The following paper Restrictive Covenants in Victoria–Theory and Practice is a presentation to the University of Melbourne’s undergraduate Property Law class, updated in December 2022.
It provides a relatively comprehensive overview of the law in relation to restrictive covenants in Victoria.
An hour long walk-through of the notes can be found here:
And a downloadable audio version can be found here:
Comments are welcome: townsend@vicbar.com.au
A restrictive covenant is a contract that runs with the land, that is negative in nature. More particularly, a restrictive covenant is an agreement creating an obligation which is negative or restrictive, forbidding the commission of some act. In its most common form it is a contract between neighbouring land owners by which the covenantee determined to maintain the value of a parcel of land or to preserve its enjoyment, acquires a right to restrain the other party, namely the covenantor, from using the land in a certain way: Fitt v Luxury Developments Pty Ltd (2000) VSC 258. The land subject to a restrictive covenant is known as the burdened land and the land with the corresponding ability to enforce the covenant is known as the benefited land.
If a restrictive covenant burdens or runs with a parcel of land, it should be noted under the heading “Encumbrances, Caveats and Notices” on a certificate of title available from Landata. You can then search Landata again for the relevant covenant that is often contained within a Transfer of Land, or ask a title searching firm to do this for you. One such title searching firm is Feigl & Newell on (03) 9620 7022.
Typically, the extent of beneficiaries can be discerned from a careful reading of the words of the covenant itself, but this may require further title searches and a careful examination of the Parent Title. Some covenants purport to convey the benefit of a covenant to all land in a subdivision, which may not be legally effective, see Re Mack and the Conveyancing Act [1975] NSWLR 623. Before you become a party to proceedings concerning the modification or enforcement of a covenant, seek advice from a lawyer with experience in this area. Many people assume that because their land is located within an estate burdened by a network of similar covenants, they are necessarily a beneficiary to other comparable covenants, which may not be the case. See too, the section on Building Schemes, below.
There are several ways in which restrictive covenants can be varied or modified, but the two most common means are via a planning permit application to the local council or by application to the Supreme Court.
There is an initial appeal to applying for a permit to modify a covenant via the planning permit or Planning and Environment Act 1987 process, because it is seen to be cheaper and easier, but this appeal diminishes when one understands that all beneficiaries need to be notified (unless a pre-existing breach is being regularised) and for covenants created before 25 June 1991, only one genuine objection from a beneficiary is sufficient to bring the process to an abrupt halt.
For this reason, applications that might be seen as even slightly controversial, such as increasing the number of dwellings on a lot, routinely go straight to the Supreme Court. Most applications to the Supreme Court are successful as they proceed through the process without sustained objection, but the challenge here is to pitch your application at something a judge will be comfortable with, for the Courts have traditionally acted with caution when it comes to modifying restrictive covenants.
For more information about the various options for modifying or removing a restrictive covenant in Victoria see here.
To modify a covenant through the Property Law Act 1958, or Supreme Court, process, an applicant will typically need a planning report prepared by a planner with experience in this area of law and an Originating Motion drafted by a solicitor. There are numerous other procedural requirements that invariably require the involvement of an experienced and competent lawyer.
Once the application is lodged with the Court, a hearing is convened at which directions for advertising is given by an Associate Judge. Typically the notification process will take eight to ten weeks before a further hearing is convened at which objections may be considered by the Court.
If no objectors appear to be heard, which is routinely the case, the Court will consider granting the relief sought, but a judge may still want to be convinced about the appropriateness of the application. If it is positively received, relief may be granted at that time. However, if the matter is contested, directions may be given for the exchange of evidence and submissions and the hearing may be listed some six months or so later for determination.
A detailed description of the process of modifying or removing a restrictive covenant in the Supreme Court is set out here along with a comprehensive collection of precedents.
An objection to vary a restrictive covenant does not need to take any particular form. However, it is useful to understand what the Court deems to be a relevant or persuasive reason to object against what is typically seen as being irrelevant or difficult to establish. A useful indication was given by Justice Cavanough in Prowse v Johnston who gave weight to objections that complained of loss of character, loss of privacy, the bulk of the proposed building, additional noise, traffic, parking and access issues and most importantly, that of precedent, that is, is this proposal the thin edge of the wedge?
An article setting out the process of objecting to a restrictive covenant in Victoria is set out here.
The Supreme Court published a guide for objectors in December 2017.
Where a building scheme, or scheme of development is established, all purchasers and their assigns are bound by, and entitled to the benefit of, the restrictive covenant. However, notwithstanding the frequency with which they are discussed, in Victoria, they are not often established. The real difficulty in attempting to uphold a building scheme in this state is establishing that a purchaser of land was or should have been aware that a building scheme was in place prior to purchase and therefore ought to be bound by its terms. See Randell v Uhl [2019] VSC 668. An authority that helpfully sets the relevant principles is Vrakas v Mills [2006] VSC 463.
An article setting out some principles for the construction or interpretation of a restrictive covenant in Victoria is set out here.
If the land is of no use to you unless the covenant is modified, it is probably unwise to buy it. The process of modifying a covenant is often too uncertain, too time consuming and too expensive to justify taking the risk. Covenants can cost as little as a few thousand dollars to modify if things go well. On the other hand, parties have spent close to half a million dollars to modify covenants without success. Equally, some modifications may be completed within weeks. Others may take years. Most applications to modify covenants receive little or no sustained opposition, others ignite well orchestrated and well resourced community campaigns. Any estimate as to prospects is just a well informed guess. If you’re not dissuaded, get a beneficiary report from Feigl and Newell and then find a lawyer with experience in the modification of restrictive covenants to give you an estimate of the likely opposition to change. You may be lucky and find there only a few beneficiaries who live some distance away.
The modification or removal of restrictive covenants is a specialised area of law and regularly done by only a handful of lawyers in Victoria. An article setting out a reliable means of finding a lawyer with experience in the jurisdiction is set out here.
An article summarising the principles in relation to orders of costs in s84/Supreme Court proceedings is set out here.
Judges make every effort to accommodate self-represented litigants. The Supreme Court even has a self-represented litigant coordinator who may be able to provide you with some guidance.
Traditionally, the practice has been to set the matter down for a contested hearing in the normal manner, with the exchange of evidence and submissions. This can involve much time and a large amount of preparation. But more recently, the Supreme Court has facilitated self-represented litigants in covenant cases, by giving people an opportunity to present a short submission at the second return of the application, that is, immediately after advertising. In this way, litigants in person can put a short summary of their views to the judge, without becoming a party to the proceedings; without the need to prepare evidence or cross examine witnesses; and without the potential costs consequences of running a contested case to its conclusion. It must be remembered though, that this will occur in the course of a busy Court list and the judge’s capacity or preparedness to entertain detailed submissions will be limited. The Plaintiff also may elect to not press its case at this second return, and may ask the Court to set the case down on a future occasion, at which time the application can be heard and determined in a more considered manner.
Further, although there are cases in which the court has refused applications to modify covenants, even where there are no parties in opposition such as in Re: Jensen and in Re: Morihovitis, in practice, it is probably fair to say that a defendant has far lower prospects of success if they are not represented, and the plaintiff’s case is not thoroughly tested.
As mentioned above, the matters you wish to put before the Court are set out here.
An article explaining the role and utility of mediating covenant disputes in the Supreme Court is set out here.
An article setting out the process for dealing with a restrictive covenant that confers a discretion on a deregistered company is set out here.
For a more detailed analysis, see here:
Feel free to contact me by email for further information.
Matthew Townsend
townsend@vicbar.com.au
If you are yet to decide which process to follow to modify or remove a restrictive covenant, you should read this article first. If you have already elected to pursue the Property Law Act 1958 or Supreme Court process, then the following discussion is an overview, along with some precedents you may wish to use. These are updated regularly.
To begin, when applying to remove or modify a covenant in the Supreme Court, an Originating Motion will need to be prepared, setting out the relief sought. Most applications will only need a simple Originating Motion such as this, this, this or this. More complex examples that incorporate applications for declarations can be found here, here, here and here.
In determining how to phrase the modification sought, you should seek the minimum change necessary to achieve your objectives. That is, if you are after a dual occupancy, seek to replace ‘one dwelling’ with ‘two dwellings’ or draft a variation to allow a particular form of development. Although a practice has been to vary covenants with the addition of the following words “… but this covenant will not prohibit the construction of any development generally in accordance with the development described in the plans prepared by ABC Architects dated 1 July 2016 numbered A00 to A30”, this technique known as the ‘proviso’ has recently fallen out of favour with the Court because it means attaching plans to an instrument of transfer that may sit in the Office of Titles for decades to come. For this reason, orders that incorporate a simple building envelope are preferred. The broader point, however, is that if you ask for removal of the covenant and you don’t actually need it, you may attract unwarranted opposition. Moreover, the Court is increasingly unwilling to allow the complete removal of anything but obsolete covenants.
No summons is required at this time given that the first hearing will ordinarily be ex parte.
While the schedules of parties may have been removed from the attached examples, such a schedule is ordinarily not added until after the first return of the application, for the identity of the Defendants is not likely to be known until that time.
Overarching Obligations Certification and Proper Basis Certification should also be provided.
The Court will also want an application form completed.
A helpful Guide for Practitioners has also been prepared by the Supreme Court. This provides a checklist for applications and some draft precedents. This version was updated by the Court in December 2016, but to be prudent, download the latest version from the Supreme Court website. As at March 2018, it is understood that a review is presently underway.
Current practice is to include an affidavit from the Plaintiff setting out the intended use and development for the property. If the land is to be sold, that should be disclosed and the Court given a realistic understanding as to how the land might be used or developed. An example of a Plaintiff’s affidavit can be found here. Traditionally, solicitors would give this information to the Court on instructions, but the emerging best practice is to hear from the applicant directly.
The Court will also want to know whether there has been previous applications to modify or remove a restrictive covenant on the land.
If the land is under contract, full details of that should be out too. Indeed, there is an argument to suggest that the application should be made under the name of the owner, even if the land is under contract.
The objective is to provide the Court with reliable information about the covenant; its purpose; the identification of land with the benefit of the covenant; and any relevant circumstances surrounding the application. Ensure you have an up-to-date certificate of title for the land and that the application is made on behalf of that party or those parties.
If relying on a map showing the location of beneficiaries, ensure the map is clear and legible and accurately reflects the location of beneficiaries.
The quickest and most cost-effective means of establishing who has the benefit and the burden of the relevant covenant is to call a professional title searching service such as Feigl and Newell on (03) 9629 3011. Dinah Newell should be able to provide you with a colour-coded cadastral plan such as this. However, you should double-check any advice you receive to identify transcription or other errors. Mistakes made at this point of the process can be expensive to fix later on.
Once you have the above information, you can provide it to a town planner for the preparation of a planning report. Two further examples can be found here and here. This version was in support of an application to modify a covenant restricting the height of a dwelling and was praised by the Court for its clarity.
A letter instructing a town planner in a s84 application can be found here. If you want the names of planners to prepare evidence in support of (or against) an application to modify or remove a covenant, find someone who has given evidence in a contested s84 application. You can look through Supreme Court cases in relation to restrictive covenants here. Unfortunately, all too often, planners approach the task as if it were a common or garden planning application in VCAT relying on principles of public policy rather than analysing impacts on proprietary rights. This evidence will almost certainly be useless. Just as importantly, a ‘cheap’ planning report may end up becoming expensive once it becomes clear how much additional work it will create for the lawyers to fix it up. Applicants are reminded that the Supreme Court is not the Victorian Civil and Administrative Tribunal where the tribunal member can patch up evidentiary gaps with their own knowledge and experience. In the Court, judges are confined to the evidence and if your planner does not adequately address the merits of the application in his or her written evidence, at trial, any significant omissions can be fatal.
A planning report should include photographs of the neighbourhood so the Court can gain a clear understanding of the context in which the application is being made.
It should also identify land within the parent title that has been varied since the time of the original subdivision, whether this is by order of the Court, planning permission or simply a breach that has gone unchallenged. Evidence demonstrating how that change has occurred, should be annexed to the planning report when available. Often this will be the pivotal evidence in the hearing and it must be done with precision.
Applicants are sometimes keen to lodge the application without planning evidence to save costs or time, but this risks the application being dismissed for being improperly supported. Any planning evidence should be before the Court at or before the first return of the application.
In some cases, lay evidence may be sufficient, at least in opposition to a modification or removal application. For instance, in Gardencity v Grech, the defendants were successful despite the absence of any expert evidence, for the Court found the plaintiff had failed to prove the absence of substantial injury. Evidence from the defendants in that case can be found here, here and here. An example of an expert report in support of an application to oppose a modification can be found here.
For a separate discussion about what to include in an objection, look here.
At the first hearing of an application, which is usually done ex parte, the Court is likely to make further orders, similar to the following for a sign to be placed on the land and for direct notice to be given to the closest beneficiaries. This raises a tactical question for applicants for it may be prudent to suggest to the Court that all beneficiaries be notified directly rather risk attracting the attention of non-beneficiaries via a sign on the land.
On the other hand, the Court has been known to be content with simply a sign on the land and no direct notification if there are no nearby beneficiaries.
The Court now also directs applicants to notify the beneficiary at the address indicated on title and at the street address, if different.
As always, practitioners should attend the Court with draft orders, preferably forwarded to the Court a few days beforehand. The Court is now directing the attachment of Information for Objectors to the draft orders. An example can be found here.
The normal standards expected of practitioners in ex parte applications apply, and you should disclose to the Court any necessary countervailing facts even if they are not helpful to your case. For instance, if your client is running a simultaneous application to modify a covenant elsewhere (which isn’t a good idea), the Court will want to know about it.
Once advertising has been carried out, an affidavit should be prepared that describes the process undertaken, the nature of responses received and whether any beneficiaries objected. This is a short example and a more comprehensive example. Leave sufficient time to complete this as it may be time consuming.
A sample letter sent should be included in the affidavit–not a copy of each letter sent.
In answering queries from third parties, including beneficiaries, avoid giving advice about who has the benefit of the covenant. Inquirers need to make their own investigations about their entitlement to participate in the proceedings and the answer is not always clear. Record details of all phone calls and emails as a summary should also be included in the affidavit of compliance.
The Court may then make orders providing for the further provision of evidence and the listing of the matter for hearing. Two examples can be found here and here. The schedule of parties may have been removed.
Increasingly, covenant cases are being set down for mediation.
If no person seeks to become a Defendant, draft orders should be provided to the Court along with an affidavit to that effect (see examples above). Try to get the papers to the court three or four days in advance of the directions hearing so that the judge has time to read them before the hearing. Two examples can be found here and here.
Significantly, you may find that despite the absence of any defendants, you may still need to make out your argument for modification on the basis of the evidence provided. For instance, in Re Jensen, and Re: Morihovitis the Court refused relief despite the absence of any objectors.
A written outline of argument setting out why the variation or removal of the covenant should be provided to the Court, preferably in advance of the hearing. Two examples can be found here and here.
If the matter runs to a contested hearing, you will need to prepare a more comprehensive outline of argument. Submissions in support of a modification application can be found here: from Wong v McConville (opening); Wong (closing) and Re: Milbex. Submissions in opposition to a modification application can be found here from Re Pivotel; Suhr v Michelmore; and Prowse v Johnstone; and Re: Morrison.
To improve your client’s costs position in the litigation, a Calderbank letter or offer of compromise may be appropriate to disturb the defendants’ presumption that their costs will be reimbursed by the Plaintiff at the conclusion of the proceedings, irrespective of the outcome. A Calderbank letter needs to be drafted with precision and according to established principles if it is to be effective. Examples can be provided upon request.
Needless to say, all applications are different and great care should be taken to ensure that the relevant matters are placed before the Court.
Matthew Townsend
Owen Dixon Chambers
https://www.vicbar.com.au/profile/6975
townsend@vicbar.com.au (04) 1122 0277
Liability limited by a scheme approved under Professional Standards Legislation.
This article briefly describes a number of ways to modify or remove a restrictive covenant in Victoria, namely:
– by planning permit pursuant to clause 52.02 of a planning scheme–mostly useful for a deadwood or non-contentious covenant;[1]
– the making of orders pursuant to s84 of the Property Law Act 1958 (PLA)–the most common route for potentially contentious applications;
– by amending the relevant planning scheme–useful where there is considerable support for the proposed change at the municipal or state level;
– by consent–useful where there is a small number of beneficiaries and/or good relations amongst beneficiaries; and
– at the direction of the Registrar of Titles–useful where the covenant might be said to be personal or where the benefit of the covenant fails to pass.
For completeness, there has also been at least one instance, where the Court has been prepared to amend a restrictive covenant under s103(1) of the Transfer of Land Act 1958, where the Court concluded there had been a common mistake made by the parties to a transfer of land in the expression of a restrictive covenant.
For what might be described as “deadwood” covenants, an application may be made for a planning permit to remove or modify a covenant pursuant to clause 52.02 of the relevant planning scheme.
However, the operation of s60(5) of the Planning and Environment Act 1987 (PEA) means that where there is a real prospect of genuine opposition, this avenue is to be avoided. Section 60(5) provides:
The responsible authority must not grant a permit which allows the removal or variation of a restriction … unless it is satisfied that—
(a) the owner of any land benefited by the restriction … 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;
As described by DP Gibson of the Victorian Civil and Administrative Tribunal (VCAT) in Hill v Campaspe SC [2011] VCAT 949 this is “a high barrier that prevents a large proportion of proposals.” For covenants created on or after 25 June 1991, a less restrictive test applies.[3] Hill v Campaspe was recently applied in Dacre v Yarra Ranges SC [2015] VCAT 1453.
A further disincentive to rely on this provision is the need to notify all, rather than the closest beneficiaries of the application.[4]
Interestingly, there is a provision that allows the circumvention of the onerous advertising provisions in the PEA where the breach has been in existence for two years or more. Section 47(2) of the PEA provides:
(2) Sections 52 and 55 do not apply to an application for a permit to remove a restriction (within the meaning of the Subdivision Act 1988) over land if the land has been used or developed for more than 2 years before the date of the application in a manner which would have been lawful under this Act but for the existence of the restriction.
Section 52 of the Act deals with advertising of applications for permits to potentially affected third parties and section 55 deals with referral to bodies such as DELWP, Telstra, VicRoads and so on.
In Hill v Campaspe SC [2004] VCAT 1399, the Tribunal explained:
26 My conclusion is that if part of a covenant is breached, and the breach continues for 2 years without any action on the part of those having the benefit of the covenant, it is reasonable that no notice should be given of an application to vary by removal part of the covenant of which there is a breach. But this exemption from notice pursuant to section 47(2) of the Act should not extend to the removal of any aspect of a covenant of which there is no breach.
Although the proper interpretation of this provision is not free from doubt, this decision suggests that if a use or development has been in breach of a covenant for more than two years, a permit can be granted to remove or modify the covenant to regularise the use or development. If you rely on this provision, the relevant responsible authority under the Act should issue the permit to remove or amend the covenant without notifying other beneficiaries. However, as DP Gibson cautions, the power is limited, so any application should be judiciously drafted.
Where some degree of opposition is expected from one or more beneficiaries, an application may be made to remove or modify the covenant pursuant to s84(1) of the PLA.
S84(1) is currently structured as a series of threshold tests to be satisfied before the court’s discretion to exercise the power is enlivened. The two most commonly relied upon are ss84(1)(a) and (c):
(1) The Court shall have power … 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) that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Court deems material the restriction ought to be deemed obsolete or that the continued existence thereof would impede the reasonable user of the land without securing practical benefits to other persons or (as the case may be) would unless modified so impede such user; or …
(c) that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction…
An application under s84(1) usually involves the filing of an Originating Motion and Summons for Relief with the Supreme Court. This application should be accompanied by planning or other evidence in support of the application for modification or removal.
This is returnable before an Associate Judge who may inquire as to the nature and location of beneficiaries before determining the extent of advertising—often a combination of letters to the closest beneficiaries and the posting of a sign on the land.
Orders may then be made for the return of the summons at a future directions hearing at which objectors may attend.[5]
A surprising number of applications attract no objections. Upon being satisfied that this is the case, the Court may grant the application.
Alternatively, objections may be received and/or objectors may attend court on the return.
If a mutually acceptable agreement on the application cannot be reached with the objectors, orders may be made for the exchange of further evidence before the matter is listed for mediation and/or final hearing.
Historically, the courts have taken a conservative approach to applications for the removal or modification of restrictive covenants. In the often cited words of Farwell J in Re Henderson’s Conveyance:
… I do not view this section of the Act as designed to enable a person to expropriate the private rights of another purely for his own profit. I am not suggesting that there may not be cases where it would be right to remove or modify a restriction against the will of the person who has the benefit of that restriction, either with or without compensation, in a case where it seems necessary to do so because it prevents in some way the proper development of the neighbouring property, or for some such reason of that kind; but in my judgment this section of the Act was not designed, at any rate prima facie, to enable one owner to get a benefit by being freed from the restrictions imposed upon his property in favour of a neighbouring owner, merely because, in the view of the person who desires the restriction to go, it would make his property more enjoyable or more convenient for his own private purposes.[6]
However, in recent times, the Court has been more prepared to agree to modification applications based on s84(1)(c) of the Property Law Act 1958. See Wong v McConville & Ors and Maclurkin v Searle.
The practical challenge is to reassure the court about the likely impacts of the proposed development scheme, while allowing sufficient flexibility in the subsequent town planning permit application process.
As Morris J explained in Stanhill:
… the lack of specific plans makes it more difficult for the plaintiff to discharge the onus of showing that a modification of a restriction will not substantially injure persons entitled to the benefit of the restriction.[16]
In view of this judicial need for certainty, or at least reassurance based on the ability to consider the detail of a development proposal, it would be sensible to allow the grant of a planning permit conditional upon the subsequent removal or variation of the subject covenant, but this possibility was ruled out by VCAT in Design 2u v Glen Eira CC[17]. In that case, DP Gibson held:
5 … I find that unless there is a prior or simultaneous grant of a permit or decision to grant a permit to allow the removal of variation of the covenant, a permit cannot be granted by either the responsible authority or the Tribunal if the grant of a permit would authorise anything which would result in a breach of the covenant. I find that as the grant of a permit in this particular case would result in a breach of the covenant affecting the subject land, the application for review must fail and should therefore be dismissed.
Regrettably, the Victorian Government elected to not remove this obstruction in its Response To The Key Findings Of The Initial Report of the Victorian Planning System Ministerial Advisory Committee.[18]
Applicants now need to substantially reduce the scope of development schemes in anticipation of a worst-case assessment by VCAT or simply articulate building envelopes into which future applications for planning permission may subsequently be contained.
Alternatively, for modest variations to covenants there is some scope to rely on the planning system as a means of ensuring that substantial injury would not result from the variation. This recently occurred in Hermez v Karahan [2012] VSC 443 when Associate Justice Daly held:
4 … in respect of the relevance of town planning principles in determining whether an applicant has established a ground for removal or modification of a restrictive covenant, Cavanough J agreed with the general principle laid down by the authorities that the desirability or otherwise of a proposed development, taking into account such considerations was not part of the Court’s function. However, his Honour was prepared to assume, without finally deciding the matter, that the existence of statutory planning provisions aimed at protecting the amenity of neighbours might be relevant for assessing substantial injury. For the purposes of this application, I am also prepared to assume that planning and building regulations governing building size and height, set backs, and allowable overshadowing and overlooking are relevant to assessing whether modifying the covenant would cause substantial injury.
Significantly, the court in Hermez allowed a variation of the covenant to replace the reference to “one dwelling” with “two dwellings” and didn’t confine the applicant to building two dwellings generally in accordance with a given set of plans.
Notwithstanding these matters, it would be a mistake to frame an application under s84(1)(c) solely on town planning concepts of amenity. For instance, in Fraser v Di Paolo[19] Coghlan J reviewed a number of authorities before observing: “These decisions were made more than 30 years ago but they do give an insight into the importance of the rights which go with a covenant beyond town planning rights.” In other words, substantial injury may occur merely through the diminution of proprietary rights, particularly if the decision may set a precedent.
Potential applicants should be familiar with the cost implications of Re: Withers[20] that:
… unless the objections taken are frivolous, an objector in a proper case should not have to bear the bitter burden of his own costs when all he has been doing is seeking to maintain the continuance of a privilege which by law is his.
Re Withers was applied by Justice Morris in Stanhill v Jackon[21] who noted:
The principle set out in Re Withers is consistent with other decisions of the Court, such as that by Gillard J in Re Markin[22], Lush J in Re Shelford Church of England Girls’ Grammar School[23] and McGarvie J in Re Ulman.[24] In my opinion, it is a sound principle.
When acting for objectors, this rule may be of corresponding significance.
Interestingly, the least-used means of removing or amending a covenant is also that arguably capable of delivering the most ambitious proposals, namely amending the planning scheme to remove or amend a covenant.[25]
In this process, the assessment is made according to ordinary planning principles:[26]
In the Mornington Peninsula C46 Panel Report, Member Ball explained:
First, the Panel should be satisfied that the Amendment would further the objectives of planning in Victoria. …
Second, the Panel should consider the interests of affected parties, including the beneficiaries of the covenant. It may be a wise precaution in some instances to direct the Council to engage a lawyer to ensure that the beneficiaries have been correctly identified and notified.
Third, the Panel should consider whether the removal or variation of the covenant would enable a use or development that complies with the planning scheme.
Finally, the Panel should balance conflicting policy objectives in favour of net community benefit and sustainable development. If the Panel concludes that there will be a net community benefit and sustainable development it should recommend the variation or removal of the covenant.[27]
Here an applicant runs an entirely different risk, for while the planning system might eschew Farwell J’s disdain for profitable property ventures, to succeed, an application will need the support of the local council and the relevant Minister at the time the amendment is both prepared and adopted. In the worst case, the period between these two events may be many months and punctuated by Council elections thus adding a political wildcard into an already unpredictable process.
An example of this process being successfully employed was the recent approval of a Place of Assembly (museum) at 217 And 219 Cotham Road, Kew as part of Amendment C143 to the Boroondara Planning Scheme. The proposal involved the conversion of two dwellings into a contemporary museum with liquor licence and few on-site parking spaces, contrary to a restrictive covenant that prevented the use of the land for anything other than dwellings. Arguably, there would have been no prospect that such an ambitious project would have been approved under s84 of the Property Law Act 1958, but the project received Council backing at both ends of the process and a highly favourable planning panel report.[28]
A restrictive covenant can be removed or modified by consent. Section 88(1AC) of the Transfer of Land Act 1958 provides:
A recording on a folio of a restrictive covenant that was created or authorised in any way other than by—
(a) a plan of subdivision or consolidation; or
(b) a planning scheme or permit under the Planning and Environment Act 1987—
may be deleted or amended by the Registrar if the restrictive covenant is released or varied by—
…
(d) the agreement of all of the registered proprietors of all land affected by the covenant; …
If the proposed modification or removal is not controversial and/or the number of beneficiaries is not large, this may be the most efficient means of proceeding.
Finally, a covenant may be removed at the direction of the Registrar of Titles pursuant to s106(1)(c) of the Transfer of Land Act 1958. This provides:
(1) The Registrar—
(c) if it is proved to his satisfaction that any encumbrance recorded in the Register has been fully satisfied extinguished or otherwise determined and no longer affects the land, may make a recording to that effect in the Register;
This provision can be used for covenants that do not define the land to which the benefit is affixed or where the benefit of the covenant might be said to have not passed to subsequent successors or transferees. Covenants of this nature were discussed in Prowse v Johnstone [No. 2] [2015] VSC 621 at [62].
Download a .pdf of this article.
Matthew Townsend
Owen Dixon Chambers
http://www.vicbar.com.au/profile?3183
townsend@vicbar.com.au (04) 1122 0277
Liability limited by a scheme approved under Professional Standards Legislation.
[1] “A permit is required before a person proceeds: – Under s23 of the Subdivision Act 1988 to create, vary or remove an easement or restriction or vary or remove a condition in the nature of an easement in a Crown grant.”
[2] [2011] VCAT 949 at [65]
[3] PEA s60(2): … must not grant a permit which allows the removal or variation of a restriction unless … the owner of any land benefited by the restriction … 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] PEA s52(1)(cb).
[5] See R52.09 of the Supreme Court (General Civil Procedure) Rules 2005.
[6] [1940] Ch 835 at 846
[7] [2005] VSC 169; (2005) 12 VR 224, 231
[8] [2005] VSC 169; (2005) 12 VR 224, 231 [13], 239 [41]-[42]
[9] Per Daly AJ in Grant v Preece [2012] VSC 55 at [55]
[10] [2006] VSC 298
[11] [2007] VSC 426
[12] [2011] VSC 346
[13] [2008] VSC 281 at [48]
[14] (2007) 81 ALJ 68 at 71
[15] [2012] VSC 4
[16] [69]
[17] [2010] VCAT 1865
[18] Response to Committee Finding 26
[19] [2008] VSC 117 at [42]
[20] [1970] VR 319-320 at 320
[21] [2005] VSC 355
[22] [1966] VR 494.
[23] Unreported, 6 June 1967.
[24] (1985) VConVR 54-178.
[25] See Division 5 of the PEA “Combined permit and amendment process” or the use of site specific controls pursuant to clause 52.03 as occurred in Amendment C143 to the Boroondara Planning Scheme.
[26] M.A. Zeltoff Pty Ltd v Stonnington City Council [1999] VSC 270
[27] Amendment C46 to the Mornington Peninsula Planning Scheme at 25. Applied by the panels considering amendments C23 to the Stonnington Planning Scheme; C72 to the Manningham Planning Scheme; and C137 to the Mornington Peninsula Planning Scheme.
[28] http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/PPV/2012/5.html?stem=0&synonyms=0&query=Amendment%20C143%20to%20the%20Boroondara%20Planning%20Scheme
[29] Easements and Covenants, Final Report #22; Recommendation 43.
Recently, we managed to modify a building materials restrictive covenant through the Supreme Court’s section 84 process–without advertising to beneficiaries.
We achieved it by applying to add in the words “or other materials with a rendered finish” after the brick and/or stone restriction.
This might not work in all cases, for there were peculiarities in the distribution of beneficiaries’ here, but we are often approached by developers wishing to construct a building out of contemporary building materials where there is a brick and/or stone restriction.
This may be one of the most cost effective means of doing it.
The long awaited decision in Jeshing Property Management Pty Ltd v Yang [2022] VSC 306 has been handed down by the Supreme Court.
This was probably the most heavily contested restrictive covenant case since Prowse v Johnston and resulted in the dismissal of an application to modify a single dwelling covenant to allow five dwellings at 16 St Georges Road, Toorak.
As is often the case, restrictive covenant applications are the plaintiff’s to lose, and here too, the Court found the plaintiff had not discharged its onus to prove an absence of substantial injury to beneficiaries.
The Court made adverse observations about the plaintiff having not prepared detailed plans in support of the application. Rather, Annexure A to the Originating Motion provided an annotated two dimensional building envelope:
Matthews AsJ explained:
338. For the reasons given above, I am not satisfied that there will be no substantial injury to any of the Defendants as a result of the Plaintiffs’ proposal. As a consequence, the s 84(1)(c) Application will be refused.
339. Before moving on, I wish to say something further about the way that the Plaintiffs put their case in respect of the Modification Applications, and it is convenient to do so here. The Plaintiffs clearly made a decision to pursue the Modification Applications without providing detailed drawings or plans of their proposal; rather, the detail of the proposal was confined to the Proposed Envelope. That was their choice, and they were entitled to run their case that way if they saw fit. As noted earlier, having made that choice, they then have to bear the consequences of it in terms of not being able to clearly articulate the changes which may occur and whether they will be substantially injurious to the Defendants.
Schematic plans such as those shown above, may still be sufficient for unopposed applications or indeed for mediated settlements, but this decision suggests that plaintiffs take a risk by not preparing architectural drawings if the modification application proceeds to trial.
Section 24 of the Supreme Court Act 1986 (Vic) specifies that costs are in the discretion of the Court:
Costs to be in the discretion of Court
(1) Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid. [1] …
This discretion in relation to costs is absolute and unfettered to ensure substantial justice is achieved between the parties:
3 … the court has an absolute and unfettered discretion in relation to costs, and may, in appropriate circumstances, examine the realities of the litigation and attempt to achieve on the matter of costs substantial justice as between the parties.[2]
Despite this discretion, there is a settled practice that costs follow the event, and a successful litigant should receive their costs absent disqualifying conduct:
Although costs are in the discretion of the Court, there is a settled practice (sometimes called a general rule) that in the absence of good reason to the contrary a successful litigant should receive his or her costs. It is not, however, a legal rule devised to control the exercise of the discretion.[3]
This discretion is modified in certain applications pursuant to section 84 of the Property Law Act 1958 (Vic) to the effect that:
… unless the objections taken are frivolous, an objector should not have to bear the burden of his own costs when all he has been doing is seeking to maintain the continuance of a privilege which by law is his.
This principle from Re: Withers[4]was applied by Morris J in Stanhill Pty Ltd v Jackson[5]who noted:
The principle set out in Re Withers is consistent with other decisions of the Court, such as that by Gillard J in Re Markin, Lush J in Re Shelford Church of England Girls’ Grammar School andMcGarvie J in Re Ulman. In my opinion, it is a sound principle.
However, his Honour sounded a note of caution that objector defendants should not see the reimbursement of costs as an entitlement:
It is also relevant that the defendants conducted the proceeding responsibly. If a defendant, resisting an application to modify a covenant, acts irresponsibly then it would not be entitled to costs in relation to that irresponsible conduct; indeed, it might be in a position where it would have to pay the plaintiff’s costs.[6]
Indeed, in Re Jeffkins Indenture,[7] the court suggested that defendants in applications for declarations in relation to restrictive covenants ought not expect a full indemnity on costs:
I would add, on the question of costs, that a plaintiff seeking a declaration that restrictive covenants do not affect his property is expected to pay his own costs. He is also expected to pay the costs of any defendants who enter an appearance down to the point in the proceedings at which they have had a full opportunity of considering the matter and deciding whether or not to oppose the application. Any defendant who then decides to continue, and appears unsuccessfully before the judge, does so at his own risk as to his own costs at that stage. Such defendant would not, however, be ordered to pay the plaintiff’s costs.
The Victorian Law Reform Commission adopted a somewhat similar recommendation in its report on Easements and Covenants:
45. In an application under section 84 of the Property Law Act 1958 (Vic), the court or VCAT should apply the following principles to the award of costs:
a. Where the application is unsuccessful, the applicant should normally pay the costs of any respondent entitled to the benefit of the easement or restriction.
b. Where the application is successful, the applicant should normally pay the costs of the respondent incurred prior to the point in time at which, in the opinion of the court or of VCAT, the respondent has had a full opportunity to assess the merits of the application. The respondent should normally bear his or her own costs incurred after that point, but not the costs of the successful applicant.
By reason of the above, a well-advised plaintiff should look for opportunities to make Calderbank offers[8] and/or Offers of Compromise to improve their position in the future when it comes to discussing the issue of costs.
Calderbanks were unsuccessful in Wong v McConville[9] where the Court found that it was not unreasonable for the defendants to have rejected multiple offers to compromise.
Similarly, in Lahanis v Livesay & Ors (Costs) [2021] VSC 65 Derham AsJ found that in an application to modify a single dwelling covenant to allow two dwellings, there was insufficient difference between the offer to compromise and capitulation:
51 In this case, the factors that make up a so called ‘genuine offer’ have been separately considered, including whether the offer involved a real element of compromise. These matters include the timing of the offer, content and terms of the offer, its clarity, the explanation given for it, what was known or not known to the offeree at that time and the offerees’ prospects of success. What is left for consideration in order to determine whether the offer was a ‘genuine compromise’, in the sense of a real compromise, is whether it had an element of compromise or whether in truth it required the defendants to capitulate. In my view, it essentially required the defendants to capitulate.
52 In conclusion, it is in my view incorrect to say, as the plaintiff submitted, that the real cause of the litigation from the time of the expiry of the Calderbank offer was the defendants’ refusal to accept the offer and not the defendants’ legitimate action in defence of the Covenant. The defendants were entitled to put their views before the court and justified in opposing the application, so that the costs incurred by them ‘were a necessarily incident to such an application’. In my view, it is only right and proper that the plaintiff should pay all the defendants’ costs incurred by reason of the application on the standard basis.
That said, Calderbanks have been successfully applied by defendants in Michelmore v Suhr[10], and Manderson v Smith.[11] In the latter case, Efthim AsJ held that an offer of compromise should have been accepted and directed the Plaintiff to pay indemnity costs:
21 In my view, indemnity costs should be awarded to the defendants from the date of the first offer of compromise. The plaintiff commenced the proceedings knowing that he had a fence on his own property encroached the boundary line by a much greater distance than the defendants’ fence and knowing that all other residents had fences. He should also have known that the defendants’ fence was at best only six centimetres over the boundary line.
22 The first offer of compromise should have been accepted and, in my view, it was unreasonable that it was not. The defendants have come to the Court with clean hands, they obtained a permit from the local council to erect the fence. It is clear from the evidence of Ms Smith that the defendants were concerned about the native flora. They were put to a great deal of expense in defending this claim which they should never have had to do.
As a matter of practicality, however, while most cost disputes are resolved by negotiation, Calderbanks and offers of compromise can still have an outsized impact on this process, simply because of their potential impact should they be upheld by the Court.
Moreover, objectors’ costs are typically low until after the second return of the application, meaning a plaintiff can commence a section 84 application with a fair degree of confidence about how much the process will cost.
It is not until the number and extent of defendants becomes known that the implications of a Re Withers’ costs ruling starts to emerge.
None of this is to say that a defendant can take an order for costs for granted:
These examples of costs orders against defendants should not dissuade beneficiaries from acting in good faith to protect their property rights and from subsequently seeking reimbursement for the reasonable costs in doing so, but defendants must remember that they too, are bound by the following overarching obligations in the Civil Procedure Act 2010:
20 Overarching obligation to cooperate in the conduct of civil proceeding
A person to whom the overarching obligations apply must cooperate with the parties to a civil proceeding and the court in connection with the conduct of that proceeding.
22 Overarching obligation to use reasonable endeavours to resolve dispute
A person to whom the overarching obligations apply must use reasonable endeavours to resolve a dispute by agreement between the persons in dispute, including, if appropriate, by appropriate dispute resolution, unless—
(a) it is not in the interests of justice to do so; or
23 Overarching obligation to narrow the issues in dispute
If a person to whom the overarching obligations apply cannot resolve a dispute wholly by agreement, the person must use reasonable endeavours to—
(a) resolve by agreement any issues in dispute which can be resolved in that way; and
(b) narrow the scope of the remaining issues in dispute—
unless—
(c) it is not in the interests of justice to do so; or
(d) the dispute is of such a nature that only judicial determination is appropriate.
24 Overarching obligation to ensure costs are reasonable and proportionate
A person to whom the overarching obligations apply must use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate to—
(a) the complexity or importance of the issues in dispute; and
(b) the amount in dispute.
25 Overarching obligation to minimise delay
For the purpose of ensuring the prompt conduct of a civil proceeding, a person to whom the overarching obligations apply must use reasonable endeavours in connection with the civil proceeding to—
(a) act promptly; and
(b) minimise delay.
[1] Supreme Court Act 1986 (Vic) s 24.
[2] Manderson v Wright (Costs) [2018] VSC 177, [3] (John Dixon J).
[3] BCA Asset Management Group Pty Ltd v Sand Solutions (Vic) Pty Ltd [2021] VSC 177, [11].
[4] Re Withers [1970] VR 319.
[5] Stanhill Pty Ltd v Jackson [2005] VSC 169.
[6] Ibid, [6].
[7] [1965] 1 WLR 375
[8] See Calderbank v Calderbank [1975] 3 All ER 333.
[9] [2014] VSC 282
[10] [2013] VSC 284
[11] Unreported, S ECI 2020 03378, 24 August 2021
[12] [1970] VR 319
It is relatively unusual for large development applications to simultaneously seek both planning approval and the modification or removal of a restrictive covenant. This is particularly so for covenants created prior to 25 June 1991 where section 60(5) of the Planning and Environment Act 1987 (PEA) applies. This provision states a responsible authority must not grant a permit that allows the removal or variation of a restrictive covenant unless it is satisfied that:
(a) the owner of any land benefitted by the restriction … 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.
The orthodox approach is to deal with the modification or removal of a restrictive covenant first, typically by way of an application pursuant to section 84 of the Property Law Act 1958, with a planning application being dealt with subsequently as part of a separate process.
Pulitano Properties Pty Ltd v Yarra Ranges SC [2022] VCAT 32, serves as a reminder as to why an assessment against section 60(5) of the PEA is to be avoided, seemingly at all costs.
In this case, the Tribunal was asked to remove a series of covenants that provided an absolute discretion to a natural person, deemed to be deceased, to accept or refuse plans for development:
[the covenantor] shall not erect on the said lot … any building whether shop or dwelling house except in accordance with a plan thereof which shall first have been submitted to and approved by the said Elizabeth Annie Lipscomb…
Notwithstanding the absence of opposition from beneficiaries or indeed any opposition to the removal of the covenants by the municipal council that was otherwise contesting the development application, the Tribunal still found that the combined operation of section 60(5) and clause 52.02 of the relevant planning scheme meant that it should reject the application to remove the restrictive covenants:
365 The opening words of s. 60(5) of the Act contain a mandatory direction to a responsible authority (and the Tribunal) that a permit to remove or vary a restrictive covenant must not be granted unless the responsible authority (or the Tribunal) is satisfied of the matters that follow.
366 The Tribunal has previously recognised that there is a stringency in the requirements of s. 60(5) of the Act that sets “the bar that is extraordinarily high. The existence of any detriment of any kind (including any perceived detriment) is sufficient to defeat an application to vary a covenant.”
367 I do not accept that the fact that none of the beneficiaries to the restrictive covenants have objected to the proposed development, of itself, supports a finding that the beneficiaries would not suffer any detriment of any kind because of the development. There may be many reasons why a person (including a beneficiary to a restrictive covenant) may not make an objection to a planning permit, however it is for the Tribunal to be ultimately satisfied that beneficiaries will not suffer detriment of any kind.
368 In light of our findings on the merits of the proposal particularly in respect to the impact of the proposal on the surrounding traffic network and the unacceptable visual bulk of the proposed building, I am not satisfied that the beneficiaries of the restrictive covenant will not suffer detriment of any kind.
369 The other reasons given by the applicant for the exercise of discretion cannot overcome the statutory obligation imposed by s. 60(5) of the Act on the Tribunal to be satisfied that the beneficiaries of the restrictive covenant will not suffer any detriment of any kind.
370 In addition, the findings on the matters of concern to the resident respondents, Mr Williams, the League and the ETR Board, as ‘affected persons’ for the purposes of clause 52.02 of the planning scheme supports my finding that the restrictive covenants should not be removed.
In contrast, in an application pursuant to section 84 of the Property Law Act 1958 the Court would be unlikely to give much, if any, weight to injury occasioned on non-beneficiaries, and the absence of objectors might be expected to weigh heavily in favour of the Court’s discretion to remove or modify the restrictive covenants.
A recent case in the Victorian Civil and Administrative Tribunal (VCAT) demonstrates the difficulties involved in removing an easement over the objections of the party with the benefit of the easement.
The case was Wheelhouse v Maribyrnong CC [2021] VCAT 1171, in which the Victorian Civil and Administrative Tribunal rejected an application by Wheelhouse to remove a ~24m by .9m walkway down the side of Wheelhouse’s home to Georgiadis’ home to the rear.
Wheelhouse was upset that Georgiadis, his visitors and guests, could see into his house as they walked down the pathway, amongst other things.
He argued Georgiadis had alternative access down a laneway to the rear.
The Tribunal applied the principles in KJ Barge & Associates v City of Prahran (1992) 10 AATR 345 asking:
1. Does the current use of or the current state or condition of the dominant and servient lands (tenements) indicate a need or requirement for the continued existence of the easement?
2. Would the owners of the dominant land (Georgiadis) suffer any material detriment in their use and enjoyment of the land if the easement was removed or varied?
The Tribunal noted the convenience that the easement provides to Georgiadis, and that removal of the easement would add time and distance to the pedestrian route to nearby Footscray:
“It is not uncommon for residential properties to have more than one access point and the mere fact that there are two access points to a site does not of itself mean that both access points are not needed.
The parties have different views as to whether the easement is needed for the purposes of mail and parcel delivery, waste collection, pedestrian access and emergency access.
Ultimately, these differences are not material to my decision in this proceeding… the current use, state and condition of the dominant and servient land indicates the easement is needed…
I consider the loss of this convenient, direct pedestrian access to Cowper Street would result in a material detriment to the use and enjoyment of No. 2/113 Cowper Street. In my view, this means that the need served by the easement is a real and ongoing one. For this reason, I do not consider it appropriate to grant a planning permit which would remove the easement.”
This case is a reminder that easements are property rights that the Tribunal will not lightly remove over the objections of the party with the benefit of the easement. Where easements are to be removed, this is best achieved by negotiation and agreement.
It’s also a reminder why people should study a section 32 agreement carefully and take advice about the consequences of easements and restrictive covenants, before a purchase of land is made.
It’s long been established that equitable restrictive covenants or restrictive covenants inter partes should be construed in a common sense and non-technical way, with the objective being to ascertain the intention of the parties by reference to the words in their context. See Clare v Bedelis [2016] VSC 381 at [31]
Arguably, this approach to interpretation should not be strictly applied to a restriction in a plan created by way of the Subdivision Act 1988 (Vic).
As the learned authors of the Victorian Law Reform Commission’s report on Easements and Restrictive Covenants (VLRC Report) explained, equitable restrictive covenants and restrictions on a plan are not the same:
6.40 It is commonly assumed that a restriction created by registration of a plan is a restrictive covenant and that all lot owners in the subdivision have the benefit of it. The idea is likely to have been fostered by the inclusion of ‘restrictive covenant’ in the definition of ‘restriction’ in the Subdivision Act. It also finds some support from administrative provisions recently inserted into the Transfer of Land Act, which refer to a ‘restrictive covenant created by plan’.
6.41 We disagree with this assumption. A restriction created in a plan is not one that equity would recognise or enforce, as the restriction is not created for the benefit of specified land. Equity has strict requirements about identifying the benefited land.
In Manderson v Smith [2021] VSCA 359, the Court of Appeal was asked to construe a restriction arising out of a now-expired plan of subdivision, however, their Honours did not see fit to draw the distinction made in the VLRC Report.
Rather, Beach and Kennedy JJA were content to have recourse to a dictionary definition of a term in the restriction, namely “building”, and eschewed reliance on the definition of “building” in the Planning and Environment Act 1987:
42 Restriction 2 prohibits the ‘develop[ment]’ of the land ‘other than in accordance with’ the NDP. Even presuming that the construction of a boundary fence constitutes a development of the land, the fence is only ‘other than in accordance with’ the NDP if it properly constitutes a ‘building’, or ‘part of a building’ the subject of the prohibition in the NDP.
43 The Macquarie Dictionary definition of a ’building’ is as follows:
1. a substantial structure with a roof and walls, as a shed, house, department store, etc.
2. the act, business, or art of constructing houses, etc.
There is nothing in this definition which suggests that a ‘building’ should extend to a boundary fence. In this respect, we would respectfully disagree with Emerton J that it was appropriate to have recourse to the definition contained in the Planning and Environment Act 1987.
The matter does not appear to have been the subject of contested submission. In any event, we do not consider that any such recourse is necessary or appropriate. Although the Permit is to be interpreted pursuant to the definitions in that Act, the Permit is spent. It would also be unnecessary to include the words, ‘or part of a building’ if that definition applied, because the statutory definition already includes ‘and part of a building’.
Such an approach, their Honours found, would be consistent with the principles summarised in Clare v Bedelis and avoided a technical or legal approach.
The tantalising point made in the VLRC report about jurisdiction was not taken and will need to be fought another day:
6.43 If, as we maintain, statutory restrictions are not restrictive covenants, they are enforceable under administrative law rather than as property rights. Administrative law is the branch of public law that regulates the exercise of public powers and duties. Statutory duties and restrictions can be enforced by obtaining an injunction or declaration by a court. The Attorney-General has the right to enforce the public interest in the observance of a statutory duty or a restriction, and can apply to a court for an injunction or declaration or authorise somebody else to do it.
The Supreme Court has approved the use of section 84(1)(a) of the Property Law Act 1958 as a means of cleansing a title of a reference to a restrictive covenant with no further work to do.
Practitioners have in the past found that Titles Office officials have refused to remove a reference to a restrictive covenant from a certificate of title, unless directly ordered to do so by the Court.
In turn, the Court has expressed reservations about being able to direct the removal of the covenant from a title solely pursuant to its declaratory power under section 84(2) of the Property Law Act 1958.
The end result is that an originating motion seeking a declaration that a restrictive covenant is ineffective, should also seek a consequential finding of obsolescence.
In Re Pomroy [2021] VSC 739, the court held:
“83. It follows that the third element required in order for the Covenant to run with the Subject Land and burden the plaintiff, being a successor in title, is not present. This is because the Covenant has not been given for the benefit of land and does not touch or concern that land.
84. As the benefit of the Covenant is unenforceable by any persons other than the Covenantees, it can no longer be said to affect the Subject Land.”
The Court then agreed to its powers under section 84(1)(a) as a consequence of this finding:
The plaintiff submits that with respect to s 84(1)(a), if the Court is of the view that the Covenant is ineffective and therefore no longer has any work to do, it would be appropriate to issue an order for its removal from title to the Subject Land.
I agree with this submission and will therefore make such an order.
A copy of the submissions presented to the Court can be found here.
Restrictive Covenants and Easements in Victoria 