notice

Court clarifies notice required to create a binding building scheme

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In Randell v Uhl [2019] 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.

Regularising a longstanding breach of a covenant

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One of the first questions often asked of aspiring applicants for covenant modification is whether there have been any longstanding breaches of the covenant.

The answer to this question can have significant implications, for where land has been used or developed for at least two years in breach of a restriction,[1] in a manner that would be lawful under the PE Act but for the restriction, an application to vary the restriction may be made pursuant to section 47(2) of the Planning and Environment Act 1987. Such an application may be made without:

    1. notice of the application under section 52 of the PE Act (including beneficiaries of the Covenant); and
    2. the application being referred under section 55 to any relevant referral authorities:

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.

Gibson DP explained the operation of section 47(2) in Hill v Campaspe SC:[2]

9… Section 47(2) of the Act exempts applications for the removal of covenants from the need to give notice under sections 52 and 55 of the Act in certain circumstances.

10     The section 52 notice requirements for an application to remove or vary a covenant include notice to the owners and occupiers of all land benefited by the covenant (section 52(1)(cb)). Section 55 of the Act relates to notice to referral authorities. …

…

26     … [I]f part of a covenant is breached, and the breach continues for 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.

DP Gibson’s analysis is consistent with the Explanatory Memorandum of the Subdivision (Miscellaneous Amendments) Bill that introduced section 47(2) into the Act:[3]

Clause 61 amends section 47, 68, 69, 81 and 85 of the Planning and Environment Act 1987 in relation to easements or restrictions. This is consequential on amendments outlined elsewhere in these notes.

It also provides that the notification procedures under the Planning and Environment Act 1987 do not apply to the removal of covenants from land where an otherwise lawful building has breached the covenant for more than 2 years.

In some respects, this is an awkward provision because:

    1. the provision contemplates an application to remove a covenant, whereas the effect of the decision in Hill v Campaspe SC is to essentially permit its modification;
    2. it is not clear how the responsible authority’s discretion is to be exercised in the absence of notification. For instance:
      • some council officers will endeavour to apply section 60 of the Planning and Environment Act 1987 against an application made under section 47(2) with its reference to the tests of “detriment” and “loss of amenity”, despite the fact that any reference to “perceived detriment” is at odds with a beneficiary not knowing about an application being made under the provision;
      • most commonly, however, council officers seem content to apply 47(2) without reference to any tests in section 60; and
    3. it is not clear whether the provision can be used in circumstances where the breach has since been rectified through demolition or the removal of non-complying materials.

This divergent approach to the application of section 47(2) is partly because there have been so few cases that have considered the provision. If the advantage offered by section 47(2) is to avoid having to bring an application to vary a covenant to the attention of beneficiaries, it makes less sense to appeal a Council’s refusal to exercise its powers under the provision.

Consistent with this, applications under section 47(2) should be pursued a separate planning application before the substantive use or development application is made.

[1] As that term is defined in section 3(1) of the Subdivision Act 1988 (Vic).

[2] [2004] VCAT 1456.

[3]Explanatory Memorandum, Subdivision (Miscellaneous Amendments) Bill 1991 No. 48, section 61(1)(c).