Can private development rules trump public planning policies?

By Daniel Moulis, Principal and Lauren Gray, Lawyer

Developers often want to "lock-in" the value of the amenity and design of a new development, such as in a commercial precinct or new suburb. Similarly, residents of a street or suburb often wish they had some way of controlling what their neighbours do on surrounding blocks of land.

What if there was a way to define your own rules, for your own development, or your own street? Could your rules override what the local planning body wanted to do in the future? Maybe you can, by way of covenants to controland restrict what adjoining landowners can do with their land.

The issue is back in the news, with recent media reports suggesting that the chief executive of the Sussan Group cannot redevelop her $12 million residential property in Melbourne the way she wants to, because of a covenant imposed in 1890 limiting the roof of any structure built on the land to"slates or tiles".

What's a restrictive covenant?

A restrictive covenant "restricts" the use of land with the intention that the value and enjoyment of adjoining land is preserved. Typically, restrictive covenants are private agreements between private owners. Covenants can either impose a positive obligation on a person to do a particular thing (a positive covenant) or to refrain from doing a particular thing (a negative covenant). A developer that is subdividing a large area might want to ensure that only single houses are built, rather than multi-unit developments. Restrictive covenants usually emerge from land subdivisions where one person has control over the first sale of all of the individual blocks in the area, and can therefore impose restrictions or requirements that buyers sign on to as part of their purchase of their block.

Restrictive covenants restricting or prohibiting a range of things have been upheld in the courts, including:

prohibitions on the construction of more than one house; restrictions or prohibitions on the construction of a structure above a certain height; prohibitions not to conduct a particular business or trade; and restrictions or prohibitions that prevent the landowner from clearing the land. Under modern Torrens title land registration systems, restrictive covenants can be registered against land and will "run with the land". This means they are enforceable by and against successors in title.

"Touching and concerning" the land

But can anything be the subject of a restrictive covenant?

Well, no. A...