REAL PROPERTY - Restrictive covenant - Application to modify single dwelling restriction to allow four dwellings and remove material restriction - Necessity for earlier applications to be disclosed - Whether the modification will not substantially injure the beneficiaries of the restrictions - Whether establishes a precedent for areas in the interior of the subdivision - MacLurkin v Searle

2 The application is not formally opposed by an objector joined as a defendant. It has, however, met with strong objection from two benefited landowners who live in Marie Street, Boronia which meets Boronia Road to the west of the subject lots, between 66 and 68 Boronia Road. Those objectors are Mr Anthony Searle of 16 Marie Street, Boronia, and Mrs Shirley Gibbon of 22 Marie Street, Boronia. They appeared at the Court hearing on 7 February 2019, at which I permitted them to speak to their written objections, and have also attended the trial as observers. As they are not defendants, I did not permit them to participate in the trial. Their land does not adjoin the subject land and is not in its immediate vicinity, but they are concerned about the precedential effect of the proposed modifications. They are concerned that allowing the proposed modifications will encourage similar development further within the subdivision, away from Boronia Road, in particular along their own street, Marie Street. They also have other concerns about the proposal.

3 In the period since 2010, similar covenants burdening four of the five lots along Boronia Road, to the west of the subject lots up to the western edge of the subdivision, have been discharged (Lot 17, known as 66 Boronia Road, on the eastern corner of Boronia Road and Marie Street) or modified to permit up to four dwellings. The lots where the covenants have been modified are Lot 18, known as 64 Boronia Road, which immediately adjoins the subject lots on the west, and Lots 15 and 14, known as 70 and 72 Boronia Road respectively. The result is that of the lots running west from the subject lots along Boronia Road to the western end of the subdivision, only Lot 16 known as 68 Boronia Road, on the western corner of Boronia Road and Marie Street, may still retain a single dwelling restriction.

4 Mr Searle, one of the objectors to the present application, was the defendant in a contested trial concerning the modification to the single dwelling covenant burdening Lot 15, known as 70 Boronia Road, reported as MacLurkin v Searle.[1] Associate Justice Derham allowed that application, modifying the covenant to allow up to four dwellings. Similar applications were made in 2018 to modify the single dwelling covenants burdening the land at 64 and 72 Boronia Road i.e. to allow four dwellings. Mr Searle appeared in Court on 23 May 2018 with others to object to the application concerning 64 Boronia Road, but he, and they, later withdrew their objections. That application was allowed on its adjourned date, 27 June 2018.[2] Mr Searle had also indicated an intention to object to the application concerning 72 Boronia Road, although in the event he did not do so. That application was allowed by order made 26 June 2018.[3]

5 Mr Sanders, the first plaintiff in this application, was a witness for Mr Searle in MacLurkin v Searle i.e. at that time he opposed a modification to allow four dwellings. He now seeks it, in respect of the land he owns at 60 Boronia Road. He is also a benefited landowner because of his ownership or part ownership of land immediately behind 60 Boronia Road, known as 1A and 3 Gwyn Crescent.

6 The plaintiffs principally rely on these previous changes in support of their contentions that the similar modification that they seek will have no or limited precedential effect, and that the benefit of the single dwelling restriction burdening the subject lots has already been substantially eroded. The objectors are alive to the force of this argument, but the further modification sought in this application increases their concern about precedential effect i.e. that similar changes will become more widespread, and more directly affect them.

7 I undertook a view of the subject lots, and the surrounding area, accompanied by my associate but not by the plaintiffs or their representatives, or by the objectors. I did so because of the history of contest to similar applications, and to view for myself the physical circumstances that had contributed to Associate Justice Derham allowing the modification in MacLurkin v Searle. A particular reason why Associate Justice Derham allowed the modification in that case was because he considered the subject land before him to have a singular character. He also concluded that the modification would have no significant precedential effect not only because of the discharge of the covenant over 66 Boronia Road in 2010, but also because of the subdivision of some properties within the body of the subdivision to allow a second dwelling. His findings about the singular character of the land he was then considering, and about precedential effect, were adopted by other fellow associate judges in the subsequent similar modifications to the covenants burdening 64 and 72 Boronia Road.

8 For the reasons I gave orally at the trial of the proceeding on 27 March 2019, and now elaborate, I will allow the modification. I stress that I do not consider that it sets or enhances any precedent for any other lots burdened by a similar covenant, other than potentially Lot 16. Even the lots further to the east of the subject land along Boronia Road are arguably distinguishable, although that is a matter for another day if application is made to modify a covenant burdening such a lot. In my view, the area containing Marie Street, Gwyn Crescent and Ethel Street retains the spacious low density feel intended to be conferred by a single dwelling covenant. I disagree with the conclusion of Associate Justice Derham that subdivision of a few lots fronting Gwyn Crescent and Ethel Street to allow an additional dwelling behind the original dwelling has already eroded the benefit conferred on that area by the single dwelling covenants on the land fronting Boronia Road. However, I do not consider that this modification establishes a precedent for further development within that area, largely because there are in fact few single dwelling covenants within that area.

9 The following account is drawn from the conclusions of the expert retained by the plaintiffs, Mr Robert Easton, and the documents he attaches to his report, and from the history given by Associate Justice Derham in MacLurkin v Searle.

10 The covenants were created when the subject lots were first transferred out of certificate of title Vol 3560 Folio 825 (Parent Title). In the case of 62 Boronia Road, now owned by the second plaintiff, that occurred by transfer dated 24 October 1949. In the case of 60 Boronia Road, now owned by the first plaintiff, the transfer is dated 28 September 1951. Each transfer contains a covenant for the benefit of the land then remaining within the Parent Title. This was a conventional way to confer benefit at the time. It follows that to ascertain the extent of the land benefited by the covenants in these transfers it is necessary to identify what land remained in the Parent Title as at the date of each transfer.

11 The Parent Title covered a large area of land bounded by roads now known as Boronia Road, Maryville Way/Underwood Road and Forest Road. It was subdivided by LP 5783 in 1912. Lot 14 on LP 5783 was subsequently subdivided by LP 26826, which contained 27 residential lots and two large balance lots, Lots 13 and 29. The subject land is Lot 19 and Lot 20 in LP 26826.

12 Ordinarily for a covenant in this form, the benefited land would be ascertained by identifying on the Parent Title itself all transfers out of the Parent Title registered after the date on which the transfer creating the covenant was signed. That task is made less straightforward than usual in this case because, for reasons that are not explained in the evidence before me, many transfers, including these transfers, were not immediately registered on the Parent Title. Instead the land contained within them formed part of a bulk transfer registered on the Parent Title on 30 March 1954 (Bulk Transfer) i.e. some years after the date of the individual transfers relating to the subject land. The Bulk Transfer transferred all lots on LP 26826 other than Lot 29 out of the Parent Title, into a new certificate of title, Vol 8043 Folio 928 (Subsequent Title). The transfers that created the covenants over the subject land and multiple other transfers of land out of the Parent Title (of unknown date) were all registered on the Subsequent Title on that same day, 30 March 1954.

13 As noted, the land within LP 26826 had previously been part of Lot 14 of LP 5783. Various portions of land in LP 5783, to the west and south of what became LP 26826, were transferred out of the Parent Title before the subject transfers, and so the land within those transfers does not benefit from the subject covenants. The orders I first made in relation to notification of the application incorrectly record in Other Matters that the benefit of the covenants attaches to all the land formerly within the Parent Title.[4] This error has become apparent following my closer examination of the evidence for the purpose of these reasons. It has not occasioned any injustice, as it incorrectly extended the area of benefit, as opposed to incorrectly confining it.

14 LP 26826 contained 29 lots. The Bulk Transfer was of all lots within LP 26826 except Lot 29. Some of these lots may have been the subject of transfers out of the Parent Title that were signed prior to the subject transfers. However, as they were not registered as having come out of the Parent Title until the same date as the transfers creating the subject covenants, the application has proceeded on the basis that they are all benefited lots.

15 Lots 14 - 28 run along Boronia Road, and 1-12 run south to north fronting east onto Marie Street. Lot 13 of LP 26826 was a large area of land adjoining on the south the lots running along Boronia Road and facing Marie Street in the west, and so opposite the lots running along the western side of Marie Street. Part of Lot 13 was subsequently subdivided by LP 41989 to create lots numbered 30 to 60, and the road reserves for Gwyn Crescent and Ethel Street. That area now comprises lots fronting onto Gwyn Crescent, Ethel Street, and the eastern side of Marie Street. The balance of Lot 13 is the area now largely occupied by the Boronia Bowling Club. All the lots within LP 41989 and the area occupied by the Boronia Bowling Club are benefited land.

16 As noted, Lot 29 of LP 26826 did not form part of the Bulk Transfer. It was a large parcel of land on the eastern side of what became the north/south portion of Ethel Street. Lot 29 was transferred out of the Parent Title after the Bulk Transfer was registered on the Parent Title. It follows that the land within Lot 29 is benefited land. It has been subsequently subdivided.

17 Mr Searle is a joint owner of Lot 5 in LP 26826, known as 16 Marie Street. Mrs Gibbon is the owner of Lot 2, known as 22 Marie Street. Accordingly, they are both beneficiaries. No other beneficiaries sought to object to the application.

18 An important factor in ascertaining if a modification will have a precedential effect, that could be injurious to benefited landowners, is whether the subject covenant, in this case subject covenants, form part of a network of covenants, that combine to preserve the spacious, low density feel of an area. In the case of these covenants, that was only partially the case, even before the modification or discharge of the single dwelling covenants previously burdening 72, 70, 66 and 64 Boronia Road. Mr Searle and Mrs Gibbon are beneficiaries of the subject covenants and both assert that their land is burdened by a single dwelling covenant. However, they, and other burdened landowners, do not have the benefit of similar covenants over all nearby land.

19 I turn first to the subdivided residential lots along Boronia Road and Marie Street within the Bulk Transfer, all of which benefit from the subject covenants. One of the lots along Boronia Road (Lot 28 of LP 26826, known as 44 Boronia Road) is benefited by the restriction in the subject covenants, but is not itself burdened by a single dwelling covenant.[5] Mr Easton does not include in his report evidence in relation to each of the other lots along Boronia Road within the Bulk Transfer, and I will assume that they are, or were, burdened by single dwelling covenants. Nor does he include evidence as to whether every lot on the west side of Marie Street within that Bulk Transfer are so burdened. He refers only to four of those lots, Lot 12 (2 Marie Street), former Lot 10 (now Rubida Court), Lot 9 (8 Marie Street) and Lot 4 (18 Marie Street), all of which have similar restrictive covenants. I will assume that all of the lots along Marie Street are similarly burdened.

20 However, the land in the interior of the Bulk Transfer, former Lot 13, is generally not burdened with covenants.[6] The area that was subdivided by LP 41989 to form residential lots fronting onto Gwyn Crescent and Ethel Street (most of Lot 13 of LP 26826) was not originally burdened by a covenant, and single dwelling covenants were not uniformly created on subsequent transfers of those lots. The balance of Lot 13 that became the Boronia Bowling Club is also not burdened by a covenant.[7] Some subsequent transfers by Arthur Sanders of residential lots within LP 41989 (in particular of the land known as 5, 7, 8, 9, 11, 12 and 13 Ethel Street, and some lots within Gwyn Crescent) did create single dwelling covenants, with limited beneficiaries.

21 Some of the lots within LP 41989 contain a second dwelling. Examples are Lots 50 and 51, known as 1 and 3 Ethel Street respectively. Each contain a single storey second dwelling behind what appears to be the original dwelling, on a battle axe subdivision. These lots were not burdened by a single dwelling covenant. The local council has subsequently included these lots, and other large parts of the LP 41989, within a more restricted neighbourhood zone, within which two dwellings are no longer possible.[8] In other words, further development of this and surrounding land is currently prevented, but by local planning controls, rather than by a network of covenants.

22 The absence of a network of covenants over the former Lot 13 of LP 26826 is significant to the determination of this application, because it is this land that is directly opposite the land owned by the objectors, and they regard their street and this area to be of the most concern to them. It is also significant because the benefit of a single dwelling covenant on land along Boronia Road has been eroded by the development of that road into a major arterial road, with consequent increase in noise, activity and congestion. That factor does not apply to the land in the interior of the Bulk Transfer, which is the land, together with the land within Lot 29 that does not abut Boronia Road, that could retain the benefit of a network of single dwelling covenants if such existed.

23 No covenant was created when Lot 29, the large area beyond Ethel Street to the east, was transferred out of the Parent Title, after the Bulk Transfer. Single dwelling covenants were subsequently created when the land was further subdivided into residential blocks.[9] As this land is remote from both the subject land and the objectors' land, I do not consider it further in this application.

24 The plaintiffs' application for modification of the restrictive covenants is made pursuant to s 84 of the Property Law Act 1958 (Vic) (PLA). It first came before me on 10 October 2018. In accordance with usual practice, I ordered that direct postal notice of the application be given to the owners and mortgagees of proximate land only, and that a sign advertising the application be placed on each of the subject lots, with the intention of thereby affording notice to all other benefited landowners.

25 I was not at that time informed that the second plaintiff had previously made an application to the local council to discharge the covenant burdening its land under the Planning and Environment Act 1987 (Vic) (PEA), to which three nearby landowners had objected, including Mr Searle and Mrs Gibbon. Nor was I given by the plaintiff at that time a full account of the history of objection, or proposed objection, to the other similar applications along Boronia Road, although in fairness close scrutiny of the attachments to the expert's report would have revealed it. The test for modification of a restrictive covenant under the PEA is stricter than that under the PLA, and the application to the council was refused.

26 These omissions are regrettable, because the Court expects full disclosure of all relevant matters at this initial stage of an application. The Court cannot act in the interests of justice unless proper notice is given to all benefited persons. Where there has been a previous unsuccessful application, objectors to that application, whether it was made under the PEA or PLA, who are benefited landowners should in my view be notified of a subsequent application. Further, benefited persons are entitled to be made aware of the full history of attempts to modify a restriction, and to be given the opportunity to understand the difference between an application under the PEA and one under the PLA. If the Court is made aware of a previous application made under the PEA, this can be directly referenced and distinguished in the notice given to benefited landowners of this application.

27 Failure to disclose these matters at the earliest opportunity can also cause delay, as indeed happened in this case. When I became aware of the previous unsuccessful application by the second plaintiff,[10] I considered it necessary that direct postal notice of this application be given to Mr Searle and Mrs Gibbon, the two objectors to that application who are benefited landowners. That occasioned a further adjournment of the proceeding.[11] Mr Searle and Mrs Gibbon both attended on the adjourned date of the proceeding and I allowed them to speak to their written objections, although they did not wish to become defendants. On that day, I listed the application for trial and indicated that I would undertake an unaccompanied view, which I subsequently did.

28 This application is made pursuant to s 84(1)(c) of the PLA. Section 84 relevantly provides as follows:

84 Power for Court to modify etc. restrictive covenants affecting land

(1) The Court shall have power from time to time on the application of any person interested in any land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon by order wholly or partially to discharge or modify any such restriction (subject or not to the payment by the applicant of compensation to any person suffering loss in consequence of the order) upon being satisfied -

(a) (not here relied upon); or

(b) (not here relied upon); or

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

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

(2) The Court shall have power on the application of any person interested -

(a) to declare whether or not in any particular case any land is affected by a restriction imposed by any instrument; or

(b) to declare what upon the true construction of any instrument purporting to impose a restriction is the nature and extent of the restriction thereby imposed and whether the same is enforceable and if so by whom.

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

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

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

(6) This section shall apply to restrictions whether subsisting on the thirty-first day of December One thousand nine hundred and eighteen, or imposed thereafter and whether the land affected thereby is registered or not, and in the case of registered land the registrar shall if the restriction has been noted on the register give effect on the register to the order when made[1].

29 By s 84(1)(c) the Court must be satisfied of a negative - that the proposed modification (here to remove the materials restriction, and increase the number of permitted dwellings from one to four on each lot) will not substantially injure the persons entitled to the benefit of the restriction. Those beneficiaries are, broadly speaking, the owners or mortgagees of benefited lots or those with a legal interest in such lots. The burden of proving this negative is on the plaintiff, and the absence of objectors is not determinative in favour of the application.[12]

30 The test imposed on an applicant by s 84(1)(c) is stringent, but less stringent than that imposed on an application for a planning permit to the local council pursuant to the PEA, which is the provision pursuant to which applications for modification or discharge of a restriction in a covenant may be made to a local council. That provision, s 60, relevantly provides as follows:

60 What matters must a responsible authority consider?

...

(2) The responsible authority must not grant a permit which allows the removal or variation of a restriction (within the meaning of the Subdivision Act 1988) unless it is satisfied that the owner of any land benefited by the restriction (other than an owner who, before or after the making of the application for the permit but not more than three months before its making, has consented in writing to the grant of the permit) will be unlikely to suffer -

(a) financial loss; or

(b) loss of amenity; or

(c) loss arising from change to the character of the neighbourhood;

or

(d) any other material detriment -

as a consequence of the removal or variation of the restriction.

...

(4) Subsection (2) does not apply to any restriction which was -

(a) registered under the Subdivision Act 1988; or

(b) lodged for registration or recording under the Transfer of Land Act 1958; or

(c) created -

before 25 June 1991.

(5) The responsible authority must not grant a permit which allows the removal or variation of a restriction referred to in subsection (4) unless it is satisfied that -

(a) the owner of any land benefited by the restriction (other than an owner who, before or after the making of the application for the permit but not more than three months before its making, has consented in writing to the grant of the permit) will be unlikely to suffer any detriment of any kind (including any perceived detriment) as a consequence of the removal or variation of the restriction; and

(b) if that owner has objected to the grant of the permit, the objection is vexatious or not made in good faith.

(6) If an application for a permit to remove or vary a restriction referred to in subsection (4) was made on or after 25 June 1991 and the responsible authority had made a decision in respect of the application before the commencement of section 15 of the Planning and Environment (Amendment) Act 1993, the Tribunal must determine in accordance with subsection (5) any appeal under this Act in respect of that decision.

(7) Nothing in subsection (4), (5) or (6) affects the validity of a permit to remove or vary a restriction issued under this Act before the commencement of section 15 of the Planning and Environment (Amendment) Act 1993.

31 The covenant burdening the second plaintiff's land was registered before 25 June 1991, and so the application for its discharge that the second plaintiff made to Knox City Council fell to be determined under s 60(5). An application under that sub-section may only be granted if the council is satisfied that no benefited landowner will be likely to suffer detriment of any kind, including perceived i.e. subjective detriment.

32 By contrast, under s 84(1)(c) of the PLA, the Court must be satisfied that no benefited landowner will suffer substantial injury. An injury sufficient to prevent modification must be 'something more than unsubstantial, must be real and not a fanciful detriment'.[13] Further, the test imposed by s 84(1)(c) is to be considered objectively, although the subjective views of beneficiaries will be taken into account.[14]

33 The principles governing an application based on s 84(1)(c) have been stated in many cases.[15] For the purpose of this application, principles of particular significance are the following:

(i) Whether there will be substantial injury is to be assessed by comparing the benefits initially intended to be conferred, and actually conferred, by the restriction, and the benefits, if any, which would remain after the proposed modification or discharge.

(ii) Substantial injury may consist of the precedential effect of the modification, because it may be used to support further applications for modification and the long term erosion of the benefits of a single dwelling covenant.

(iii) In assessing the benefits actually conferred, the Court may take into account the most potentially injurious development that would be permitted by the restriction, but should have regard to the realistic probability of this occurring. In assessing the benefits that would remain after the proposed modification or discharge, the Court may take into account the protections afforded benefited properties by statutory planning provisions.[16]

(iv) However, in considering whether or not there will be no substantial injury town planning principles are not to be taken into account, as the covenant confers proprietary rights.

(v) Even if the plaintiff satisfies the Court that there will not be substantial injury to benefited persons, the Court has a residual discretion to refuse the application. In the exercise of this discretion, the Court may take precedential effect and town planning principles into account.

34 The principal concern of the objectors is that this modification will encourage further applications closer to their properties, perhaps particularly along Marie Street, to allow higher density housing. They note that this application, like the earlier applications, concerns land within the Boronia Activity Centre, an area designated by the local council for higher density housing.[17]

35 To better understand this concern, I sought further evidence from the plaintiffs about the Boronia Activity Centre. Counsel provided a copy of the s 21.10-3 of the Knox Planning Scheme, which relates to the Boronia Activity Centre. The extract from the Planning Scheme shows that the Activity Centre is a large area centred on the shopping centre at the intersection of Boronia and Dorset Roads, each of which are substantial roads. Counsel for the plaintiffs also marked up a cadastral plan to show the overlap of the Activity Centre with LP 26826. This marked up plan shows an overlap with only the north western portion of LP 26826. The eastern boundary of the overlap runs along the eastern boundary of Lot 58, one lot to the east of the subject land, running south along the eastern boundary of 3 Gwyn Crescent (owned by the first plaintiff) and the eastern boundary of the Boronia Bowling Club. The southern boundary of the overlap on the east side of Marie Street is the southern boundary of the Bowling Club, but on the west side of Marie Street the southern boundary of the Activity Centre is further north, at 12 Marie Street. The objectors' land is outside the Activity Centre.

36 Clause 2.8 of s 21.10-3 of the Knox Planning Scheme proposes increased housing density in parts of the Activity Centre. Examination of Figure 3 to s 21.10-3 suggests that this does not, however, apply to any of the land to the east of Marie Street, even the land on Boronia Road. Nor does it appear to include the land to the west of Marie Street, with the exception of land fronting Boronia Road (which includes 72, 70 and 68 Boronia Road). With the exception of that land, the land in the overlap area appears to be designated 'Established Residential' on Figure 3, which according to Clause 2.8 would mean that 'new development ... must provide a positive contribution to the existing character of the local area'. This description does not appear to exclude increased density, but does not positively encourage it.

37 The objectors also express concern about loss of vegetation, increased traffic, and increased noise once more intense development is permitted.

38 I accept the submission of the plaintiffs that the purpose of the single dwelling covenants in this case was, as in other cases, to afford their beneficiaries a low density population with the consequent benefits expressed by Associate Justice Mukhtar in Re Morihovitis as follows:

...the manifest purpose or benefit of a single dwelling covenant is to maintain the building density in an area, variously put by saying that single dwellings keep the peace and tranquillity or ambience of an area, as the presence of multiple dwellings on land brings with it added use, more people (maybe tenants), more cars, more movement, reduction in land values and space, more noise or general hustle and bustle, more rubbish and waste collection, so on and so forth.[18]

39 The plaintiffs submit that these benefits have already been eroded by the four lane arterial road that Boronia Road has become, by the discharge or modifications of the other similar covenants burdening numbers 72, 70, 66 and 64 Boronia Road, and by the construction of second dwellings on a number of lots within LP 41989. They further submit that there will be no substantial injury to the residential amenity of the adjoining land for the following reasons. The land to the west at 64 Boronia Road has already had its covenant modified in a similar way. The land to the east at 58 Boronia Road is adversely affected by the large roundabout on Boronia Road directly opposite it. A small portion of 1 Marie Street is at the rear of 62 Boronia Road, but Mr Easton states that the impact of the proposed development at that point will be 'minimal'.[19] His evidence does not give the reasons for this conclusion, but I note that none of the affected landowners or mortgagees of the land adjoining the subject land on the west, east or south have objected. Finally, most the land adjoining at the south of the proposed development is owned, or partly owned, by the first plaintiff. It follows that he does not consider there to be any substantial injury from the proposed development, and indeed promotes it.

40 The plaintiffs also seek removal of the brick (or brick veneer) external walls and tile roof building materials restriction. There is no specific sourced evidence as to the purpose of that restriction in this case, but I proceed on the basis that the purpose was either to ensure a uniformity of appearance for the permitted single dwellings on burdened lots, or to ensure that they were constructed of materials perceived to be of greater attractiveness or prestige than other materials, such as timber, or both of these purposes.[20] Mr Easton opines that the intent of the restriction was likely to be to prevent dwellings being built of materials considered at that time to be of lesser quality.[21] He notes that there are now a variety of materials used in modern buildings, not just brick or brick veneer and tiles, that are considered to be of high quality, and that there is now a tendency to use a mix of building materials on the external walls of dwellings.[22]

41 Associate Justice Derham approved the modification to allow four dwellings in MacLurkin v Searle for four particular reasons.[23] The first is that the land in that case was accessible only from a service road running parallel to Boronia Road, and not directly from Boronia Road. Derham AsJ adopted the description of 70 Boronia Road by the expert for the plaintiff as an 'orphan' area, with a significantly different character from, and no real relationship to, the land in the interior of the subdivision, where most of the properties having the benefit of the covenant are located.[24]

42 His second stated reason was that the discharge of the covenant over 66 Boronia Road had established a precedent for multi-unit development, and so the modification before him for four dwellings would not, in his view, have any significant precedential effect.

43 The third reason as stated by him was that subdivision of some properties in Marie Street, Gwyn Crescent and Ethel Street to enable a second dwelling to be built behind the original dwelling had 'already affected the density of dwellings in the neighbourhood and created precedents for further subdivision'. His fourth stated reason was that the immediate neighbours would not be substantially affected.

44 My observations when I undertook a view were as follows. Boronia Road is a major four lane road. It contains a large roundabout at the intersection with Albert Avenue, opposite 58 and 56 Boronia Avenue to the east of the subject land. These lots, and 54 Boronia Avenue, are accessible from a service road off that roundabout. The traffic on Boronia Road, and Albert Avenue, was substantial, creating quite a lot of noise and activity. The subject lots are a short walk from Boronia shopping centre, which is a major shopping centre extending over a number of blocks and containing major intersections.

45 The land the subject of MacLurkin v Searle and properties to its west leading to the Boronia shopping centre, is, as observed by Associate Justice Derham, accessible by road only by a service road, running parallel to Boronia Road, from which it is separated by an embankment and substantial trees. I would not for myself describe the properties along this service road, that form part of LP 26826, as being of a different character to the land in the interior portion of it, as did Associate Justice Derham in MacLurkin v Searle. To my observation, the properties along this service road were actually more protected from the noise and traffic of Boronia Road than the subject properties, which do not have the protection of any embankment, and in that respect similar in amenity to the properties in the interior of the subdivision.

46 The noise from Boronia Road diminishes as one walks south along Marie Street. The area fronting onto Marie Street, Gwyn Crescent and Ethel Street has a spacious, suburban feel of low rise single dwellings of a generally uniform appearance, and attractive views east to the Dandenongs. What appear to be the original dwellings in this area are almost entirely homes of modest size constructed of brick (or brick veneer) with tiled roofs, and, to the extent I could observe them from the street, so are the second dwellings on lots where they have been constructed. I observed only one or two two-storey dwellings in this area. Some of the more recently subdivided lots within what was Lot 29 contain more substantial two storey homes.

47 The original dwellings on the land fronting Boronia Road are also largely single storey, constructed of brick and tile, and appear to be of similar age to many of those in the interior. However, the feel of this part of the subdivision is quite different to that of the interior of the subdivision, due to being adjacent to such a large road. My impression was that the original dwellings along Boronia Road were also, at least in some instances, not as well maintained as those in the interior, giving the impression of further development being likely in the near future.

48 It is understandable that the objectors would wish to preserve the feeling of spaciousness within the interior of the subdivision. However, as noted earlier, this cannot be guaranteed as a matter of property rights, as the lots within this area are generally not burdened by single dwelling covenants. In particular, I observed that the triangle of land at the north of the Bowling Club, which is not burdened by any covenant, was bearing a sign that it was available for development. To the extent that low density may be preserved on this and other land within the interior of the subdivision, this would be the result of planning restrictions, not covenant restrictions. I do not, however, agree with the conclusion of Associate Justice Derham in MacLurkin v Searle that the construction of second dwellings on some lots in this area has already eroded the benefit to lots in this area of the single dwelling covenants burdening the land fronting onto Boronia Road. To my observation, these second dwellings are unobtrusive, being well hidden from the street, and do not detract from the general ambience of large lots with single dwellings.

49 Arguably, the properties along Boronia Road further to the east of the subject properties, in particular those beyond the roundabout, are distinguishable from the subject properties, because of their greater distance from the shopping centre, and not being adjacent to the roundabout. Accordingly, I do not consider the views that I express about the subject land are necessarily applicable to those properties.

50 I do not consider that any substantial injury will be occasioned to beneficiaries by modification of the covenants to permit four dwellings for the following reasons.

51 First, I consider that the benefit of peace and quiet conferred by low density on the subject land has been almost entirely eroded on benefited land along Boronia Road by reason of the noise and traffic along Boronia Road. To the extent benefited lots along Marie Street, Gwyn Crescent and Ethel Street enjoy peace and tranquillity it is not because of the single dwelling covenants on the subject land, but because of their greater distance from Boronia Road and the current level of development on those lots. In the case of lots on Marie Street which are burdened by single dwelling covenants, it is those covenants, not those over the subject land, that contribute to that peace and tranquillity. In the case of most of the land fronting Gwyn Crescent and Ethel Street, it is planning restrictions, rather than covenants on that land, or the covenants on the subject land, that control the level of future development.

52 Next, I accept that there is no substantial injury to any adjacent benefited land. No beneficiary of adjacent land has expressed any objection. The owner, and subsequent owners of the adjacent land to the west, would have difficulty in expressing any objection when that land is also to be developed to contain four dwellings. There is no evidence to contradict that of Mr Easton that the impact on 1 Marie Street, adjacent on the south, will be minimal, and one of the plaintiffs is the owner or part owner of much of the balance of the land to the south. He seeks to control the impact on his land fronting onto Gwyn Crescent by himself being responsible for the further development on the land to its north fronting onto Boronia Road.

53 In relation to lots along Boronia Road that are currently burdened by single dwelling covenants, the applications previously granted have already set a very substantial precedent. I do not consider that this application will have any substantial further precedential effect than those applications. To the extent the concern could be about further development of land along Boronia Road to the west, all of that land with the exception of 68 Boronia Road can already be developed by reason of the earlier applications. To the extent there could be concern about precedential effect in respect of single dwelling covenants burdening land along Boronia Road to the east, which includes lots subdivided out of former Lot 29 of LP 26826, as I note above, it is arguable that the subject land is distinguishable. This is because of its greater proximity to the shopping centre and closeness to the roundabout and substantial intersection with Albert Avenue.

54 The objectors are concerned about the precedential effect on land along Marie Street and within the interior of the subdivision. I have assumed that all of the lots along Marie Street are burdened by single dwelling covenants, and only one (Lot 9, known as 8 Marie Street) currently contains more than one dwelling. It appears that the subdivision that permitted that departure from the covenant took place in 1993, before the stricter enforcement of covenants now required.[25] It is understandable that the objectors, who live on that street, are concerned that this application may be relied upon if further development along Marie Street is proposed in future. While that concern is understandable, I do not consider that this application should be relied upon as a precedent in any such future application to modify a covenant along Marie Street. The two determining factors for allowing this proposal are the location of the subject land on this part of Boronia Road, and the earlier approval of similar applications along Boronia Road to the west of the subject land. These factors do not apply to the land along Marie Street, or to the land fronting Gwyn Crescent or Ethel Street.

55 This land, in the interior of the subdivision, is distinguishable by reason of its distance from Boronia Road, and consequent substantially greater peace and tranquillity. Any precedential effect on this land would in any event be limited by the absence of a complete network of covenants in this area. Protection of that peace and tranquillity is a matter for town planning controls.

56 It may be that a chief concern of the objectors is their opposition to the designation of the Boronia Activity Centre, or its boundaries. If so, this is a matter to take up with the Knox City Council. It is a town planning issue and so not relevant to the assessment as to whether substantial injury will be occasioned as a matter of property law to the beneficiaries of the covenants.

57 For completeness, I express no opinion about any precedential effect on the land subdivided out of former Lot 29 of LP 26826. That land is, however, sufficiently remote from the subject land for me to be satisfied that no substantial injury will be occasioned to any benefited landowner within it by reason of this modification.

58 The concerns other than precedential effect expressed by the objectors are in relation to increased noise, traffic and loss of vegetation. These are genuine issues. I accept that they are likely consequences of greater housing density, and that they will represent a loss of the amenity that single dwelling covenants are intended to afford. However, as set out earlier I do not consider that the single dwelling restrictions on these lots now confer much in the way of peace and tranquillity on benefited lots. Specific concerns about loss of vegetation and parking are planning matters for the local council to address in conditions on any planning permit.

59 I also consider that no substantial injury will be occasioned to beneficiaries by removal of the materials restriction. I accept Mr Easton's evidence as to the availability of high quality building materials that are not brick, brick veneer or tile, and the propensity for mixed use of materials. Neither of the two objectors have expressed any objection to the removal of the materials restriction. A similar restriction was removed in the applications concerning 70 and 64 Boronia Road (although apparently not sought in the application concerning 72 Boronia Road), and was part of the discharge of the entire covenant in respect of 66 Boronia Road. The plaintiffs also rely on Mr Easton's evidence that the upper level of 2 Marie St is not entirely constructed of brick.[26] This does not establish any precedent in my view, as it appears to have been done in contravention of a similar restriction, not by way of modification of it, but it gives some support to Mr Easton's evidence about the use of other materials without injury to beneficiaries.

60 Having reached these conclusions on substantial injury, I have considered whether to exercise the residual discretion to nevertheless refuse the application. I see no reason to do so. In particular, the issue of planning permits for four or more dwellings on land along Boronia Road to the west of the subject land where covenants have been discharged or modified, suggests that similar application for the subject land would not necessarily be refused by Knox City Council. In other words, the modification will not be futile.

[1] [2015] VSC 750.

[2] Order of Ierodiaconou AsJ in Re Siyani & Ors (Supreme Court of Victoria, S CI 2018 00267, 27 June 2018).

[3] Order of Mukhtar AsJ in Re 72 Boronia Road Pty Ltd (Supreme Court, S CI 2018 01061, 26 June 2018).

[5] Exhibit RWE-1 to the affidavit of Robert Easton, sworn 4 October 2018, 25 ('Easton Report').

[6] Associate Justice Derham reached the same conclusion in MacLurkin v Searle [43]-[44]; [63]-[65].

[10] This was disclosed by John Carlos Marquez, a director of the second plaintiff, in his affidavit sworn 26 November 2018, 2 [3].

[12] Oostemeyer v Powell & Others [2016] VSC 491, [50] (Riordan J) ('Oostemeyer v Powell').

[13] Re Stani, Full Court of Supreme Court of Victoria 7 December 1976, 10, discussed in Freilich v Wharton [2013] VSC 533, [27] (Bell J).

[14] Freilich v Wharton (n 13), [29].

[15] For example, Vrakas v Registrar of Titles and anor [2008] VSC 281, [34]-[46] (Kyrou J, as he then was); Freilich v Wharton (n 13), [17]-[29]; Oostemeyer v Powell (n 12), [47]-[51].

[16] Prowse v Johnstone & Ors [2012] VSC 4, [52] (Cavanough J); Oostemeyer v Powell (n 12), [49].

[17] Email dated 22 January 2019 from Mr Anthony Searle on behalf of himself and Mrs Gibbon, part of Exhibit GAE-14 to the affidavit of service of Glen Egerton, sworn 25 January 2019.

[18] [2016] VSC 684, [20].

[20] In this regard I agree with the observations of Associate Justice Mukhar in Re Hammond [2015] VSC 608, [22]-[26].

[23] MacLurkin v Searle (n 1), [94].