantana Avenue Draper DO HEREBY TRANSFER to the said Edward John Philbrick All my estate and interest in so much of such parts as lie above the depth of fifty feet below the surface of ALL THAT piece of land being Lot 13 on Plan of Subdivision No. 19064 lodged in the Office of Titles and being part of Allotment A in the Town of Templestowe Parish of Bulleen County of Bourke and being part of the land comprised in Crown Grant Volume 6316 Folio 1263141 and I the said Edward John Philbrick with the intent that the benefit of this covenant shall be attached to and run at law and in equity with every Lot on the said Plan of Subdivision other than the Lot hereby transferred and that the burden of this covenant shall be annexed to and run at law and in equity with the said Lot hereby transferred DO HEREBY for myself my heirs executors administrators and transferees COVENANT with the said Donald Bernard his heirs executors administrators and transferees registered proprietor or proprietors for the time being of so much of the land comprised in the said Crown Grant as constitutes the Lots on the said Plan of Subdivision (other than the Lot hereby transferred) that I the said Edward John Philbrick will not erect on the said Lot more than one dwelling house or any building (exclusive of out buildings) other than a dwelling house having walls of brick stone or concrete with a roof other than iron and containing an area not less that twelve hundred square feet. [emphasis added] (Covenant version 2)

9 It can be seen that the covenants have three elements. First a restriction to one dwelling house. Second, a building materials restriction and, third, an minimum area of the dwelling. The defendants do not dispute a modification of the building materials restriction and the plaintiffs' proposal does not involve the erection of a dwelling house on either part of the Land that has an area of less than 1200 sq. ft. (111.4 sqm).

10 Shortly before the trial of the proceeding, the plaintiffs' lawyers realised that the transfer that created the Land, being instrument of transfer A667956 executed on 19 December 1958, and which transferred the whole of Lot 13 and the part of Lot 12 that is marked lot 2 on the plan of the Land, was expressly made subject to the Lot 13 Covenant and not the Lot 12 Covenant. The instrument of transfer (A667956) was from William Alan Ramsay and Beatrice Agnes Ramsay and is expressed as follows:

... SUBJECT to the encumbrances notified hereunder, in consideration of the sum of ONE THOUSAND, EIGHT HUNDRED AND FIFTY POUNDS (£1,850.0.0) paid to us by KENNETH CHARLES MORRIS, Commercial Traveller and MERLYN JUNE MORRIS, Married Woman, both of 39 Comer Street, East Brighton DO HEREBY TRANSFER to the said KENNETH CHARLES MORRIS and MERLYN JUNE MORRIS, as joint tenants all estate and interest in the surface and down to a depth of 50 feet below the surface in ALL THAT piece of land delineated and coloured red on the map drawn on the fold hereof, being Lot 13 and part of Lot 12 on Plan of Subdivision Number 19064 lodged in the Office of Titles and being part of Crown Allotment A, Town of Templestowe, Parish of Bulleen, and being the whole of the land described in Certificate of Title Volume 7603 Folio 077 and part of the land described in Certificate of Title Volume 7603 Folio 075.

11 The 'encumbrances' notified at the foot of the Transfer were expressed as 'The covenant contained in Instrument of Transfer No. 2420525 in the Register Book', being the Lot 13 Covenant alone. The Register Search Statement for the Land in evidence, however, records that both Covenants burden the Land. The Certificate of Title of the Land is not in evidence. It seems clear that there is an error in the title recording that the Land is burdened by both covenants.

12 The Land is vacant and has never had any structure built on it. The plaintiffs purchased the land on the understanding that it was burdened with the two Covenants and that they would be able to build one dwelling house on each lot on the Land. In the course of undertaking the application for a permit to re-subdivide the land so as to make two equal sized lots, it was discovered that the Covenant affecting Lot 2 on the Land had been 'fulfilled' by the building of a dwelling house on the other part of Lot 12 in the Subdivision. That is the house to the immediate north west with the street address 2/30 Dellas Avenue.

13 The plaintiffs propose to realign the boundary between lots 1 and 2 on the Title Plan of the Land to make each lot approximately equal in size and to build a single dwelling on each lot as realigned.

14 By Crown Grant dated 12 April 1939 Donald Bernard (Mr Bernard) became registered as proprietor of 21 acres and thirty two perches of land bounded to the west and to the north by the Yarra River, to the south by Unwin Street, and to the east by McLaughlin Street, being the land that subsequently became the land in the Subdivision (Head Title).[3]

15 In or about March 1949 the Registrar of Titles registered Plan of Subdivision 19064 by which the Head Title was subdivided into 51 lots and a land locked reserve. At the foot of the first page of the Crown Grant, being Certificate of Title 6316 Folio 141, there appears annotation in red handwriting:[4]

Building Scheme

affecting all lots on

Plan of Subdivision N 19064

GH Sinclair

Assistant Registrar of Titles

16 If the notation was dated, it has not survived, but it must have been early in 1949 as the first transfer out of the title was dated 23 March 1949 and registered on 22 June 1949. It is also unclear when the Subdivision was registered, but it must have been before 23 March 1949.

17 The original layout (or first edition) of the Subdivision was as depicted below. There was a land locked reserve between lots 10 and 11 which is coloured red (the reserve parcel):[5]

18 At a later date there were further editions of the Subdivision. The 3rd Edition is the only other one in evidence, and I assume it is the latest. It is as follows:

19 It can be seen that in the 3rd Edition of the Subdivision the reserve marked red has been incorporated into lot 10 and, perhaps, also into lot 11. There is no notification on the 3rd Edition of the Subdivision of the existence of a building scheme, as there was in the Head Title and as there was on the plan of subdivision in Fitt v Luxury Developments Pty Ltd.[6]

20 The order of transfer of the various lots out of the Head Title and the presence or absence of restrictive covenants, and the terms of those covenants, are relevant to the identification of the beneficiaries of the covenants in the absence of there being a binding building scheme, as claimed by the defendants, of which proper notice has been given.

21 My analysis of the order of transfers out of the Head Title differs from the analysis by the plaintiffs and defendants in minor respects. I have not troubled to identify the differences and, if it becomes relevant, I will give the parties liberty to apply to make submissions as to the analysis I have undertaken, which is substantially based on the affidavit of Myles Patrick Watson sworn 21 June 2019 and the exhibits to that affidavit (third Watson affidavit). The following lots were the subject of transfers out of the Head Title (in order of the date of the instrument of transfer rather than the date of registration):[7]

(a) Lots 3, 4 and 5 were the first lots transferred out of the Head Title by instrument of transfer 2207578 dated 23 March 1949 (registered 22 June 1949). That transfer included a covenant which initially was the same as the Lot 12 Covenant but was amended to insert 'other than iron' instead of the words 'of tiles or slates' pursuant to an order of this Court made on 5 June 1951. Many other instruments of transfer contained this form of covenant.

(b) Lots 8 and 9 were transferred by instrument of transfer 2287753 dated 30 December 1949 (registered 9 March 1950). There was no covenant in the instrument of transfer at the time of execution. A covenant was added in much the same terms as Covenant version 1 by handwritten amendment dated 5 July 1951.[8]

(c) Lot 11 was transferred by instrument of transfer 2305296 dated 11 May 1950 to Beatrice Agnes Ramsay (registered 25 May 1950). There was no covenant in the transfer as executed and none was added later.

(d) Lots 25 and 26 were transferred by instrument of transfer 2420584 dated 10 July 1950 (registered 20 July 1951). The transfer contained a covenant in the same form as Covenant version 2.

(e) Lot 12 was transferred by instrument of transfer 2327741 dated 8 August 1950 to Edward John Philbrick (registered 16 August 1950). The transfer contained the covenant set out in paragraph [7] above.

(f) Lots 36 and 37 were transferred by instrument of transfer dated 3 November 1950 (registered 11 December 1950). The transfer contained a covenant in substantially the same terms as Covenant version 1.

(g) Lots 43 and 44 were transferred by instrument of transfer 2411903 dated 19 June 1951 (registered 20 June 1951). The transfer contained a covenant in substantially the same terms as Covenant version 2.

(h) Lots 6 and 7 were transferred by instrument of transfer 2420155 dated 12 July 1951 (registered 19 July 1951). The transfer contained a covenant in substantially the same terms as Covenant version 2.

(i) Lots 32 and 33 were transferred by instrument of transfer 2423456 dated 30 July 1951 (registered 31 July 1951). The transfer contained a covenant in substantially the same terms as Covenant version 2.

(j) Lots 47 and 48 were transferred by instrument of transfer 2452084 dated 20 August 1951 (registered 31 October 1951). The transfer contained a covenant in substantially the same terms as Covenant version 2.

(k) Lot 13 was transferred by instrument of transfer 2420525 dated 15 October 1951 to Edward John Philbrick (registered 30 October 1951). The transfer contained the covenant set out at paragraph [8] above.

(l) Part of lot 39, lot 40 and part lot 41 were transferred by instrument of transfer 2423451 dated 5 November 1951 (registered 14 November 1951). The transfer contained a covenant in substantially the same terms as Covenant version 2. The effect of this transfer was to subdivide lots 39 and 41 and to consolidate approximately half of each of them with Lot 40.

(m) Lots 16 and 17 were transferred by instrument of transfer 2423452 dated 5 November 1951 (registered 14 November 1951). The transfer contained a covenant substantially the same terms as Covenant version 2.

(n) Lot 38 and such part lots 39 and 41 remaining untransferred after registration of instrument of transfer 2423451 (see above at paragraph (l)) were transferred by instrument of transfer 2480706 dated 1 May 1952 (registered 6 May 1952). The transfer contained a covenant substantially the same terms as Covenant version 2. The effect of this transfer was to consolidate lot 38 with the balance of lots 39 and 41 not transferred previously.

(o) Part of lot 21 and the whole of lot 22 were transferred by instrument of transfer 2498285 dated 10 June 1952 (registered 16 June 1952). The transfer contained a covenant in substantially the same form as Covenant version 1 save that the single dwelling restriction applied 'to any one lot'. The effect of the transfer was to subdivide lot 21 and consolidate part of it with lot 22.

(p) Lots 23 and 24 were transferred by instrument of transfer 2555998 dated 18 April 1953 (registered 27 April 1953). The transfer contained a covenant in substantially the same form as Covenant version 1 save that the single dwelling restriction applied 'to any one lot'.

(q) Lots 34 and 35 were transferred by instrument of transfer 2572343 dated July 1953[9] (registered 14 July 1953). There was no covenant in the instrument of transfer at the time of execution. A covenant was added in substantially the same terms as Covenant version 2 by handwritten amendment dated 12 April 1954 and applicable to each lot.

(r) Lots 20 and that part lot 21 not transferred by instrument of transfer 2498285 (see paragraph (o) above) were transferred by instrument of transfer 2632635 dated 31 March 1954 (registered 31 March 1954). There was no covenant in the instrument of transfer at the time of execution. A covenant was added in substantially the same terms as Covenant version 1, and applicable to each lot, by handwritten amendment on a later date which is unclear.[10]

(s) Lots 14 and 15 were transferred by instrument of transfer 2634909 dated 8 April 1954 (registered 13 April 1954). The transfer contained a covenant in substantially the same terms as Covenant version 1 applicable to each lot (after amendments were made in June 1964).

(t) Lots 28 and 29 were transferred by instrument of transfer 2655498 dated 5 July 1954 (registered 14 July 1954). The transfer contained a covenant in substantially the same terms as Covenant version 2 applicable to each lot (after slight amendment in June 1955).

(u) Lots 45 and 46 were transferred by instrument of transfer 2688553 dated 20 October 1954 (registered 15 November 1954). At the time of registration of the transfer it contained no covenant. In January 1955 a handwritten covenant was added in substantially the same terms as Covenant version 1 applicable to each lot.

(v) Lots 30, 31, 49 and 50 were transferred by instrument of transfer A126922 dated 18 August 1955 (registered 15 March 1956). These four lots together made a large parcel of land between Dellas Avenue and Unwin Street. At the time of registration of the transfer it contained no covenant. On 29 August 1956 a handwritten covenant was added in substantially the same terms as Covenant version 1, applicable to each lot.

(w) Lots 27 and 51 were transferred by instrument of transfer A412977 dated 30 September 1957 (registered 3 October 1957). The lots together made a larger parcel in Dellas Avenue. The transfer contained a covenant in substantially the same terms as Covenant version 1 applicable to each lot (after slight modification on 24 December 1957).

(x) Lots 1 and 2 were transferred by instrument of transfer A459113 dated 23 December 1957 (registered 24 December 1957). At the time of registration of the transfer it contained no covenant. On 3 July 1958 a handwritten covenant was added in substantially the same terms as Covenant version 1 applicable to each lot.

(y) Lot 10 (north part), being lot 2 on PS A532912, was transferred by instrument of transfer A598084 dated 11 July 1958 (registered 3 September 1958). There was no covenant in the transfer as executed and none was added later.

(z) Lots 18 and 19 were transferred by instrument of transfer A712957 dated 14 March 1959 (registered 3 April 1959). At the time of registration of the transfer it contained no covenant. On 21 May 1959 a handwritten covenant was added in substantially the same terms as Covenant version 1, applicable to each lot.

(aa) Lot 10 (south part), being lot 1 on PS A532912, was transferred by instrument of transfer A987992 dated 3 June 1960 (registered 9 June 1960). There was no covenant in the transfer as executed and none was added later.

(bb) Lot 42 was transferred by instrument of transfer B756653 dated 18 September 1962 (registered 23 September 1963). At the time of registration of the transfer it contained no covenant. On 11 October 1963 a handwritten covenant was added in substantially the same terms as Covenant version 1.

22 In tabular form the order of the transfers out of the Head Title, by reference to the date of the instrument of transfer rather than the date of registration, is set out in an annexure to these reasons.

23 The Land is located on the north eastern side of Dellas Avenue and at the northern edge of the area of the Subdivision (the neighbourhood). It is an irregularly shaped parcel of about 1,478sqm, with a maximum depth of some 70.71 metres along its southern boundary and a frontage of about 36.96 metres to Dellas Avenue. The Land is currently undeveloped and densely treed and vegetated and after a gently sloping part at the Dellas Avenue frontage falls away steeply toward the Yarra River. Dellas Avenue is a cul-de-sac which terminates to the north-west of the Land.

24 The remainder of Lot 12 on the plan of subdivision that is not a part of the Land is now known as 2/30 Dellas Avenue and has erected on it a single dwelling house so that the single dwelling restriction of the Lot 12 covenant has been fulfilled, so to speak. In other words, the effect of the Lot 12 Covenant is that no dwelling house can now be erected on that part of the Land marked as lot 2 without modification of the Lot 12 Covenant. Only the area of the Land marked lot 1 can be developed with one dwelling house.

25 The property at 2/30 Dellas Avenue lies immediately to the north-west of the Land. It comprises part of Lot 12 and part of the lot originally designated as Lot 11 on the plan of subdivision. Julia Ellen Griffith, the thirteenth defendant (Ms Griffith), and her husband Andrew William Smith, are registered as proprietors of the property at 2/30 Dellas Avenue.[11]

26 Ms Griffith gave evidence that her home has been in her family ever since it was built by her grandparents in about 1971. Before this, from the early 1950s, her grandparents lived in a home on Lot 11 of the subdivision. In 1958 her grandmother, Beatrice Agnes Ramsay, became the registered proprietor of parts of Lots 10 and 12 on the subdivision. In 1979, some of the land in the subdivision was re-subdivided upon the registration of SP13039. That is a Plan of Strata subdivision which re-subdivided land in Lots 10, 11 and 12 to create Lots 2, 4A, 3A and 5A and common property, being a driveway giving access to the several lots. Ms Griffith and her husband became registered proprietors of 2/30 Dellas Avenue on 24 April 2019, following the death of Beatrice Mary Griffith on 30 November 2018. The property was bequeathed to them under her will.

27 Ms Griffith's uncle and aunt, William Alan Ramsay and Robin Ramsay, are registered proprietors of what is known as 1/30 Dellas Avenue comprising Lots 4A and 5A on the Plan of Strata subdivision. Their son (Ms Griffith's first cousin) Peter Ramsay and his wife Lois, reside at 1/30 Dellas Avenue.

28 Lot 3A on the Strata plan of subdivision is 3/30 Dellas Avenue which is occupied by Ms Griffith's cousin, Christopher James Ramsay and his wife, Julianne Ramsay.

29 Immediately to the south east of the Land is 24 Dellas Avenue occupied by Elizabeth Mary Whyte and her husband Nicholas Paul Whyte, who are the registered proprietors. 24 Dellas Avenue is burdened by a covenant to much the same effect as the covenants in this application. The house on the land is a two storey brick dwelling positioned towards the western part of the lot and set back about 7.2 metres from the common boundary with the Land. It is set in a naturally vegetated landscape, including dense trees and vegetation to the rear of the lot and along the river. 24 Dellas Avenue comprises former Lots 14 and 15 in the subdivision.

30 To the west, on the other side of Dellas Avenue, there are more properties that benefit from a frontage on the Yarra River that are developed with single detached dwellings positioned towards the street frontage and set in a vegetated bush setting. The development of properties in the neighbourhood of the Land have been influenced by whether or not they abut the Yarra River. The properties that front the Yarra River are generally characterised by a larger size, wider street frontage (arising mainly from consolidation of some original lots), considerable depth, variation in shape, minor variation in side boundary alignment, dense mature tree cover with bush character and dwellings that are one or two storeys of diverse style, materials and colour, often sited centrally on the consolidated land. The depth of the lots on the river includes a good deal of steep land falling to the river, a part of the river bank in fact, which limits the area available for erection of a dwelling house. A good deal of the dense vegetation evident along the river is a product of the inability to build on the part of the lots abutting the river and planning restrictions on the removal of trees.

31 Properties to the south of Dellas Avenue and east of Ellen Grove tend to be smaller, more regularly shaped, shallower and wider, part of a grid of conventional lots, more regimented in terms of sighting and setback of dwellings and set in more formal gardens.

32 Dellas Avenue presents as a pleasant, tree-lined street with a relatively quiet residential environment. There is an absence of pedestrian footpaths and there is unrestricted kerbside parking available on both sides of the street. The land is accessible to a wide range of services and facilities, including public open space and recreational opportunities, the public transport network, a range of schools and convenient services and activities including the nearby Templestowe Village shopping centre.

33 The plaintiffs relied on the following evidence:

(a) affidavits of Robert Milner, affirmed on 15 November 2018, 2 May and 20 June 2019 including an expert report as exhibit RM-1 to his first affidavit (Milner Report). He was cross-examined;

(b) affidavits of Vaughan Aaron Randell sworn 23 November 2018 and 17 May 2019. He was not cross-examined;

(c) affidavits of Myles Patrick Watson, solicitor, sworn 28 November 2018, 14 February and 21 June 2019. He was not cross-examined.

34 Mr Milner gives evidence of the covenants, the Land and the neighbourhood as set out above and that the age of the buildings and the special residential amenity that is to be experienced as a result of the area's relationship with the Yarra River and its environs is influencing the renewal and further development within the locality and within the area the subject of the covenant (a matter I confirmed by my unaccompanied view of the neighbourhood conducted with the consent of the parties). The new dwellings being constructed are of a larger size and a greater variety of styles.

35 Mr Milner has examined the history of the titles applicable to the subdivision. That history shows that the part of the neighbourhood fronting the Yarra River, which includes the Land, has been subject to considerable variation and redistribution of land between lots. In summary:

(a) the subdivision originally provided for 26 separate lots and the reserve parcel. The reserve parcel had no access to the street and was reliant upon Lot 10 for any access. Effectively, it was landlocked. As originally designed, all the lots with the exception of the reserve parcel had a frontage to either Ellen Grove or Dellas Avenue;

(b) over the passage of time, the consolidation, re-subdivision and development of the properties along the Yarra River has resulted in a notable modification of the original sub-division pattern;

(c) Lots 3, 4 and 5 have been consolidated and developed with a single dwelling;

(d) Lots 8 and 9 have been consolidated and developed with a single dwelling;

(e) the reserve parcel has been sub-divided to enable the partial distribution of land to former Lot 11; the subdivision constituted by the Plan of Strata subdivision created four lots out of Lots 10, 11, 12 and the reserve parcel;

(f) Lots 14 and 15 have been consolidated;

(g) Lots 16 and 17 were previously consolidated and developed as one. Recently, however, each lot has been developed with a single detached dwelling consistent with the original plan of subdivision;

(h) Lots 18 and 19 have been consolidated and developed with a single dwelling;

(i) Lot 21 has been subdivided and split into two halves with the land being absorbed between both neighbouring lots, Lots 20 and 22;

(j) Lots 23 and 24 have been consolidated and developed with a detached dwelling;

(k) Lots 25 and 26 have been consolidated and re-subdivided on the alternate east-west axis, but maintained as two lots. Each lot is developed with a detached dwelling;

(l) of the 26 original river lots, Lots 1, 2, 6, 7, 10, 13, 16 and 17 are the only lots that have been maintained and developed in a manner consistent with the original subdivision pattern.

36 In Mr Milner's opinion the construction of two dwelling on the Land, one on each lot after their size is equalised, will not materially change the character of the neighbourhood. In his view the recent development of lots 16 and 17 is illustrative of the of how the Land will be developed. Those lots are long and relatively narrow and have been developed towards the font of the lots, with elongated two tiered built forms with narrow side setbacks, with visually prominent walls, landscaped gardens with the river ends retaining their treed, bush character.

37 Mr Milner also noted that at present a large house could be constructed on former Lot 13 (lot 1 on the title plan of the Land), in compliance with the Lot 13 Covenant, which could be large and imposing on the south eastern neighbour, with outbuildings and garage, that had two crossings to the street. He correctly observes that the Covenants do not regulate aspects of the proposed development that relate to height, bulk, siting and position on the lot, removal of vegetation, orientation of windows and treatment of the front and side setbacks. These matters, so far as they are considered by the witnesses, including Mr Gattini, as being a factor in the issue of substantial injury, are not relevant to this application, although they are of course highly relevant to any planning application.

38 Mr Milner is satisfied that the proposed development will not substantially injure the beneficiaries of the Covenants nor adversely affect the character of the neighbourhood. He and Mr Gattini were of the view that any increase in the traffic would be not be noticeable.

39 The plaintiffs seek to realign the boundary between lot 1 and lot 2 as marked on the plan of the Land so that they are more closely equal in size, with an area of approximately 739 square meters each (proposed subdivision) in order to develop the Land with one dwelling on each of the resulting lots (proposed development).

40 The details of the proposed development are now set out in the Second Affidavit of Robert Milner, dated 2 May 2019,[12] which records that the proposed development will be in the form of two attached dwellings which share a party wall and are intended to appear from Dellas Avenue as one single-dwelling. The proposed development will include a landscape plan to provide for a high retention of existing vegetation, and to protect large established trees. A comprehensive set of plans has been prepared and are in evidence to allow a thorough assessment of any purported injury to those having the benefit of the covenants and to establish that the modification of the covenants will not substantially injure those persons in their enjoyment of their lands.

41 There are twenty defendants. According to the plaintiffs' analysis of the history of the titles, not all of them are beneficiaries of the covenants unless there is a building scheme applicable to the subdivision, as the defendants' contend. According to my analysis, the defendants and their properties (and whether they have the benefit of the Covenants, or one or other of them, in the absence of a building scheme) are as follows:

(a) Friedrich and Lydia Uhl of 5 Dellas Avenue, Templestowe (lot 50 ) are the first and second defendants. This land has the benefit of both Covenants;

(b) Letitia Evelyn Prickett of 6 Dellas Avenue, Templestowe (lots 23 and 24 ) is the third defendant. This land has the benefit of both Covenants;

(c) Coralie Elizabeth Owen-Jones of 7 Dellas Avenue, Templestowe (lot 49 ) is the fourth defendant. This land has the benefit of both Covenants;

(d) Shirley Anne Millier of 16-18 Dellas Avenue, Templestowe (lots 18 and 19) is the fifth defendant. This land has the benefit of both Covenants;

(e) Dimitrios and Victoria Pahos of 17 Dellas Avenue, Templestowe (lot 44 ) are the sixth and seventh defendants. This land has the benefit of both Covenants;

(f) Elizabeth Mary Whyte of 22 (lot 16) and 24-26 (lots 14 and 15) Dellas Avenue, and Nicholas Paul Whyte of 24-26 Dellas Avenue, Templestowe are the eighth and ninth defendants. Both properties have the benefit of both Covenants;

(g) Andrew and Christine Pithier of 27 Dellas Avenue, Templestowe (lot 7) are the tenth and eleventh defendants. This land has the benefit of the Lot 12 Covenant but not the Lot 13 Covenant;

(h) Ben Gerst of 29-31 Dellas Avenue, Templestowe (lots 8 and 9) is the twelfth defendant. This land does not have the benefit of either Covenant;

(i) Julia Ellen Griffith and Catherine Mary Taylor, as executors of the estate of Beatrice Mary Griffith, of 2/30 Dellas Avenue, Templestowe (part of lots 11 and 12) are the thirteenth defendants.[13] This land does not have the benefit of the Covenants and is burdened by covenant in the form of Covenant version 1;

(j) Peter and Becky Radcliffe of 33 Dellas Avenue, Templestowe (lot 10) are the fourteenth and fifteenth defendants. This land has the benefit of both Covenants;

(k) William and Robin Ramsay of 1/30 Dellas Avenue, Templestowe (part lots 10 and 11) are the sixteenth and seventeenth defendants. In so far as this land is comprised of lot 11, it does not have the benefit of either Covenant. In so far as it is comprised of lot 10, it does have the benefit of both Covenants;

(l) Norman Henry Young of 5-9 Ellen Grove, Templestowe (lots 3, 4 and 5) is the eighteenth defendant. This land does not have the benefit of either Covenant;

(m) Michael William and Lynne Julie O'Brian of 11 Ellen Grove, Templestowe (lot 6) are the nineteenth and twentieth defendants. This land has the benefit of the Lot 12 Covenant but not the Lot 13 Covenant.

42 The defendants relied upon the following evidence:

(a) affidavit of expert evidence of Giovanni Gattini, sworn 12 June 2019. He was cross-examined;

(b) affidavit of Elizabeth Mary Whyte affirmed on 11 June 2019. She was cross-examined;

(c) affidavit of Ben Gerst, affirmed on 11 June 2019. He was cross-examined;

(d) affidavit of Julia Ellen Griffith, sworn 11 June 2019. She was cross-examined;

(e) affidavit of Peter John Radcliffe, sworn 19 June 2019. He was cross-examined.

43 Mr Gattini was instructed to give his opinion as to whether any or all of the beneficiaries of the Covenants would suffer substantial injury if the Covenants were modified to enable two dwelling houses to be erected on the Land, one on each lot of which it is comprised after their sizes are approximately equalised. In his opinion, the proposed development would have 'significant potential to injure the beneficiaries substantially'.

44 In his view the character of the neighbourhood is that of single dwellings with large gardens and that this is a product of the single dwelling restriction in the several covenants. The neighbourhood has retained its low density character. In his view the proposed development will result in a more intensive development which is inconsistent with the neighbourhood character. This is a product of the necessity to build towards the front of the Land because of the slope down to the river at the rear, where there is an exclusion zone preventing building. However, it was not his opinion that an additional dwelling on the Land will change the low density nature of the neighbourhood as a whole. He notes that the planning controls themselves will maintain the low density of the neighbourhood. Essentially, in my view of his evidence, the key to the substantial injury that in his opinion will be caused to the beneficiaries of the Covenants is the building of two houses on the somewhat smaller lots that result from the subdivision of the Land to equalise their size. That is lots smaller than other river lots in the neighbourhood.

45 Ms Griffith gave evidence as related above at [26] - [28] and further that:

(a) her home is nestled in a bend of the Yarra River, sloping down from Dellas Avenue to the water. Gumtrees line the river and rise to the road. She has seen wombats, echidnas, platypuses, and a variety of wildlife around her home;

(b) that the character of the neighbourhood is a product of the covenants that apply to so many of the properties in the area which has resulted in the formation of a neighbourhood of large blocks with houses well separated from each other where there is room for large trees and wildlife;

(c) she loves the quiet, private, spacious, treed and wildlife rich neighbourhood character;

(d) if the application is approved she would suffer significant injury because a dwelling would be able to be constructed on the lot next to her home, there would be less space for trees and wildlife and this would be inconsistent with and harm the character of the neighbourhood and the amenity that she enjoys at her home;

(e) her house is a detached double storey brick dwelling aligned along the long axis of the lot and includes minimum setbacks of about 1 metre from the common boundary with the Land and at least 5 metres from the street frontage. It is about 15 metres from the Yarra River. My own observation from photographs in evidence and from my view of the neighbourhood is that the house is built surprisingly close to the boundary with the Land.

46 The cross-examination of Ms Griffith concerned, amongst other things her understanding that the planning controls regulated the removal of trees and vegetation in the neighbourhood, which she did, and that if the modification of the Covenants to enable the proposed development was approved, there would still be less than the 26 houses as originally intended on the river lots, which she also understood.

47 Elizabeth Mary Whyte and her husband Nicholas Paul Whyte are the registered proprietors of 24 Dellas Avenue. Ms Whyte was also registered as proprietor of 22 Dellas Avenue, which is Lot 16 in the subdivision. She has now sold 22 Dellas Avenue and resides at 24 Dellas Avenue. Ms Whyte gave evidence that:

(a) she has lived in Dellas Avenue for nearly ten years, initially at 22 Dellas Avenue and most recently at 24 Dellas Avenue. She became aware of the covenant registered on the title to each of her properties at the time of purchase and was aware that many neighbours were burdened with the same covenant and that has helped to create the rich built and natural environment she enjoys;

(b) if the plaintiffs' application is successful, she and her family would suffer significant injury because the construction of the development shown on the plans in evidence would introduce excessive visual bulk from the outlook from their property and there would be many windows overlooking their private backyard as well as two balconies. She says the number of cars and people that the development accommodates is certain to impact the level of noise and traffic in an otherwise quiet court. The development next door will impact on her and her families ability to relax and entertain in their back garden without the feeling of being watched by not just one, but two households;

(c) her family enjoys the open space and treed outlook that the neighbourhood offers and this would be affected by such an enormous building next door to her;

(d) the plaintiffs are attempting to create two blocks that would be the smallest ones on the Yarra River front. There are no homes in the area that back onto the Yarra River that are built on such small parcels of land. There are no homes that share a party wall, nor with the amount of bulk at the rear. The surrounding homes in the cul-de-sac are either single level at the street or set well back from the road; and

(e) the unique environment in the neighbourhood with a very wide array of flora and fauna has been brought about by the original single dwelling covenant and allowing the development will have an immediate affect and create a dangerous precedent for worse to follow.

48 Ms Whyte's further evidence and cross-examination revealed that she had redeveloped 20 and 22 Dellas Avenue (lots 17 and 18), which previously had only one house on both lots (across the boundary between the two properties) by demolishing the house, building a new house at 22 Dellas Avenue (lot 18) and selling 20 Dellas Avenue. Nothing else of significance emerged.

49 Mr Radcliffe gave evidence that he and his wife bought their land in 1997. They were aware of the covenant burdening their land at the time of purchase. It is in the form of Covenant version 1. Their land is one of the river lots. They were attracted to the quiet low density character of the area as well as the extensive tree cover. He gave evidence also of the flora and fauna that was enabled by the low density bush character of the area. He considers that if the application to modify the Covenants is approved it would be a disaster for the relaxing treed character of the area and create a precedent for higher density housing. His cross-examination did not disclose anything of significance in my view. To some extent, his evidence was, as is usual for lay persons giving evidence in applications of this kind, a mixture of matters of fact and a good deal of opinion. The notion of the modification being a 'disaster' should not, in my view, to be taken literally. The position of Mr Radcliffe's property almost opposite the Land and a change from vacant land to land with two dwellings on it might be seen as shocking. But that is in my estimation significantly a product of the change from vacant land to developed land.

50 Mr Gerst gave evidence that his property is burdened with a covenant in the form of Covenant version 1. His land, where he resides with his wife, is comprised of lots 8 and 9 in the Subdivision and is opposite the Land. He considers he will be significantly injured by the increase in the traffic, noise and congestion if the Covenants are modified to allow two houses on the Land. The proposed development will, in his opinion, remove habitat for the wildlife in the area and run counter to the neighbourhood character of one house on 'each land holding'. His cross-examination revealed he was not aware of the layout of the proposed development and he was not able to comment on the proposition that building one house on each of the two lots comprising the Land would retain the neighbourhood character as originally intended by the covenants.

51 There is no issue regarding the burden of the Covenants. The burden is accepted as running with the land in equity where:[14]

(a) the covenant is in substance negative and relates to the use of the covenantor's land;[15]

(b) the burden of the covenant is intended to run with the burdened land;

(c) the covenant is given for the benefit of land and not merely for the benefit of the covenantee;

(d) the covenant touches and concerns the benefited land, that is it benefits the covenantee in their enjoyment of the land and not merely in a personal capacity;[16]

(e) the plaintiffs had notice of the restrictive covenant from information contained in the Register of Land kept under the Transfer of Land Act 1958 (Vic) (TLA).[17]

52 All of these criteria are met in this case, bearing in mind that the exact identification of the benefitted land is a matter of debate. What is clear, however, is that some of the defendants' properties do have the benefit and if there is a building scheme, then all of the defendants have that benefit. I will return to the notice requirement mentioned in [51(e)] in relation to the issue of whether there is a building scheme.

53 None of the plaintiffs or the defendants is an original covenantee, having purchased their land from successors of those who acquired their lots out of the Head Title. In these circumstances, there are only three ways in which a defendant can establish an entitlement to enforce the benefit of the restrictive covenant against the plaintiffs:[18]

(a) as an assignee of land to which the benefit of the covenant is annexed.

(b) as an express assign of the benefit of the covenant and of some or all of the dominant land.

(c) that the plaintiff and the defendant own lands subject to a scheme of development and that they are reciprocally affected by the covenant.

54 The second of the three ways in which a defendant may have the benefit, by express assignment, is not applicable here. In relation to the first way of acquiring the benefit of the Covenants, it is not disputed and is clear that the terms of each of the Covenant are apt to annex the benefit of the Covenants to the benefitted lands. In this connection it is relevant to recall that the result in Re Arcade Hotel, where the wording of the covenant in question merely referred to the benefit being annexed to land retained by the transferor, and that was the land as a whole and not each part of it, was abrogated by the enactment in 1964 of s 79A of the PLA so that:[19]

It is hereby declared that when the benefit of a restriction as to the user of or the building on any land is or has been annexed or purports to be annexed by any instrument to other land the benefit shall unless it is expressly provided to the contrary be deemed to be and always to have been annexed to the whole and to each and every part of such other land capable of benefiting from such restriction. [Emphasis added]

55 In this case, the Covenants' terms make clear that every part of the land - whether retained by the vendor or not - is intended to have the benefit of the Covenants (if as a matter of law they are capable of benefiting from such restriction), as the covenantor covenants:

..with the intent that the benefit of this covenant shall be attached to and run at law and in equity with every Lot on the said Plan of Subdivision other than the Lot hereby transferred..

56 There is no issue that by restricting the erection on the Land of no more than one dwelling house, amongst other things, the Covenants touch and concern the benefitted land and are for the benefit of the owners of that land in their enjoyment of it.[20] Such a covenant does affect the mode of occupation of the land and may affect the value of it. The covenant is concerned with the land and is not merely entered into for collateral purposes. Hence it touches and concerns the land.[21]

57 It is common ground between the parties that if there is no building scheme, then certain lots in the subdivision do have the benefit of the Covenants, namely those lots that remained untransferred out of the Head Title at the time of the execution of the transfers of Lots 12 and 13, respectively; but that those that were transferred out of the Head Title before Lots 12 and 13, respectively, do not have the benefit of the Covenants. This is because it is well established that the original covenantee and his successors cannot enforce a restrictive covenant against a successor in title of the covenantor unless they retain land which is benefited by the covenant.[22] Thus, a vendor of land in respect of which he takes the benefit of a restrictive covenant cannot, by the covenant, annex the restriction to land which he does not own at the time of the covenant, unless the covenant is given as part of a building scheme.[23] If the existence of a building scheme is established, the defendants do not have to prove that the benefit of the Covenants was annexed to their land. The date of the execution of the transfer is selected as the relevant date because it is only in equity that the burden and benefit of the Covenants run with the Land, and in equity the date on which the transfers were executed is the relevant date, not registration.

58 Where the lots in a subdivision of land are all (or substantially all) sold subject to a restrictive covenant, the Court may find that there has been a building scheme. Where a building scheme is established, all purchasers and their assigns are bound by, and entitled to the benefit of, the restrictive covenant.[24]

59 In Elliston v Reacher[25] Parker J stated the requirements in terms 'that have since been universally accepted',[26] as follows:

[I]t must be proved (1) that both the plaintiffs and defendants derive title under a common vendor; (2) that previously to selling the lands to which the plaintiffs and defendants are respectively entitled the vendor laid out his estate, or a defined portion thereof (including the lands purchased by the plaintiffs and defendants respectively), for sale in lots subject to restrictions intended to be imposed on all the lots, and which, though varying in details as to particular lots, are consistent and consistent only with some general scheme of development; (3) that these restrictions were intended by the common vendor to be and were for the benefit of all the lots intended to be sold, whether or not they were also intended to be and were for the benefit of other land retained by the vendor; and (4) that both the plaintiffs and the defendants, or their predecessors in title, purchased their lots from the common vendor upon the footing that the restrictions subject to which the purchases were made were to enure for the benefit of the other lots included in the general scheme whether or not they were also to enure for the benefit of other lands retained by the vendors. If these four points be established, I think that the plaintiffs would in equity be entitled to enforce the restrictive covenants entered into by the defendants or their predecessors with the common vendor irrespective of the dates of the respective purchases.[27]

60 Counsel for the defendants pointed out, quite correctly, that there is an addition requirement that almost goes without saying, namely, that the area to which the building scheme extends must be defined.[28]

61 In addition, because the Land is under the operation of the TLA, the decision in Dennerstein[29] establishes, as Hargrave J put it in Vrakas v Mills, that:

...in order to bind a transferee of land registered under the Transfer of Land Act with a restrictive covenant arising under a scheme of development, it is necessary for the notification in the Register to give notice of:

(1) the existence of the scheme;

(2) the nature of the restrictive covenant; and

(3) the identity of the lands affected by the scheme, both as to the benefit and the burden of the restriction.

Further, it is necessary that this notice is given in the certificate of title, either directly or by reference to some instrument or other document to which a person searching the Register has access.[30]

62 After the above oft quoted extract from Elliston v Reacher, Parker J went on to observe:

I may observe, with reference to the third point, that the vendor's object in imposing the restrictions must in general be gathered from all the circumstances of the case, including in particular the nature of the restrictions. If a general observance of the restrictions is in fact calculated to enhance the values of the several lots offered for sale, it is an easy inference that the vendor intended the restrictions to be for the benefit of all the lots, even though he might retain other land the value of which might be similarly enhanced, for a vendor may naturally be expected to aim at obtaining the highest possible price for his land. Further, if the first three points be established, the fourth point may readily be inferred, provided the purchasers have notice of the facts involved in the three first points; but if the purchaser purchases in ignorance of any material part of those facts, it would be difficult, if not impossible, to establish the fourth point. It is also observable that the equity arising out of the establishment of the four points I have mentioned has been sometimes explained by the implication of mutual contracts between the various purchasers, and sometimes by the implication of a contract between each purchaser and the common vendor, that each purchaser is to have the benefit of all the covenants by the other purchasers, so that each purchase is in equity an assign of the benefit of these covenants. In my opinion the implication of mutual contract is not always a perfectly satisfactory explanation. It may be satisfactory where all the lots are sold by auction at the same time, but when, as in cases such as Spicer v Martin,[31] there is no sale by auction, but all the various sales are by private treaty and at various intervals of time, the circumstances may, at the date of one or more of the sales, be such as to preclude the possibility of any actual contract. ... It is, I think, enough to say, using Lord Macnaghten's words in Spicer v Martin,[32] that where the four points I have mentioned are established, the community of interest imports in equity the reciprocity of obligation which is in fact contemplated by each at the time of his own purchase.[33]

63 There is often only limited circumstantial evidence available to assist in establishing the existence of a building scheme. Sometimes there is evidence of an auction of many or most of the lots in a subdivision and of a contract that is the source of the covenant in question, as was the case in Dennerstein. On other occasions there is little more than the registered instruments and what may be inferred from the terms of the covenant.[34] Nevertheless the court can draw the inference from the documentation and will readily do so where it is proven that there was a large subdivision of building blocks and which were sold over a relatively short period by a common vendor and a common form of restrictive covenant.[35]

64 I will deal with the submissions in relation to whether there is a building scheme under the head of each element.

65 There is no dispute that the first element is satisfied, the plaintiffs and the defendants have all derived their titles from Mr Bernard.

Estate laid out before sale intending to impose the restriction on all lots

66 In relation to the second element, the defendants contend that:

(a) the layout of the estate when the Subdivision was registered in 1949 was not changed in any material respect after the sale of the final subdivided lots in 1963. The area of Lot 10 was increased somewhat, and lots 39 to 41 were reconfigured. The balance remained the same. The subdivisional layout in 1963 was recognisably the same as that registered in 1949;

(b) the restrictions imposed in the Covenants applying to each lot did not change over that time. These restrictions could only come into effect once each lot was sold. Yet each covenant controlled three aspects of the subdivision, use and development of the estate in an identical or (with the respect of the building materials restriction) almost identical manner;

(c) there was a consistent imposition of covenants in substantially the same form over the 14 years that passed from registration of the plan of subdivision to the sale of the final lots. There are differences in the number of lots purchased in each sale and the subdivision or consolidation of some lots does not, with the exception of lots 10 and 11 over which there is no covenant, lead to an inference against this element. The fact that Mr Bernard's sometimes failed at first to impose a covenant in the transfer of each lot, and his subsequent actions to bring them into a uniform system by amendment and through orders of the Court demonstrates and provides evidence of the original layout of the estate for sale of the lots in the Subdivision subject to the same restrictions;

(d) the terms of each of the Covenants show they were intended to benefit all of the lots in the Subdivision and by entering into them Mr Philbrick, the original purchaser from Mr Bernard, evinced the intention that the covenants enure for the benefit of all lots in the Subdivision:

... with the intent that the benefit of this covenant shall be attached to and run at law and in equity with every Lot on the said Plan of Subdivision other than the Lot hereby transferred ...

(e) despite there being no express indication on the titles to Lots 12 and 13 of the existence of a building scheme, the express language of the Covenants makes clear the existence of reciprocal restrictions intended to benefit and burden substantially all the lots in the Subdivision. The authorities make clear that some variation is not fatal;[36]

(f) the handwritten notation on red on the Head Title resolves all doubt.

(a) Mr Bernard had not originally laid out the estate 'for sale in lots subject to restrictions intended to be imposed on all the lots, and which, though varying in details as to particular lots, are consistent and consistent only with some general scheme of development'. That is because the inference that has to be drawn to satisfy this element is not available from the evidence of the creation and subsequent change of the Subdivision, nor from the way the Subdivision was in fact sold;

(b) if the Subdivision had been left intact, it might be said that the vendor had laid out the estate into predetermined lots prior to sale. However, if there was any such intention, it began to be abandoned almost immediately, as Mr Bernard commenced selling lots in a piecemeal fashion. Lots were sold together to form larger parcels, Lot 10 was expanded to include the land originally set out as a reserve, lot 21 was divided in half so that the boundaries of lots 22 and 20 could be expanded, lots 38 to 41 were subdivided into three lots, lots 11, 12 and 13 were only three lots sold in their original form, lots 10 and 11 were sold without any covenant, lot 10 was split and sold separately in two parts;

(c) in the result, it cannot be said the vendor had laid out his estate prior to the sale of the lots with the requisite intention. It cannot be said that the way the lots were varied, combined, subdivided and sold is 'consistent and consistent only with some general scheme of development'.

(a) this element requires proof that Mr Bernard laid out the Subdivision intending to impose the same restriction on all of the lots, consistent only with establishing a building scheme;

(b) I agree with the submissions of the defendants as to this element. In my view, the history of the Subdivision, the consistent imposition of substantially the same covenant over all the lots, bar lots 10 and 11, the terms of the covenants referring to all lots in the subdivision as benefitted, is consistent only with Mr Bernard laying out the Subdivision, before beginning to sell the lots, for sale in lots subject to restrictions intended to be imposed on all the lots;

(c) the fact that all but two lots were sold subject to the substantially identical form of restrictive covenant, over a 14 year period, is strong evidence of this intention;

(d) the fact that Mr Bernard's sometimes failed at first to impose a covenant in the transfer of each lot, and his subsequent actions to bring them into a uniform system by amendment, is strong evidence of the original layout of the estate for sale of the lots in the Subdivision subject to the same restrictions;

(e) the fact that the existence of a building scheme is noted on the Head Title which, in the evidence before the Court, includes the original Subdivision, is also evidence in favour of the laying out of the lots in the Subdivision for sale subject to the common restriction; and

(f) the fact that some lots were initially combined for sale, other lots were subdivided, some sales were a combination of parts of one or more lots, and the failure to impose restrictions on the sale of lots 10 and 11, resulting in the strata subdivision of lots 10, 11 and part of lot 12, is not inconsistent with the inference being drawn that the Subdivision was laid out with the intention of being sold with reciprocal restrictions imposed on all lots.

69 The third element requires proof that Mr Bernard intended the restrictions in the covenants to be for the benefit of all of the lots in the Subdivision. The Covenants contain words that make it quite clear that the restrictions were intended to benefit all of the lots in the Subdivision. The first purchaser of each of Lots 12 and 13, Mr Philbrick, entered into the Covenants and in doing so evinced an intention that the restrictions would enure for the benefit of all other lots in the Subdivision.

70 The failure to impose the restrictions on the sale of lots 10 and 11 is the exception that proves the rule. In other words, out of all the lots sold (42 originally) only two did not include a covenant at all. The area of the land in lots 10 and 11 is extensive and special, being at the apex of the land at the bend in the Yarra River. The inference I draw is that Mr Bernard did not impose the covenant on this land because of its special character and because such a large land holding was likely to be further subdivided. This is consistent with the findings in other cases where there have been some lots sold without the common form covenant, and with the relevant intention being that of the vendor existing at the time of establishing the scheme.[37]

71 The matters addressed with respect to the second element also show that the 'common vendor', Mr Bernard, persisted with the imposition of the covenants in terms that were almost the same, the only variation being the materials of which the roof was to be constructed, and consistently imposed the same restrictions despite some initial failures to do so. Again this is strong evidence to support the inference that the covenants were intended by Mr Bernard to benefit all lots. That is, the benefit of the restrictions were intended to run at law and in equity with every Lot in the Subdivision, other than the subject lot.

Lots purchased on footing that restrictions would apply to all lots

72 The fourth element requires proof that the parties to the proceeding to enforce the covenant, or their predecessors in title, purchased their lots from the common vendor on the footing that the restrictions were to enure for the benefit of the other lots included in the scheme.

73 The defendants submitted that imposition of substantially the same covenant across almost all the land sold in the Subdivision, and the terms of the covenants, show the extent to which both Mr Bernard and every purchaser of the subdivided lots in the Head Title intended to be bound in a scheme of mutual burden and benefit at the genesis of the suburb in order to achieve the urban density and neighbourhood character evidently intended by all.

74 In Elliston v Reacher, Parker J said that this element may readily be inferred, provided the purchasers have notice of the facts involved in the first three points; but if the purchaser purchases in ignorance of any material part of those facts, it would be difficult, if not impossible, to establish the fourth point.[38] In Vrakas v Mills Hargrave J was not satisfied that this element had been established. He reasoned that the purchasers from the common vendor had notice of the first two elements because each transfer of land identifies the land transferred by reference to its lot number in the subdivision and identifies the land as being part of the land comprised in the head title, of which the common vendor was the owner. He was not prepared to infer, however, that the purchasers had notice of the third element, being in that case:

[T]hat the intention of Ms Robinson [the common vendor] was to benefit all of the lots in the Robinson subdivision intended to be sold by her. In my view, the sale of the lots in the Robinson subdivision over a period of 20 years, combined with the lack of any suggestion that Ms Robinson was contractually obliged to impose a restrictive covenant in respect of any subsequent sale of lots by her, militates against an inference that the purchasers knew Ms Robinson's intention was to benefit all of the lots in the subdivision which she intended to sell.

Further, there is no evidence that the purchasers were ever informed that the restrictive covenant was imposed on them for the benefit of other purchasers of lots in the Robinson subdivision, or that they would be the beneficiary of a reciprocal covenant in their favour.[39]

75 The importance of the fourth element lies in there having been notice to each covenantor that their covenant is common to all in the estate or subdivision and involves reciprocal rights and obligations. As Buckley LJ said in Reid v Bickerstaff:[40]

...the nature and particulars of the scheme shall be sufficiently disclosed for the purchaser to have been informed that his restrictive covenants are imposed upon him for the benefit of other purchasers of plots within that defined estate with the reciprocal advantage that he shall as against such other purchasers be entitled to the benefit of such restrictive covenants as are in turn to be imposed upon them.

76 X In this case, the terms of the Covenants discloses that it is the intent that the benefit of the covenant be attached to every lot in the Subdivision. In Vrakas v Mills the covenant was significantly different; it was given to the vendor and the registered proprietors for the time being of the land in the Head Title, other than the land purchased by the covenantor:

[The Transferee] doth hereby for herself, her heirs, executors, administrators and transferees covenant with the said Sarah Leonora Robinson her heirs executors administrators and transferees registered proprietor or proprietors for the time being of the land comprised in the said Certificate of Title other than the land hereby transferred as follows:- That...

77 The validity of the covenant with that wording was saved by s 79A of the PLA (as to which see above at [[[41]](#_Ref2029567 (a) although there is no express reference on the titles to Lot 12 or 13 or on the Subdivision to a building scheme applicable to the Land, the express language of the covenants makes plain the existence of a reciprocal scheme of restrictions intending to benefit all of the land contained in the Subdivision. This is a critical point of distinction between the Covenants in this case and that before the Court in Vrakas v Mills;[42]

(b) the handwritten notation in red on the Head Title is notice of the existence of the building scheme. As was the case before the Court in Fitt v Luxury Developments Pty Ltd,[43] that express notice on the face of the original document describing the Subdivision is sufficient notice. Although this has not been transposed into Title Plan 575977B,[44] because that instrument was made subject to the Lot 13 Covenant, it does not matter;

(c) the plaintiffs were therefore not in the situation of the purchaser in Vrakas v Mills, needing to carry out searches of encumbrances to other land in order to identify both the existence of a building scheme, its content and geographic extent. Rather, a search of the original folio containing the Subdivision 19064 would have confirmed the existence of a building scheme had the plaintiffs not already inferred one from both of the terms of the Lot 12 Covenant and the Lot 13 Covenant. It follows that upon purchasing the Land the plaintiffs had notice of both the Lot 12 Covenant and the Lot 13 Covenant, of the existence of a building scheme, of the restrictions that it imposed on the subdivision, use and development of the Land, and of the bounds of the community of common interests enjoying both the benefit and the burden of the building scheme;

(d) It follows that upon purchasing the Land the plaintiffs had notice of both the Covenants and of the existence of a building scheme.

81 The plaintiffs submitted that a search of the title to the Land in the Register by the plaintiffs does not give notice of the building scheme.

(a) the determinative issue in this case is the notice requirement. The plaintiffs were on notice of the nature of the Covenants and their precise terms were set out in the two instruments recorded as encumbrances on the certificate of title to the plaintiffs' land, being the two transfers;

(b) however, the terms of the Covenants do not make reference to the existence of a building scheme, unless the reference to the land intended to benefit, that is 'every Lot on the said Plan of Subdivision other than the Lot hereby transferred' is sufficient to give notice of a building scheme;

(c) In Vrakas v Mills a similar issue arose. It was submitted that there were numerous documents indicating the existence of a scheme available from a search of the Register, including the plan of subdivision, the head title, each title created out of the head title and the 56 transfers of land out of the head title, each containing an identical restrictive covenant. There was, however, no indication that the head title had a notation on it that a building scheme had been established, as is the case here;

(d) the submission in Vrakas v Mills that going beyond the search of the relevant certificate of title would have revealed as a matter of inference the existence of a building scheme was firmly rejected by Hargrave J, essentially on the basis that a purchaser of land under the TLA is not bound to prosecute inquiries and searches and make deductions such as would be involved if the objector's submission were accepted. Hargrave J relied on the reasoning of Hudson J in Dennerstein:

In my view, a purchaser of land under the Transfer of Land Act is not bound to prosecute inquiries and searches and make deductions such as would be involved if Mr Searby's contentions were accepted. Even when all the materials and evidence in relation to the circumstances under which an estate has been subdivided and sold are available it is not by any means easy to determine whether the sale of allotments in the estate has been made under or pursuant to a common building scheme. To require a person interested in purchasing one of those allotments to make this determination after obtaining the necessary evidence perhaps years after the original sale if it is available would render conveyancing a hazardous and cumbersome operation, and, in the case of dealings in land under the operation of the Transfer of Land Act, would defeat the object of the Act and destroy in large measure the efficacy of the system sought to be established thereby.

I have reached the conclusion that, even assuming there is power under the Act to notify as encumbrances on a certificate of title restrictions arising under a building scheme, such a notification will not be effective to bind transferees of the land unless not only the existence of the scheme and the nature of the restrictions imposed thereunder, but the lands affected by the scheme (both as to the benefit and the burden of the restriction) are indicated in the notification, either directly or by reference to some instrument or other document to which a person searching the register has access. In the present case these requirements are not satisfied. The covenants contained in the instrument of transfer notified as an encumbrance, though they certainly set out the restrictions, give no indication that they arose under a building scheme, nor of the land to which the benefit thereof was intended to be annexed, under such a scheme. The applicant, therefore, had no notice of the existence of the scheme or of the restrictions imposed thereby. She did have notice that the covenants contained in the instrument of transfer had been entered into by her predecessor in title but those covenants as she had no doubt been advised are no longer enforceable by any person and, therefore, she took her transfer free of the restrictions contained therein and is entitled to a declaration accordingly.[45]

(e) it is this authority which led Hargrave J to state the three requirements set out in [61] above. These matters must appear in the certificate of title, either directly or by reference to some instrument or other document to which a person searching the Register has access;

(f) the question in this case is whether the Registrar's notification on the Head Title, together with the terms of the Covenants, satisfies this requirement? It is important to this question to appreciate what a search of the title to the Land reveals. The title to the Land is in Certificate of Title Volume 08216 Folio 026. A search of that title presently reveals, and in the search of the title of the plaintiffs' vendors it was similarly revealed,[46] under the heading Land Description:

Lots 1 and 2 on Title Plan 575977B.

Parent Titles:

Volume 07603 Folio 075 and Volume 07603 Folio 077

Created by instrument A667956 24/12/1958

(g) the search then shows the registered proprietors and gives notice of the encumbrances, caveats and notices as follows:

COVENANT as to part 2327741

COVENANT as to part 2420525

Any encumbrances created by section 98 of the Transfer of Land Act 1958 or Section 24 Subdivision Act 1988 and any other encumbrances shown or entered on the plan set out under the DIAGRAM LOCATION below.

DIAGRAM LOCATION

See TP 575977B FOR FURTHER DETAILS AND BOUNDERIES

(h) the covenants referred to are the Lot 12 and Lot 13 Covenants, respectively. The encumbrances created by s 98 of the TLA are easements arising from the applicable plan of subdivision. Section 24 of the Subdivision Act 1988 refers to easements, restrictions or rights (amongst many other possible encumbrances) specified in a plan which are created upon registration of the plan of subdivision. Neither of these are relevant as no building scheme is referred to or specified in TP 575977B. The only reference to a building scheme is in the Head Title, which is the Crown Grant made in 1939, the only evidence of which is an image as follows:

(i) attached to this Head Title is the original Subdivision. There is no indication on the Subdivision precisely when it was created, but the very strong inference is that it was well after the original crown grant in 1939 and probably not long before the first transfer out of the Head Title in March 1949. More to the point, however, whether the notification of the building scheme is taken to be made on the Subdivision or not, the search of the title to the Land would not lead the searcher to the Head Title or the Subdivision. Neither is referred to in the search. The parent titles referred to in the search are the titles that issued in consequence of the two transfers which created the Covenants. Those titles are not in evidence, but it is not to be expected that they would reveal anything relevant except to identify the Head Title;

(j) the result is that there is nothing in a search of the title to the plaintiffs' land which either directly, or by reference to some instrument or other document referred to in a search of the title, indicates the existence of the scheme;

(k) the reasoning of Hargrave J does not mean that it is enough that some other document, not referred to in a search of the title to the plaintiffs' vendors' land, contains notice of the building scheme. The fact that a wider search of the Register might reveal the Head Title is not sufficient. A wider search of the Register does not accord with the reasoning and logic of Dennerstein, from which Hargrave J drew the statement of conclusion to which I have referred above at [61]. Nor is a wider search in accordance with conveyancing practice or what I would expect a purchaser of land in Victoria to undertake by way of searches;

(l) If it were sufficient notice that the Head Title in this case bears the notification of a building scheme, it would require a person interested in purchasing the Land to search the Register further than the title search indicated and to go back to the Head Title and the original, or first edition, of the Subdivision. That would render conveyancing a hazardous and cumbersome operation beyond what is reasonable to expect.

83 In summary, I am satisfied that a building scheme was established but the notification of it was not sufficient to give notice of it to the plaintiffs because a search of the title of the Land by the plaintiffs did not, and would not, reveal the existence of the scheme either directly, or indirectly by reference to any instrument referred to in the search of the title.

84 The plaintiff relies on s 84(1)(c) of the PLA, and therefore has the burden of proving as a matter of fact that the proposed discharge or modification will not substantially injure those with the benefit of the covenant.[47] The plaintiff must prove the negative[48] 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.[49]

85 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 to the benefitted land that is real and not fanciful.[50] The requirement that the injury must be substantial is intended 'to preclude vexatious opposition cases where there is no genuineness or sincerity or bona fide opposition on any reasonable grounds'.[51] That does not mean, however, that s 84(1)(c) of the PLA is restricted to dealing with vexatious or frivolous objections. Although the restriction of s 84(1)(c) of the PLA to 'substantial' injury would enable the weeding out of vexatious objections to the modification or removal of a covenant, the dichotomy in the section is not between vexatious and non-vexatious claims but is between cases involving some genuinely felt but insubstantial injury, on the one hand, and cases where the injury may truly be described as substantial, on the other;[52]

(b) the substantial injury relates to practical benefits, being any real benefits to the person entitled to the benefit of the covenant.[53] 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;[54]

(c) substantial injury may arise from 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'.[55] This consideration is referred to as the 'precedent value';[56] 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;[57]

(e) 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;[58]

(f) it is relevant to consider evidence of statutory planning provisions to the extent they show 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';[59]

(g) in considering whether the plaintiff has satisfied the Court that there will not be substantial injury:

(i) town planning principles and considerations are not relevant;[60]

(ii) the absence of objectors to the discharge or modification of a covenant will not necessarily satisfy the onus of proof;[61] and

(iii) each case must be decided on its own facts,[62] and each covenant should be construed on its own terms and having regard to the particular context in which it was created;[63]

(h) 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.[64] The Court in exercising its discretion, may consider town planning principles and the precedent value.[65]

86 The common single dwelling covenant is imposed for the purpose of ensuring one residence only can be erected on the Land, 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.[66] The general suggestion is that this living environment would be reduced by higher density housing, leading to a reduction of open space, a greater congestion of people and traffic and an increased demand on municipal amenities. The judgment to be made about 'substantial injury' turns on the nature and degree of the injury to those benefits.[67]

87 The plaintiffs submit that, assuming the Lot 12 Covenant does burden the Land as well as the Lot 13 Covenant, the Land is unusual within the plan of subdivision because the presence of the existing dwelling on the balance of Lot 12, being the house at 2/30 Dellas Avenue, has the result that Lot 2 may not be developed with even a single dwelling house.

88 One consequence of this feature of the Land is that permitting two dwellings upon the Land, is unlikely to be a precedent. In any event, a precedent has already been created in the subdivision that created four lots from Lot 11, and development of those lots with 3 dwellings.[68]. Moreover, if the modification is approved, there will still only be 20 dwellings along the Yarra River where the original subdivider initially planned for 26 dwellings. The experts agreed that an additional dwelling house on the Land, once subdivided as proposed, would have no traffic impact and thus no effect on the tranquillity of the neighbourhood in consequence of the movement of motor vehicles.

89 The plaintiffs also submitted that the proposed development is in keeping with the neighbourhood character. The development would be similar to the current redevelopment of lots 16 and 17 on the plan of subdivision. It maintains a low site coverage, and provides for on-site parking and a highly vegetated site, maintains the integrity of the original plan of subdivision and the intent and purpose of the Covenant in so far as it would provide for:

(a) two, long and narrow lots of similar size and proportions on the river side of Dellas Avenue;

(b) the development of each lot with a single two storey dwelling sited toward Dellas Avenue;

(c) a low site coverage, consistent with the existing character and comparable to nearby River Lots;

(d) on-site car parking and a single vehicle access from Dellas Avenue for each lot;

(e) a landscape setting, including the retention and protection of existing trees and vegetation where practicable including a 'bush' character to the rear of the Land.[69]

90 The neighbourhood is characterised by substantial dwellings, consistent with the minimum area restriction in the covenants. There are a variety of house types, a diversity of lot sizes and shapes and a diversity of front and side setbacks. The neighbourhood character is such that the proposed development of two dwelling houses, each on its own lot, with a party wall between them, will be in keeping with that character. Moreover, it is likely that due to the increased front and side setbacks, the development proposal will be of a lower impact to the surrounding properties and aid in maintaining the low density neighbourhood character. A comparator is the new development of lots 16 and 17 which have greater site coverage and narrower side setbacks than the proposed development on the Land.

91 There will be limited, if any, impacts on the amenity of the neighbourhood as any impacts on traffic and parking will be inconsequential, any noise will be that normally arising from a single dwelling, overshadowing will principally be to Dellas Avenue, overlooking will be indistinguishable from what might be built without a modification to the Covenants and there will be no visual impact on beneficiaries of the Covenants.

92 The overwhelming impression gained from the defendants' evidence was that they don't want any development on the Land at all:

(a) Mr Radcliffe fairly admitted as much when he said that if he had a magic wand that would be his preferred outcome;

(b) Mrs Whyte compared the development against her current perspective towards 30 mature trees - quite oblivious that a similar number of trees would be removed if the land was developed without any variation to the Covenants; and

(c) Mr Gerst complained about the potential nuisance created by children playing in the street for the noise of children playing.

93 The Covenants, in conjunction with all of the other covenants applying to lots in the Subdivision, have been pivotal in creating a neighbourhood character defined by large houses on even more expansive blocks. This character is a bush and garden estate for those lots fronting the Yarra River, and a garden estate for the balance of the land. This character is the product of the relationship between the subdivisional layout, the restrictions in the covenants, and the topography of the land - and especially of the topography of the land fronting the Yarra River.

94 The houses built on the lots in the Subdivision tend to be nestled in abundant vegetation, maintaining a respectful relationship with nature and allowing for privacy and wildlife. There is no bunching or clustering of dwellings; dwellings tend to be well set back from other dwellings and from the street. It is precisely this green and spacious character that all of the resident witnesses said that they love and value about their homes and their neighbourhood and which were the benefits intended to be conferred by the covenants.

95 The defendants' expert, Mr Gattini, made clear that the estate is 'intact' because every lot within it is defined by the same built form type of a high quality detached dwelling in a garden setting. There is variety in lot size, lot shape, and architectural styles. These are the result of the varying topography of the land - and especially the river frontage - and in the marked preferences of the buyers of the subdivided lots. But all of these buyers and their successors have kept the promise they have made to each other to build high quality detached dwellings in a garden setting.

96 The covenants do not restrict the height, mass or siting of dwellings or the landscaping. They do not need to because the one-dwelling per lot restriction on generously sized lots does the work of more detailed and prescriptive design restrictions. Mr Milner's evidence supports this contention. As he explained in cross examination, even though the covenants do not require tree retention, limit building heights, or prescribe setback requirements, Mr Milner considered that all of these aspects of the development plans were relevant to his assessment of 'injurious effect'. They could only be relevant if these aspects of the proposed development touched upon features of neighbourhood character that derived from the covenants.

97 It follows that the current built form, space for landscaping, and abundance of flora and fauna in the neighbourhood is the realisation of the vision that Mr Bernard had for his land and that those who bought lots shared and continue to share. Owners such as Ms Whyte who have combined their lots into larger parcels of land have strengthened and enhanced rather than departed from this vision for the neighbourhood.

98 There is only one exception to retention of the single dwelling covenants throughout the Subdivision, and that is the subdivision of Lots 10, the reserve, lots 11 and 12 into five lots which now contain four dwellings. Lots 10 and 11 are not subject to any covenants registered on title and the strata subdivision and the development was permitted on the basis that it breached no restrictions. That strata subdivision occurred nearly 40 years ago. The form of the strata subdivision and development was in keeping with the prevailing restriction of one dwelling per lot nestled within a bush and garden setting. The subdivision of what is now 30 Dellas Avenue is not a precedent in support of this application, but weighs against it.

99 The benefits that are created by the Covenants are an ongoing and tangible promise of quality and space. Quality flows from the minimum dwelling size and building materials requirement. Space flows from the restriction of one dwelling per lot on the spacious lots shown on the Subdivision. The proposed development plans would, if implemented, be inconsistent with both the prevailing neighbourhood character and that contemplated by and allowed by all of the covenants applying to lots in the Subdivision. As Mr Gattini explained, the proposed amendments to the covenants, the height, siting and massing of the proposed development would mean that the:

... development [would take] on the form of more intense development lacking suitable setbacks and landscaping which is inconsistent with the overall appearance of the neighbourhood. The property will take on a more urban feel losing its spaciousness. [70]

The amenity of the beneficiaries is compromised by the relative proximity of the buildings to the front and side boundaries. The extent of site coverage (over the area of the property that is practically able to be developed) is relatively high. Their amenity is also impacted through the inevitable loss of trees on the site as well as on their property due to impacts on tree zones. The loss of valued native trees and shrubs could be moderated by siting one dwelling on the property as intended by the covenants.[71]

100 If the modification sought were allowed it would result in a smaller size to Lot 1 and the addition of a dwelling to Lot 2 at the Land. The smaller lot 1 would squeeze the area on the lot available for a dwelling, reducing the chance for planting and increasing the amenity impact of the building on Ms Whyte's property. The addition of a dwelling on lot 2 would introduce built form into an area where none is now possible due to the presence of a dwelling on what was once Lot 12 and the division of that lot into separate ownership. This would have a significant impact on both direct and oblique views of the Land from the street and a consequential impact upon neighbourhood character.

101 Most significantly, the proposed development of the Land would constitute the first departure from the prevailing neighbourhood character of high quality detached dwellings in a garden setting. There would be no room for canopy planting between the proposed building and its neighbours in Ms Whyte's and Ms Griffith's properties. The two doors, two garages, two driveways, and the jutting party wall separating dwellings with two distinct façade designs and front parapet heights would create the impression of two dwellings in the one large building. This would be the first semi-detached building in the estate on the smallest lots among those fronting the Yarra River. If built, the proposed development would violate the common promise of space that presently defines neighbourhood character and protects residential amenity and would thereby harm the benefits that all of the beneficiaries enjoy from the Covenants.

102 The example of the development of Lots 16 and 17 does not assist the plaintiffs. The differing designs on those lots both minimise the visual impact of the new dwelling at Lot 16 whilst also allowing views of the side of the new dwelling at Lot 17. These look like the distinct and separate dwellings that they are; they look, in other words, like one dwelling each on a lot. This allows them to better conserve the bush and garden setting than would the proposed development.

103 The nub of the plaintiffs' case, however, is that the proposed development is no different to what might otherwise be permitted on the Land under the covenants if either Ms Griffith's dwelling was extended or a new dwelling were built on what was once Lot 12. The contention ought not be accepted. There is no evidence to suggest that a dwelling has ever occupied the street frontage of Lot 2 in the manner contemplated by the proposed development and such an outcome is impossible so long as the Land and Ms Whyte's land remain in different ownership. But even addressing the proposition on a purely hypothetical basis, a dwelling on Lot 12 would be placed in the wider setting afforded by that much larger (albeit now re-subdivided) lot. Behind it the lot would widen and open rather than narrow and close. It would be much easier to maintain respectful setbacks to neighbouring dwellings and, in so doing, to create the bush and garden setting that characterises the lots fronting the river. Such an outcome would be entirely consistent with Mr Bernard's vision and yet the prospect for that outcome would be lost were the application to be approved.

104 These opinions are predicated, however, upon the plaintiffs actually developing the Land in accordance with the proposed development plans. There would be no requirement for them to do so, however, were the covenants to be amended in the manner sought. The defendants accept that the plaintiffs have put forward the proposed development plans in good faith and genuinely hope to realise them and acknowledge that the plaintiffs seek a form of order that would limit development to three dimensional notional building envelopes. The Court ought to determine the application on the footing that alternative built form proposals could be pursued subject only to the remaining house size restriction in the Lot 12 Covenant and the Lot 13 Covenant and those controls contained in the Manningham Planning Scheme.

105 It remains the case then that Mr Gattini's opinion at paragraphs [66] and [67] of his affidavit takes on special significance:[72]

... the changes that arise from the construction of two large dwellings on the lot will have a significant impact on the subdivision and consequently the beneficiaries of the surrounding Properties who value the heavily treed and vegetated environments of the allotments. They will be impacted directly by the changes as outlined because the ability to integrate the dwellings within the landscape will be severely limited.

As a consequence of the topographical constrains on the property there is limited flexibility in being able to locate the dwellings so they can be integrated with the neighbourhood. The irregular nature of the proposed lots will give rise to pressure to limit side and front setbacks which are a valued character element within the neighbourhood.

106 The result of this increased density would be an increase in built form and traffic beyond that contemplated by the covenants. The benefits of spaciousness, abundant vegetation, privacy and peace would be injured were the application to be approved. In any event, the Court retains a residual discretion under s 84(1)(c) of the PLA to refuse the application even if satisfied that the defendants will not suffer a significant injury from amendment of the Lot 12 Covenant and the Lot 13 Covenant.[73]

107 Other owners who wish to depart from the cognate restrictions imposed by covenants applying to their land might also take heart were the plaintiffs' application to succeed. That would be the first instance of this Court removing the one-dwelling-per-lot restriction from land in the Subdivision. As the first such decision - and on the smallest lots fronting the Yarra River - the Court would set a precedent applying across all of this part of the suburb. By virtue of their size, narrow street frontage, and location in the lots fronting the Yarra River, the injury that approval of the application would cause to the beneficiaries would be most keenly felt at the Land. In other words, there is no worse a place for intensification of development contrary to the covenants to occur.

108 The Manningham Planning Scheme would not serve to protect the existing neighbourhood character and residents' amenity in the same manner as the covenants. Put simply, the plaintiffs' private interests in favour of realising their development plans (especially as the proposed amendments to the covenants would not limit the plaintiffs to the proposed development plans) and, to the extent that it can be discerned from the provisions of the Manningham Planning Scheme, the public interest in more intensive development of the lots in the Subdivision, are outweighed by the combined private and public interests in continuing to preserve the valued neighbourhood character and residents' amenity created by the covenants and which has endured for more than half a century.

109 The actual modification sought in the amended originating motion is to modify each covenant so that it restricts the erection of more than one dwelling house on each of the two lots comprising the Land after the consolidation and re-subdivision of the Land to equalise the size of the two lots, and to do so by reference to an identified plan of survey. In my view, that is not an appropriate way of limiting any modification in this case. I expressed that view at the outset of the hearing, and suggested that if the modification is allowed, it would be best to set out in the Covenants as modified the particular restrictions, what might loosely be called 'parameters' of what may be built on the Land. The parties agreed to defer the debate on the precise wording of the modification until after the issue of substantial injury was determined, albeit on the basis of the configuration of the proposed development.

110 In my view that modification of the Covenants sought to enable the erection on the Land of two dwelling houses will not substantially injure those defendants having the benefit of the Covenants. I reach this conclusion for the reasons advanced by the plaintiffs and for the reasons as set out below.

111 The assessment of whether the plaintiffs have established the negative - that the defendants entitled to the benefit of the Covenants will not suffer substantial injury if the Covenants are modified to allow two dwellings on the Land as in the proposed development - involves an assessment of the benefits initially intended to be conferred and actually conferred by the covenant compared the benefits which would remain after the covenant has been discharged or modified to allow the proposed development.

112 This is a case where the character of the neighbourhood, being the area of the Subdivision, will be well maintained by allowing the plaintiffs to erect one dwelling house on each lot comprised in the Land, once the two lots sizes are made approximately equal. Permitting two dwellings upon the Land is unlikely to be a precedent for the redevelopment of other lots so that multiple dwellings may be erected on them. This is because:

(a) the Land is unusual within the plan of subdivision because, although the Land is large in size and divided into two lots, the presence of the existing dwelling on the balance of Lot 12 has the result that lot 2 may not be developed with even a single dwelling house;

(b) the earlier strata subdivision which re-subdivided land in Lots 10, 11 and 12 to create Lots 2, 4A, 3A and 5A and common property is a precedent. The strength of the precedent is diminished, however, because these lots were not burdened with a covenant, and the area is open and spacious. Nevertheless, it is a precedent for re-organising the layout of lots in the Subdivision in a way that retains the overarching neighbourhood character of one dwelling per lot. That is also the intent, and will be the result, of the proposed development of the Land.

113 Thus the erection of a dwelling on each lot on the Land, after their size is equalised, is in keeping with the neighbourhood character. Although the lot sizes might be a little smaller and the frontage a little narrower than some others (and there has been no full analysis of lot sizes to enable a certain conclusion one way or the other as to this element), the development would be in keeping with the current redevelopment of lots 16 and 17 on the Subdivision. The evidence of Mr Milner shows that the river lots are largely irregular in size and shape, some are shallower or narrower than others and in some cases the houses built appear crowded on the lots. Some of the sense of spaciousness is a product of the informal consolidation of two or more lots originally laid out. These may or may not remain consolidated, as has happened with lots 16 and 17, which were originally developed with one house, but are now developed with one house on each lot, which are relatively narrow.[74] The proposed development of the Land with one house on each lot (after equalisation) will not be substantially different in effect on the character of the neighbourhood.

114 Even if the modification of the Covenants does not descend to specifying the level of detail that is set out in the proposed development plans, the various planning overlays inhibit a development that is out of character with the neighbourhood, in particular there is a significant landscape overlay, a design and development overlay and an environmental significance overlay. The proposed development presently specified maintains a low site coverage, provides for on-site parking and a highly vegetated site, maintains the integrity of the original plan of subdivision and the intent and purpose of the Covenant. The experts for both plaintiffs and defendants agreed that there will be no perceptible impacts on traffic and parking. So far as one can tell from the plans submitted, there will be no significant impact on noise, overshadowing and overlooking, matters that are peculiarly within the planning jurisdiction, and no visual impact on beneficiaries of the Covenants.

115 I agree that what lies behind many objections, particularly from the immediate neighbours, Ms Griffith and Ms Whyte, is the fact that there will be a structure on each lot where previously there has been none. That is the position that has obtained for the whole life of the Subdivision and it is understandable that their attitude to the development of the Land is affected by the delight of a vacant lot of land adjacent to their lots.

116 The character of the neighbourhood will not be changed, in my view, by the proposed development. It will remain made up of substantial dwellings, consistent with the minimum area restriction in the covenants, in a bush setting, with a variety of house types, a diversity of lot sizes and shapes and a diversity of front and side setbacks. The fact that houses built on each lot on the Land may be relatively close to their neighbours will not be out of character for the neighbourhood. The house at 2/30 Dellas Avenue is quite near the boundary with the Land and other houses in the Subdivision appear to have, and houses in Dellas Avenue certainly have, minimal setbacks from side boundaries.

117 The neighbourhood character is such that the proposed development of two dwelling houses, each on its own lot, either with or without a party wall between them, will be in keeping with that character. In my opinion, the front and south side setbacks of the proposed development will not impact the property to the south, Ms Whyte's property, to any greater extent than if a house were built on lot 1 of the Land as it is presently configured. Ms Griffith's property at 2/30 Dellas Avenue, on the northern boundary of lot 2 of the Land, does not have the benefit of either of the Covenants and the house on that lot is close to the boundary of the Land.

118 The building of a dwelling on each lot of the Land (after they are equalised) will not affect the low density of the neighbourhood to any degree that will change the character of the neighbourhood or substantially injure any other person in the enjoyment of their benefitted property. A comparator is the new development of lots 16 and 17 which have greater site coverage and narrower side setbacks than the proposed development on the Land.

119 In my view, the purpose of the Covenants of ensuring one residence only can be erected on each lot in the subdivision will not be affected substantially by allowing the modification sought. Once the lots comprising the Land are reconfigured there will still be one house per lot. The reasonably low density of housing and population will be maintained; the quiet residential atmosphere 'providing a tranquil, quiet existence' will be substantially undisturbed. The main reduction in open space will be a consequence of there being houses on the Land where none were before.

120 In my opinion the 'bush and garden' character of the neighbourhood, particularly the blocks fronting the Yarra River, will not be substantially affected by allowing the modification. Whether or not this character is the product of the relationship between the subdivisional layout, the restrictions in the covenants, and the topography of the land - and especially the topography of the land fronting the Yarra River - that character will not change as a result of a modification to enable the proposed development.

121 The houses built on the river lots in the Subdivision are particularly set in a bush landscape. This was submitted to be the product, to a significant extent, of the covenants imposed throughout, or almost throughout, the Subdivision. That may be partly correct, but the bush setting - with the consequent flora and fauna - is in my estimation a consequence of the proximity to the Yarra River and the fact that for all the River lots the land falls away steeply towards the river. It is neither possible or permissible to build on the steep bank of the river and it is that land that gives much of the open bush and garden character to the river lots. It is the steeply sloping part of the river lots that means they have substantial areas of garden where native trees, bushes and undergrowth have been allowed to remain relatively undisturbed and thus allowing for wildlife to exist where otherwise it might not. This feature will be substantially undisturbed by the proposed development.

122 The nature and degree of the injury to those properties having the benefit of the Covenants will be, in my judgment, not substantial. The green and spacious character that all of the defendants who gave evidence said that they love and value about their homes and their neighbourhood will not be substantially altered by the proposed development.

123 The particular plans of the proposed development are necessarily prescriptive. They allow the Court and the parties to have a basis for an assessment of whether modification of the Covenants will or will not substantially injure the enjoyment of the properties benefited by the Covenants by their owners and occupiers. Having considered the proposed development, and heard the evidence given by Mr Milner and Mr Gattini regarding it, I consider it would be a mistake to be overly prescriptive in the modification of the Covenants.

124 The assessment of whether the users of the benefitted properties will be substantially injured in their enjoyment of their properties remains one that is determined by whether two dwellings on the Land, one on each lot after equalisation, will have that effect. The exact configuration of the developments is more a matter for the planning process. The bulk (other than the area of the dwelling, meaning the floor area), height, front and side setbacks and site coverage are matters that are not usually appropriate to be delimited by the Covenants. They are not within the original scope or intent of the Covenants in this case. Similarly, the questions of overlooking and overshadowing the neighbours are matters for the planning jurisdiction.

125 By way of contrast, in other cases where the parties resolve their differences by agreement, and the development proposed involves multiple dwellings to be erected on the subject land, it may be appropriate to give effect to modification of the single dwelling covenant burdening the subject land in a way that anticipates to some degree the development proposed on the land. That is different from this case. The issue here is one which is much more confined. It is whether the land should be reconfigured into two lots with one house on each lot, whether or not each lot becomes a separate title.

126 Thus, subject to further submissions to be made as to the particular form of modification, it is my view that the modification should make clear that two dwellings may be erected on the Land (that is the land in Certificate of Title Volume 8216 Folio 026), one such dwelling to be erected on each lot currently in TP575977B after the boundary between the lots is moved to make the area of the lots approximately equal. The formulation of such an order may not be straight forward and could require the re-subdivision of the Land to be effected first.

127 Alternatively, the parties may consider the removal of the Lot 12 Covenant altogether as it appears to me to be clear that the transfer that created the Land out of Lot 13 and part of Lot 12 was not subject to the Lot 12 Covenant, and the modification of the Lot 13 Covenant to give effect to these reasons. Once again, final orders may need to await the boundary between lots 1 and 2 on the Land to being moved so that the modification of the Covenant can refer to the one dwelling house restriction applying to each lot on the new title plan.

128 I am satisfied that no substantial injury will be suffered by any of the defendants having the benefit of the Covenants if they are modified to allow the erection on the Land of two dwelling houses after the Land is re-subdivided so that the two lots of which it is comprised are of approximately equal size.

Part 39, 40 & part 41

38, part 39 & part 41

Part 21 & 22

20 & part 21

JULIA ELLEN GRIFFITH and CATHERINE MARY TAYLOR (as executors of the Estate of BEATRICE GRIFFITH)

[1] The land more specifically described in Certificate of Title Volume 8216 Folio 026.

[2] Lots 1 and 2 on Title Plan 575977B; exhibit MPW- 2 to the affidavit of Myles Patrick Watson sworn on 28 November 2018, Court Book (CB) 177 (first Watson affidavit).

[3] Certificate of Title 6316 Folio 141; Exhibit MPW-7 to the first Watson affidavit, CB 177.

[4] Exhibit MPW-7 to the first Watson affidavit, CB 177.

[6] [2000] VSC 258, [29].

[7] Third Watson affidavit, [4] and exhibit MPW-12.

[8] This appears to be the date, but it is indistinct: exhibit MPW-12 to the third Watson affidavit, CB 408.

[9] The date in July is indistinct, see exhibit MPW-12 to the third Watson affidavit, CB 378.

[10] See exhibit MPW-12 to the third Watson affidavit, CB 351.

[11] Julia Ellen Griffith is named with Catherine Mary Taylor, as executors of the estate of Beatrice Griffith, as the thirteenth defendant. Since the addition of the defendants by order made on 21 February 2019, Ms Griffith and her husband became registered as proprietors on 24 April 2019, but the name of the owners has not been corrected in the title of the proceeding.

[13] The description of these defendants is now incorrect as there has been a transmission of the land to Ms Griffith and her husband.

[14] Langdale Pty Ltd v Sollas [1959] VicRp 83; [1959] VR 634,638 (Langdale v Sollas); Anthony J Bradbrook and Susan V MacCallum, Bradbrook and Neave's Easements and Restrictive Covenants (LexisNexis Butterworths Australia, 3rd Ed, 2011) [14.19] (Bradbrook and Neave).

[15] The question is whether a covenant is negative in substance not whether it is negative in wording: Shepherd Homes Ltd v Sandham (No 2) (1971) 1 WLR 1062, 1064-7.

[16] Rogers v Hosegood [1900] 2 Ch 388, 395; Bradbrook and Neave, [14.33-14.34].

[17] Fitt v Luxury Developments Pty Ltd [2000] VSC 258, [159]-[189].

[18] Re Arcade Hotel Pty Ltd [1962] VicRp 41; [1962] VR 274, 276 (Re Arcade Hotel); Pirie v Registrar-General [1962] HCA 58; (1962) 109 CLR 619, 628-9 (Kitto J); Fitt v Luxury Developments Pty Ltd [2000] VSC 258, [87]-[89].

[19] Introduced by the Transfer of Land (Restrictive Covenants) Act 1964 (Vic).

[20] Langdale v Sollas [1959] VicRp 83; [1959] VR 634, 638.

[21] Re Arcade Hotel [1962] VicRp 41; [1962] VR 274, 277.

[22] Chambers v Randall [1923] 1 Ch 149; Langdale v Sollas [1959] VicRp 83; [1959] VR 634, 639.

[23] Re Mack and the Conveyancing Act [1975] 2 NSWLR 623; Xu v Natarelli [2018] VSC 759, [105].

[24] Fitt v Luxury Developments Pty Ltd [2000] VSC 258, [249]-[254].

[25] [1908] 2 Ch 374.

[26] Re Dennerstein [1963] VicRp 93; [1963] VR 688, 692 (Hudson J) (Dennerstein). The principles stated by Parker J have been cited with approval in many Australian cases, including Cobbold v Abraham [1933] ArgusLawRp 55; [1933] VLR 385, 391; Langdale v Sollas (1959) VR 637, 641; Cousin v Grant (1991) 103 FLR 236; Fitt v Luxury Developments Pty Ltd [2000] VSC 258, [255]; Vrakas v Mills [2006] VSC 463, [28].

[27] [1908] 2 Ch 374, 384.

[28] Reid v Bickerstaff [1909] 2 Ch 305, 323; Dennerstein [1963] VicRp 93; [1963] VR 688, 693; Fitt v Luxury Developments Pty Ltd [2000] VSC 258, [144].

[29] [1963] VicRp 93; [1963] VR 688.

[30] Vrakas v Mills [2006] VSC 463, [45].

[33] [1908] 2 Ch 374, 384-5.

[34] Re Dolphin's Conveyance [1970] Ch 654; Re Texaco Antilles Ltd v Kernochan [1973] AC 609; See Fitt v Luxury Developments Pty Ltd [2000] VSC 258, [146].

[35] Fitt v Luxury Developments Pty Ltd [2000] VSC 258, [146]-[148]; Vrakas v Mills [2006] VSC 463, [29].

[36] See Elliston v Reacher [1908] 2 Ch 374, 384 and Vrakas v Mills [2006] VSC 463, [32].

[37] Vrakas v Mills [2006] VSC 463, [33]; Re Mack and the Conveyancing Act [1975] 2 NSWLR 623, 635.

[38] [1908] 2 Ch 374, 385.

[39] [2006] VSC 463, [38]-[39].

[40] [1909] 2 Ch 305, 323. See also Vrakas v Mills [2006] VSC 463, [38].

[41] Vrakas v Mills [2006] VSC 463, [22]-[24].

[42] [2006] VSC 463, [13] (Hargrave J).

[43] [2000] VSC 258, [40].

[44] Exhibit VR-2 of the Affidavit of Vaughan Randell sworn on 23 November 2018, CB 110.

[45] Dennerstein [1963] VicRp 93; [1963] VR 688, 696-7.

[46] John Charles Morris and Margot Anne Morris as the legal personal representatives of Merlyn June Morris: Exhibit VR-2 to the affidavit of Vaughan Randell sworn 23 November 2018, being a part of the Vendors' Statement under s 32 of the Sale of Land Act 1962 (Vic), CB 107.

[47] Vrakas v Registrar of Titles [2008] VSC 281, [40] (Kyrou J) and the cases cited (Vrakas).

1. [51] Ridley v Taylor (1965) 1 WLR 611, 622 (Russell LJ); referred to with approval in Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 10.

[52] Greenwood v Burrows (1992) V ConvR 54-444, 65, 199 (Eames J) (Greenwood); MacLurkin v Searle [2015] VSC 750, [54]-[56] (MacLurkin); Jiang v Monaygon Pty Ltd [2017] VSC 591, [37].

[53] Vrakas [2008] VSC 281, [30], [34] and the cases cited.

[54] Re Parimax (SA) Pty Ltd (1956) SR (NSW) 130, 133 (Myers J).

[55] Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 11.

[56] Vrakas [2008] VSC 281, [39] and the cases cited.

[57] Prowse v Johnstone [2012] VSC 4, [104] (Prowse).

[58] Re Cook [1964] VicRp 106; [1964] VR 808, 810-11 (Gillard J) (Cook); approved in Freilich v Wharton [2013] VSC 533, [25] (Bell J).

[59] Prowse [2012] VSC 4, [104].

[60] Vrakas [2008] VSC 281, [41] and the cases cited.

[63] Prowse [2012] VSC 4, [52].

[64] Cook [1964] VicRp 106; [1964] VR 808, 810; Re Robinson [1972] VicRp 28; [1972] VR 278, 285-6; Re Stani (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 Pty Ltd v Jackson [2005] VSC 169; (2005) 12 VR 224, 239 (Stanhill).

[65] Vrakas [2008] VSC 281, [45]-[46].

[66] Re Stani (Supreme Court of Victoria, Young CJ, Barber and Nelson JJ, 7 December 1976) 8; See also Re Miscamble's Application [1966] VicRp 81; [1966] VR 596, 601 (Miscamble); MacLurkin [2015] VSC 750, [59]; Re Morihovitis [2016] VSC 684, [38] (Morihovitis).

[67] Morihovitis [2016] VSC 684, [38].

[68] Milner Report, [111], [112], CB 44.

[70] Affidavit of Giovanni Gattini sworn on 12 June 2019, [51], CB 306.

[73] Vrakas [2008] VSC 281, [67]-[71] (Kyrou J); Stanhill [2005] VSC 169; (2005) 12 VR 224, 239 (Morris J); Xu v Natarelli [2018] VSC 759, [107] (Ierodiaconou AsJ).

[74] Mr Milner notes that the covenants burdening these lots were modified to remove the building materials restrictions to enable the construction of flat iron roofed houses which depart from the original intent of the covenants, but does not change the single dwelling character of the neighbourhood: Milner Report, [92], CB 40.