In Jayasinghe v Perry, the Supreme Court of Victoria held that a beneficiary’s prolonged inaction in response to an obvious breach of a restrictive covenant can amount to implied acquiescence, signifying the beneficiary’s agreement by implication to modify the restrictive covenant.
Summary
The Perrys are a retired couple who subdivided part of their land. Upon selling the vacant subdivided lot, the Perrys created a registered restrictive covenant that prevented the purchaser from constructing more than one dwelling, which could not exceed a specified height. The intent was to protect the view from the Perrys’ existing home on the higher adjoining lot.
The land was purchased by the Jayasinghes. Unaware of the specific details of the covenant (and relying on the assurances of their builder), the Jayasinghes commenced construction of a dwelling that ultimately breached the covenant. Although the Perrys noticed the potential breach and raised their concerns with the builders and the Jayasinghes, they failed to take decisive action until well after the breach of the covenant had become unmistakable when the dwelling was close to completion.
| Before Construction |
During Construction |
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The Jayasinghes successfully applied to the Supreme Court of Victoria to modify the restrictive covenant pursuant to s 84(1)(b) of the Property Law Act 1958 (Vic) to allow the dwelling as constructed to remain without constituting a continuing breach of the covenant. The Court held that the Perrys’ prolonged inaction over a seven-month period once the breach had become unmistakable, amounted to acquiescence, implying their agreement by implication to the required modification of the covenant in accordance with s 84(1)(b).
Key Takeaways
- Raising concerns as a beneficiary of a covenant with the owner of the burdened land and/or their builders, may not be sufficient to preserve and protect one’s rights to the benefit of the covenant.
- More formal action, such as a solicitor’s letter of demand requiring any works in breach of the covenant to stop, should be sent on behalf of the beneficiary as soon as possible and certainly within a reasonable time of the beneficiary having knowledge of an unmistakable breach and having regard to the rate of progress of the offending works.
- The proprietary right constituted by the benefit of a restrictive covenant is not as sacrosanct as one might think. If a beneficiary significantly delays asserting their rights after acquiring full knowledge of a breach, that delay may risk forfeiture of the substantive benefit of the covenant through acquiescence or other means of establishing an implied agreement to the modification of the restrictive covenant.
How we can help
This decision is a timely reminder that both beneficiaries and developers need to act early and decisively when restrictive covenants are in play. Whether you are seeking to enforce a covenant, responding to a potential breach, or considering an application to modify or remove a covenant under the Property Law Act 1958 (Vic), early legal advice is critical to protecting your position.
Our Property & Development team advises landowners, developers and consultants on covenant enforcement, modification applications and risk management at all stages of a development.
If you would like to discuss how this decision may affect your project or property rights, please contact Mark McKinley, Michael Dowling, Bridgette Kennedy or a member of our Property & Development team.
Written with assistance from Marietta Stent.
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