Stoops v Frankston CC [2009] VCAT 15

1. The decision of the Responsible Authority is affirmed.
2. In permit application No. 42/2008/P no permit is granted.

Mr Peter Stoops in person, assisted by Ms Hannah Williams

1. This application was made under section 79 of the Planning and Environment Act 1987 against the failure of the responsible authority to grant a planning permit within the statutory time for the amendment of two restrictive covenants applying to the subject land.
2. In advance of the hearing, the responsible authority advised the Tribunal and the parties that it would have refused to have granted a planning permit on the following ground:

Owners of the land benefiting from the restrictive covenant may suffer detriment (including perceived detriment) as a result of the variation to the covenants.

1. Planning permit No. 040816 was issued by the responsible authority in respect of the subject land on 21 February 2006[3]. It allows a two lot subdivision[4] and the removal of a restrictive covenant contained in Instrument of Transfer No. 2255898[5] subject to conditions. Condition 6 of this permit provides:

Before a Statement of Compliance is issued under the Subdivision Act 1988, the owner must remove or vary the restrictive covenants referred to in Instrument of Transfer Nos. 1770776 and 1770775 in such a way that a single dwelling may be lawfully constructed on each of the lots to be created by the subdivision.

It follows that, at the current time, no Statement of Compliance has issued.

1. The permit application proposes to vary both the land to which the two covenants in Instrument of Transfer Nos. 1770776 and 1770775 apply in addition to the substantive wording of the varied covenant that would apply to the whole of the subject land. Both covenants are identical in terms.
2. On the first aspect, Mr Stoops proposes to amend the extent of the two covenants so that a single covenant applies to the full extent of the land under his ownership, currently known as 2 Fenton Crescent, Frankston (the subject land). To this effect, the permit application proposes the following:
   1. Instrument of Transfer No. 1770776 would be extended to cover all the land within Mr Stoops' ownership - that is, the land currently contained within Certificate of Title Volume 07575 Folio 099[6] and Certificate of Title Volume 08107 Folio 913; and
   2. Instrument of Transfer No. 1770775 would be varied[7] to cover only the land at 3 Liddesdale Avenue, Frankston South, contained within Certificate of Title Volume 09505 Folio 831.
3. Following from this, the application proposes to vary the single covenant that would apply to the whole of the land within Mr Stoops' ownership (that is, Instrument of Transfer No. 1770776) by deleting the wording:

that no gravel or sand shall be dug out of the said land hereby transferred except for the purpose of excavating for foundations, nor shall such land be used as a road or street nor shall the said land be used for any purpose other than residential purposes and

from the covenant. However, the wording "that not more than one messuage shall be erected on the said land" is proposed to be retained in the covenant.

1. At the hearing, Ms Marcus clarified the responsible authority's position as follows:
   • It did not take issue with varying the extent of the covenants to enable one covenant to apply to 2 Fenton Crescent (both lots) and the other to 3 Liddesdale Avenue, Frankston South;
   • It did not oppose variation of the covenants to remove the prohibition on removing gravel, digging or the construction of a road;
   • It would consent to variation of the wording of the covenants from "one messuage" to "one dwelling" to avoid any doubt about the meaning of this term, although this was not sought by the current application; and
   • It would strongly oppose any variation of the covenants that would remove the restriction that the land must be used only for residential purposes.

I note that the responsible authority and the applicant were in agreement as to the properties that had the benefit of the relevant covenants.[8]

1. Ms French explained that she was a beneficiary and was concerned with the effects of incremental change on the character of the discrete neighbourhood that is subject to the covenants. She has lived at her current address for 12 years and regarded the character of the area subject to the covenants as being different from other areas which contain unit development, as a result of compliance with the provisions of the covenants.
2. Mr Flight submitted that the covenants provided a genuine benefit to each of the benefiting properties. He was concerned with the precedent that this application might set, particularly if it were to result in increased development density and/or traffic.
3. Mr Stoops presented a very detailed, researched and comprehensive submission in support of the application which addressed the following points, in summary:
   • Assessed objectively, the beneficiaries of the covenants will be unlikely to suffer any detriment, including perceived detriment, as a consequence of the proposed variations;
   • The Tribunal should apply tests developed by the courts in respect of "injury" referred to in section 84(1)(c) of the Property Law Act 1958 in assessing "detriment" under section 60(5)(a) of the Planning and Environment Act 1987, the only difference being the amount of injury or detriment allowable to beneficiaries. This test involves a comparison of benefits intended to be conferred and those actually conferred;
   • Issues of equity arise in this application - in making the above assessment, it is relevant to consider that the beneficiaries could not enforce the covenants by virtue of their own actions[9] and are therefore not currently in a position to gain any benefit from them; and
   • All objections to the application were vexatious or, alternatively, were not made in good faith.
4. From the outset I had some difficulty in understanding the rationale underpinning this application, in that it appeared to me that the proposed variations to the covenants would not of themselves enable a statement of compliance to be issued in accordance with condition 6 of planning permit No. 040816. That is, even if I was to direct the grant of a permit as sought by Mr Stoops, the variations to the covenants do not appear to enable a single dwelling to be lawfully constructed on each of the lots to be created by the subdivision.
5. On this point, the responsible authority surmised:

Once a single and amended covenant applies to all of the Burdened Land, it is Council's understanding that the Applicant intends to apply to the Supreme Court to remove the covenant in its entirety. Council understands that the Applicant considers this interim stage will facilitate their removal by the court.

1. When I questioned Mr Stoops about the proposed effect of the application, he readily admitted that the application would not allow for the development of two dwellings on the subject land - even if approved, he conceded that only one messuage could be constructed on all of the land in his ownership[10]. He regarded the current application as a step in the process of streamlining and/or refining the extent of the covenants before a further application or proceeding might be instituted[11] to vary or remove the relevant covenant. However, he advised that no decision had been made as to what, when or where further steps will be taken.

Subject land and applicable planning scheme provisions

1. The subject land has an area of approximately 1240 square metres and currently contains a single dwelling fronting Fenton Crescent. The subject land is included within the Residential 1 Zone of the Frankston Planning Scheme (planning scheme). It is also subject to the Design and Development Overlay (Schedule 6).[12]
2. A planning permit is required under clause 52.02 of the planning scheme before a person proceeds to vary a restriction under section 23 of the Subdivision Act 1988. The permit application is made under this provision.
3. The responsible authority submitted that:

The Burdened Land is located within an area dominated by detached dwellings set in a well vegetated environment. There is a considerable canopy of native and exotic vegetation throughout the area forming a backdrop to many of the dwellings. . .

. . . These dwellings are single and double storey located on large allotments generally ranging between 900 to 1,200m2.

This description of the local setting was not contested by any other party.

The relevant covenants and the statutory test for the variation of the relevant covenants

1. Having regard to the age of the covenants in question[13], I am obliged to assess this application in accordance with the provisions of section 60(5) of the Planning and Environment Act 1987. This section establishes two 'tests' that must be satisfied before a permit may be granted to allow the variation or removal of a restriction, inter alia:
   1. The beneficiaries of the covenant/s will be unlikely to suffer detriment of any kind (including any perceived detriment) as a consequence of the removal or variation of the restriction; and
   2. The objections made by beneficiaries of the covenant/s are vexatious or not made in good faith.

1. The first limb of section 60(5) of the Planning and Environment Act 1987 directs my attention to potential detriment to beneficiaries as a result of the proposed variations to the covenants. Relevant case law includes McFarlane v Greater Dandenong City Council & Ors[14] and C Carabott & Ors v Hume City Council and T Scuderi[15].

Will each of the objecting beneficiaries be unlikely to suffer detriment of any kind, including perceived detriment, as a result of the proposed variations to the covenant?

1. In terms of the proposal to simplify the land covered by each of the covenants, I find that the beneficiaries would be unlikely to suffer detriment of any kind, including perceived detriment. The two covenants are identical in wording and the land that was formerly covered by one or more of the covenants would remain covered by at least one covenant if the variation was granted. This variation is therefore in the nature of 'housekeeping'.
2. On the issue of the proposed variation to the substantive wording of the covenants, I need to consider whether the beneficiaries would be unlikely to suffer detriment of any kind including perceived detriment if the following activities were to become permissible:
   • gravel or sand may be dug out of the land, whether or not for the purpose of excavating for foundations;
   • the land may be used as a road or street; or
   • the land may be used for any purpose other than residential purposes.
3. While the first two activities may not be particularly contentious (noting that the land could not automatically be used as a road or street, for example) the 'sticking point' for me is that I am unable to be satisfied that the removal of the restriction on non-residential use would be unlikely to cause detriment to any of the beneficiaries. Contrary to the submissions made by the responsible authority, I regard this as a potentially separate restriction from the limitation on constructing only one messuage (which is to remain).
4. In theory, if the covenant was varied in the manner proposed by Mr Stoops, a non-residential building (or even buildings) could be constructed on the subject land and used for say, a medical centre or childcare centre if the zoning and overlay controls were otherwise complied with. At the present time, this would not be able to be entertained by virtue of the operation of the covenant. I consider that such a use could readily generate amenity and other visual impacts beyond that which would arise from the residential use of the land. Having regard to the case law tests referred to above, while the planning merits may be considered acceptable on balance, the test for detriment under section 60(5) is more stringent than this, referring to any detriment, assessed objectively. The removal of this particular restriction would, in my view, have the potential to generate detriment to the beneficiaries of the covenant. On this basis, the application does not meet the test in section 60(5)(a) of the Planning and Environment Act 1987, which requires me to be affirmatively satisfied that there will be no detriment of any kind to any beneficiary[16].

Were each of the objections vexatious or not made in good faith?

1. Given my finding in respect of the first limb of the test above, I am not required to make a determination on section 60(5)(b) of the Planning and Environment Act 1987. However, it is appropriate for me to address this matter in response to submissions made on this point. This test has been often recognised by the Tribunal and the Supreme Court as a very onerous one to overcome, particularly where there are numerous beneficiaries who have objected to the application and they are within close proximity to the subject land.
2. Mr Stoops made detailed submissions about each of the beneficiaries who have objected to the application, to the effect that they have either used or developed their land in contravention of the covenant, or have acquiesced to such action. He submitted that this was sufficient for me to make a finding that each of the objections was either vexatious or not made in good faith.
3. Even if I was to accept the evidence presented by Mr Stoops at face value and if I was to regard departures from the covenant or acquiescence as an indication of vexatiousness or bad faith, I am still confronted with the difficulty that I consider that there are many objections made by beneficiaries who have not acted in contravention of the covenant, or have not acquiesced to any breach to the requisite degree, such that their objections should be regarded as vexatious or not made in good faith.
4. I agree with the responsible authority that there is no basis to find that their objections were vexatious or not made in good faith. Some of the objections may have been misdirected, to the extent that they considered that these variations might allow a second dwelling on the subject land. Nevertheless, they also raised numerous other grounds and, in my view, reflect genuinely held concerns such as that relating to the preservation of residential amenity that appear to be bona fide.

Could I direct the variation of some aspects of the covenants?

1. Even if I was empowered to do so, I would not support a piecemeal amendment to these covenants which I regard as multi-faceted. The permit application has been framed to cover all manner of proposed amendments to the two covenants applying to the subject land. Where either test in section 60(5) of the Planning and Environment Act 1987 is not satisfied in relation to the application as a whole, I doubt that parts of the application can lawfully be 'separated out' to enable less contentious variations to be approved but not others.

1. I accept that Mr Stoops regards this application as involving a significant moral issue, and that he appears to have a mission to ultimately develop the subject land for what he regards as an environmentally beneficial outcome. However, my considerations in determining this application are limited to the principal legislative provisions. Failing either legislative test in section 60(5) of the Planning and Environment Act 1987, as is the case here, is fatal to the application, notwithstanding any potential flow-on benefits of the application on the other side of the ledger.
2. As Mr Stoops is aware, there is a separate process for the variation or removal of restrictive covenants provided for in section 84(1)(c) of the Property Law Act 1958. This establishes a different test from that provided in section 60(5) of the Planning and Environment Act 1987. Alternatively, there is an opportunity to seek a planning scheme amendment to facilitate this. To my mind, the first course of action seems more apposite in light of the circumstances and the submissions made by Mr Stoops[17]. I do not consider that the Supreme Court would be in any way limited by the lack of success of this application in any proceeding that may be initiated under the Property Law Act 1958, which relates to a different legislative 'test' to that which forms the basis of my determination.

1. I am not satisfied that the beneficiaries who have objected to this application will be unlikely to suffer detriment of any kind, including perceived detriment. My concern particularly relates to the proposed deletion of the restriction on the use of the land for non-residential purposes. Therefore, the application fails the first limb of the test in section 60(5) of the Planning and Environment Act 1987.
2. If I had been satisfied of the test in section 60(5)(a) of the Act, I would still not have been in a position to find that each objection from the beneficiaries was vexatious or not made in good faith as required by section 60(5)(b) of the Act.

[1] I note that a number of these parties are not beneficiaries of the covenants, such as Mr Dobson and Ms Marsh and I have not had regard to these objections on that basis. However, I have considered the statements of grounds and letters of objection from the remaining parties who are beneficiaries.

[2] The parties agreed that both Mr Flight and Ms French were beneficiaries of the relevant covenants.

[3] This permit was issued at the direction of the Tribunal (Member Martin) in Peter Stoops v Frankston City Council & Ors [2006] VCAT 167, a decision made with the consent of the parties. In advance of this, a number of applications for development of the subject land were refused by the Tribunal on the basis that they would offend the provisions of the covenant/s applying to the subject land, Peter Stoops v Frankston City Council & Ors [2003] VCAT 965 and Peter John Stoops v Frankston City Council [2004] VCAT 591.

[4] The subdivision would facilitate a front lot of 607 square metres and a rear lot, accessed via a right hand accessway which forms part of the rear lot, totalling 633 square metres.

[5] I was advised by Mr Stoops that this covenant has been removed from title to the subject land.

[6] It currently only applies to Lot 1 on Title Plan 855016C depicted in Certificate of Title Volume 07575 Folio 099.

[7] That is, the land identified as Lot 2 on Title Plan 855016C (within Certificate of Title Volume 07575 Folio 099) and the land in Certificate of Title Volume 08107 Folio 913 would no longer be subject to Instrument of Transfer No. 1770775.

[8] It appears that 17 of the objections received by the responsible authority were from beneficiaries.

[9] Such as by the construction of a swimming pool, the conduct of a home occupation or digging for landscaping purposes, or by acquiescence to these works. Mr Stoops considered that he himself had also acquiesced to these works but sought to distinguish his position from those beneficiaries who were seeking to rely on the covenant.

[10] He considered the officer assessing the application to be mistaken when advising that the proposal "would facilitate the construction of a dwelling on each of the lots affected by the covenant". This opinion appears to have been corrected or superseded by the submission made by Ms Marcus on behalf of the responsible authority.

[11] Such as, in the Supreme Court under section 84(1)(c) of the Property Law Act 1958.

[12] Neither the zoning or overlay controls are directly relevant to this application.

[13] That is, their creation pre June 1991.

[14] [2002] VCAT 2696, a decision of Justice Strong and Member Cimino.

[15] (1998) 22 AATR 261, a decision of Judge Wood, Deputy President Macnamara, Senior Member Byard and Member Moles.

[16] See Carabott v Hume City Council & Scuderi, above.

[17] In that forum, comparisons of perceived versus actual benefits may well be relevant, as well as whether any aspects of the covenant are in the nature of "dead wood".