Re Hammond [2015] VSC 608 (5 November 2015)

2 In an application by the plaintiffs as successors to the covenantor ― an application not opposed by any covenantee ― I determined ex tempore that the intention as discernible from a strong context created by the absence of such a burden on the other nearby lots in the subdivision, was not to limit the construction to one dwelling. My reasons now follow. But two matters need to be stated at the outset.

3 First, the plaintiffs' application was not for a declaration about the true construction of the restriction under s 84(2) of the Property Law Act. Rather, it was an application under s 84(1)(c) of the Act, supported by expert evidence from a town planner, to modify the covenant to remove the form of singular expression in the covenant and replace it plurally with 'any buildings other than private dwelling houses' on the ground that such a modification would not substantially injure the persons entitled to the benefit of the restriction. Although the question of construction was discrete, it was really a means to sustain a case for modification. Consonant with the application, the order as made by the Court was for a modification on statutory grounds.

4 Secondly, and more importantly, this determination is a product of some facts peculiar to this small subdivision that informed the construction of the covenant. This Court deals frequently with applications concerning single dwelling covenants over residential land in which covenanters seek to discharge or modify single dwelling covenants. Such applications are increasing noticeably, and not only from commercial developers. Maybe it goes without saying that each case in this field turns on the particular language of the covenant in question and context; but more explicitly I wish to state that the determination of this case ought not be understood as pronouncing or attracting a pervading view that the indefinite article 'a' in the expression 'a dwelling house' in a restrictive covenant does not mean 'one' dwelling house'. It did in this case, and that is why I shall spend a little time on the principles of construction.

5 Philip and Annette Hammond are the proprietors of residential land at 5 Park Street in Brighton. It is a rectangular corner lot located at the intersection with Webb Street, not far from the Brighton Esplanade. Their land has on it a single storey brick dwelling with a detached carport. It has an area of approximately 721 square metres. The Hammonds propose to demolish the house and build a single building containing two separate dwellings, one to be accessed from Park Street; the other to be accessed from Webb Street. There are concept plans in evidence that show a contemporary two level building which appears, superficially, as one large dwelling rather than two distinct residences which is what they are. The concept plans describe the external building materials as being: rendered brick; rendered Hebel panels; timber cladding; painted Weathertex; painted fibre cement sheet (fascias and soffits); Colorbond metal roofing; and aluminium and timber windows.

6 The Hammond's land is burdened by a restrictive covenant, originating in a transfer of land dated 12 August 1912 (registered on 22 August 1912) to: '... not at any time erect or build or cause or suffer to be erected or built on the said land hereby transferred or any part thereof any building other than a private dwelling house of stone or brick.' The land transferred was Lot 4 on plan of subdivision LP 5687. The covenant was made to the vendor and 'her heirs executors and transferees registered proprietor or proprietors for the time being of the land remaining in Certificate of Title Volume 3601 Folio 070'. That certificate of title was the parent title to the covenant. It comprised a rather small area of about 1.2 acres on the north-east corner of Park Street and Webb Street. The parent title was subdivided into six lots numbered 4 (the subject land), 5, 6, 7, 8 and 9. They appear to be about the same size.

7 The expert written evidence in this case came from Mr Robert Walter Easton, a town planner. He explained that before 1968 a technique existed that progressively cancelled individual lots from the parent title as lots were sold, making the parent title a dynamic document that gradually reduced in size. Thus, to identify the land that has the benefit of the covenant burdening the Hammond's land, a search is required to see which lots were remaining in the parent title on the day the Hammonds' covenant was created. Mr Easton has conducted that search. He discovered that Lot 7 (which is 2 Webb Street and adjoins the Hammond's property on their northern boundary) was transferred beforehand and thus does not have the benefit of the covenant. Lot 8 (which is 6 Webb Street, about 20 metres north of the Hammond's land) was originally transferred in two separate transfers. The covenant burdening each separate half of that lot is similar in terms to that applying to the Hammond's land in that it refers in the singular to 'any building other than a private dwelling house of stone or brick'. The point is that Lot 8, which is the size of the other lots was divided in two, but there are two houses over the same area.

8 Lot 6 is at 9 Park Street and is 18 metres east of the Hammond's land. The covenant burdening that land refers, in the plural (as I underline), to 'any buildings other than private dwelling houses of stone or brick'. That is significant. Lot 9 is at 8 Webb Street and is 40 metres north of the Hammond's land. It too is burdened by a covenant expressed in the plural; that is, 'any buildings other than private dwelling houses of stone or brick'. Lot 5 is next door to the Hammonds at 7 Park Street. The covenant burdening that land refers in the plural to 'any buildings other than private dwelling houses of stone or brick'.

9 The upshot is this. First, out of the four lots having the benefit of this covenant ― that is, Lots 5, 6, 8 (in two parts) and 9 ― three of the lots have covenants referring in the plural to 'houses' and 'buildings'. Three of the lots have a covenant that speaks in the singular to 'building and house', that is: Lots 4 (the Hammonds), 7 (which does not have the benefit of the covenant on the Hammonds land) and Lot 8 (which is split in two and has two houses). As Mr Rimmer submitted, single dwelling covenants are created in a subdivision to create in a neighbourhood or locality a form of private control over housing density and associated amenity which can be best achieved by the covenant applying all round to the lots in the areas, but this disparate admixture around the Hammonds' land ought show the Court there was no evident intention by the subdividers of this small area to confine all lots in the subdivision to one house or one building. This comes to inform the question of construction and the ultimate statutory question of substantial injury to the covenantee.

10 Secondly, the owners of the 5 lots having the benefit of the Hammonds' covenant make no objection to the Court on this application. That does not amount to implied agreement. But it matters. For completeness, I should record that by orders of 18 August 2014, I required the Hammonds, on their suggestion, to serve the owner of Lot 7 (next door) with notice of the application even though that land does not have the benefit of the covenant. It is just as well because that owner, a Mr Alberto Colla stated his intention to oppose the application and be joined as a defendant. He said he was concerned about the set back to his adjoining property. He subsequently renounced his intention, and was content to accept the Hammonds' willingness to act reasonably and in good faith to address his concerns on the broader proposal to build.

11 Does the phrase 'a private dwelling house' mean 'one dwelling house'? It is unnecessary, I think, to engage in a disquisition about the principles of construction of restrictive covenants, but it has to be considered to some extent: see generally Bradbrook and Neave's Easements and Restrictive Covenants.[1] The learned authors of that work see the construction of a covenant as no different to the objective technique applied by courts in the construction of written contracts. After all, the common purpose is to ascertain intention in legal relations according to written words and phrases. The approach to construction of a covenant was considered by Cavanough J in Prowse v Johnstone[2] with a concern about limitations on the extent to which background material could be used in that exercise.[3] It is enough to state two general propositions from Prowse. First, the words of a restrictive covenant are generally to be given their ordinary and every day meaning and not in any technical or legal sense. Secondly, the words must always be construed in their context.

12 It might be thought to be reasonable and principled to assume that principles of construction of written contracts apply with equal utility to the construction of a restrictive covenant, itself a form of private treaty. The principle as stated in Codelfa[4] (the usual point of reference in this discourse) is that evidence of surrounding circumstances is admissible to aid the construction exercise if the language is susceptible of more than one meaning. But as a rule of evidence the extrinsic evidence is confined to facts commonly known to both parties (and not subjective intention) for that gives an understanding of the surrounding circumstances in which parties make an agreement and enables a Court to better comprehend what the parties had in mind, to then assess what a reasonable person would understand the contract to mean. Thus when speaking of 'background' or context or (the over-used and best avoided) 'factual matrix', it means looking beyond internal linguistic considerations to the circumstances with reference to which the words in question were used, and from there, to discern the objective of the parties: see Royal Botanic Gardens v South Sydney City Council[5] and Toll v Alphapharm.[6]

13 A concern was aroused by Cavanough J in Prowse whether such principles were applicable to the construction of instruments lodged for registration under the Torrens system having regard to Westfield Management Limited v Perpetual Trustee Company Limited.[7] That case concerned the construction of an easement over land. The primary judge was prepared to look into the intention or contemplation of the parties to the grant of the easement outside what was manifested by the terms of the grant. The High Court held that rules of evidence assisting the construction of contracts inter partes as explained in Codelfa did not apply to the construction of the easement.[8] Seeing the question as involving fundamental considerations, the Court said:[9]

The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court) later seized of a dispute in the situation of the grantee.

One exception, the court recognised, was evidence to make sense of that which the register identifies by the terms or expressions found in the register, such as surveying terms and abbreviations appearing on a plan of subdivision. That aside, the court held that it was impermissible for the court to have received evidence to establish the intention or contemplation of the parties to the grant of the easement.

14 The Court in Prowse did not have to consider the scope of Westfield and whether it applied to restrictive covenants as well as easements, as it was not necessary for the disposition of that case. But reference was made to a view of the New South Wales Court of Appeal in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council[10] that Westfield:

[Does] not deny the applicability of the principle whereby a document will be construed as having the meaning that a reasonable reader, with such knowledge of the surrounding circumstances as is available to him or her, would attribute to it. If surrounding circumstances cannot be established by evidence to construe an easement, that does not mean that one is thrown back onto the discredited exercise of seeking to construe a document simply by reference to a supposed "natural and ordinary meaning" of the words. Rather, it means the sort of surrounding circumstances to which one can look are limited to those that one can know without evidence from outside the terms of the document itself.[11]

15 Prowse also referred to appellate decisions deciding that, faithful to Westfield and the Torrens system, a court construing a registered instrument could have regard to documents such as the material in the folio identifiers, the registered instrument, the deposited plans and the characteristics of the tenements.[12]

16 The point of my reference to these authorities, in an unopposed case, is to validate the reference to the plan of subdivision and the corresponding covenants that affect the other lots in this subdivision upon which the construction case turns. Those documents can be found by searching parts of the register without offending the rationale of Westfield. In the end it may not matter if the court is, in any event, exercising a power under s 84(1)(c) to modify the covenant on the ground of no substantial injury, having regard to the fact that covenants on other surrounding lots permit more than one building and more than one dwelling house.

17 The opening of Mr Rimmer's submission was that the meaning to be given to the statement 'I will not build any building other than a private dwelling house' means (and these are my words now) 'I will only build a house and not for example a shop or a factory so that even if I wish to build two houses, I am still keeping my promise because nowhere did I promise it would only be one house.' That is, it is a promise about the type of building. I think that is certainly one meaning. But I do not think it is the only possible meaning. A statement that 'I will not build any building other than a private dwelling house' could also mean 'I can only build a house' which as a matter of impression of language in the non-technical idiom of a purchaser of an ordinary suburban block in 1912 (if not now), may be a way of saying the only permitted building is one dwelling house. To my mind, that is an innate and not a forced ambiguity.

18 That brings me to the decision of Bongiorno J (later, JA) in Tonks v Tonks.[13] In that case, the restrictive covenant was expressed in these terms: '...will not erect or cause or permit to be erected on the land hereby transferred or any part thereof any building other than a dwelling house'. The applicants in Tonks desired to erect more than one dwelling house on the land. The Court recognised its task as being purely one of construction to be approached against the background of the facts which existed at the time when the covenant was made. The submission in Tonks was that as a matter of immediate impression a promise 'I will only build a dwelling house' naturally means 'I will only build one dwelling house'. Bongiorno J acknowledged the attractiveness of such an argument (as would I) but would not accept it. His Honour said:[14]

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

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

20 Tonks supports the application here. But warnings are frequently administered about the care that must be taken with construction of particular covenants in other cases which can turn on small differences of language or particular context: see Prowse.[15] Maybe I am about to say no more than was said in Tonks, but for my part, I favour the approach of saying the phrase in question is reasonably capable of two meanings. 'A' could mean 'one'. Indeed in Tonks it was put forward as the ordinary dictionary meaning. Legal principle permits, as Tonks recognises, resort to the background facts at the time of making the covenant. But in the Torrens context it is confined to accessible material on the register. In this case I regard the other covenants in this subdivision as informing true intention and enabling justice to be done. The other covenants are akin to pari materia as used in statutory construction. They are objective evidence. They are ascertainable from the register. They concern the same subject matter. They concern something of material common interest to the intended features of this small subdivision; that is, the number of dwellings per lot. The restrictive covenants burdening three of the five lots all used the expression 'any buildings other than private dwelling houses of stone or brick'. In this enclave created by a rather small plan of sub-division in which the parent title comprised an area of about 1.2 acres, that demonstrates objectively that there was no intention to preserve the sub-division with a form of residential development that confined this area to single dwelling developments. The context as I have sought to expose, is a small plan of subdivision in which a significant number of other lots had the freedom to build more than one house which derogates from any presumed intention for no apparent reason that the Hammonds' land had to be confined to one building only.

21 I am not asked to make a declaration about the proper construction as a matter of relief or remedy. This is an application under s 84(1)(c). Even if I had been, it may not have been necessary. I think the application is efficaciously and comprehensively dealt with (having regard to the second part of the application to concerning building materials) by holding, as I do, that the covenant over the Hammonds' land was intended to cohere with the covenants in the other lots within the subdivision which permit 'buildings' and 'houses' in the plural. That means it is likely that 'a private dwelling house' was not intended to mean one private dwelling house. But even if that conclusion be incorrect, then independently of that, I would also hold that the very same facts necessarily support a conclusion that a modification to the Hammond's covenant to permit more than one building would not cause substantial injury within the meaning of s 84(1)(c) of the Property Law Act.

22 That leaves the question of that part of the covenant which requires the use of 'stone or brick'. The only question here is whether deletion of that requirement will cause substantial injury to anyone with the benefit of the covenant.

23 In these sorts of covenants, the courts recognise the reality that in the last one hundred years the type, durability, and aesthetic quality of construction materials has so markedly changed and advanced that the court looks to see if there are any special benefits of a 'bricks and stone covenant' that might be taken away unjustly if the application is granted.

24 Mr Easton's inspection of the neighbourhood identifies six nearby dwellings which variously have some timber features (more of a decorative nature it seems to me), have rendered external surfaces not making it possible to determine whether or not there has been compliance with the building materials restriction, and some instances of alternative or contemporary building materials.

25 I do not think it possible to conclude that this was once an old or established neighbourhood in Brighton where there is strong evidence that the covenantees and other houses in the area have made renovations or have rebuilt homes of a contemporary feature or with building materials so as to conclude that the Hammond's proposal will just be another instance of the erection of a contemporary home in an area that has changed. The court can only suppose that the 'bricks and stone covenant' had as its intent the desirability of maintaining what might have once been perceived as the aesthetic displeasure of timber or weatherboard homes and the perception that such dwellings not only lacked the permanence of bricks and masonry but might have also been regarded as 'lessening' the appeal or housing standards of a better area, or possibly being a fire hazard. These things are now very much debatable. But even so, the fact is the availability of high grade, everlasting and aesthetically high grade materials and finishes cast serious doubt on views that might have been had over a century ago about building materials.

26 It may be supposed that the covenantees who were served with this application and have chosen not to object, and who have been able to see the concept plans and make an assessment of the aesthetics and the materials to be used, have not regarded the 'bricks and stone covenant' to be so significant to them that they would object. All the above factors, together with the observations made in Mr Easton's report are in my view sufficient to reach the conclusion that no substantial injury would be caused by modifying the covenant to remove that requirement.

27 It is for those reasons the Court granted the application and made an order to modify the covenant by replacing the expression 'any building other than a private dwelling house of stone or brick' with the expression 'any buildings other than private dwelling houses'.

[2] [2012] VSC 4, [52] ff.

[3] [2012] VSC 4 [57].

[4] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337.

[5] [2002] HCA 5; (2002) 240 CLR 45, [9] to [11].

[6] [2004] HCA 52; (2004) 219 CLR 165.

[7] [2007] HCA 45; (2007) 233 CLR 528.

[8] [2007] HCA 45; (2007) 233 CLR 528, [37].

[9] [2007] HCA 45; (2007) 233 CLR 528, [39].

[10] [2010] NSWCA 64, [157], [158].

[12] Sertari Pty Ltd v Nirimba Developments Pty Ltd [2007] NSWCA 324 [16] and Fermora Pty Ltd v Kelvedon Pty Ltd [2011] WASC 281 [33].

[13] [2003] VSC 195.

[15] [2012] VSC 4 [54].