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Bettson Properties case – Restrictive covenants update

Restrictive covenants are a private planning tool used by many developers to maintain control of the ‘look’ of a flat-land subdivision. They often dictate the permitted colours and materials to be used, whether or not front fences are allowed and the number of buildings, external to the primary residence, which can be constructed.

Other than in Queensland, restrictive covenants run with the land and are registered on Title to the property. Queensland, on the other hand, must rely on private contract law to impose restrictive building covenants, by requiring buyers to enter into deeds of covenant via their purchase contracts, and then repeating the exercise when they on-sell, and so on. Being a private method of control, there is no centralised method of recording the existence of these covenants, relying only on buyers to comply with their contractual obligations under the deeds of covenant.

Despite these complexities, the system in Queensland works reasonably well, however, recently we have seen that statutory sustainability has the ability to override these deeds of covenant.

In 2009, the Building Act (the Act) was amended to support “sustainable housing”. A featured element of those amendments related to solar panels, whereby covenants that restrict the installation of solar panels on the roof or other external surfaces of a building, merely for creating and preserving a desired external appearance, are unenforceable by operation of these legislative amendments. In addition to this, where consent is required from an entity such as a developer to install solar panels, consent must not be withheld purely for the same reason.

In the recent case of Bettson Properties1, a contract incorporated a number of special conditions requiring the owner to comply with various building covenants. The special conditions required the owner to submit plans to the developer for approval of solar panels and any panels which were considered to cause visual impact, or were not aesthetically pleasing, would not be approved.

The owner installed the solar panels and subsequently sought the developer’s consent. The developer refused on the grounds that the panels caused visual impact and were not aesthetically pleasing. The owner successfully argued that the clauses contained in the contract were non-binding in light of the amendments to the Act. It was found that the restrictive covenant had no force or effect by reason of s246Q of the Act – being that the restriction in its terms prohibited solar panel installation merely for the enhancement or preservation of the external appearance of the building.

The case outlines three mechanisms of restrictive covenants concerning solar panels and sustainable housing by which the Act renders such covenants “of no force or effect”:

  1. Covenants concerned with prohibiting the installation of solar panels to the extent that the prohibition applies merely to enhance or preserve the external appearance of the building.
  2. Covenants which have the effect of restricting the location of the roof where solar panels may be installed to the extent that it applies merely to enhance or preserve the building’s appearance and it prevents installation. This provision is conjunctive and so long as the restriction satisfies both limbs, the restriction will be considered ineffective. Accordingly, the restriction must:
      (a) apply merely to enhance or preserve the external appearance of the building, and
      (b) prevent (being to keep from occurring or hinder) a person from installing solar panels on the roof.
  3. Covenants requiring the consent of an entity to install solar panels on the roof of a building. In such circumstances, consent cannot be withheld merely to enhance or preserve the external appearance of the building.

Bettson’s case reminds us that it is important to bear in mind that not all building covenants are enforceable, in particular those that offend sustainability provisions.

If you would like further information in relation to restrictive covenants, please contact a member of our team.

This article was written by Frances Kelly, Graduate, and Sharon O'Toole, Special Counsel. 

1Bettson Properties Pty Ltd & Anor v Tyler [2018] QSC 153

"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."