Re DVC Management & Consulting Pty Ltd [2018] VSC 814 (21 December 2018)

... shall not at any time hereafter excavate carry away or remove or permit to be excavated carried away or removed from the land ... any earth soil clay stone gravel or sand except for the purpose for excavating for the foundations of any building to be erected thereon nor erect or cause to be erected thereon any buildings save and except one dwelling house on each of the said lots with outbuildings and each of such dwelling houses shall be of a value or cost of not less than One thousand pounds exclusive of cost out buildings ...

2 The plaintiff proposes to demolish the existing dwelling and, subject to obtaining a planning permit from the responsible authority, to then construct four dwellings on the land according to a professionally prepared concept plan that is before the Court. That plan shows that the front dwelling will be accessed from the existing driveway. The three rear dwellings will be accessed by a common driveway. Viewed from Ryland Avenue, the first dwelling (Unit 1) will appear as a two-storey dwelling, with an attached double garage. Units 2 and 3 are in the middle of the site and will also be double storey. They will each have a double garage. The rear dwelling, Unit 4, will be single storey with a double garage. It will be set back about five metres from the rear boundary.

3 The covenant stands in the way of the plaintiff applying for a planning permit; hence the plaintiff has applied to the Court under s 84(1)(c) of the Property Law Act to modify the language of the covenant so as to not prohibit the construction of up to four dwellings on the land.

4 In these applications, the Court does not act as a public planning authority. It cannot. A restrictive covenant is, in substance, a private agreement originally made between individuals (usually vendor and purchaser) to control the way in which the purchaser may use or develop their land. Although private in origin, that agreement runs with the land to give it a proprietary character. Since 1848 Courts of equity have permitted the enforcement of the covenant against a successor in title of the original covenantee if the purchaser bought with notice of the covenant. Statute has since intervened to give the Supreme Court power to modify the covenant on the application of the owner of the burdened land on a number of grounds, the most common of permits modification if the Court is satisfied that the proposed modification 'will not substantially injure the persons entitled to the benefit of the restriction'.

5 In my own recent experience, these applications to modify single dwelling covenants so as to allow dual occupancies or multi-unit developments are proliferating in metropolitan and outer metropolitan Melbourne. And they are not always or usually by commercial developers. Other landowners in a neighbourhood may dislike such applications that increase housing density; or they may be thinking of doing the same thing. But, as a covenant is a private not a public obligation, only a person having the benefit of the covenant (i.e., the ability to enforce it) has standing to object to such an application in this Court. Of course, if a covenant is removed or modified, disaffected neighbours may make later objections to the particular features of the proposed development to the planning authority on public planning grounds if and when a planning permit is sought.

6 In this case no beneficiary appeared in Court to object to the application, so the matter proceeded as unopposed. The absence of opposition may lead the Court to infer that the beneficiaries will suffer no injury, but the beneficiaries' failure to make objection to the Court does not establish that the proposed modification will cause no substantial injury.[1] That is, despite the absence of opposition, the plaintiff still carries the onus of satisfying the Court.

7 However, in this case, the plaintiff's lawyers received a written objection from Julie Gilbert (nee Trembath) who owns and lives in a nearby property at 26 Ryland Avenue. That is three houses away from the plaintiff's land at 18 Ryland Avenue. Despite her proximity, she is not a beneficiary of the covenant burdening the plaintiff's land. Nevertheless, her objection, to which I shall return later in more detail, appears to be genuine and implores the Court to protect her 'from the blight of units that have been encroaching upon Ryland Avenue' and to see that a modification of the single dwelling covenant 'would allow development that will continue to erode the lifestyle that I currently have'.

8 Although, Ms Gilbert does not have standing to object to the application, her objection will not be ignored, because it happens to attract attention for another reason peculiar to this case. In November 2017, an Associate Judge of this Court refused a similar application as this one made by the owner of 24 Ryland Avenue who also sought to modify a single dwelling covenant to enable up to four houses to be built: see RJ & RG Bakey Pty Ltd.[2] Ms Gilbert's land is next to that applicant's land in Bakey and she is a beneficiary of the covenant that burdened that land. There are only two houses between the land in Bakey and the plaintiff's land.

9 The judgment in Bakey states that, Ms Gilbert lodged her written objection but did not propound it in Court because she did not want to incur the financial burden of becoming a defendant to the case. In my experience, this is not an uncommon apprehension by residents, even though traditionally, the Court will in its discretion be inclined to order a plaintiff to pay the defendant's legal costs of the proceeding unless the objection was frivolous or vexatious. Nevertheless, in Bakey, it appears the Associate Judge, acting in accordance with the beneficent attitude taken in these cases in this Court, considered three letters of objection from other potential objectors and a letter from the Croydon Conservation Society.[3]

10 What adds to the peculiarity of the situation before me is that, before Bakey, in October 2010 another Associate Judge discharged a single dwelling covenant on nearby land at 21 Gladys Avenue on the application of Anthony and Peta Howden.[4] A discharge is an extinguishment and is a more significant order than a modification. That land in the Howden case is immediately behind the applicant's land. It shares a common rear boundary, and is likewise close to the land in the Bakey application albeit in the next street. The order in Howden shows the application was unopposed, and was made on the Court being satisfied that the proposed modification would not substantially injure the persons entitled to the benefit of the restriction. As a result, four double-storey dwellings with garages have been built on that land, directly behind the plaintiff's land. They are conspicuous especially as they are next to a municipal reserve that is also behind Ms Gilbert's property.

11 Thus, legal analysis aside, as a matter of sensibilities, the plaintiff in this case might well question how its application here, unopposed by any beneficiary, could be refused if a similar application in the Howden property, immediately behind, was allowed in 2010. But, likewise, Ms Gilbert and the unsuccessful applicant in Bakey might question how this application could be allowed if the nearby Bakey application was refused_._ This only goes to show the essentially private nature of these applications, despite the issues of public policy or planning. It all depends on the particular covenant, its timing, the transfers out of the parent title, and its variable beneficiaries. The fact that Ms Gilbert was a beneficiary to the covenant burdening 24 Ryland Avenue but not a beneficiary to the covenant burdening the plaintiff's land at 18 Ryland Avenue only serves to make the point. Invidious outcomes can occur in these applications which are understandable to lawyers but which ordinary people would see as inconsistent, unless properly informed.

12 After hearing some submissions from the plaintiff's counsel, Mr Rimmer, in support of the application, I adjourned part heard to enable me to conduct an unaccompanied walking and driving view of the neighbourhood. I did that in the quiescence of a Sunday morning on 1 December 2018. Aided by my view of the area, and after hearing more submissions from counsel on 12 December 2018, on that day I decided to allow the application. I pronounced orders to modify the covenant as well as deleting the now obsolete reference to imperial currency. On the face of that order, I stated this as a précis of my reason for allowing the application:

1. ... A close examination of the numerous instances of multiunit development in the neighbourhood (many of which have occurred by prior Supreme Court discharge or modification of similar covenants to enable more intensive use of land in the neighbourhood), and the different location of beneficiaries for the purposes of this case, give grounds for distinguishing this case from the Court's refusal of a similar application in November 2017 by the owner of nearby land at 24 Ryland Avenue in Re RJ Bakey Pty Ltd [2017] VSC 699.

1. The Court will separately publish its explanatory reasons for these orders.

13 By this judgment, I wish to give those explanatory reasons. The matter calls for an analysis of the housing development and density in the neighbourhood. Those facts with photographs, plans and other aids are contained in a comprehensive planning report prepared by a town planning consultant, Robert Walter Easton. As an aid to understanding the evidence and the Court's reasons, I have attached to this judgment three documents.

14 The first document is a copy of the Plan of Subdivision LP11393 with my annotations. I have marked out the boundaries of the parent title out of which the transfers occurred. That is the relevant neighbourhood for the purposes of this application. The plan does not show the contemporary fact that lot 87 is now the approximate location of the part of Monteith Avenue that intersects with Ryland Avenue.

15 More pertinently, the plan of subdivision identifies the Lots that have the benefit of the covenant. It must be kept steadily in mind that the Court's concern is with substantial injury to the persons entitled to the benefit of the covenant. Only two lots in Ryland Avenue have the benefit of the covenant, namely, 8 Ryland Avenue (Lot 77) and 10 Ryland Avenue (Lot 76). As Lot 76 has been developed with four dwellings, the owner obviously has no basis for claiming injury caused by this application. Another salient feature of this application is that none of the Lots in the south eastern pocket of the neighbourhood in which Ms Gilbert lives, and about which she is concerned to preserve, has the benefit of the covenant.

16 The black dots on the plan of subdivision show those lots in the subdivision on which there is multi-unit development either because the land is not burdened with a single dwelling covenant, or, as enabled by this Court or a public authority in exercise of powers to allow more than one dwelling. Looking at those annotations, it is as if there has been a tide of increasing housing density in this block flowing from Whitehorse Road up to the plaintiff's land, on the cusp of the area that Ms Gilbert seeks to protect from any more development. This must be the 'blight' about which Ms Gilbert laments. Her real apprehension, as I see it, is that unless restrained, the tide will flow into the remaining part of Ryland Avenue where she lives near the intersection of Ryland Avenue and Woodland Avenue. The Lots on Ryland Avenue on the east side are not part of the parent title and have been separately sub divided.

17 The evidence before the Court provides the following details about the degree of development within various lots (as shown by the black dots on the attached plan):

(a) 14 Ryland Avenue (Lot 74) has been redeveloped with three units. The planning authority amended the Croydon Planning Scheme in March 1996 to delete the single dwelling limitation and a planning permit was issued at the direction of the Administrative Appeals Tribunal to allow the three units to be constructed.

(b) 12 Ryland Avenue (Lot 75), has been developed with four units. The single dwelling covenant on that property was discharged by a Judge of this Court in August 2004 on the basis that 'by reason of changes in the character of the neighbourhood the continued existence of the restriction would impede the reasonable use of the land without securing practical benefits to other persons' which is the statutory language of s 84(1)(b).

(c) 10 Ryland Avenue (Lot 76), has the benefit of the covenant. But, it has been developed with four units after a variation of the covenant by public authority. The plaintiff's proposal here could not be said to substantially injure the owner of this benefitting lot when this lot already has a four unit development on it. The only other benefitting Lot on Ryland Avenue is Lot 77 (8 Ryland Ave) on which is built a single dwelling.

(d) 2-4 Ryland Avenue (Lots 79 and 80), have been redeveloped together with seven units. The covenants applying to these two sites were varied by the planning authority in 2001 in a plan of consolidation.

18 In the lots that face Whitehorse Road at the end of Ryland Avenue the following developments have occurred:

(a) Lot 12 has a dwelling, with another dwelling at the rear;

(b) Lots 10 and 11 have been redeveloped with 13 double-storey units, for which the single dwelling covenants have been discharged;

(c) Lot 9 has four units;

(d) Lot 8 has four units; and

(e) Lot 7 has five double-storey townhouses.

19 Those lots facing Whitehorse Road might be said to be in a field of their own as they face a major highway and can expect no quiet residential ambiance. But for analytical purposes, they are part of the neighbourhood and the point from which the altered housing density starts and continues along Ryland Avenue and Gladys Grove up to the Gladys Grove Municipal Reserve.

20 As for Gladys Grove, the evidence shows the following developments:

(a) Lot 51 (No 5 Gladys Grove) has built on it an existing dwelling plus three additional dwellings. The single dwelling covenant was discharged by the Court in November 2007 in an unopposed application.

(b) Lots 52 and 53 (Nos 7 and 9 Gladys Grove), in combination, have erected on them nine units. In November 2017, the Supreme Court, in an unopposed application, discharged the single dwelling covenant over those two lots.

(c) Lot 55 (No 13 Gladys Grove) has the benefit of the covenant, but that lot has constructed on it two dwellings, allowed under court order made in 1977.

(d) Lot 59 (No 21 Gladys Grove) is a beneficiary of the covenant. That is the Lot is directly behind the plaintiff's lot and next door to the municipal reserve on Gladys Grove. This lot has built on it four double-storey units, as enabled by an order of the Court made in October 2010 in Howden.

21 The plan of subdivision shows all of the Lots on the south side of Gladys Grove have the benefit of the covenant. There are also instances (as shown by the black dots) on that south side with multi-unit developments most of which were enabled by court orders modifying the single dwelling covenants:

(a) Lot 44 (No 12 Gladys Grove) has two dwellings;

(b) Lot 42 (No 16 Gladys Grove) is developed with three dwellings;

(c) Lot 41 (No 18 Gladys Grove) is developed with three dwellings; and

(d) Lot 33 (No 34 Gladys Grove) has been developed with three dwellings.

22 There are also instances of multi-unit developments along Murray Road, some of which are on Lots having the benefit of this covenant. They are:

(a) Lot 16: has a second house built at the rear of the property;

(b) Lot 25: has two dwellings;

(c) Lot 26: has two dwellings at the rear;

(d) Lot 27: has two dwellings at the rear; and

(e) Lot 32: has two dwellings at the rear.

23 The second document attached to this judgment is a map extract from a planning certificate produced by Mr Easton, from data maintained by the State of Victoria. The purpose of annexing this document is to give a visual appreciation of the degree of multi-unit development in this particular part of the neighbourhood. It also shows the four unit development immediately behind the plaintiff's land.

24 The third document is an extract from the Maroondah Planning Scheme taken from Mr Easton's report. That document gives a good appreciation of the tide of multi-unit development in this neighbourhood, in the area shaded pink and bounded by the blue border signifying the plan of subdivision. Mr Easton explains that the reference to 'GRZ 1' means a General Residential Zone which, amongst other things, has a minimum garden area of 35 per cent on lots over 650 square metres and does not limit the number of single or multiple dwellings, as long as they comply with Rescode. The hinterland area is the Neighbourhood Residential Zone which, it can be seen, has very little multi-unit development.

25 From that evidence a number of conclusions can be drawn.

26 This neighbourhood is close to the Maroondah Highway. That is a major highway with multiple carriageways. In the block bounded by Ryland Avenue and Gladys Grove and Woodland Avenue, there are many instances of multi-unit developments, many of which have been enabled by past Court orders. It would be incorrect in the face of reality to characterise that area from the Maroondah Highway up to the plaintiff's land as being, by distinct character, a single dwelling area. To that I would add the following observations on my view of the neighbourhood.

27 Walking down Ryland Avenue, I could hear the din of traffic and see the moving traffic at a distance on the Maroondah Highway, but not to the extent (at least on a Sunday morning) of saying that the sound was disturbing. Despite a consciousness of the proximity of a major highway, and despite the presence of multi-unit developments, this is, I think, a pleasant and appealing neighbourhood. The neighbourhood has a feel of spaciousness. That is perhaps enhanced by the presence of wide nature strips and because quite a few of the homes have low front fences and others have no front fences at all. The housing in the neighbourhood is of an older style with quite a few weatherboard homes having tiled roofing and some instances of corrugated iron. There are instances of housing modernisation. What I found particularly conspicuous, and which gave ambient pleasantness was the widespread presence of large and healthy trees on nature strips and on property boundaries. Lot 69 (24 Ryland Avenue) which is the lot for which the application in Bakey was refused, together with Lot 68 where Ms Gilbert lives, are very well treed and vegetated (which would attract bird life), and their proximity to the Gladys Grove Reserve gives a visual appreciation of why it is certain residents would value their living conditions in this 'neck of the woods'. Even so, it is part of the neighbourhood and not a Shangri-La.

28 This brings me back to Ms Gilbert's objection. The essence of her complaint is stated in the form of these bullet points in her letter:[5]

• 38 years of belief. I bought the vacant block at 26 Ryland Ave Croydon in December 1979. The main reason I chose this block was its size and the covenant was part of this as I believed development would not be possible.
• Equivalent to east side of street. All blocks on the east side of the street west of Monteith Street are part of a council overlay. These properties cannot be developed under 1000sqm - ensuring single dwellings. The covenant provides the same security to my property on the west side of the street. Ensuring equity.

• Precedent v preserving amenity. I would ask that the amount of units already built in the street not set a precedent, but be seen as a reasonable percentage of the single dwellings already removed and that the few remaining blocks be protected to ensure the street provides a variety of lifestyle options. Between the highway and Monteith approx. 60% of blocks are developed or planned to. Over Woodland approx. 57% of the blocks are developed or planned to. The very small section of 15 blocks between Monteith and Woodland should remain single dwellings.

• Canopy trees. 18 Ryland Ave is home to some canopy trees. These provide part of the landscape of the street. As so many units have been already been built that look of the street has been diminished. Again providing a small 'sanctuary' of houses between Monteith and Woodland would ensure the original old trees could remain.
• Gladys Grove Block. In addition to Ryland Ave 18 houses now sit on 5 blocks in Gladys Grove, backing on to the Ryland Ave properties, including 18 Ryland Ave, and 26 houses sit on 4 blocks on Maroondah Highway. This represents the block from Monteith St to the highway and the same distance up Gladys [adjoining blocks on rear boundary], further adding to the removal of trees and lack of ability to plant large trees.

...

I love living at 26 Ryland Ave. I have lived here since 5th July 1980 and have no intention of selling, hoping the house will be the only one I will live in for the rest of my life. I truly believed that the covenant protected me from the blight of units that have been encroaching up Ryland Ave. I purchased the property with the belief I would have a certain lifestyle. Removing the covenant at 18 Ryland Ave would allow development that will continue to erode the lifestyle I currently have.

I implore the court to look at this request to remove the covenant from the position of my house, backyard and community and decide to keep the very small section of Ryland Ave between Monteith and Woodland home to 15 single dwelling homes, protected by the council overlay or the covenant.

29 Care must be taken with identifying the 'sanctuary' by reference to the location of Monteith Avenue. As I have already said, Monteith Avenue and the other side of Ryland Avenue (that is, the side that is across the road from the plaintiff's land) is outside the parent title. That means the single dwelling area on Ryland Avenue with which Ms Gilbert is concerned is constituted by Lot 73 to Lot 66. Lot 67 and 66 have been re subdivided into 4 Lots which are not burdened by a single dwelling covenant. Behind Ms Gilbert's land is the municipal reserve, next to which is Lot 64 (single dwelling) and Lot 65 which has been re subdivided into 4 Lots.

30 The objection being raised by Ms Gilbert in this application and which I apprehend was raised in the Bakey case, was that approval would inflict the substantial injury of the setting of a precedent which would threaten to bring more multi dwelling development to this exceptional pocket of the neighbourhood. But even on her own objection, and in any event on the evidence, the precedent of multi-unit development in the neighbourhood has already been set. The objection is that the precedent should now be curtailed at the plaintiff's land.

31 The refusal of the application in Bakey does not set a legal precedent which has to be followed in this case. I wish to say that I can readily appreciate why the judge in Bakey in effect acceded to Ms Gilbert's objection. She was a beneficiary. She lives right next door to the burdened land at Lot 69. The purpose of a single dwelling covenant is to ensure low density housing with generous setbacks and landscaping and to avoid residential overcrowding and the concomitant of added noise and activity and traffic and demand on urban amenities. The proposed construction of four dwellings next door to her meant she was truly in a position to contend that she would suffer intangible injury such as impairment of views, spoiling of ambiance or intrusion of privacy.

32 But I think Bakey is distinguishable for a number of reasons. The question for this Court is not whether the application here will or will not cause substantial injury to Ms Gilbert. As a plain and cardinal matter, she does not have the benefit of the covenant. Neither do any of the Lots in the southeast quadrant of the block. Thus the injury that is perceived by Ms Gilbert in her 'sanctuary' is legally not material on this application, as it was in Bakey. The question is whether the plaintiff has shown that the proposed modification will not cause substantial injury to the owners of land having the benefit of the covenant.

33 In order to bring in to consideration the injury to the pocket in which Ms Gilbert lives, it would have to be argued that the true beneficiaries (who have not appeared, and who are away from the pocket) stand to be injured if a precedent is established here that would likely lead to multi-unit development in the pocket. But I do not think such a proposition can be sustained. The Court acts on evidence. On the evidence as I have exposed, it cannot be said that multi-unit development is anything exceptional in this neighbourhood. The multi-unit development that the plaintiff proposes is no greater than existing developments. There are 7 units at 2-4 Ryland Avenue. There are a total of 11 units between 10 and 14 Ryland Avenue. There are 9 units at 7-9 Gladys Grove.

34 There is no doubting the genuineness of Ms Gilbert's attachment to the pocket in which she lives which is enhanced by the location behind her of the Gladys Grove Reserve. But she and others in this pocket are, as non-beneficiaries, in no legal position to enforce the covenant. In any case, faithful to the statute, and the evidence, I think the numerous instances of multi-unit developments means it is not reasonable to contend that a modification of a single dwelling covenant would cause substantial injury by setting an undesirable precedent for similar applications in the future ― applications which have to be made by those living in the 'sanctuary' and presumably likewise minded to preserve the existing single dwelling conditions. The precedent for this application by the plaintiff has already been set, to the extent that I think it would be unjust to deny it.

35 It was for those reasons that the Court allowed the application.

Figure 7: Extract of Maroonda Planning Scheme showing parent title outlined in blue. General Residential Zone marked GRZ1. Neighbourhood Residential Zone marked NRZ2 (light pink). Subject land marked with purple arrow.

[1] See generally Butt's Land Law (Seventh Ed), [10910].

[2] See [2017] VSC 669.

[4] In the matter of an application by Howden: S CI 2010 04196.