The plaintiffs own property in Walsh Street South Yarra ...



IN THE SUPREME COURT OF VICTORIANot RestrictedAT MELBOURNECOMMON LAW DIVISIONNo. 4691 of 2011 IN THE MATTER of the Property Law Act 1958 (Vic) s 84and IN THE MATTER of an application by Mark William Suhr and Elizabeth Alexandra Suhr for the discharge and or modification of the restrictive covenant contained in Instrument of Transfer No. 1656917 registered in the Land Titles Office in the Register Book and imposed upon the land more particularly described in Certificate of Title Volume 6132 Folio 361IN THE MATTER of an application by:MARK WILLIAM SUHR & ORS(according to the schedule attached) PlaintiffsvANDREW GORDON MICHELMORE & ORS(according to the schedule attached) Defendants---JUDGE:Pagone JWHERE HELD:MelbourneDATE OF HEARING:5, 6, 7, 8 March 2013 DATE OF JUDGMENT:31 May 2013 CASE MAY BE CITED AS:Mark William Suhr & Ors v Andrew Gordon Michelmore & OrsMEDIUM NEUTRAL CITATION:[2013] VSC 284---RESTRICTIVE COVENANT – Height restriction – Application to declare invalid, discharge or modify restrictive covenant - Whether restrictive covenant is void for uncertainty – Indefeasibility of title - Extent to which extrinsic evidence is permissible to give effect to what the Register identifies – Whether the level of the land today is the same as the level of the land in 1937 - Whether restrictive covenant is obsolete – Whether continued existence of the covenant impedes the reasonable user of the land – Whether the continued existence of the covenant secures a practical benefit to other persons – Changes in the character of the land or neighbourhood – Whether modification of the covenant will not substantially injure those entitled to its benefit – Whether the Court should exercise its discretion to deny relief – Whether conduct of plaintiffs should disentitle them to relief - Westfield Management Ltd v Perpetual Trustee Company Ltd (2007) 233 CLR 528 – Bursill Enterprises Pty Ltd v Berger Brothers Trading Co Pty Ltd (1971) 124 CLR 73 - Property Law Act 1958 (Vic) s 84(1).---APPEARANCES:CounselSolicitorsFor the PlaintiffsMr S Horgan S.C withMs L HarrisonBest HooperFor the First & Second DefendantsMr J Gobbo QC withMr M TownsendJRT Partnership Pty LtdFor the Third DefendantMr J Gobbo QC withMr M TownsendSackville Wilks Pty LtdHIS HONOUR:The plaintiffs own property in Walsh Street South Yarra including that numbered 252 Walsh Street, the rear of which is subject to a restrictive covenant made in 1937 by Sir Edmund Herring and Lady Mary Herring upon its transfer to Robert?Outhwaite. The covenant relevantly provides that those burdened by it:[W]ill not at any time hereafter erect any building of a greater height than twelve?feet above the present level of the land hereby transferred and any such [building] shall not be erected within five feet of the southern boundary of the lastmentioned land. The plaintiffs challenge only the height restriction in the covenant and seek orders that, to that extent, it be declared invalid, or that it be discharged or modified to enable the erection of dwellings within a building envelope as described on drawings attached to the plaintiffs’ further amended originating motion filed 2?May?2012. The first and second defendants own land at 226?Walsh Street which has the benefit of the restrictive covenant and they oppose the plaintiffs’ application. The third defendant is the registered proprietor of the block of flats at 222 Walsh Street which also has the benefit of the restrictive covenant and also opposes the plaintiffs’ application. The land which now comprises 212 to 264 Walsh Street was contained on a single title in 1895. Over time sections of the property were subdivided, sold, reconsolidated and re-subdivided. In 1918 the property at 264 Walsh Street was transferred and the balance of the parent title was transferred to Arthur Outhwaite. In 1934 the front parcel of land at 252 Walsh Street was separated from the balance of the land on the relevant parent title and (a) the front parcel of the land at 252?Walsh Street was continued to be held by Arthur Outhwaite and (b) the rest of the land was transferred to Edmund (later Sir?Edmund) Herring and Mary (later Lady Mary) Herring. At that point the Herrings owned the land at 212-240 Walsh Street and the back of the land at 252 Walsh Street. In 1935 the Herrings subdivided and transferred the land at 240?Walsh Street. The effect of that transfer was to divide the remainder of the Herrings’ property: a tennis court belonging to the Herrings was at the rear of 252 Walsh Street to the north of 240?Walsh?Street and the remainder of the Herrings’ property was to the south of 240?Walsh Street. A covenant was applied to the property at 240 Walsh Street which limited the number of apartments that can be built on the block, and limits the buildings on the back half of the block to five metres. Buildings, referred to as the Maisonettes, were constructed on 240 Walsh Street.In 1937 the site with the restrictive covenant in the present dispute was transferred out of the parent title to Robert Outhwaite. It was at that point that the covenant was made. In 1952 the balance of the land at 212?to?238?Walsh?Street was subdivided. The northern portion of the subdivision comprised the current 226?Walsh Street and the southern portion of the subdivision comprised the land occupied by two apartment blocks at 212 and 222 Walsh Street. These properties continued to have the benefit of the restrictive covenant over the rear of 252 Walsh Street which had been transferred to Arthur Outhwaite in 1937. The current allotments may be seen from the following diagram:A.Void for UncertaintyThe plaintiffs contend that the covenant is void for uncertainty because it cannot be given effect without the use of what is contended to be impermissible evidence. The covenant prevents construction above the height of 12 feet above “the present level of the land”. The plaintiffs contend “the present level of the land” cannot be determined without evidence beyond what appears in the Register of Titles. All parties agree that the words “the present level of the land” is a reference to the level of the land in 1937. This, the plaintiffs contend, cannot be determined on the face of the covenant and may not permissibly be determined by reference to extrinsic evidence. The plaintiffs place significant reliance upon the decision of the High Court in Westfield Management Ltd v Perpetual Trustee Company Ltd where the Court held that it was not permissible to rely upon extrinsic evidence to construe an easement. That case concerned an easement, rather than a restrictive covenant, conferring a right of carriageway created over Torrens system land in New South Wales. The easement had been created by an instrument in standard form which provided for the proprietors of the dominant tenement “to go, pass and repass at all times and for all purposes with vehicles to and from the said lots benefited or any such part thereof across the lots burdened”. An issue in that case was the extent to which it was permissible to have regard to extrinsic evidence to determine what was meant by the words “for all purposes” in the terms of the easement. The High Court held that the meaning of the terms of an easement under the Torrens system was to be determined from what appeared on the Register and not by reference to extrinsic material. Central to that reasoning was the principle of indefeasibility of title to land under the Torrens system, and, in that context, the importance for third parties inspecting the Register to determine rights and obligations by reference to the Register without needing to look further. The?Court said:The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.In that case there had been extensive evidence at first instance directed to establishing the intention or contemplation of the parties to the grant of the easement. That evidence was held to be inadmissible for the purpose of interpreting what the grant provided. An argument advanced in the High Court was that it was admissible to lead extrinsic evidence of the “factual matrix” predating a deed which had been made on 26?February 1988 or of the subjective intention of the then owner of a property which had not been communicated to the then owner of the other property. The High Court rejected recourse to evidence of that kind as an aid in construction of the terms of the grant. However, not all extrinsic evidence was held to be inadmissible for the purpose of understanding a term of a grant when properly construed. In that context their Honours said:It may be accepted, in the absence of contrary argument, that evidence is admissible to make sense of that which the Register identifies by the terms or expressions found therein. An example would be the surveying terms and abbreviations which appear on the plan found in this case on the DP.Extrinsic evidence of the kind mentioned by their Honours may be admissible because it does not “establish the intention or contemplation of the parties” but may be needed to give effect to what the Register itself had identified.Westfield was a case concerning the construction of an easement rather than of a restrictive covenant, and the distinction between the two is important. In Chiu v Healey Young CJ observed:Although easements and restrictive covenants tend to be dealt with together in textbooks and in the courses at law schools, they are of completely different juristic natures. An easement is an interest at law and is an estate in land. It is an incorporeal hereditament. A restrictive covenant, on the other hand, is an interest in equity and is not properly described as an estate. It is easy to see how such an equitable interest can be abandoned: it is not so easy to see how one can abandon an estate in land at law.Amongst the differences between easements and restrictive covenants is that the former require registration for validity whereas the latter are required to be notified but the recording does not establish or effect validity. In Bursill Enterprises Pty Ltd v Berger Brothers Trading Co Pty Ltd (a case referred to by the High Court in Westfield without disapproval) the Court had expressed the view that the system of title by registration required notification of an easement but did not require that all of the information appear on the title. In Bursill Barwick CJ said:It seems to me that it was not intended that the certificate of title alone should provide a purchaser dealing with the registered proprietor with all the information necessary to be known to comprehend the extent or state of that proprietor's title to the land. The dealings once registered became themselves part of the Register Book. It was therefore sufficient that their registration should be by statement of their nature recorded on the certificate of title. Section 42 of the Act of 1862 provided for a memorandum of transfer as the appropriate instrument for the transfer of an estate or interest in land, or for the creation or transfer of any right of way or other easement. Section 49 provided for a memorandum of lease where land is intended to be leased for a life or lives or for any term exceeding those years. Section 54 provided for a memorandum of mortgage when land is to be charged or made security and for a memorandum of encumbrance where an annuity, rent charge or sum of money is to be charged on land.These descriptions in this list indicate, in my opinion, the nature of the various principal instruments which can be registered under the Act. In my opinion, the nature of the instrument to which s. 37 refers is its description as a transfer, lease, mortgage, encumbrance, etc. What it achieves in particular is not part of its nature for relevant purposes. It is not necessary, in my opinion, to make a memorial effective as the registration of a dealing that the endorsement should particularize to any extent what the instrument does. It is sufficient to state whether it is a transfer or a mortgage etc. Thus, in my opinion, the endorsement on a certificate of title of a statement, "Memorandum of Transfer No. 7922 dated 15th May 1872 produced and entered the 15th day of June 1872 at 12 o'clock noon", would be a sufficient memorial and upon its endorsement on the certificate of title, the memorandum of transfer would be duly registered and form part of the Register Book. There would be no need to state the subject matter of the transfer though the convenient practice is to state on a memorial of a memorandum of transfer etc. the fact that the whole or part of the land comprised in the certificate of title is the subject of the memorandum. But, in my opinion, the absence of such information will not render the memorial ineffective. Once the memorial is sufficient to effect registration of the instrument then the interest of the registered proprietor becomes subject to the registered instrument because of the words in the body of the grant on certificate of title describing the proprietor's interest.However, the endorsement in this case was not confined to the words I have set out. Both in the endorsement in 1862 and in the endorsement on the present certificate of title a description of what the memorandum of transfer achieved appears. In practical terms this inadequate description cannot be of moment because even to ascertain the nature and extent of the right or rights of way which it is said to have created or extended the memorandum of transfer must be searched and examined. Potent however as such a practical consideration must be, it cannot itself resolve the question whether or not the inadequate, or if you will, misleading, description of the effect of the memorandum of transfer vitiated the memorial as a registration of the memorandum of transfer or prevented an endorsement which otherwise would qualify as such being a memorial.Although accompanied by a statement purporting to notify its effect, the endorsement did, in my opinion, state that a memorandum of transfer had been produced and numbered. That was a statement of the nature of the instrument. The relevant purpose of the endorsement was not to describe the effect of an unregistered instrument. It was evidently intended as a step in the registration of the memorandum of transfer. Consequently, the addition of a statement of the operative effect as distinct from the nature of the instrument ought not to be regarded as of the essence of the endorsement but rather as surplusage so far as the process of registration is concerned. That statement, in my opinion, was not effective either to prevent the statement of the nature of the instrument and of the other relevant particulars being a memorial sufficient to effect the registration of the memorandum of transfer: nor would the addition of a statement of the operative effect of the instrument vitiate the endorsement as an effective memorial. Consequently, in my opinion, the memorandum of transfer was duly registered under the Act of 1862.If, as I think, the memorandum of transfer was duly registered that registration was continued under the Act of 1900 (see s. 2 (3) of the Act of 1900). The estate or interest in the airspace occupied by the building over the right of way therefore was not an unregistered interest: on the contrary, it was a registered interest. That registered estate or interest was, in my opinion, sufficiently particularized on the present certificate of title in conformity with s. 32 (2) of the Act of 1900. The notification brought to the knowledge of the purchaser the existence in the Register Book of the memorandum of transfer and therefore of the registered interest in the land of the registered proprietor which the registered memorandum of transfer created.The decision in Bursill was cited in Westfield as showing the importance of the information appearing on the Register under a scheme of Torrens land in providing third parties with the information necessary to comprehend the extent or state of the registered title to the land in question. Their Honours in Westfield returned to the importance of information being on the public Register when construing the easement in that case, but the Court did not disapprove what had been said in Bursill. Nor was it necessary to do so. It may be accepted, however, that the proper construction of the meaning of both restrictive covenants and easements is to be undertaken without regard to extrinsic evidence but it does not follow that the properly construed instrument cannot itself require reference to extrinsic material. Indeed, counsel for the plaintiffs conceded (in my view correctly) that the restrictive covenant in this case would not have been void for uncertainty had it been expressed by reference to a datum such as may now exist in the Australian Height Datum or the datum points of the Melbourne and Metropolitan Board of Works applicable in 1937. Each such reference point in the covenant appearing on the Register would, however, have required a person to look to something outside the Register to determine precisely the point from which the relevant restriction notified on the Register was to be calculated and to take effect.Significance was also placed by the plaintiffs upon the way in which the Court in Westfield referred to an earlier decision of the Equity Division of the New South Wales Supreme Court. The passage from Westfield first quoted above (emphasising the importance that a third party inspecting the Register need not look beyond the Register to extrinsic material) was followed by a footnote with a citation preceded by “cf”. The use of “cf” was said in Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council to be an indication of the kind of evidence that the Court in Westfield had in mind as “unlikely to be sought out by someone searching the Register”. The case referred to in the footnote in Westfield was Proprietors Strata Plan No 9,968 v Proprietors Strata Plan No 11,173 which had considered a right of way that had been registered on title. The plaintiffs in that case had sought to rely upon surrounding circumstances to establish that the strip of land in question was to be used only as a footway. It was evidence of the circumstances at the time the right of way was created which was said in Phoenix Commercial Enterprises to be of the kind that the High Court in Westfield had in mind as “unlikely to be sought out by someone searching the Register”. However, neither the reference to Proprietors Strata Plan 9,968 in Westfield, nor the decision in Westfield itself, nor the observation in Phoenix Commercial Enterprises require the conclusion that extrinsic evidence may not be relevant to a properly construed term which upon its proper construction directs attention to something outside of the Register - even in the case of an easement. Indeed, in Phoenix Commercial Enterprises Campbell JA observed that Westfield had made clear that the unavailability of extrinsic evidence to construe even a grant of an easement was not complete. Surveying terms and abbreviations were examples of the kind of extrinsic evidence that may be taken into account to make sense of what the Register had itself identified. The critical task is to construe “that which the Register identifies by the terms or expressions found therein”. That task requires a reading of the Register without reference to extrinsic evidence; the Register so read may put the reader on notice of having to look elsewhere to give effect to what the Register notified.In Sertari?Pty?Ltd?v?Nirimba Developments Pty Ltd the New South Wales Court of Appeal accepted that physical characteristics of the tenement were not part of the extrinsic materials excluded by the decision in Westfield. The same view was expressed in Dillon?v?Gosford City Council, and in Brugge v Hare Slattery J observed that both authority and considerations of logic supported the proposition that “the Court can take into account the present physical characteristics of the tenements” to determine the nature of an easement. A similar approach has been adopted by the New Zealand Court of Appeal in Big River Paradise Ltd v Congreve where the Court considered the decision in Westfield, and in respect of a restrictive covenant said that it “should be construed not in the abstract but, at the very least, by reference to the location of the properties which are affected by it”. In Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS Fryberg J observed that the High Court in Westfield “was not saying that a third party who inspects the register never needs to look further”. In Cannon v Villars “the nature of the locus in quo over which” a right of way was granted was “a very material circumstance” to the proper construction of the grant.The cases decided since Westfield do not compel the conclusion propounded by the plaintiffs, namely, that the covenant must be void for uncertainty because the determination of the “present level” of the land as at 1937 would require reference to something outside of the Register. Plainly it would be void for uncertainty if its terms were “so vague that it [was] really impossible of apprehension or construction” such as might occur by the omission of any criteria by which the words in the restrictive covenant are to be ascertained. In Miller v Evans Hall J took what might be called a narrow view of the impact of Westfield as limiting the construction of the restrictive covenant to what appears on the “face of the document” and not “to go beyond the text”. A statement to much the same effect may be seen in Ryan v Sutherland. Neither case concerned a restrictive covenant where its terms, as revealed on the face of the Register, directed a searcher unambiguously to something outside the Register.A restrictive covenant was held to be void for uncertainty in Ellison?v?O’Neill where a height restriction was expressed to be “not greater than 3 feet above the ‘mean lateral level’ of the common boundary” of the respective properties. In that case Wallace P had regard to the details of the topography of the area and, by reference to those features, concluded that the phrase “mean lateral level” was “practically meaningless”. His Honour’s description of the topography in question explained why the phrase “mean lateral level” was not just uncertain but “practically meaningless”:The “common boundary” and the “said common boundary line” referred to in the first clause of the covenant takes the form of two adjacent sides of a rectangle, the point of the right angle being to the northwards and in the general direction of Mrs Stabback’s cottage. On the plans this boundary line is lettered A-N-M. The distance between N and M (which is south-west of N) is about ninety-five feet and N is about fifty-three feet higher than M. The distance between N and A (which is south-east of N) is about seventy-five feet and A is about one and a half feet lower than N. Thus there is a steep (and rugged) descent from N to M and an almost equally steep descent diagonally from A to M. The floor of Mrs Stabback’s cottage is nearly seventy feet higher than the point M. The case is an illustration of reference to matters extrinsic to the covenant to establish the uncertainty of its meaning; a conclusion which might not otherwise have been evident from the words in the covenant alone. The description of the phrase given by the surveyor, and adopted by his Honour, was that the phrase “mean lateral level” “as applied to the line A-N-M [was] ‘unintelligible and meaningless’.” The criteria which had been used in the covenant in that case was unlike that in the present case which, at least in 1937, simply identified the existing level of the land as it was found on the site without the need to undertake any calculation.The impact of the decision in Westfield was considered by Cavanough J in Prowse?v?Johnstone. In that case an issue arose about the extent to which background material could be taken into account to construe restrictive covenants under Torrens system land. The specific question concerning the impact of Westfield had not been argued by the parties but was dealt with by his Honour without having to require the parties to make further submissions. In that context, his Honour said:Nevertheless, my own research suggests that the extent to which background material may be taken into account to construe restrictive covenants affecting Torrens system land may be more limited than in the case of contracts generally. ?In Westfield Management Limited v Perpetual Trustee Company Limited, a decision of the High Court on appeal from New South Wales concerning the construction of an easement set out in a registered instrument, it was held that the easement should be construed in accordance with its terms; that the rules of evidence assisting the construction of contracts inter partes, of the nature explained by Codelfa , did not apply to the construction of the easement; and that establishing the intention or contemplation of the parties to an instrument registered under the Real Property Act 1900 (NSW) by reference to material extrinsic to the instrument would be contrary to the principles of the Torrens system. ?It is true that Westfield related to an easement rather than a restrictive covenant; that the High Court did not expressly refer to restrictive covenants; that there are considerable differences between the two; and that there are differences between the relevant Torrens system provisions of New South Wales and of Victoria. However, the High Court’s reasoning was not expressly confined to the case of easements under the Torrens legislation of New South Wales. ?Indeed the court referred to “fundamental considerations” concerning the operation of the Torrens system of title by registration, being considerations which involved “the maintenance of a publicly accessible register containing ?the terms of the dealings with land under that system”. The court also referred with apparent approval to the Victorian case of Riley v Pentilla as being a case in which the importance of the principle of indefeasibility for the construction of easements was duly recognised. ?The full implications of Westfield are still being worked out. However Westfield has been recognised as a significant case not only for New South Wales, but also for the ACT, Tasmania, Queensland, and Western Australia. In Ryan v Sutherland , Black J of the Supreme Court of New South Wales treated it as applicable to restrictive covenants. ?In Big?River Paradise Ltd v Congreve , the Court of Appeal of New Zealand referred to Westfield as a case relating to both easements and restrictive covenants, although the court said that it was open to question whether Westfield should be followed at all in New Zealand. ?Until now, no Victorian case has addressed its possible significance for the interpretation of restrictive covenants affecting Torrens system land in Victoria. ?The point is not squarely addressed by Bradbrook and MacCallum, nor in the recent final report (2010) of the Victorian Law Reform Commission on Easements and Covenants. Neither side made any reference to Westfield in the present case. In these circumstances, I have considered whether or not to relist the hearing of this case for further submissions, in order to give the parties an opportunity to address the questions raised by Westfield. Ultimately, however, I have determined not to do so. ?This case has already involved six hearing days, a view and many opportunities for amendments and submissions. ?More expense would be involved, and I think that the expense would be wasted. ?In Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council, Campbell JA (with whose reasons Spigelman CJ agreed) pointed out that the unavailability of extrinsic evidence to construe a grant of an easement was not complete. The High Court itself had said that sometimes extrinsic evidence may be necessary to make sense of that which the Register identifies by the terms or expressions found therein, for example surveying terms and abbreviations appearing on the deposited plan. ?Further, Campbell JA emphasised that the High Court judges had stated that it was the rules of evidence assisting the construction of contracts inter partes, of the type referred to in Codelfa Constructions Pty Ltd v State Rail Authority of NSW, that did not apply to the construction of an easement. ?Campbell JA continued: They do not deny the applicability of the principle whereby a document will be construed as having the meaning that a reasonable reader, with such knowledge of the surrounding circumstances as is available to him or her, would attribute to it. ?If surrounding circumstances cannot be established by evidence to construe an easement, that does not mean that one is thrown back onto the discredited exercise of seeking to construe a document simply by reference to a supposed “natural and ordinary meaning” of the words. Rather, it means that the sort of surrounding circumstances to which one can look are limited to those that one can know without evidence from outside the terms of the document itself. The Court of Appeal of New South Wales had determined soon after Westfield was decided that Westfield allowed regard to be had to “the material in the folio identifiers, the registered instrument, the deposited plans and the physical characteristics of the tenements”. In the present case, the plan of subdivision is referred to in the covenant itself. ?A copy of the plan of subdivision is obtainable from a search of the register in that it is recorded on the parent title (Lot 1). ?I gather from the affidavit evidence and the submissions in this case that the corresponding covenants affecting other lots in the Coonil Estate can all be found by searching particular parts of the register. ?So the rationale of Westfield would not be offended by taking into account the matters which Mr?Wright concedes I can take into account. ?In any event, even if the Court were required to shut its eyes to everything except the bare words of the instrument containing the restrictive covenant, in this case the result would be no different. ?Those bare words, in combination, sufficiently reveal the relevant object of the covenant. ?They show that the declaration sought should not be made. ?Anything additional would only assist the defendants, not the plaintiff. ?So, there will be no injustice to the plaintiff in not relisting the hearing.In this passage his Honour identified the issues raised by Westfield in relation to restrictive covenants and adopted a narrow view for the purpose of the disposition of the case without having to relist the matter for further hearing on a point that had not been fully argued. His Honour had regard to the plan of subdivision which had been recorded on the parent title and which was obtainable from a search of the Register. Reference to that material did not offend the rationale of Westfield and was sufficient to dispose of the case before his Honour without the need to consider whether the principle would be offended if regard was had to other matters referred to in the Register but which required ascertainment beyond the Register. His Honour was not deciding the extent of Westfield any more broadly than was necessary to dispose of the matter before him in the context in which he came to consider the question.A restriction in a covenant to be valid must of course, be capable of operation. However, that does not mean that all of the terms of a covenant must appear on the Register. It is important to bear in mind that the function of registration on title of a restrictive covenant is to give notice rather than to create validity. The giving of notice does not require all of the terms of the covenant to be on title for it to be valid. In Fitt v Luxury Developments Pty Ltd Gillard J said:In my view there is a very strong argument that the recording must make it clear that there is a restrictive covenant, identify the land to be benefited and set out the restrictions and other questions concerning the basis upon which it is said to be valid and enforceable are matters for the court and not required to be part of the information in the Register of Land.What will be sufficient to give notice may vary from case to case. Uncertainty to render a covenant void involves something different from ambiguity capable of resolution by proper construction. The restriction in Ellison v O’Neill was held to be void for uncertainty because the height restriction was imposed by reference to a formula which was incapable of operation given the particular topography of the land. A term which is capable of operation is not void for uncertainty if it can properly be construed. In Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd Barwick CJ said:But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. … In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus with uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved.In construing terms courts should strive to give them effect where fairly open for that to be done. In Meehan v Jones Mason J (as his Honour then was) cautioned against ignoring the “traditional doctrine that courts should be astute to adopt a construction which will preserve the validity of a contract”. Those general principles of construction apply also to restrictive covenants provided that their meaning can be ascertained from the text without having recourse to principles such as those in Codelfa?Construction?Pty?Ltd?v?State Rail Authority of New South Wales which are inconsistent with indefeasibility of title by registration. Amongst the rules of interpretation of a restrictive covenant is that any doubt should be construed against the covenantor or grantor. The covenant registered in 1937 in this case on the title to the land at the back of 252?Walsh Street directs attention to the level of the land. It is accepted that this means the level of the land as at 1937 but there is no reason to assume that there is any material difference between the level of the land in 1937 and the level of the land today. In Ferella v Otvosi it was held that the lack of definition of a particular height did not render a restrictive covenant uncertain. The relevant height restriction in that covenant was expressed as limited to the erection of a building of not more than two stories in height upon the said land. Hamilton J said:The lack of definition of a particular height does not render it uncertain. The sloping nature of the site may make the determination of fact as to whether a building is more than two storeys in height a more difficult one (the judgment will have to be made in respect of a particular building), but it does not render it impossible. I bear in mind the Court’s duty to endeavour to uphold the provision.His Honour held that the ground referred to in the covenant was the ground where the building stood “whether it be at the highest or lowest point of the land”. The covenant in this case, without regard to extrinsic evidence, itself unambiguously directs attention to the land for its operation. The covenant, as was in my view correctly conceded, was valid when first made in 1937, and is not shown by the plaintiffs to have become invalid because of any material change to the land since then. A visual inspection of the land revealed by the numerous present and historical photographs tendered in evidence showed that there had been no construction on the land since 1937 beyond such work as was required to surface or resurface the land for use as a tennis court. Such variation to the level of the land as may have occurred by its surfacing or resurfacing is in my view de minimis. In my view the covenant is not void for uncertainty and does not offend the principles in Westfield. It is not necessary for me to deal with various statutory provisions to which I was referred as an aid to determining whether the level of the land, for the purposes of the covenant, was to be determined above the surface of the tennis court or immediately below it. If it be relevant I accept the submissions on behalf of the defendants that the tennis court is relevantly to be regarded as part of the surface and thereby constituting the land within the meaning of the covenant. For that purpose it may be sufficient to note that the tennis court does not constitute, or in any way involve, a building or structure beyond the laying of a surface immediately upon the land. What is to be construed for this purpose is the word “land” in the covenant created in 1937. The tennis court then, and the tennis court now, does not have a level which in my view materially affects the level from which the covenant is to take effect. A visual inspection of the land reveals the existence of a surface layer on the land for its use as a tennis court. A visual inspection reveals that the position of the land has not changed in any material way since 1937. In my view it is not necessary to have regard to any of the extrinsic evidence about the surface of the land to establish that its position today is as it was in 1937. Such evidence might have been relevant if the plaintiff had been able to establish that the surface of the land had so changed since 1937 that the operation of the restrictive covenant was no longer possible. But the extensive technical evidence relied upon by the defendants confirms what can be seen by visual inspection. Critical to that evidence was the evidence of Mr Singleton. Mr?Singleton is a Licensed Surveyor who inspected the land and compared it with historical records of the land as it was in 1937. The surface of the land is generally covered by an existing tennis court. The land is significantly higher than the abutting laneway to the east known as Airlie Bank Lane. The land is approximately 3.00?metres to 1.50 metres higher than the lane at its northern and southern ends respectively. Near the north-eastern corner of the tennis court is an old “sewer cap” known as an inspection opening. The sewer cap is flush with the tennis court surface and sits over the vertical sewer pipe as part of the property connection. The sewer cap is made of cast iron and the vertical shaft from the boundary trap is made from cast iron sections. The cap, vertical shaft and boundary trap inlet and outlet did not appear to Mr Singleton to have been replaced or disturbed since the installation and design authorised by the Melbourne and Metropolitan Board of Works in 1917. Mr?Singleton was able to identify steel piping which, in cross-examination, he confirmed had not been in general use, nor had been newly installed elsewhere, for decades. It is probable that the piping he saw, and which was evident from photographs tendered in evidence, was piping which existed in 1937 and which rose to and stopped at the surface level of the land in 1937 in the same way that it does today. The defendants also relied upon the survey evidence of Mr Goodison obtained by the plaintiffs. It supports the conclusion that the surface level in 1937 was the same as the surface level that can be seen today by visual inspection. Nothing in the topography or relevant circumstances of the site renders uncertain the operation of the covenant according to its terms.The defendants also sought to rely upon extensive direct evidence from a number of people about the land affected by the covenant. Mr Anthony Peter Kelly and his sister, for example, gave evidence of their recollection of the tennis court land when they were children. Their parents were then the owners of the property at 252?Walsh?Street and Mr Kelly was able to produce family photographs taken on the tennis court land. Evidence of that kind is, in my view, not consistent with the decision in Westfield and I do not take it into account. The historical evidence about the land burdened by the covenant may be relevant and admissible for the purposes of s 84 of the Property Law Act 1958 (Vic) but not for the purposes of construction of the covenant. The covenant itself identifies the level of the land as the point from which the height restriction is to operate. There is, therefore, no occasion in this case to refer to any other extrinsic or historical evidence and I rule that it is inadmissible for the purpose of construing the meaning of the covenant.B.Section 84 ApplicationThe plaintiffs seek orders, in the alternative, for the discharge or modification of the covenant under s 84(1)(a) and (c) of the Property Law Act 1958 (Vic). The relevant provisions relied upon permit the Court to modify or discharge a restriction in a covenant 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.The principles governing the exercise of the power under s 84 were considered by Kyrou J in Vrakas v Registrar of Titles where his Honour said:Section 84(1)(a) has two limbs. ?In essence, the first limb is that, due to changes in the character of the property or neighbourhood or other circumstances, the covenant is obsolete, and the second limb is that the covenant’s continued existence would impede the reasonable user of the land without practical benefits to other persons. An applicant need only establish one of these limbs in order to have a right to a remedy under s?84(1)(a), subject to the court’s residual discretion (see below).In relation to the first limb of s 84(1)(a), what is the “neighbourhood” must be determined as at the date of the hearing, rather than the date of the covenant. What is the “neighbourhood” is a question of fact.A covenant is “obsolete” if it can no longer achieve or fulfil any of its original objects or purposes or has become “futile or useless”. A covenant is not obsolete if it is still capable of fulfilling any of its original purposes, even if only to a diminished extent. The?test is whether, as a result of changes in the character of the property or the neighbourhood, or other material circumstances, the restriction is no longer enforceable or has become of no value. If a covenant continues to have any value for the persons entitled to the benefit of it, then it will rarely, if ever, be obsolete. A?covenant could be held to be not obsolete even if the purpose for which it was designed had become wholly obsolete, provided that it conferred a continuing benefit on persons by maintaining a restriction on the user of land. Strictly speaking, the inquiry is as to whether the restriction of user created by the covenant is obsolete, rather than as to whether the covenant itself is obsolete. ?In relation to the second limb of s 84(1)(a), to establish that a covenant would impede the reasonable user of the land, it must be shown that “the continuance of the unmodified covenants hinders, to a real, sensible degree, the land being reasonably used, having due regard to the situation it occupies, to the surrounding property, and to the purpose of the covenants”. Whether this is so is essentially a question of fact. It is not sufficient merely to show that the continued existence of the covenant would impede a particular reasonable use which is proposed by the applicant. The?applicant must show that the restriction will impede all reasonable uses. “Practical benefits” within the meaning of the second limb of s 84(1)(a) are any real benefits to a person entitled to the benefit of a restrictive covenant and are not limited to the sale value of the land benefited by the covenant. It must be established that the covenant is not necessary for any reasonable purpose of the person who is enjoying the benefit of it. If a relaxation of the restriction imposed by a covenant would be likely to lead to further applications of a similar nature, resulting in a detrimental change to a whole area, this “precedential” effect may be relevant in determining whether the restriction secures any practical benefits. Whether there are any practical benefits to other persons is a question of fact. In relation to s 84(1)(c), the test for whether a discharge or modification of a covenant would “substantially injure” a person entitled to the benefit of the covenant is similar to that in relation to “practical benefits” in the second limb of s?84(1)(a).Section 84(1)(c) requires a comparison between the benefits initially intended to be conferred and actually conferred by the covenant, and the benefits, if any, which would remain after the covenant has been discharged or modified – if the evidence establishes that the difference between the two (that is, the injury, if any) will not be substantial, the ground in s 84(1)(c) is made out. The injury must not be unsubstantial, and must be real and not a fanciful detriment. It is not enough for the applicant merely to prove that there will be no appreciable injury or depreciation in value of the property to which the covenant is annexed. A lack of specific plans makes it more difficult for an applicant to show that there will be no substantial injury to persons entitled to the benefit of a covenant. The prospect that, if the application for the discharge or modification of a covenant were granted, that might be used to support further applications in a similar vein, may be relevant.?Such “precedent value” may, in an appropriate case, of itself be a factor demonstrating that an applicant fails to establish the requirements in s?84(1)(c). Whether a person entitled to the benefit of the covenant would be substantially injured within the meaning of s 84(1)(c) is a question of fact. Town planning principles and considerations are not relevant to the Court’s consideration of whether an applicant has established a ground under s?84(1).The applicant has the onus of establishing the matters set out in a limb of s?84(1)(a), or in s 84(1)(c), upon which he or she relies. In relation to s?84(1)(c), this means that the applicant must effectively prove a negative. The absence of objectors to the discharge or modification of a covenant will not, in?itself, necessarily satisfy the onus of proof. Each case must be decided on its own facts. Even if the matters set out in a limb of s?84(1)(a), or in s 84(1)(c), are proved by the applicant, the Court has a discretion to refuse the application. Town planning principles and considerations may be relevant to the exercise of the Court’s residual discretion. “Precedential” issues similar to those discussed above may also be relevant in the exercise of that discretion. A somewhat different construction of the provisions was preferred by Morris J in Stanhill Pty Ltd v Jackson but neither party sought to rely upon any principles different from those summarised in Vrakas.(a)ObsoleteThe first limb of s 84(1) of the Property Law Act 1958 (Vic) requires consideration of whether the covenant is obsolete. That, in turn, requires consideration of the original objects of the covenant to determine whether, as a result of changes in the character of the property or the neighbourhood, or other material circumstances, the restriction imposed by the covenant is no longer enforceable or has become of no value. In this regard the plaintiffs contend that the purpose of the present covenant was specifically to preserve a view down the Punt Road hill northwards and towards (if not to) the Yarra River. The lots to benefit from that view were said to be those now known as 212-222?and?226?Walsh Street, and the plaintiffs contend that the views protected by the covenant are now not available to the benefited land by reason of the townhouse development to the north of the border of the land at 264 Walsh Street and the other buildings which have been constructed since 1937 further down the hill. The plaintiffs contend that there are now no available views of the Yarra River and that there are no available distant views which were protected by the covenant and which are not now blocked by buildings on other land. The defendants, in response, take issue with the plaintiffs’ statement of the object or purpose of the covenant. The defendants contend that the purpose of the covenant was to create a sense of openness and the protection of views to the north-east as they may exist from time to time. These purposes, the defendants contend, are still secured by the covenant.The Court should approach any application for extinguishment on the grounds of obsolescence as a serious inroad upon the property rights of a landowner that ought not to be interfered with lightly. The determination of whether “the restriction ought to be deemed obsolete” has been held to require a consideration of whether the restriction is currently incapable of fulfilment or serve no other purpose. The consideration of current obsolescence must, of course, be undertaken by reference to the original purpose. In Re?Robinson Adam J said:It appears to me the critical words in that limb of the section are the words “shall be deemed to be obsolete”. What does “obsolete” mean? When is a restrictive covenant properly to be deemed “obsolete”? This has by authority been stated to arise where the object of a restrictive covenant can, by reason of changes that have occurred, be no longer achieved or fulfilled. In other words, through changes that have occurred the restrictive covenant has become futile or useless.His Honour went on to observe that a restrictive covenant will very rarely be deemed obsolete if it “continues to have any value for the persons entitled to the benefit of it”. Obsolescence is fundamentally a question of fact. In Greenwood v Burrows Eames J said:Such an issue is a question of fact to be determined in each case and I am not satisfied that the covenant has so lost all value as to be incapable of achieving, to any degree, any purpose or object of the covenantor. In my opinion, there need not be only one purpose or object attributed to the covenantor. The covenant may well, as in this case, encompass a number of objectives … One such objective, in my opinion, was the maintenance of reduced population numbers in the area and that continues to be achieved by the covenant (although to a lesser degree than the designers of the Estate may have liked). The fact that the covenant is incapable of fulfilling, wholly, one of its original purposes but may do so to a limited extent is nonetheless evidence that the covenant is not obsolete.His Honour referred to an alternative way of posing the test accepted by author Dr?S?Robinson and said:In theory at least, it could be possible, in my opinion, for a covenant to be held not to be obsolete because it provides a continuing benefit to persons by maintaining a restriction on the user of land, and this could be so, notwithstanding the fact that the purpose for which it was designed has now become wholly obsolete.On either basis the plaintiffs must establish something substantially more than that the original purpose has been diminished to warrant a conclusion that the covenant is obsolete.The covenant affecting the rear of the property at 252 Walsh Street does not contain a statement of its purpose for those entitled to its benefit. The plaintiffs contend, however, that the purpose of the covenant can be identified with certainty because of an earlier restriction imposed on the land between the benefited land and the burdened land. In 1935 a covenant had been made with restriction over the rear of 240-242 Walsh Street to prevent a building over the height of 16 feet and six inches. This was submitted to indicate that the restriction of 12 feet over the burdened land was to preserve a view line from the properties with the benefit of the covenants protecting a view down the hill towards the river although the evidence does not establish that the purpose of the covenant was to secure a view of the river. The precise identification of the purpose of the covenant assumed significance in the proceeding because of dispute about whether the purpose, once identified, continued to be of value to those entitled to the benefit of the covenant. The purpose of the covenant can in part be determined by reference to its effect and what it achieves or is apt to achieve. A view towards (but not of) the river from the benefited land is, no doubt, an effect of the covenant. That effect and purpose may perhaps be supported by the historical fact of the higher level restriction of 16 feet 6 inches on the property between the benefited and burdened land in question, although I doubt that the purpose of the covenant in question is permissibly determined by reference to the height restriction imposed by another covenant made earlier. However, the view line down the hill and towards the river was one of the effects, and therefore at least one of the purposes, of the subject covenant. That view has undoubtedly been affected by changes in the area and by construction within the field of view from the benefited land. The biggest impact on the view may have been the construction of a large building at 264 Walsh Street. However, there is still a significant view afforded from the benefited land presently protected by the restrictive covenant. Many photographs were tendered in evidence from which it is clear that the view in 1937 from the benefited land has substantially changed by the developments which have occurred in the field of view protected by the covenant, but that there is still a view afforded in part by the restriction in the covenant. The presence of the substantial building at 264 Walsh Street does not render obsolete the views enjoyed from the benefited land. Mr Milner, a Town Planner called on behalf of the defendants, provided photographs with a report showing the view from different directions from the benefited land which permitted views over the burdened land towards buildings across and over the Yarra River. From some vantage points the building at 264 Walsh Street was not visible, although that fact can be given less weight given its plain visibility from the benefited land from other points.The continued availability, albeit modified and somewhat reduced, of views from the benefited land over the burdened land is sufficient to conclude that the covenant is not obsolete. However, in any event, other purposes of the covenant continue to be enjoyed. Mr Milner also gave evidence about the sense of openness created for the benefited land which the covenant continues to provide. An effect of the covenant is directed towards a sense of outlook and openness that continues to provide a benefit and which means that the covenant cannot be regarded as futile, useless or as having no value. Mr Gattini, a Town Planner called on behalf of the plaintiffs, was asked about the sense of openness created by the view. His answer may not have been entirely responsive to the question but he rejected that openness was sought to be protected by the covenant because it did not accord with his interpretation of the purpose of the covenant. According to Mr Gattini: The homestead itself had a substantial garden attached to it. It was on an elevated piece of land and the dwelling itself [as] exhibited in the Lovell affidavit showed that the dwelling was very high off the ground indeed, almost two metres. Sir Edmund Herring would have had a strategic view from that particular part of the site over much of the development to the north.In the end Mr Gattini maintained his opinion that openness was not a purpose of the covenant and that the purpose of the covenant was specific about protecting downward views towards the river. However, a sense of openness (as the evidence of Mr Milner showed) was something achieved by the covenant and something which I consider to be one of its purposes. Mrs Michelmore’s evidence was that a factor attracting her to purchase the land with the benefit of the covenant was “the fantastic views to the north and north-east” and “the sense of openness and privacy” afforded to her property.(b)Reasonable userThe second limb of s 84(1)(a) of the Property law Act 1958 (Vic) is that the continued existence of the covenant would impede the reasonable user of the land without securing practical benefits to beneficiaries of the covenant. The test for the application of this limb has been stated in various ways. The Full Court in Re Stani and Menhennitt J in Re Alexandra said: [What] must be shown, in order to satisfy this requirement [is] that the continuance of the unmodified covenants hinders, to a real, sensible degree, the land being reasonably used, having due regard to the situation it occupies, to the surrounding property, and to the purpose of the covenants.In Vrakas Kyrou J observed that it was not sufficient merely to show that the continued existence of the covenant would impede a particular reasonable use which was proposed by the applicant but that the applicant must show that the restriction would “impede all reasonable uses”. In that context the “practical benefits” to be considered are any real benefits to a person entitled to the benefit of a restrictive covenant and not only the sale value of the land. In Re Robinson Adam J said:It is not sufficient that the continued existence of the covenant impedes the reasonable user of the land, because the section says “without securing practical benefits to other persons”. Well, are any practical benefits secured to other persons by the existence of the covenant? The legislation is obviously framed to protect restrictive covenants which are of any practical benefit to other persons from modification or discharge, even though the existence of these restrictive covenants impedes any reasonable user of the land. The first concern obviously is the preservation of property rights, however hard the consequences may be to others. And so the question here is whether to interfere with the restrictive covenant at present existing would deny any practical benefits to other persons. The modification sought is to convert land, which under the restrictive covenant is limited to use for a private residence, to land which would be used for the purposes of shops. Is there any practical benefit to any of the persons entitled to the benefit of the covenant, because if to one person that would be sufficient – if to more persons, of course the case is strengthened. Can it be said that there is no practical benefit to any person entitled to have this covenant maintained? I think it is sufficient to state the proposition to answer it. The test of practical benefit, it seems clear enough, is not really whether if the covenant is modified or discharged there would be any depreciation in the sale value of the land benefited by it. The notion of practical benefit goes much further than that, as indicated by some of the cases that were cited to me. [They … ] make it clear that if there is some real benefit to the person entitled to [the] restrictive covenant, then to deprive him of it is to deprive him of some practical benefit. And the right of a person to have preserved amenities for what he reasonably considers to be amenities for his projects is a right, the deprivation of which deprives him of a practical benefit.The plaintiffs contend that the covenant, unless modified, to a real and sensible degree, now hinders the land being used reasonably having regard to its situation, the surrounding properties and the purpose of the covenant. They also contend that the continued existence of the restrictive covenant would not secure any practical benefits to others. The defendants contend that the covenant does not impede “all reasonable uses” and that the continued existence of the covenant secures practical benefits to those benefitting from the covenant.The case for the defendants had been that the covenant did not impede all reasonable uses because a single storey development on the covenant land was an entirely reasonable use of the land having regard to the fact that a substantial residential development can be accommodated on the balance of the land and that scope existed for basement car parking beneath the single storey section. The evidence did not support the submission that a single storey dwelling could be constructed on the subject land if it was to have a Walsh Street address unless there was substantial excavation below the existing surface. The evidence as it emerged established that the 12 feet height restriction makes it impossible to build a single storey dwelling with a Walsh Street address on the land burdened with the restriction. The evidence established that a Walsh Street address for the land burdened by the covenant was more desirable than its use by a residence with an Airlie Bank Lane address. Construction of residential premises with access from Walsh?Street could not be built as a single storey within the height restriction imposed by the covenant. Nor, obviously, could a two storey building be constructed within the 12 feet height restriction unless there was substantial excavation below the surface level of the land. Underground excavation, however, would result in any new building having restricted access to natural light. Counsel for the defendants conceded that it should be open to the plaintiffs to construct a single storey building with access in a sensible way from Walsh Street without having to be subterranean. One set of plans to construct a building on the burdened land had been for a full ground floor level with a step down from Walsh Street, however Mr Jeffreson, an Architect, said that that would require variation of the covenant by at least 600 mm. An alternative proposition was explored with Mr?Jeffreson in cross-examination by senior counsel for the defendants of development of the tennis court land as a separate parcel with a two storey construction. Mr Jeffreson’s evidence was again to the effect that there would not be sufficient clearance and counsel for the defendants accepted that such a construction would require a variation of the level of the height restriction in the covenant by at least an extra 600?mm.The plaintiff tendered, without opposition, a page from the biography of Sir Edmund Herring describing something of the property as it was before and around 1937:It was a rambling, late-nineteenth-century residence, standing in a large garden and with an uninterrupted view to the north across the River Yarra … There, after selling part of the grounds to pay for necessary alterations to the house, they laid a grass tennis court … The court, a treasured possession lovingly tended, would be the scene of countless weekend tennis parties and family tournaments, … Evidence tendered by the defendants of the property around the 1940s with family photographs is consistent with the image of the land and of the neighbourhood as substantially less developed real estate than it has become today.Whether the continued existence of the restriction would impede the reasonable user of the land is a question of fact to be determined by inquiry into the consequences of the changes in the character of the property or of the neighbourhood or of other circumstances of the case which may relevantly and probatively bear upon the continued impact of the restriction upon the reasonable user of the land. The operation of s?84(1)(a) is conditional upon a causal connection between the stipulated changes and the impediment to the reasonable user. It is, therefore, necessary to look at the changes which have occurred and their impact upon the reasonable user of the land. The changes since 1937 to the property (whether to the benefited property or to the burdened property), and to the neighbourhood, and the other circumstances of the case, make the continued existence of the covenant an impediment to the reasonable user of the land burdened by the restrictive covenant. All of the evidence, including the expert opinions, agreed that both the properties and the neighbourhood had experienced significant change since the covenant was made, although they disagreed about the extent and degree of the change. Mr?Gattini expressed the opinion that it was unreasonable for building heights on the property to be limited to 12 feet as this would constrain development on the site and that would be inconsistent with many of the developments already in existence in the neighbourhood. There has, since 1937, been substantial construction of multi-storey properties in Walsh Street and the neighbourhood. In oral testimony Mr Gattini gave the following evidence:COUNSEL: I want you to tell me what considerations you took into account in considering the reasonable use of the subject land?MR GATTINI: Well, the reasonable use of the land, having regard to the changes, it’s my opinion that the reasonable use isn’t a building that’s limited to a height of just over three metres. It is clear from the photos, it’s clear from my research and it’s clear from simply a layperson’s inspection of the neighbourhood that single dwelling heights are not the norm in this part of the neighbourhood and the neighbourhood is very much dominated by higher buildings, up to four storeys, five storeys in most cases. So the reasonable use of the land is not a single storey dwelling or building of any form.COUNSEL: Taking into account whether the utility of the covenant can still be achieved, what do you say about reasonable use?MR GATTINI: I think the reasonable use of this land, taking into account the changes to the character of the area are built heights of two and three storeys commensurate with the predominant building heights that are within the immediate area of the property itself and the immediate area of the property itself exhibits three and four storey heights, exclusively.Mr Gattini’s evidence needs, of course, to be understood in light of his strongly held opinion that the purpose of the covenant was to preserve a view across the Yarra?River which, in large part, had been affected by other buildings constructed nearby and which, to the extent to which it was not otherwise protected by the covenant, would still be available in any event. Much of the plaintiffs’ evidence was directed to establishing the reasonableness of its proposed use as revealed in plans tendered in evidence. However, the statutory test will not be satisfied simply by showing that a proposed use is reasonable. The covenant must be shown to prevent the reasonable use of the land and that test will not be met if the land may reasonably be used in ways other than that which the applicant might prefer. Mr Gattini’s evidence for the plaintiff does not, in my view, go as far as establishing that a single storey construction over the land with the covenant would not be a reasonable use of the land. Mr Gattini’s opinion was that the building envelope contemplated by the plaintiffs was a reasonable use but he accepted that something less could also be a reasonable use of the land. That included a detached house with space around it rather than an apartment development. Mr Suhr accepted that the neighbourhood had many apartments of about 35 squares many of which did not have views or where views were available only from the top floor. The evidence of Mr Biles, a Town Planning consultant called to give evidence for the plaintiffs, was directed to reasonable user. His report recorded, as did all of the evidence on this point, that there had been substantial change in the nature and development of the land in the area since 1937 saying, amongst other things: The nature and development of land in the area has substantially changed since 1937. Land use and development has intensified with buildings becoming taller with greater site coverage and with a greater density of occupation. The views from the properties benefiting from the covenant have been obscured by buildings constructed after 1937. Number 258264 Walsh Street developed in the last decade is a case in point.Mr Biles also observed that there are no vacant lots in the area with “most available land [having] been developed in a relatively substantial manner”. Mr?Biles could only find one single storey dwelling to have been built in the last 50 years in the locality but accepted that apartments of 40 or 50 squares in the area would be generous spaces for the market place in South Yarra. A difficulty in application of this limb of s 84(1)(a) is that of determining the point in the height restriction at which a reasonable user is, if at all, impeded. Use of land may change over time and people may differ about how they should be permitted to use their land. The plaintiffs may understandably desire to maximise the construction on the burdened land for economic return whilst the defendants may wish to minimise the construction as much as possible to maximise their enjoyment of the restriction. The evidence before me is that the restriction impedes the reasonable user of the land because it effectively prevents construction of any level of residential building upon the land with a Walsh Street address without substantial excavation. It is plain that the land in the neighbourhood is now commonly used for multi-storey buildings. To require the land to remain vacant or used as open space is no longer a reasonable use of the land in view of the changes to the character of the property and to the neighbourhood since 1937. The property is no longer a stately home alongside mansions with lawns and tennis courts. The neighbourhood has long become heavily developed with multi-storey dwellings. The evidence concerning the reasonable level to which the height restriction in the covenant should be allowed was not entirely satisfactory nor fully explained in open court. Much of the technical material relied upon was left by counsel for the Court to read without explanation or assistance. Mr Wyatt was a Landscape Architect called to give evidence for the defendants. He produced a report, with drawings and photographs dealing with, amongst other matters, the impact of construction upon the views from the benefited land upon the burdened land. In cross-examination he accepted that there would be no impact upon the view lines from the benefited land until any construction on the burdened land rose above the level of around RL 36. For that purpose Mr Wyatt appears to have calculated the existing covenant to be at level RL 29.88. The oral evidence and the various written expert reports tendered in evidence made references to different height measurements which, no doubt were well known to those in the field but which were not specifically explained by counsel in Court despite the significance of the extent by which the height restriction might need to be modified. The report by Mr Singleton, and more specifically the material in appendix 13 (out of 23 appendices), provided an explanation of the means of measuring and recording levels. He explained in his report that the use of reduced levels (recorded as “RL”) was widespread before the advent of Australian Height Datum (recorded as “AHD”) which began in 1971. The relevant regulation requires that all altimetric surveys be connected either directly or indirectly to AHD. The term RL relates to the distance above or below a specific datum surface. The AHD relates levels to mean sea level. Mr Wyatt’s evidence was expressed in RL. Mr Wyatt’s calculations and opinions were based upon the selection of a view cone taken between two points marked on a diagram as AA. A cross-section of views primarily from the property at 226 Walsh Street under existing conditions and under the proposed conditions showed the impact upon the views over the area affected by the covenant from the chosen point of view from the benefited land at 226 Walsh Street. The impact depended, of course, upon the commencement point of the view and the specific direction being viewed. It is, nonetheless, clear that Mr Wyatt’s evidence was that there would be no impact upon the view from construction up to RL 36. The evidence needed to determine the level at which to increase the height restriction in the covenant is not as useful as it could have been. It is, however, sufficient to warrant raising the height restriction to RL 36 as shown in Mr Wyatt’s diagram although it is not entirely clear whether that would be enough to permit the plaintiffs to construct a viable building. The plans and diagrams tendered by Mr?Wyatt contemplated a three level construction, including a basement, with the ground floor level reaching RL 37.13. There were, however, no plans tendered for a proposed single storey level and, therefore, it is not possible to determine by reference to evidence the exact height needed for the construction of a single storey building. It is not clear on the evidence whether RL 36 would be sufficient to enable an actual building to be constructed. However, both parties submitted that the evidence permitted a variation to about RL 36. Senior counsel for the defendants accepted that it was open for the plaintiffs to contend on the evidence that it was open to modify the height limit to RL 36. In response to a question about whether the Court was precluded from making a modification to that extent senior counsel said:Maybe I’m opening the door to my learned friend saying something that your Honour’s not going to be happy to entertain, but we understand that the process is really here about ascertaining the facts as can be best done from the material and then making a judgment about where the fair outcome is. We’ve got positions at opposite ends of the spectrum at the moment, but your Honour has a capacity to resolve the dispute in a fashion that you see accords with the evidence, and yes, if it came as a complete surprise to me that there was some midpoint being advocated by my learned friend and I didn’t have an opportunity to make a submission about it, then I guess I’d ask for time as he may well. He’ll have overnight obviously if he doesn’t like the idea of being given another 600 millimetres, but we don’t see that as problematic as a matter of fairness. It might be in other cases your Honour, but in the way in which this case has been argued, no.Senior counsel for the defendants had previously conceded, as I have mentioned above, that it should be open for the plaintiffs to construct at least a single storey building with “access in a sensible way” from Walsh Street. The evidentiary problem is whether that can be done with a modification of the height restriction to RL 36. Senior counsel for the plaintiffs, for their part, conceded upon instructions that the material before the Court, especially given the evidence in relation to RL?36?given by Mr Wyatt, permitted modification of the covenant to that level. It is in those circumstances that I conclude that the reasonable user of the property requires modification of the restriction to permit construction up to RL 36 as shown in Mr Wyatt’s diagram.The second limb to s 84(1)(a), however, also requires an enquiry into whether the impediment to the reasonable user is “without securing practical benefits to other persons”. Whether the restriction continues to secure “practical benefits” is also a question of fact and calls for a different inquiry from whether the restriction is obsolete. The inquiry will not be determined by a consideration of only the impact upon the sale value of the land but by consideration of the benefits, including to the amenity, to the person entitled to the benefit of the restrictive covenant. The test of whether there is substantial injury, as Menhennitt J pointed out in Re Alexandra is not determined by inquiry whether the benefit of the restriction will be “interfered with at all [by the proposed modification] in circumstances where” the purpose of the restriction is capable of being carried into effect. In Re?Stani the Full Court agreed with the conclusion of the trial judge that a practical benefit existed in the continuation of a restriction by securing to the persons entitled to the benefit of the covenant an ability to “be living in an area of light population density with the great advantages that go with that circumstance”. It is, of course, for the plaintiffs to discharge the onus of establishing, amongst other things, that the continued existence of the restriction is without practical benefit to the persons entitled to it. The defendants maintain that the restriction provides them practical benefits and rely upon the evidence of Mrs?Michelmore that she was attracted to the views to the north and north-east as important in the decision to purchase the house along with the sense of openness and privacy it afforded to the property. The modification of the height restriction to RL 36 may have an impact on the landscape but not necessarily to a practical benefit secured by the covenant. Some part of the overall view may be removed but not the view as a whole; nor would construction to RL 36 remove the sense of openness and privacy currently enjoyed from the benefited land. That conclusion is supported by the evidence, particularly that of Mr?Wyatt and Mr?Jeffreson. The latter produced photographs showing views across the land with the restriction from the defendants’ property. Some of the photographs were modified to show the impact of construction over the existing tennis court. Those photos reveal that a construction over the present tennis court would be seen from some viewing point on the defendants’ land, and that some views of the distance would necessarily be obscured, but that construction to an appropriate level would not destroy the defendants’ view materially, nor remove the sense of openness and privacy. The visual impact from the defendants’ property of construction over the burdened land would obviously vary depending upon the point of view taken from the defendants’ land. A construction over the burdened land would be visible from certain points on the defendants’ land but less so from others. The evidence of Mr Wyatt, also supported by diagrams and photographs, is that any construction would only have an impact upon view lines from the defendants’ land above the land from around RL 36. (c)Substantial injuryThe plaintiffs also rely upon s 84(1)(c) of the Property Law Act 1958 (Vic) which empowers the Court to discharge or modify a restriction upon being satisfied:(c)that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction.The plaintiffs’ task in relying upon this provision is to prove a negative, namely, that the proposed modification of the covenant will not substantially injure those persons entitled to the benefit of the restriction.The test of substantial injury under this section is similar to that of practical benefits in the second limb of s 84(1)(a). The purpose of s 84(1)(c) was said by the Full?Court in Re Stani to be to preclude vexatious opposition cases where there was no genuineness or sincerity or bona fide opposition on any reasonable grounds. Having regard to that purpose of the section the Court observed that the correct view of its operation required that “any injury sufficient to prevent the Court modifying the restriction must be something more than unsubstantial, [it] must be real and not a fanciful detriment”. In Re Cook Gillard J had said about the operation of the section:It should be noted that in paragraph (c) the emphasis is on the injury suffered by the persons entitled to the benefit. From the nature of the proprietary right arising from the restrictive covenant clearly the injury must occur in relation to the person’s enjoyment of his property. Such injury can only be properly assessed by a comparison between the benefits intended to be conferred and actually conferred by the covenant initially on the persons entitled thereto and the resultant benefits, if any, remaining to such persons after the covenant has been modified. If from the evidence it appears that the difference between the two will not be substantial, then the applicant will have established a case for the exercise of the Court’s discretion under paragraph (c). In order to make this comparison it is proposed to consider what benefits the covenant over the subject land may have conferred upon the persons entitled thereto, and then to assess whether the modification of such covenant would or would not substantially diminish the benefits so discovered.The plaintiffs contended that the discharge or modification of the restriction will not lessen the available benefits to the benefited land because they contended that even without modification or removal those views were no longer available. The strength of the contention depends in large measure upon seeing the purpose of the covenant as a view down Punt Road hill towards the Yarra River and not more broadly, as contended by the defendants. The defendants, in turn, argued that the proposed removal or modification will cause substantial injury by blocking or diminishing views to the north and north-east which are protected by the covenant and would create a sense of enclosure and diminish the sense of openness. The defendants also maintained that they would suffer substantial injury by the negative precedential impact the removal of the covenant will have.Deciding whether the proposed discharge or modification will not substantially injure the persons entitled to the benefit invokes an element of judgment. It first requires the identification of the discharge or modification which is proposed. In this case the proposal was that in the plans attached to the plaintiffs’ amended originating motion. However a proposal under consideration during the hearing, and in particular during closing submissions, became a modification to lift the height restriction to around RL 36. The latter proposed modification, in my view, would not substantially injure the persons entitled to the benefit of the restriction for the reasons which I have considered under the second limb of s 84(1)(a). The former proposed modification might have been, but it is unnecessary to consider it in any more detail than to note that the structure would have been higher, more visible, and therefore would necessarily have had a greater impact. C.DiscretionThe final matter raised by the parties is whether the plaintiffs should be denied relief in exercise of the Court’s discretion under s 84(1) of the Property Law Act 1958 (Vic). In Vrakas v Registrar of Titles Kyrou J said:Even if the plaintiffs had succeeded on one of the three alternative bases upon which they argued their case, I would have refused them relief under s?84(1) in the exercise of my discretion. Mr Vrakas’ evidence was that he and his wife bought the property without first inspecting it or making other inquiries and therefore they were not aware, at the time of the purchase, that the property was burdened by the covenants. Mr Garde submitted that, as Mr Vrakas is an experienced real estate agent, it is unlikely that he did not know about the single dwelling covenants when he and his wife acquired the property. Alternatively, Mr Garde submitted that, if Mr Vrakas’ evidence is true, his?conduct was “close to recklessness”. I accept Mr Vrakas’ evidence that he bought the property without inspecting it and without knowing that it was burdened by the covenants. I find that the plaintiffs bought the property for its development value rather than the attributes or intrinsic value of the existing house. The plaintiffs saw potential to develop the land and took a risk that there may be legal impediments to achieving that goal. Unfortunately for them, the restrictive covenants, which have burdened the property since the early 1940s, are an impediment to developing the land other than use for a single dwelling house. To?that extent, they are the authors of their own misfortune. As a matter of discretion, I?cannot see any compelling reason why the defendants should lose the benefit of the covenants in order to assist the plaintiffs to overcome the difficulties that they have created for themselves. The plaintiffs’ conduct is also relevant to my discretion. They bought the property in April 2003 and applied to this Court in June 2005 to discharge the covenants or modify them to permit the construction of five units on their land. Such a proposed modification had poor prospects of success from the outset. Two weeks before the hearing before me, they gave notice to the defendants that they would seek, in the alternative, a modification to enable the construction of two dwelling houses on the land. The?proposed modification to enable the construction of five units was not formally abandoned until the first day of the hearing before me. Neither of the proposed modifications was supported by the evidence of the plaintiffs’ town planning expert. Mr Nash conceded that Mr?Vrakas was “pretty vague in the witness box” about what the plaintiffs were going to do with the property. In this case the defendants contended that the Court’s discretion should be exercised against the plaintiffs. The plaintiffs, unlike the purchaser in Vrakas, purchased the property burdened by the covenant knowing of its existence. On 5 August 2011 Mr?Suhr wrote to his neighbours, including the defendants, informing them that he and his wife had purchased the property at 252 Walsh Street. The letter gave notice of the intention of Mr Suhr and his wife to subdivide the property into two, to build a townhouse on one parcel and to develop the other. The letter also notified his neighbours of an intention to have the covenant discharged.I can see nothing in the conduct of the plaintiffs to disentitle them from any order under s 84 of the Property Law Act 1958 (Vic) as a matter of discretion. It is true, as senior counsel for the defendants submited, that the plaintiffs “took a calculated risk in relation to their capacity to remove or amend the covenant” but that fact points in favour of the plaintiffs, or is at most neutral on questions of the exercise of discretion. The plaintiffs were content to purchase a property with what they saw as valuable potential if they could persuade the Court to modify an existing restriction. They have been open about their intentions and, unlike his Honour’s finding in Vrakas, the plaintiffs have been clear and not vague in their position or evidence.D.OrdersAccordingly the orders in this proceeding will be to modify the covenant restricting the development to the land in Certificate of Title Volume 6132 Folio 361 to require the owners not to erect any building of a greater height than RL 36. I will otherwise hear the parties on any question of costs. SCHEDULE OF PARTIESNo. 4691 of 2011 BETWEEN:MARK WILLIAM SUHR First PlaintiffELIZABETH ALEXANDRA SUHRSecond PlaintiffSURMAR PTY LTD (ACN 100 678 831) Third Plaintiff- and -ANDREW GORDON MICHELMORE First DefendantJANET HAILES MICHELMORESecond DefendantANTRO NOMINEES PTY LTD (ACN 005 430 008) Third Defendant ................
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