The Business Municipal Matters

In this edition, the ongoing subject of one dwelling restrictive covenants shows no let up. Shifting sands might be detected in the latest decision of the Supreme Court. There is a follow up mention regarding the hot topic of neighbourhood tree disputes, and potentially yet another jurisdiction for VCAT to look after; and a Policy Statement of the Law Council of Australia recognises the principles described in a decision of the Land and Environment Court of NSW.

Three dwellings detrimental to amenity

In a very recent decision of the Supreme Court of Victoria Hivance Pty Ltd v Moscatiello & Ors ([2020] VSC 183, 17 April 2020) Macaulay J was not persuaded that the beneficiaries of a single dwelling covenant would not suffer a “substantial injury” if a multi-dwelling development was to be permitted on the land burdened by the covenant.

The proposal was of the type that has been developed all around suburban Melbourne - three two-storey townhouses in Reservoir on a “quarter acre block’.

The decision is interesting because of the emphasis the Court placed on the evidence of the defendant beneficiaries with respect to the amenity they enjoyed in the area within which they lived; and the precedent effect of modifying the covenant.

The Court summarised the critical questions in the case to be [3]:

(a) Does the neighbourhood retain a special distinctive character engendered and sustained by the singledwelling covenant?

(b) (b) If so has the plaintiff shown that a relaxation of the single –dwelling restriction on the property will not diminish that distinctive character either –

(i) directly (immediately), because of the construction of the proposed three-dwelling development, or

(ii) in the longer term, by establishing or contributing to a body of precedent that allows more multi-dwelling in the area?

As readers will be aware section 84 of the Property Law Act provides that the court has power to modify a restrictive covenant if satisfied, amongst other things, that “the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction” (s.84 (1) (c )).

What was meant by ‘substantial injury’ was considered in Randell v Uhl [2019] VSC 668 at par [85] (Derham AsJ).

“…. The dichotomy in the section is not between vexatious and non-vexatious claims but is between cases involving some genuinely felt but insubstantial injury, on the one hand, and cases where the injury may truly be described as substantial, on the other”.

“the substantial injury relates to practical benefits, being any real benefits to the person entitled to the benefit of the covenant”.

Assessing whether there will be a substantial injury requires a comparison between: (Randell [85] (d))

The benefits initially intended to be conferred and the benefits 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 will not be substantial, the plaintiff has established a case for the exercise of the courts discretion under s 84 (1) (c ) of the PLA.

The question to be decided when considering neighbourhood character in Hivance was:

“Does a distinctive character of the area, intended by and supported through the single-dwelling covenant, remain intact and, if so, would the relaxation of that restriction realistically harm that character and cause an injury of substance to the beneficiaries of the covenant?”

In answer to that question, the Court considered the evidence that had been given by the Beneficiaries under the covenant, who described the characteristics of the area within which they lived, and which led them to purchase their homes there.

[21] Such an amenity or ambiance of an area is sometimes hard to put into words. Nonetheless, with remarkable consistency, the defendants highlighted the large and generous proportions of the blocks of land, the sense of open space and privacy; the predominance of family homes….; and the absence of congestion.….. In my opinion, the ‘lived experience’ of those who dwell in the neighbourhood, those who have an occupant’s sense of the environment, is not only relevant but weight may be given to it.” o Address existing harm to anyone on the affected neighbour’s land that is caused by a tree; o Prevent harm that is likely to occur within the next 12 months.

The Court determined that the whole of the evidence was found to indicate that the distinctive character of the area remained intact; and that character amounted to a real and practical benefit for the members of the neighbourhood, including the beneficiaries of the covenant on the property.

The Court in Randell also referred to the ‘precedent value’ of a modification. That is where a modification could be used to support further applications resulting in further encroachment, thus defeating the object sought to be achieved when the covenant was imposed. This reasoning was adopted and referred to in Hivance

[41] “Perhaps the more significant form of potential injury to the beneficiaries, however, would arise from the precedential effect of relaxing the covenant…. [43] “Each further relaxation of a restriction either cements the particular precedent as the acceptable norm rather than the exception or, logically, heightens the risk that the next application will bring the situation closer to the flood-gate scenario”.

Following up – neighbourhood tree disputes – report

Following on from my article in the October 2019 edition of VPELA Revue, the Victorian Law Reform Commission has released its report into Neighbourhood Tree Disputes (VPELA Revue October 2019). At 330 plus pages, the report is very comprehensive. Given the pressure it is under, VCAT will no doubt raise an eyebrow at the suggestions that a new Act “is the best way to ensure that disputes are resolved in a quick, inexpensive and effective way [(par 16]”; and that under the proposed Act an affected neighbour would be able to bring a matter in VCAT to: o Prevent or remedy damage to the affected neighbour’s land or property that is caused by a tree o Prevent damage that is likely to occur within the next 12 months

The report acknowledges that there is a myriad of levels and complexities associated with tree disputes; and there is no one clear law. Chapter 10 of the report notes that the management and removal of trees on private land is affected by numerous laws and policies, including:

Planning and Environment Act 1987; Local Laws made under the Local Government Act 1989, Heritage Act 2017, Aboriginal Heritage Act 2006, Fences Act 1968, Catchment and Land Protection Act 1994, Victorian Conservation Trust Act 1972, Conservation, Forests and Lands Act 1987, Commonwealth Environment Protection and Biodiversity Conservation Act 1999.

There is also legislation which relates to the management of vegetation for fire prevention, to minimise interference with power lines and to protect public health and wellbeing and the environment.

Given the current circumstances we are dealing with, a new Act is likely to be a long way off.

Law council of australia policy on sustainable development

In September 2019, the LCA released its Policy on Sustainable Development. Pursuant to its Rule of Law Principles, the LCA provides that “States must comply with their international legal obligations whether created by treaty or arising under customary international law”.

Key Principles are drawn from the principles set out in Telstra Corporation Limited v Hornsby Shire Council [2006] NSWLEC 133 (approved by the NSW Court of Appeal in subsequent cases). Those Key Principles are:

1 Sustainable use

Natural resources should be exploited in a manner which is sustainable or prudent or rational or wise or appropriate.

2 Integration

Effective integration of economic, environmental and social consideratons in the decision-making process.

3 Precautionary principle

If there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation.

(see Telstra Corporation Limited v Hornsby Shire Council [2006] NSWLEC 133 (24 March 2006; and WOTCH v VicForests (No 3) [2020] VSC 220 (29 April 2020))

4 Intergeneratioal equity

The present generation should ensure that the health, diversity and productivity of the environment are maintained or enhance for the benefit of future generations.

5 Intragenerational equity

People within the present generation have equal rights to benefit from the expoloitation of resources and from the enjoyment of a clean and healthy environment.

6 Conservation of biological diversity and ecological integrity

Conservation of biological diversity and ecological integrity should be a fundamental consideration in all resource management and planning decisions.

7 Internatlisation of environmental costs

Environmental costs should be internalised into decisionmaking for economic and other development plans, programs and projects likely to affect the environment.

8 Global dimension to implementation

The global dimension of environmental impacts of policies and actions should be considered.

(Go to hansard.parliament.vic.gov.au)

JulieDavisLLB;MasterofBusiness(CorporateGovernance Barrister experienced in Environment, Land, Water, Planning and Local Government Law. Email: julie.r.davis@vicbar.com.au