Property Law Update: Supreme Court keeps 'Substantial Injury' Applications Alive

Public Law
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While Justice Bell in Freilich v Wharton [2013] VSC 533 appeared to close the door firmly shut on applications to modify covenants in reliance on section 84(1)(c) of the Property Law Act 1958, the so-called “substantial injury” test; Associate Justice Derham has pushed it back slightly ajar in Wong v McConville and Others[2014] VSC 148, albeit on a basis not expressly considered by Justice Bell.

Wong concerned an application to modify a single dwelling covenant on Pascoe Vale Road, in Strathmore, to allow the construction of two dwellings.

Relying on the precedent created in Hermez v Karahan [2012] VSC 443, the Plaintiff in Wong tabled concept plans that showed the sort of development contemplated should the court agree to allow the modification.

Associate Justice Derham placed weight on the near equivalent amenity impacts that a single dwelling would create, should the present application fail:

'67    In relation to the concerns that Mr Zhang has regarding potential overlooking and overshadowing of his backyard, I observe that they are minor matters having regard to the surrounds and other aspects that I have pointed to above, and: (a) These are matters that will and should be addressed in the planning process; and (b) It is as likely as not that, given the nature and pattern of residential development in the neighbourhood, these concerns will arise with the construction of a single dwelling on the Land, especially if it were a double-storey dwelling with a substantial footprint.'

On this basis, he allowed the modification to the covenant.

Although this decision should give hope to landowners keen to subdivide their land, but presently constrained by a single dwelling covenant, there were locational factors present in Wong, that might not be present in other cases. In particular, the land was at the periphery of the subdivision subject to the covenant; had direct access to an arterial road; and was in close proximity to a freeway overpass.

What the case does highlight, however, is the continuing relevance of planning controls in cases to modify covenants pursuant to the Property Law Act 1958 – not so much for reasons of public policy, but for predicting what form a development may ultimately take.

* To view Matt Townsend's blog, Restrictive Covenants in Victoria, or to sign up for to receive email notifications each time a new post is published, please click here


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Matthew Townsend has more than 20 years' experience as a barrister and practises almost exclusively in planning and environmental law and the modification and removal of restrictive covenants

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