Places Restrictive Covenant removal

Tales from the planning permit route

Council Competency as a matter of Public Confidence in the Planning System: Berecz v Casey City Council [2021] VCAT 1336

If you’re a Council officer assessing a permit application to vary or remove a restrictive covenant, you should read, and heed, the Tribunal’s comments about your role in Berecz v Casey City Council 1 The case is also a rare example of the Tribunal granting a permit to vary a covenant and it shows how difficult it is to meet the threshold test in s 60(2) of the Planning and Environment Act 1987 (Act).2

The case involved an application for a permit to modify a single dwelling covenant to allow a second dwelling in Garnet Close, Narre Warren. Council refused the application on the ground it didn’t meet the test in s 60(5) of the Act:

Pursuant to section 60(5) …, the Responsible Authority is not satisfied the owner of any land benefitted by the restriction will be unlikely to suffer any detriment of any kind (including any perceived detriment) as a consequence of the variation of the restriction.

The problem was, the restrictive covenant was created after 25 June 1991, so s 60(5) didn’t apply.

While Council correctly referred to s 60(2) in the Tribunal, it did not, as the Tribunal observed, seek to amend its ground of refusal.3 More troubling was that in substance, Council’s submission continued to apply the test from s 60(5). This was implicit in its submissions on amenity, which used the word “possible”, and on compliance with ResCode, which relied on s 60(5) authorities relating to perceived detriment:

Council is not convinced that the beneficiaries will be unlikely to suffer loss of amenity. A list of physical amenity impacts is possible to be created as a result of approving two dwellings on this lot. These impacts include additional street parking and traffic flow to the neighbourhood and additional noise and shadowing impacts to the adjoining properties.4

Though the proposed development complies with most Rescode requirements, compliance with the Rescode does not in itself establish that a covenant beneficiary will be unlikely to suffer a detriment of any kind. ‘The question is not whether the development proposed is a good one from a town planning point of view but rather, whether the beneficiaries would suffer detriment’ (Ambrose Holdings PL V Boroondara CC [1999] VCAT1852). The tribunal has long held that perceived detriment includes loss of amenity (A & K Corporation v Darebin [2014] VCAT 1783– para 21).5

Council ultimately failed entirely to engage with the actual terms of s 60(2), and relevant authorities which call up material loss or detriment, not perceived detriment of any kind.

Natalie Blok, Barrister, Castan Chambers

Councils will therefore do well to not ignore the Tribunal’s incisive comments about the need for them to competently process applications of this kind in paragraph [19] (emphasis added):

After considering Council’s written submission and the oral submissions made to us by Council at the hearing (together with the relevant text in the Delegate Report), our impression is that at all of these stages, there has been a fundamental lack of proper understanding and application of the statutory provisions and caselaw for this type of ‘variation of restrictive covenant’ disputed permit application. As we said at the hearing, for VCAT planning merits hearings to be workable and for there to be public confidence in the Victorian planning system, it is essential that this type of permit application is competently processed by the relevant Council

The case is also useful as a reminder of how difficult it is to meet the threshold test in s 60(2) before a permit may be granted to vary or remove restrictive covenants. While the s 60(2) test is easier to satisfy than the test in s 60(5), because the decisionmaker must be satisfied the owners of land benefitted by the relevant covenant will be unlikely to suffer material loss or detriment (whether financial or amenity, or arising from a change to neighbourhood character)6, rather than any perceived detriment of any kind, the test in s 60(2) remains hard to satisfy. Indeed, the Tribunal emphasised the success of the application lay on the unusual facts: the proposed second dwelling was contained in the existing building envelope, built at least 10 years before, and already inhabited by a number of people (albeit only as a single dwelling). Accordingly, there could no loss arising from change to neighbourhood character and amenity loss was marginal (emphasis added):7

For the record, we wish to be crystal clear that our findings in this case very much turn on the unusual facts before us here i.e., a second dwelling that has already existed for it would appear at least 10 years.

Other facts that tended towards the grant of a permit included that the subject land was located close to the entry to the subdivision, thus reducing amenity impact arising from increased numbers of people or vehicles. There had also already been two earlier subdivisions within Garnet Close.

While the Tribunal was undoubtedly correct to say the case turned on unusual facts, less helpful were comments that the discussion in the Tribunal would have been “very different” had there been evidence of prior illegal use of the existing dwelling as a second dwelling.8 Illegality is not a bar to the grant of a permit, and the Tribunal was not prevented from granting a permit even had the facts been such that the existing dwelling had already been in use as a second dwelling, albeit unlawfully (which they were not), irrespective of whether enforcement proceedings had been issued.9

Natalie Blok

Natalie practises in Planning and Environment law and administrative law more generally. She acted for the developer in this case.

Footnotes

1 [2021] VCAT 1336 (Berecz).

2 Berecz at [7].

3 Berecz at [18].

4 Council submissions in Berecz at [34] (emphasis added).

5 Council submissions in Berecz at [39].

6 See relevant principles summarised at [22]-[23], [34]. Sushba Group Pty Ltd v Wyndham CC [2018] VCAT 2061 and Pawlak v Golden Plains SC [2016] VCAT 2049 are two other examples of successful applications, which also demonstrate that a particular factual set of circumstances is necessary.

7 Berecz at [36] [emphasis added).

8 See Berecz at [36]-[37].

9 See s 62 of sch 1 to the Victorian Civil and Tribunal Act 1998. See also Sibilia v Monash City Council [2001] VCAT 277 at [33]. See also Wilson v Shire of Winchelsea (1988) 1 AATR 26 at 30-35 and Faithland Inc v City of Doncaster and Templestowe (1991) 6 AATR 294 at 311 (both referred to in Silibia).