Easing easement and covenant confusion

The Victorian Law Reform Commission has released its consultation paper on the law of easements and covenants. The paper can be accessed at www.lawreform.vic.gov.au. The closing date for submissions is 30 September 2010.

The Commission identifies a number of issues with the current law. One set of issues relates to the bewildering variety of rules and doctrines under which easements can be created at common law and under statute, expressly and by implication, on and off the register.

Various options are examined to simplify the modes of creation and to make it easier for purchasers to find out about easements, including easements and similar rights held by utilities and service providers. The Commission finds that Victoria’s system of creating easements by plan of subdivision has significantly diminished the need to rely on common law doctrines of implied creation of easements.

The question of whether it should remain possible to acquire prescriptive easements by long user has been controversial in other jurisdictions and is likely to arouse debate in Victoria. The objections to prescription include that it is contrary to human rights principles, in that it allows partial deprivation of property rights without due process or compensation. Another objection is that it tends to discourage neighbourly toleration of intrusions which can ripen into prescriptive rights.

The doctrine may serve some useful functions in quieting disputes, overcoming omissions in planning and conveyancing, and protecting long-standing expectations.

The Commission takes a functional approach, proposing that if prescriptive acquisition is abolished, it should be replaced with other mechanisms capable of providing similar benefits.

Turning to covenants, the Commission discusses whether positive freehold covenants should run with land. A key policy question is whether positive obligations should be able to be imposed under property law, or only under legislation. If positive covenants are introduced, new rules would need to be developed for them, as the equitable rules for restrictive covenants cannot simply be extended to them.

Whether or not positive covenants are allowed, the Commission proposes that the complex legal and equitable rules relating to the running of benefits and burdens should be replaced with a statutory scheme in which covenants would be statutory legal interests which run with land in the same way as easements.

The reforms would also convert covenants from contracts to appurtenant property rights, ending the contractual liability of the original covenantor for breaches of covenant occurring after he or she has parted with the land.

A focus of the consultation paper is on problems with the current law relating to the removal and variation of easements and covenants.

Victoria is unusual in having a number of provisions for removal or variation of easements and covenants under planning law. Easements and covenants can be removed or varied by planning scheme amendment under the Planning and Environment Act 1987 (s 6(g)) or by planning permit application under the Subdivision Act 1988 (ss 23, 24) and Planning and Environment Act 1987 (s 60). The provisions for removal by planning permit were very controversial in the 1990s and were repeatedly amended. Easements can also be removed or varied by application to VCAT under section 36 of the Subdivision Act 1988.

Aside from the overlapping and complex nature of these removal provisions, the Commission identifies a number of practical and conceptual difficulties that arise from the use of public planning law mechanisms to remove and vary what are essentially private property rights. It proposes that the power of the court to remove covenants under section 84 of the Property Law Act 1958 be extended to easements, and that additional criteria relevant to easements be inserted, such as abandonment or non-user of the easement for a specified period of time.

The Commission proposes that section 84 should be the principal mechanism for non-consensual removal of both easements and covenants. Section 84(1) is currently structured as a series of threshold tests. Even if one or more threshold test is satisfied, the court has the discretion to refuse relief. The criteria for the exercise of the discretion are not specified by the Act.  It is unsettled what scope exists for the court to take planning considerations into account.

The Commission proposes that section 84(1) be reformulated to specify more fully the criteria for the exercise of the power, and to include planning considerations.

Currently the Supreme and County Courts have jurisdiction under section 84, and VCAT has jurisdiction to review decisions made under the planning legislation. The Commission asks whether VCAT should have jurisdiction under section 84.

This article was produced by the Commission and appeared in the August 2010 issue of the Law Institute Journal.

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