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[2009] VCAT 81
Victorian Civil and Administrative Tribunal
2009-01-27
Original judgment source is linked above.
The practice of VCAT is to designate cases of interest as 'Red Dot Decisions'. A summary is published and the reasons why the decision is of interest or significance are identified. The full text of the decision follows. This Red Dot Summary does not form part of the decision or reasons for decision.
REASONS WHY DECISION IS OF INTEREST OR SIGNIFICANCE
status of section 173 agreement vis-à-vis property law rights and obligations; whether agreement enforceable against subsequent owner whilst unregistered; relevance of owner's knowledge of agreement; effect of subsequent registration of section 173 agreement after change of ownership
LEGISLATION - interpretation or application of statutory provision
Planning and Environment Act 1987 ss 87, 114, 173, 182, 184, 149B; Transfer of Land Act 1958 s 42; effect of subsequent registration of section 173 agreement after change of ownership; whether permit granted inconsistently with unregistered section 173 agreement should be cancelled; ambit of s184 - whether inappropriate for agreement to continue to apply to land
A section 173 agreement had been executed in 2000 over a number of lots, purporting to limit further subdivision before 2015. The responsible authority did not register the agreement straight away. In 2001, the Kienes purchased one of the lots with knowledge of the unregistered agreement. In 2006, with the agreement still not registered, the Kienes sought to subdivide that lot. On an application for review, the Tribunal in 2008 granted a permit for a four-lot subdivision. The responsible authority belatedly registered the agreement in May 2008 after the grant of that permit.
The responsible authority sought to cancel the permit and/or enforce the agreement. The Kienes argued that the agreement was not enforceable against them and/or that the agreement should be removed from the land.
The decision discusses at some length the status of a section 173 agreement vis-à-vis property law rights and obligations. It expresses a view that a section 173 agreement is a creature of statute, established to play a specific role in the planning system in Victoria. The detailed regime for section 173 agreements proscribed by the Planning and Environment Act 1987 is such that ordinary principles of property law do not automatically apply to these agreements, and certainly not in a manner that might conflict with their statutory charter. These provisions over-ride and impliedly vary or repeal the indefeasibility principles in s 42 of the Transfer of Land Act 1958, and allow for the registration and enforcement of a section 173 agreement after a change of ownership.
The section 173 agreement was not enforceable against the Kienes during the period it was not registered. The agreement did run with the land and become enforceable against the Kienes after its belated registration.
However, in certain limited circumstances under s 184 of the Planning and Environment Act 1987, the Tribunal has a discretion to amend an agreement to remove its application from land where, having regard to any relevant permit, the Tribunal considers it inappropriate that the agreement should continue to apply to the land and the owner.
In the circumstances of this case, given the seven and a half year delay by the responsible authority in registering the agreement, the temporary nature of the limitation on further subdivision, and the grant of the intervening permit for the four-lot subdivision after a consideration of relevant planning issues, it was inappropriate that the agreement continue to apply to the land. An order was therefore made under s 184 of the Planning and Environment Act 1987 to amend the agreement to remove its application to the land and the Kienes.
Planning and Environment Act 1987 ss 87, 114, 173, 182, 184, 149B; status of section 173 agreement vis-à-vis property law rights and obligations; whether agreement enforceable against subsequent owner whilst unregistered; whether permit granted inconsistently with unregistered agreement should be cancelled; ambit of s87(1)(a); whether a mis-statement to the Tribunal is a material mis-statement 'in relation to the application for permit'; ambit of s184; whether agreement should be removed from land; effect of subsequent registration of section 173 agreement after change of ownership; whether agreement capable of enforcement against new owner following belated registration; exercise of discretion generally.
In Applications P1904/2008, P1906/2008 and P2624/2008:
Wodonga CC v Kiene (includes Summary) (Red Dot) [2009] VCAT 81
Colin Taylor, solicitor, instructed by Charles Morgan of Nevin Lenne & Gross, solicitors
The Section 173 agreement
[4] The Corporation enters into this agreement with the understanding and that it is the intention of the Council to apply to register the agreement with the Registrar of Titles against the title to the land and that upon registration the burden of the covenants shall run with the land pursuant to section 182 of the Act and bind the owners from time to time of each and every part of the land to the intent that the council may enforce the agreement against any person deriving title from the Corporation ...
[5] The Owner from time to time of the land and each and every part of the land agrees and acknowledges:
>
> a) that the land shall not be subdivided prior to 1 January 2015.
>
> ...
[6] Without limiting the obligations of the Corporation hereunder, the Corporation must ensure:
>
> a) that until such time as a memorandum of this Agreement is registered on the Title to the land, the Corporation's purchasers or other likely successors in Title are made aware of the obligations imposed by this agreement on the owners of the land from time to time;
>
> ...
>
> c) that if a memorandum of this agreement is not registered on the title to the land before the Corporation's purchaser becomes entitled to be the registered proprietor that the Corporation's purchaser is aware that the council reserves the right to and will register the agreement against the title to the land at any time thereafter.
181 Registration of agreement
(1) A responsible authority may apply to the Registrar of Titles to register an agreement relating to land other than Crown land.
...
182 Effect of registration
After the making of a recording in the Register -
(a) the burden of any covenant in the agreement runs with the land affected; and
(b) the responsible authority may enforce the covenant against any person deriving title from any person who entered into the covenant as if it were a restrictive covenant despite the fact that it may be positive in nature or that it is not for the benefit of any land of the responsible authority.
The status and effect of the section 173 agreement vis-à-vis property law rights
The Kienes' application to amend the section 173 agreement
184 Application to Tribunal
>
> ...
>
> (3) A purchaser of land who is a party to an agreement, or an owner of land, may apply to the Tribunal for an amendment to the agreement to remove the land from the application of the agreement, if the parties to the agreement cannot agree that the agreement should be amended.
>
> (4) The Tribunal may approve the amendment if -
>
> (a) it considers that the land owner is not subject to any further liability under the agreement; or
>
> (b) having regard to any relevant permit, or requirements under the Subdivision Act 1988, it considers it inappropriate that the agreement should continue to apply to the land and the owner.
(2) An application for review under section 184(3) of the Act must be made after 60 days after the applicant gave the other parties to the agreement a copy of the proposed amendment to the agreement.
But hidden behind the limitations and subtleties, there may be scope to utilise these provisions in many circumstances in order to achieve sensible and fair planning outcomes[27].
Solid Investments ultimately turned on declarations that one section 173 agreement was void, as was a particular clause of another, and thus led to the removal of the agreements from the land under the first of the tests in s184(4) - i.e. that the owner was not subject to any (further) liability under the agreement. Morris P nonetheless noted that there was a second separate test that might facilitate the use of s 184(3) and (4) where there was a 'relevant' permit in respect of the land or neighbouring land.
180 Agreement must not breach planning scheme
>
> An agreement must not require or allow anything to be done which would breach a planning scheme or a permit.
He observed that s 180 reflects the primacy of any relevant permit over a section 173 agreement, and the absolute nature of the language used in the provision[28]. The application of s 180 in this case is however not so straightforward. First, the section 173 agreement was entered into when there was no permit and the agreement did not offend s 180. Technically, the agreement was first in time even though its enforceability against the Kienes post-dated the grant of the Permit because of its belated registration. Secondly, even after the Permit was granted, the section 173 agreement did not offend s 180. The agreement did not require something to be done in breach of the Permit (i.e. purporting to authorise something otherwise prohibited), but rather imposed a more onerous restriction on subdivision than the Permit. It is not uncommon for section 173 agreements to operate in this way. Section 180 does not therefore influence the outcome in this case, as it perhaps did in Solid Investments.
[1] [2000] VSC 258, per Gillard J at paras [181] to [186]. This view has been endorsed by the Tribunal, for example in Gray v Colac-Otway Shire Council (Red Dot) [2005] VCAT 2266, per Gibson DP at paras [18] to [37]
[2] [2003] VCAT 485. Despite this citation, the matter does not appear to be on Austlii. It was a decision of Macnamara DP on 6 March 2003 in VCAT proceeding P2457/2002.
[5] [1999] VSC 509, per Balmford J at [484] - [499]
[6] [1961] HCA 32; (1961) 106 CLR 268, at 275-276 per Fullagar J
[7] Including Horvath v Commonwealth Bank of Australia [1998] VSCA 51 (also referenced in Calabro), and South-Eastern Drainage Board (SA) v Savings Bank of South Australia [1939] HCA 40; (1939) 62 CLR 603. In Hilpalm Pty Ltd v Heavens Door Pty Ltd [2004] HCA 59; (2004) 220 CLR 472, at p491, the High Court avoided dealing directly with the issue of inconsistency between a planning Act in NSW and a property Act similar to s42, suggesting a real and lively question existed as to how the two statutory schemes might be reconciled, and whether questions of implied repeal might arise.
[11] See Kameel Pty Ltd v Casey City Council [2005] VSC 23 at [25] per Byrne J, adopting the view of Morris P in Solid Investments Australia Pty Ltd v Greater Geelong City Council [2004] VCAT 2356
[12] Planning and Environment Act 1987, s174(1); see also North Burnside Pty Ltd v Melton Shire Council [2006] VSC 35
[13] Solid Investments Australia Pty Ltd v Greater Geelong City Council [2004] VCAT 2356, at para [49] per Morris P
[14] For example, in Plentie Pty Ltd v Banyule Shire Council [2003] VCAT 750, the Tribunal (constituted by Horsfall DP on a question of law) had determined that a section 173 agreement was not a restriction or 'registered restrictive covenant'. See also Gray v Colac-Otway Shire Council (Red Dot) [2005] VCAT 2266, per Gibson DP at para [37] .
[15] Bradbrook & Neave: 'Easements and Restrictive Covenants in Australia' (2nd ed) at pp 336-347
[16] Bradbrook & Neave, op cit, at paras [14.19]-[14.36], and the cases cited therein.
[17] (1848) 41 ER 1143 (Ch) , noted at Bradbrook & Neave, op cit, at paras [14.14]-[14.19]. The Council initially contended that notice alone was sufficient to make an unregistered section 173 agreement enforceable against the Kienes. However, even assuming the principle applies here at all, the decision in Tulk, based on the criterion of notice alone, has since been heavily qualified through a line of subsequent cases adding the other three criteria set out above, and arguably qualified by legislation relating to property rights and interests.
[18] For the record, it is perhaps conceivable that a section 173 agreement could be drafted (by its clear terms) to also operate as a formal 'restrictive covenant', and to be enforceable as a restrictive covenant even without registration under the Planning and Environment Act 1987. I would not encourage such a process as it blurs the respective requirements and obligations of both approaches. In any event, such a scenario does not arise here, given the wording of cl.4 of the agreement and the absence of benefited land.
[19] By reference to clause [4] of the agreement, set out earlier in these reasons
[20] For the record, I do not consider an alternative argument advanced by the Council, that the failure of the Kienes to refer to the section 173 agreement in the initial application material is a material concealment, given the state of knowledge of the Council and the Council's own failure or delay in registration of the agreement.
[21] Following Moonee Valley City Council v Smith [2007] VCAT 1816, at para [26] per DP Gibson
[22] following Hobsons Bay City Council v Srecko & Saric [2000] VCAT 2114, at para [27] per DP Macnamara
[23] Following Sola Optical Australia Pty Ltd v Miles [1987] HCA 57; (1987) 75 ALR 513, 519
[24] The reference to the requirements under the Subdivision Act 1988 appears to relate to the use of section 173 agreements to deal with matters required to be undertaken prior to the certification of a plan of subdivision, or to agreements to which s 184(3) of the Planning and Environment Act 1987 applies by reason of s 21A of the Subdivision Act 1988. It is unnecessary to decide this issue in this case.
Wodonga CC
Kiene
(1961) 106 CLR 268
(1939) 62 CLR 603
(2004) 220 CLR 472
(1987) 75 ALR 513