Building covenants commonly appear in land contracts. Most covenants aim to ensure that structures and landscaping within a development conform to certain standards. In this way, building covenants make an important contribution to the protection of property values. But do owners subject to building covenants have to comply with every obligation?
In this article, Don Battams and Elliott Baldwin discuss a recent Queensland Supreme Court decision which provides a timely reminder that not all building covenants are enforceable, particularly those that offend sustainable housing provisions in the Building Act 1975 (Qld).
In Bettson Properties Pty Ltd & Anor v Tyler  QSC 153, the Queensland Supreme Court considered an application brought by a developer for a declaration that solar panels had been installed by a lot owner in breach of building covenants and an injunction for the relocation of the panels.
The developer was building a staged residential and commercial development at Griffin, north of Brisbane. The lot owner purchased the property ‘off the plan’ from the developer in 2014. The contract of sale contained a number of building covenants, one of which was an obligation for the owner to submit plans to the developer for covenant approval that indicated the size, number and location of any solar panels the owner planned to install. If the developer considered any solar panels would cause visual impact or were not aesthetically pleasing, the installation could not proceed.
In 2016, the lot owner arranged for the installation of solar panels on their roof. The owner was advised the panels would function best if installed on the north-eastern part of their roof, so the panels were fixed there.
Due to the location of the property, the installation of the solar panels quickly came to the attention of the developer. The developer demanded that the panels be moved to the southern side of the roof, where their presence would be less obvious but where they would function less efficiently. Despite various attempts by the developer, the owner was not ‘wildly enthusiastic’ about moving the panels.
The developer applied to the Supreme Court for a declaration and injunction requiring the removal of the panels.
Energy efficiency provisions in the Building Act
The Building Act 1975 (Qld) (Act) targets certain obligations in contracts which operate for the benefit of a person other than the owner of the ‘building’ (for example a covenant in favour of a developer).
The Act makes any obligation prohibiting the installation of solar hot water or solar photovoltaic cells on the roof or exterior of a house or townhouse (or any attached enclosed garage or shed) ineffective if the prohibition is to enhance or preserve external appearance of the building.
It is also worth noting that the Act makes certain prohibitions and restrictions regarding light coloured roofing, windows, minimum floor areas, minimum bathroom and bedroom requirements and structure orientation also ineffective. To read more on these provisions, click here.
The Court found the owner had breached the covenant by installing the solar panels without the developer’s consent. The main question for determination was the effect of the Building Act on the covenant.
The developer accepted that the covenant restricted the location on the roof where the solar panels could be installed. They argued that, while the restriction applied to enhance or preserve the external appearance of the building, it did not also ‘prevent’ the owner from installing the solar panels on the roof (as the owner could install them on the southern side) and given the test was conjunctive and required both elements to be satisfied, the covenant was still effective.
The Court found that:
- A covenant reserving power to the developer to restrict the location on a roof of solar panels contravenes the Act
- When read in its proper context, ‘prevent’ means to hinder or impede the installation of the panels
- The developer’s reading of the Act meant they would be able to require owners to install panels in an area of shade without contravening the energy efficiency provisions which was an absurd conclusion
Accordingly, the covenant was deemed ineffective and the developer’s application was dismissed with costs.
The developer has now lodged an appeal against the Supreme Court’s decision. HopgoodGanim will continue to monitor developments with this case.
What can you do?
Developers should be mindful of the energy efficiency provisions in the Building Act when drafting building covenants and always take legal advice before considering any action under a covenant.