planning permit

Should you apply to modify a covenant via the planning permit process if s60(2) of the Planning and Environment Act 1987 applies?

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For covenants created on or after 25 June 1991, applicants are often tempted to pursue the modification of covenants through the Planning and Environment Act permit application process on the basis that it is purportedly cheaper than applying through the Supreme Court.

However, this can be a false economy when considering that each beneficiary needs to be notified via the Planning and Environment Act 1987 process and depending on the size of the subdivision that can be expensive. I have had clients complaining that the process of notice can cost $3,000 for small to medium subdivisions to $10,000 for larger subdivisions.

Moreover, the obligations for the production of evidence are no lower in the Tribunal and so the cost of engaging an expert may be greater given that the expert will invariably be required to appear to give evidence at VCAT, whereas a judicial registrar or Associate Judge will typically be content to consider the evidence on the papers.

And that hints at perhaps the critical distinction—that cases in VCAT are more often than not opposed by beneficiaries who bear few if any cost consequences from appearing to oppose an application to modify a restrictive covenant, whereas in the Supreme Court applications to modify restrictive covenants are more often than not, unopposed.

Moreover, Council as the responsible authority will invariably be a party to an application for planning permission, whereas they will only rarely be involved in a section 84 application, for instance, if Council owns nearby parkland that enjoys the benefit of the covenant sought to be modified. Taking that wildcard out the equation alone is of profound assistance to applicants.

The test in section 60(2) of the Planning and Environment Act can also be more narrowly applied than section 84 in the Property Law Act. By way of example, in Ambrosio v Hume CC [2019] VCAT 2049 the Tribunal rejected an application for an additional dwelling at 30 Eucalyptus Ct, Mickleham in the Mt Ridley Estate, whereas the Supreme Court has since approved seven somewhat similar applications in the same precinct.

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).