The Institute of Surveyors - Victoria
Regional Conference – Wangaratta
Restrictive Covenants
Neil Haydon
Solicitor & Senior Planner
April 2015
What are restrictive covenants?
• A covenant is an agreement, usually formal, between two
or more persons to do or not do something specified.
• A restrictive covenant is defined in Butterworth's
Australian Legal Dictionary as a covenant affecting land
restricting the uses to which land may be put.
• Enforceable against original parties – Contract Law.
• They are interests in land which restrict the use of land by
the owner of the burdened land in favour of rights of the
benefited land.
What is the purpose of restrictive covenants?
• Developed in mid nineteenth century
• Original form of private planning control
• Used to maintain amenity of a particular property against
the loss of amenity because of activities on adjoining
property.
How do I know if land is burdened by a
restrictive covenant?
• Check title
• Normally get a “register search statement” newer
titles or found on older titles.
• Title will give information about where to locate
covenant – usually in Transfer of Land document
(as agreement between the parties upon sale of the
land to be burdened).
• Can be on a plan of subdivision.
Which land is burdened by restrictive
covenants?
• Benefit and burden must run with the land to be
enforceable.
• Burden is easy, title shows covenant encumbering
title also – check document creating restrictive
covenant.
• Burden of covenants cannot generally run at law
however, equity law provides that burden will run with
owners of burdened land if:
• Covenant is negative in nature (hence restrictive)
• Covenant touches and concerns the land
• Purchaser of burdened land has notice prior to
purchase (hence shown on title)
Which land is benefited by restrictive covenants?
• Benefit more difficult – check document creating restrictive
covenant.
• At common law, benefit of the covenant runs with the land so
successor in title to benefited land can sue on the contract.
• Benefit in law will run if:
• Dominant land is part of a building scheme (eg. All land in
subdivision equally benefited and burdened – simplified)
• The beneficiary has become the owner of land to which
the benefit of the covenant has been annexed expressly or
by implication.
• The benefit has been assigned
• Re Dennerstein (1963) VR 688 = the words of a covenant must be
sufficient, expressly or impliedly to identify the land to be benefited.
Problems with determining beneficiaries
• Benefit runs with the land – need to determine
what is the land – eg. Could be whole of an original
subdivision (all land including roads and reserves) or
could be lots only.
• Distinction between benefiting land and benefiting
owner.
• Subdivision of itself does not negate benefit from
applying to certain land.
Which land is benefited by restrictive
covenants?
• Kotefski v Boroondara CC [2006] VCAT 1835 dealt with whether
there is any land benefiting.
• John Thomas Creaser doth hereby for himself his heirs executors
administrators and transferees covenant with the said mayor councillors and
Burgesses of the Town of Camberwell (hereinafter called the said Council)
and their transferees that he or they shall not nor will erect more than one
dwelling house or tenement on the said piece of land colored red hereby
transferred without the previous consent or waiver in writing of the said
Council and that any dwelling house or tenement erected on the said land
shall be built of brick or stone and at a cost of not less than seven hundred
and fifty pounds and such house or tenement shall have its front entrance to
Broadway and shall not have its back premises or any part thereof abutting
on Broadway and it is intended that this covenant shall be set out as an
encumbrance at the foot of the Certificate of title to be issued in respect of
the said land and shall run with the land.
• No clear land benefited.
Which land is benefited by restrictive
covenants? ….continued
• In Kotesfski
• At the time this portion of land was transferred it formed
part of a larger piece of land owned by Council.
• Portions of the larger parcel were later sold but Council
kept some of the land.
• Council and subsequent owners claimed they are
beneficiaries.
• Kotefski who wanted covenant removed argued
covenant personal in nature between Council and the
owner of the land originally transferred. Argued that
because covenant does not expressly identify the land
intended to be benefited and no building scheme exists.
Which land is benefited by restrictive
covenants? ….continued
• Tribunal said at 14 that:
• To decide whether the benefit of a covenant is
annexed to some land the common intention of the
original parties to the covenant must be ascertained.
This can only be done by considering the words of
the covenant and giving them their ordinary
meaning and natural meaning. If it can be concluded
that there is an intention other surrounding
circumstances known to the parties at the time may
be properly be taken into account.
Removing or varying a restrictive covenant
• By agreement in writing of all beneficiaries
• By planning scheme amendment
• By application to Supreme Court under section 84 of
the Property Law Act 1958
• By planning permit issued by Council
By agreement
• By agreement in writing of all beneficiaries
• If all of the owners of the land which benefit from
the covenant (dominant land) agree, the covenant
can be removed from the relevant titles.
• Deed which is signed by all owners of benefited land
and the owner of the burdened land.
• Agreement recorded with land registry (s 88(1)
Transfer of Land Act 1958).
By planning scheme amendment
• By planning scheme amendment
• Amend Clause 52.02 of the Planning Scheme to
provide for covenants to be varied or removed.
Not often used.
• Useful for covenants that may cover a wide area.
• Consider Melbourne 2030.
• Would need to go to the Land Registry pursuant
to the Subdivision Act 1988 (plan would be
required).
Supreme Court application
• By application to Supreme Court under section 84 of the
Property Law Act 1958.
• That by reason of changes in the character of the
property or neighbourhood or other circumstances of
the case the Court deems material, the restriction ought
to be deemed obsolete or that its continued existence
would impede the reasonable user of the land without
securing practical benefits to other persons.
• That the persons entitled to the benefit from the
restriction agree to it being discharged.
• That the proposed discharge will not substantially injure
the persons entitled to the benefit.
Supreme Court application …..cont
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Applications made by originating motion and affidavits
No defendant
Heard first before a master
Essentially master will determine advertising and directions
for application
If advertised, and no beneficiary turns up at next court
date, then master usually makes a decision to remove or
vary covenant
If contested, case adjourned for hearing before a court
Court’s power discretionary
If granted, order to register pursuant to section 88 (1)
Transfer of Land Act 1958.
Supreme Court application …..cont
• Court’s power discretionary and the way in which courts
have interpreted various grounds often means that it
can be difficult to remove a covenant.
• Three recent cases:
• Stanhill Pty Ltd v Jackson [2005] VSC 169 (before Morris J)
• Bevilacqua & Anor v Merakovsky & Ors [2005] VSC 235
(Ashley J)
• Re Milbex Pty Ltd [2006] VSC 298 (before Byrne J
favouring Stanhill)
Planning permit
• Planning and Environment Act 1987 changes in 2000.
• Council cannot grant permit that would result in a breach
of a registered restrictive covenant.
• Council can grant permit for removal or variation of
restrictive covenant.
• Councils not responsible for enforcing private breaches
unless it is a beneficiary – essentially property law matter
not planning.
• Section 61(4) Planning and Environment Act 1987 provides:
• If the grant of a permit would authorise anything which would
result in the breach of a registered restrictive covenant, the
responsible authority must refuse to grant the permit unless a
permit has been issued, or a decision made to grant a permit, to
allow the removal or variation of the covenant.
1st Consideration - Breach
• Council’s questions
• Is there a restrictive covenant affecting land to be used or
developed?
• What does it restrict?
• If Council granted the planning permit, would it breach
the covenant?
• Problems?
• Interpretation of the covenant.
Interpretation
• Single dwelling
• Does it restrict two or more houses on land?
• Will subdivision breach such a covenant?
• No subdivision
• Only use for dwelling
• Quarrying – pools/spas/water features
• Type of building materials
• Any building at all
Single Dwelling
• Examples: “One vs A”
• Will not erect or permit to be erected on the land
hereby transferred or any part thereof any building
other than one private dwelling house with the usual
and necessary outbuildings and that such house shall
not be less value than the sum of five hundred
pounds with a roof of slate or tiles and that he will
not use the said land or any part thereof for any
purpose but those of a private residence.
Single Dwelling
• Examples:
• Will not erect or permit or allow to be or remain erected
on the land hereby transferred any dwelling house
garage or outbuilding other than a dwelling house
garage or outbuilding having external walls or brick
stone concrete glass or timber or any combination
thereof provided that:
• No building shall have any external wall solely of timber
• Any dwelling house having steel roofing other than steel
deck roofing of or similar to Lysaght colorbond type.
Single Dwelling
• In Gubby v Mornington Peninsula Shire Council and
Others [2002] VCAT 1344, the Tribunal declared that a
restrictive covenant referring to “a dwelling”, is not to be
read as a covenant restricting the construction of a
second dwelling on the land.
• Followed Urban Planning and Development v
Boroondara City Council [2001] VCAT 244
Single Dwelling……cont
• Examples
• That no main building shall contain more than one
occupancy except that two units may be incorporated
into one main building where the units are both under
the one main roof (not including a carport roof).
• Hanna v Greater Bendigo CC [2005] VCAT 1469
• Member held that while the reference in the covenant to
“no main building shall contain more than one occupancy”
it was concluded that a reference to a “main building” is a
reference to a dwelling. No restriction on number of main
buildings allowed.
Subdivision vs Single Dwellings
• It is an accepted principle that subdivision of itself does not
cause a breach of a covenant relating to construction,
frontage, single dwelling and cost or construction of
materials.
• Dukovski v Banyule CC [2003] VCAT 190
• Hampsons Enterprises v Casey CC (P3125/2002)
• Weiler v Casey CC [2004] VCAT 470
• However, Tribunal cases have rejected such appeals where
developments are also considered part of the application or
where a breach had already occurred on one lot.
Subdivision vs Single Dwellings….cont
• Helen Gibson’s Case Wade v Yarra Ranges SC [2005] VCAT
111
• Deputy President Gibson declined to make a
declaration that a two lot subdivision for residential
purposes breached a single dwelling covenant.
• Directed that the permit issue but imposed a condition
that before a statement of compliance could issue the
covenant must be removed or varied to allow a single
dwelling to be constructed on each lot.
• Relied on Clause 65.02 of the planning scheme that
allowed her to consider the existing use and possible
future development of the land and nearby land as
relevant considerations.
Subdivision specifically
• Examples
• A lot shall not be subdivided by strata subdivision,
cluster subdivision or otherwise.
• Must not subdivide the land.
Quarrying
• Has been problematic because of digging required for in
ground pools
• Example
• That the transferees and their successors of the Land
covenant with the transferor not to:
• “carry on quarrying operations on the said land hereby
transferred or any part thereof nor dig carry away or remove
any marl earth clay gravel or sand therefrom except in the way
of excavating for the construction of any swimming pool nor
permit any building, other than one dwelling home or a
swimming pool on such lot and that no such dwelling house
shall be erected at the cost of less than five hundred pounds”
(bold added as example)
• Not really a problem now – purposive approach rather than
literal approach taken.
Other
• Other examples:
• “…shall not at any time hereafter use the said land or
allow or permit it to be used in any manner for the
purposes of erecting any building or other erection or
for storage of any kind thereon”.
• “…will not use the said Lot 86 nor permit the said Lot
86 to be used for the purposes other than those of a
golf course and open space recreational pursuits”.
2nd Consideration – Grant permit
• If permit not to remove or vary restrictive covenant,
Council needs to have:
• Reviewed restrictive covenant
• Come to conclusion about whether or not granting
of permit will breach covenant (eg: if application to
subdivide and build two houses with a single
dwelling covenant Council should refuse application)
Planning permit application
• Section 47(1)(e) if application is to remove or vary a
registered restrictive covenant needs to be
accompanied by:
• Information clearly identifying each allotment or lot
benefited by the registered restrictive covenant; and
• Any other information that is required by the
regulations (nothing in particular).
Planning permit application …..cont
• If not by agreement, amendment, or court order – applicant
can make an application for a planning permit to remove or
vary a restrictive covenant.
• Clause 52.02 of the Scheme provides that a permit is required
before a person proceeds under section 23 Subdivision Act
1988 to create vary or remove a restriction.
• Restriction defined in Subdivision Act 1988 to mean “a
restrictive covenant or a restriction which can be registered,
or recorded in the Register under the Transfer of Land Act
1958.
• No definition of “restriction” in Transfer of Land Act 1958.
• Requires either a plan of subdivision or a text plan and
registered on title pursuant to Subdivision Act 1988.
Planning permit application ……cont
• Registered restrictive covenant defined to mean a
“restriction within the meaning of the Subdivision Act”
• What is not a restriction
• An agreement made under section 173 of the Planning
and Environment Act which is registered on title and
therefore becomes a “covenant” on the land is not a
“restriction” within the meaning of the Subdivision Act
1988 and therefore does not come under the definition of
registered restrictive covenant. Therefore, the provisions
of the Act applying to registered restrictive covenants are
not relevant. Ur v Wellington SC [2001] VCAT 2453 and
Van Der Heyden v Mansfield SC [2003] VCAT 102.
• Easement of carriageway not a restrictive covenant
Focused Vision Pty Ltd v Nillumbik CC (2002) 15 VPR 154.
Planning permit application ……cont
• Section 47(2) provides that notice provisions of section
52 and referral section 55 do not apply to an application
for a permit to remove a restriction 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 the Planning and
Environment Act but for the existence of the restriction.
Planning permit application ……cont
• Section 47(2) application depends on wording of
covenant.
• Hill v Campaspe SC [2004] VCAT 1399 essentially stands
for the proposition that if the restrictive covenant has a
number of restrictions, section 47(2) would only apply to
the restriction breached not every restriction. Eg. in this
case, non-compliance for the construction materials for
the shed did not extend to not give notice for removal of
the part of the covenant which allowed for only one
dwelling.
Planning permit application ……cont
• Strict tests in Planning and Environment Act
• Section 60(2) – covenants on or after 25 June 1991 –
date on document creating covenant not registration at
Land Registry date.
• Section 60 (5) – covenants before 25 June 1991
Planning permit application ……cont
• Section 60(2) – owner of any land benefited by the
restriction will be unlikely to suffer;
• Financial loss
• Loss of amenity
• Loss arising from change to the character of the
neighbourhood
• Any other material detriment
• Section 60(5) – the owner of any land benefited by the
restriction
• Will be unlikely to suffer any detriment of any kind (including
perceived detriment); and
• If beneficiary objected, the objection is vexatious and not in
good faith.
• Number of cases on this and each must be treated on its
facts.
Planning permit application ……cont
• Some comments:
• Balance of probabilities that any beneficiary will be unlikely to suffer any
detriment of any kind.
• Compliance with planning controls does not of itself establish that a
beneficiary will be unlikely to suffer any detriment of any kind
• Mere assertion of the existence of detriment not sufficient to demonstrate
its existence.
• Loss of amenity will constitute a detriment.
• Not necessary for an affected person to assert detriment because the
Tribunal must be affirmatively satisfied of a negative (ie no detriment of any
kind) and Tribunal entitled to form its own view of the evidence.
• Vexatious means groundless or having no merit without regard to the
objector’s attitude, intentions or honesty.
• Owners of land who have not objected to the variation/removal after having
been given notice generally treated as not suffering any detriment although
Tribunal still needs to be satisfied.
QUESTIONS ??
CONTACT
Neil Haydon – Solicitor and Senior Planner
Ballarat Office
Phone: 5327 2000
Email: haydonn@bevwill.com.au
Beveridge Williams & Co. Pty Ltd
Development and Environment Consultants