When construing a restrictive covenant, a careful analysis of its various components is needed to understand its true effect, and indeed, whether it is effective at all.
For example, one covenant in Toorak dating back to the 1960s, purported to prevent part of the land from being developed to more than one storey. The sole beneficiary was the neighbouring land to the south. The dwelling had been constructed on the assumption the covenant was valid. However, close consideration of the chronology revealed that the purported covenantee had already sold the benefitted land by the time the covenant was signed and registered. The Supreme Court therefore agreed that the covenant was unenforceable, given that the covenantee had lost his ability to enter into the agreement at the time the covenant was purportedly made.
In another case, a restrictive covenant in Altona had been the subject of extensive advertising in an application to modify what was believed to be a single dwelling restriction. However, closer examination revealed that the covenant suffered from the same flaw that was the subject of the following comment by Morris P in Thornton v Hobsons Bay City Council:
11 In the present case the transferor has sought to identify the land to be benefited by reference to land remaining untransferred in a particular certificate of title. That method of identification purports to be a precise method. It follows, as Ms Tooher submitted, that there is less scope in such circumstances to use surrounding circumstances to identify the benefited land. The problem is that, at the time the transfer was made on 25 April 1953, certificate of title volume 6836, folio 089 was no longer in existence, it having been cancelled on 15 September 1952. Thus at that time there was no land remaining untransferred in that certificate of title. Hence notwithstanding the exactitude with which the draftsman of the covenant sought to achieve, in fact all he has achieved is a nonsense.
The Supreme Court agreed that the restrictive covenant was a nonsense and declared the restrictive covenant unenforceable.
A degree of uncertainty now surrounds surprisingly common covenants that purport to require plans to be approved by a now deceased person or deregistered corporation. In Crest Nicholson Residential (South) Ltd v McAllister the approval of the vendor, in that case a company, was required for any construction on the subject land. The vendor company had subsequently been dissolved, and given the lapse of time could no longer be re-registered. Neuberger J noted that reading the restriction as now absolute, conformed with its strict literal interpretation. However, he found that the restriction was discharged now that the vendor could not consent. Crest Nicholson was said to be “strongly persuasive” in 196 Hawthorn Road Pty Ltd v Duszniak.
It should not be assumed that you will necessarily need to apply to the Supreme Court to have a covenant removed for reasons of defect or express limitation. For example, a covenant on the Mornington Peninsula was expressed to be for the benefit of the original vendor, its successors and transferees. The Covenant did not identify the land to be benefitted by the restriction contained in the Covenant. A letter to the Registrar of Titles was sufficient to have the covenant removed through the exercise of the Registrar’s powers under section 106 of the Transfer of Land Act 1958.
(04) 1122 0277
 Re Thaqi: S ECI 2020 01338.
  VCAT 383.
 Re Tran S CI 2018 02425.
  1 ALL ER 46,  (Neuberger J).
  VSC 235.
A common challenge in settling an application to modify a restrictive covenant pursuant to section 84 of the Property Law Act 1958 is dealing with beneficiaries’ concerns that “if we agree to this application, future developers will rely on it as a precedent”.
Practitioners should be aware that most, if not all, judges are prepared to accommodate such concerns by spelling out in detail, why a modification in one case, should not be seen as a precedent for similar applications in the future.
A good example is the recent decision of Mukhtar AsJ in Tabrizi v Pedler & Ors S ECI 2019 05629 (3 July 2020) who took care to explain why the future applications might be considered differently:
In my judgment I think there are enough features of this application to say that on the confines of the peculiar or particular facts of this case, there is no good reason to refuse the consent order as sought. One cannot presage what other landowners in this neighbourhood or commercial developers may attempt to do in the future with this or any other application for a modification of a single dwelling covenant. However, because of the peculiar facts here, and in fairness to the defendants, what ought be stated here is that this decision is confined to its unique facts and not attributable to any neighbourhood-wide change to the neighbourhood that alters its predominant character as a single dwelling area.
Needless to say, there will need to be distinguishing characteristics in the application to attract such commentary by the Court, but most applications typically enjoy some form of distinguishing feature in order to be seriously considered for modification in the first place.
It is not uncommon for a property owner to use their neighbour’s land as a means of access or egress, even though they may have no formal right to do so.
There may also be instances in which this use has continued unchallenged for such a length of time that to deny its existence could amount to injustice. In such cases, it might said that an easement by “prescription” or long use has been achieved.
If the use has carried out for an uninterrupted period of 20 years, a prescriptive easement can be established, subject to the following principles:
- enjoyment must be without violence, secrecy or consent and use must be ‘as of right’;
- the owner of the land in question must acquiesce in their neighbour’s exercise of the easement;
- the easement sought must be permanent; and
- there can be no unity of possession of both the alleged dominant and servient tenements (or parcels of land).
Given that these principles focus on the position of both the claimant and the owner of the land, it is necessary to consider both the acts of the claimant and the responses of the owner in assessing whether the 20-year time period has been established.
Although prescriptive easements have long been upheld in Victoria (for example, see Nelson v Hughes  VLR 277), the legal position in Victoria is now unclear.
Victoria’s land ownership system, known as the Torrens Title System, is a method of recording and registering land ownerships and interests in the Register Book of the Office of Title. The Register aims to provide a true, correct and complete description of all land in Victoria.
One departure from this ideal is described in section 42(2)(d) of the Transfer of Land Act 1958 (Vic) which allows for easements ‘howsoever acquired’, suggesting that the acquisition of easements via prescription might still be a recognised principle under Victorian law:
42 Estate of registered proprietor paramount …
(2) Notwithstanding anything in the foregoing the land which is included in any folio of the Register or registered instrument shall be subject to—
… (d) any easements howsoever acquired subsisting over or upon or affecting the land;
As prescriptive easements are created through use, they are not recorded on the Register, leading to an apparent inconsistency between prescriptive easements and the Torrens system, as noted by the Court of Appeal in the recent case of Laming v Jennings  VSCA 335:
186 Complex issues of statutory interpretation, legislative history and the continuing relevance of legal fictions which may conflict with the public policy underpinning the Torrens system are involved.
The Court of Appeal concluded that the rationale of concepts such as prescriptive easements has diminished with the advent of modern systems for the registration of title:
195 … the historical rationale of legal fictions such as the doctrine of lost modern grant has significantly diminished with the advent of modern systems for the registration of title, comprehensive planning laws and more mature land law jurisprudence.
However, the Court did not definitively resolve the question as to what extent prescription remains compatible with the Torrens System:
186 … In our opinion, these issues were not sufficiently explored before us to enable us to reach an informed decision on ground 4. Accordingly, we will refrain from expressing a final view on the question raised by that ground until such time as it requires determination in a future case.
So it would seem that the existence of prescriptive easements in Victoria is still an open question. Where available, the prospect of establishing a road might be a safer bet.
In Randell v Uhl  VSC 668, Derham AsJ has clarified the notice required before the Court will find a party to be bound by the terms of a building scheme.
Where a building scheme is established, all purchasers and their assigns are bound by, and entitled to the benefit of a restrictive covenant.
Previously, it was not entirely clear how far a purchaser would need to search the Register of Titles to be on notice as to the existence of a building scheme.
In Randell, his Honour found a building scheme had been established, but found the plaintiff not bound by its terms because the existence of a scheme was not evident on the face of the title, or any documents referred to therein:
82 … If it were sufficient notice that the Head Title in this case bears the notification of a building scheme, it would require a person interested in purchasing the Land to search the Register further than the title search indicated and to go back to the Head Title and the original, or first edition, of the Subdivision. That would render conveyancing a hazardous and cumbersome operation beyond what is reasonable to expect.
83 In summary, I am satisfied that a building scheme was established but the notification of it was not sufficient to give notice of it to the plaintiffs because a search of the title of the Land by the plaintiffs did not, and would not, reveal the existence of the scheme either directly, or indirectly by reference to any instrument referred to in the search of the title.
References to purported Building Schemes commonly appear on title documents in Victoria, but under close judicial scrutiny they are rarely proven. A question now exists whether Randell has made this process of atrophication effectively complete.
Solicitors and planners need to be aware that when making an application to the Supreme Court to modify a restrictive covenant via s84 of the Property Law Act 1958, any earlier application to modify a restrictive covenant via the Planning and Environment Act 1987 process needs to be fully disclosed to the judge hearing the later s84 application.
Part of the reason for this is that the Court’s current practice is to ensure that each and every beneficiary who objected to an earlier application (irrespective of its statutory basis) receives notice of the subsequent s84 application.
This can have a significant impact on the degree of opposition to the s84 application by reason of the broader notice requirements triggered by the Planning and Environment Act 1987 process. Under the planning permit process, each person who has the benefit of the covenant must receive written notice of an application to modify or remove a restrictive covenant.
In contrast, in a s84 application, notice is at the direction of the judge, but this is typically far narrower than direct notice to all beneficiaries.
In recent times, we have found that the Court directing written notice to more distant beneficiaries can have a significant impact on the conduct of the s84 application, by triggering the opposition of parties that might otherwise not have been involved in the s84 process, were it not for this broader notice obligation.
It is often thought that there is little downside in making a speculative application to modify a covenant via the Planning and Environment Act 1987 process, before commencing an application in the Supreme Court, because the only downside is the cost of advertising and a modest application fee. If our experience is anything to go by, there is an additional consequence to consider.
In April 2019, in Re: EAPE (Holdings) Pty Ltd  VSC 242, the Supreme Court found that when advancing a case for the modification of a single dwelling covenant, it is legitimate to say that the proposal for modification should be compared against a rooming house–an as-of-right land use arguably providing accommodation to the lowest end of the rental market.
This is potentially significant, because until this time, the comparator typically used in argument before the Court is a large single dwelling that would not need planning permission. In other words, applicants often argue:
– I can build this large house without modifying the covenant;
– given that my proposal for two or more dwellings is lower in impact than a large house, I should be allowed to modify the covenant for there is, relatively speaking, no substantial injury to beneficiaries by the covenant being so modified.
Now, applicants before the Court can legitimately invite the court to compare the proposed modification with the impact that beneficiaries might experience if the land was instead developed and used as a rooming house, with the increased activity, noise and parking impacts that routinely accompany such uses.
In EAPE the Court placed considerable emphasis on the plaintiff’s apparently genuine intentions to pursue the rooming house option in the event the modification was not granted, but one can imagine judges in future cases simply being convinced that a rooming house was a reasonably likely outcome of its refusal to modify a covenant: see Prowse v Johnston  VSC 4 at 120.
What is an easement?
An easement comes in a number of forms but may generally be described as the right to use another person’s land without occupying it.
It may be a private right between specified landowners, or an easement in gross, granted to a public authority by operation of statute. Easements may be implied if not expressly created; and easements may be prescribed by using land for at least 20 years without secrecy, permission or force.
What types of easements are there?
- A private easement is a property right to make a limited use of land by someone other than an owner. It cannot give exclusive possession, and must be for the benefit of other land (the dominant land).
- An easement in gross is an easement for the benefit of the holder of the easement (usually a service provider) which is not attached to dominant land. It is not recognised at common law and is a creature of statute. An example might be a drainage easement along the rear of a number residential properties in favour of a water authority.
- An implied easement is an easement that is not expressly created by grant or reservation in an instrument or by statute but is implied by common law or statute so that the land can continue to be used in a particular way.
- A prescriptive easement is an easement acquired by using land for at least 20 years without secrecy, permission or force.
What are the key elements of a private easement?
- There must be a dominant and servient tenement;
- the easement must accommodate the dominant tenement;
- the owners of the dominant and servient tenements must be different from each other; and
- the right or claim must be capable of being the subject matter of a grant.
In Victoria, private easements can be expressly created by grant or reservation:
- Creating an easement by ‘grant’ means that the servient owner grants the dominant owner an easement over his or her land for the benefit of the dominant land.
- An easement is created by ‘reservation’ when a vendor conveys land to a purchaser but reserves an easement over that land, for the benefit of other land that the vendor owns.
How do I know if land is burdened by an easement?
Typically, if land is burdened by an easement, it will be noted under the heading “Encumbrances, Caveats and Notices” on a register search or on a plan of subdivision.
However, under section 42(2)(d) of the Transfer of Land Act 1958, all easements, ‘howsoever acquired’, exist over land even if they do not appear on the register. This is significant, because while covenants can fall away if they not clear on the face of the title, easements may survive the sale process even if they are not revealed on an inspection of the Register.
How do I know if land is benefited by an easement?
Assessing who takes the benefit of an easement requires careful analysis.
The benefit of private easements cannot flow to the public at large. The exception is an easement in gross, which will confer a licence upon the person for whom the right was created. Easements in gross are commonly created in favour of statutory bodies, such as the local government or water authorities.
That said, the case of Anderson & Anor v City of Stonnington & Anor  VSC 374 provides a detailed explanation of how easements can become roads, and if and when that occurs, the operation of the Road Management Act 2004, may mean the easement is permanently displaced.
How can I remove or modify an easement?
Presently, there is no judicial means of removing or modifying easements in Victoria.
There are two options: claim of abandonment and s 23 of the Subdivision Act 1988 in combination with the Planning and Environment Act 1987.
Claims for abandonment are notoriously difficult to prosecute. In Brookville Pty Ltd v O’Loghlen  VSC 67, Kaye J found that in order to establish abandonment, the plaintiff must prove that the owner of the dominant tenement intended to relinquish their rights to the easement forever.
Section 23 of the Subdivision Act 1988 in combination with the Planning and Environment Act 1987, allow for easements to be removed or varied, without the consent of or compensation being paid to beneficiaries. For this to occur, a planning permit must first be granted under clause 52.02 of the relevant planning scheme, the purpose of which is “to enable the removal and variation of an easement or restrictions to enable a use or development that complies with the planning scheme after the interests of affected people are considered.” An example of this in operation can be found in Warner Crest Pty Ltd v Stonnington CC  VCAT 36.
How is an express subdivisional easement created?
There are overlapping provisions for the creation of express subdivisional easements contained in two different statutes:
- section 12(1) of the Subdivision Act 1988; and
- section 98(a) of the Transfer of Land Act 1958.
Section 12(1) of the Subdivision Act 1988 requires all proposed and existing easements to be specified in subdivision plans. These easements are then created upon registration of the plan. Easements created under this section are in addition to those created under section 98(a) of the Transfer of Land Act 1958.
Section 36 of the Subdivision Act 1988 also provides for an owner of land to acquire an easement compulsorily over other land in the subdivision or consolidation, or in the vicinity, if granted leave to do so by the Victorian Civil and Administrative Tribunal. The best step by step analysis of this provision can be seen in JT Snipe Investments Pty Ltd v Hume CC (Red Dot)  VCAT 1831, however, Gale v Frankston CC  VCAT 62 suggested a slight change in emphasis.
How is a prescriptive easement created?
Another way easements can arise without being expressly created is under a common law rule called prescription. A prescriptive easement can be acquired by what is called ‘long user’ or 20 years of continuous use.
Victoria retains many common law rules of implication and prescription that predate the subdivisional planning system, as well as the new statutory provisions for implied subdivisional easements.
In Laming v Jennings  VSCA 335, the Court of Appeal made some interesting comments about the apparent inconsistency of prescriptive easements with the Torrens system. It concluded by noting that the historical rationale of legal fictions such as the doctrine of lost modern grant has significantly diminished with the advent of modern systems for the registration of title, comprehensive planning laws and more mature land law jurisprudence.
Paper presented to Law Institute of Victoria’s Accredited Property Law Specialists can be found here.
It’s long been thought that a covenant prohibiting the use of land for advertising hoardings would make the putting up for display of real estate signage, a breach of that covenant.
A recent decision of the Supreme Court has thrown that view into doubt. In Re: Zhang 2018 VSC 721, Derham AsJ assessed a covenant that provided:
No hoarding for advertisement purposes shall be erected on the said lot hereby transferred.
This part of the covenant is a basic form of advertising control. In the Easton Report, the opinion is given that it is now obsolete as large commercial advertising hoardings are no longer able to be placed in residential areas. Small residential signs, real estate signs and signs relating to a lawful use on the land are the only signs generally allowed under present day planning controls. Mr Gambaro suggested that the restriction was intended to prevent ‘suburban neighbourhood homes for families’ being turned into business premises. There was no opposition by any person to the discharge of this part of the covenant. It is in my view obsolete as a form of planning control. Indeed, Mr Gambaro had, at the time of my view, affixed to the fence of his property an array of boards advertising a candidate for election to, I think, the local Council.
… The Macquarie Dictionary defines:
-‘hoarding’, relevantly, as ‘a large board on which advertisements or notices are displayed; a billboard’;
-‘advertisement’ as any device or public announcement, as a printed notice in a newspaper, commercial film on television, a neon sign, etc., designed to attract public attention, bring in custom, etc.
Construed literally, this restriction would prevent the erection on the land of a real estate ‘for sale’ or ‘for lease’ sign, for example, or a board supporting a candidate for election. But when construed in the context of a residential property in a residential neighbourhood, it seems to me that the purpose of the restriction is not to prevent reasonable advertising of properties for sale or for lease, or supporting a candidate for election. Its purpose is to prevent the erection on the Land of a board on which are displayed advertisements, particularly business advertisements, of a kind unconnected with the residential character of the land. Thus, advertising a business or advertisements for the sale of goods or land (other than the land in question) are covered by this restriction. In my opinion, the reasonable reader knows that in the Melbourne metropolitan area, ‘for sale’ signs on properties using a large board, sometimes with pictures of the dwelling, and details of its features is so common (and permitted by the planning laws) that to construe this restriction in accordance with its literal meaning would be to misread its purpose.
In other words, real estate signage might be said to be ancillary to the use of land as a dwelling.
Could that reasoning be extended to permit signage for medical centres and other uses permitted in residential areas, where that signage is to promote goods and services available on the land?