Property Law Update - Do covenants prohibiting advertising hoardings prevent real estate signage?

Property Law
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It’s long been thought that a covenant prohibiting the use of land for advertising hoardings would make the putting up for display of real estate signage, a breach of that covenant.

A recent decision of the Supreme Court has thrown that view into doubt. In Re: Zhang 2018 VSC 721, Derham AsJ assessed a covenant that provided:

No hoarding for advertisement purposes shall be erected on the said lot hereby transferred.

His Honour concluded that if one looks at the intention of the covenant, it might be said that real estate signage and other domestic forms of advertising were not intended to be prohibited:

This part of the covenant is a basic form of advertising control. In the Easton Report, the opinion is given that it is now obsolete as large commercial advertising hoardings are no longer able to be placed in residential areas. Small residential signs, real estate signs and signs relating to a lawful use on the land are the only signs generally allowed under present day planning controls. Mr  Gambaro suggested that the restriction was intended to prevent ‘suburban neighbourhood homes for families’ being turned into business premises. There was no opposition by any person to the discharge of this part of the covenant. It is in my view obsolete as a form of planning control. Indeed, Mr Gambaro had, at the time of my view, affixed to the fence of his property an array of boards advertising a candidate for election to, I think, the local Council.

… The Macquarie Dictionary defines:

-‘hoarding’, relevantly, as ‘a large board on which advertisements or notices are displayed; a billboard’;

-‘advertisement’ as any device or public announcement, as a printed notice in a newspaper, commercial film on television, a neon sign, etc., designed to attract public attention, bring in custom, etc. 

Construed literally, this restriction would prevent the erection on the land of a real estate ‘for sale’ or ‘for lease’ sign, for example, or a board supporting a candidate for election. But when construed in the context of a residential property in a residential neighbourhood, it seems to me that the purpose of the restriction is not to prevent reasonable advertising of properties for sale or for lease, or supporting a candidate for election. Its purpose is to prevent the erection on the Land of a board on which are displayed advertisements, particularly business advertisements, of a kind unconnected with the residential character of the land. Thus, advertising a business or advertisements for the sale of goods or land (other than the land in question) are covered by this restriction. In my opinion, the reasonable reader knows that in the Melbourne metropolitan area, ‘for sale’ signs on properties using a large board, sometimes with pictures of the dwelling, and details of its features is so common (and permitted by the planning laws) that to construe this restriction in accordance with its literal meaning would be to misread its purpose. 

In other words, real estate signage might be said to be ancillary to the use of land as a dwelling.

Could that reasoning be extended to permit signage for medical centres and other uses permitted in residential areas, where that signage is to promote goods and services available on the land?

 *Matthew Townsend has an online blog, Restrictive Covenants in Victoria, in which he discusses cases and news about restrictive covenants in Victoria. 

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Matthew Townsend has been a barrister for more than 20 years and practises exclusively in planning and environment and property law

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