The Court held that prolonged inaction by beneficiaries of a restrictive covenant who had knowledge of a clear breach — standing by for approximately seven months while construction proceeded from frame stage to near completion — constituted agreement by omission to modification of the covenant within the meaning of s 84(1)(b) of the Property Law Act 1958 (Vic). The Court found that while the modification would cause the beneficiaries substantial injury (defeating the s 84(1)(c) ground), the beneficiaries' acquiescence satisfied s 84(1)(b), applying equitable acquiescence principles from Orr v Ford. On discretion, the Court held that the covenantors' breach, while serious, was not a 'cynical breach' within the Alexander Devine framework, as they genuinely did not understand the technical height restriction, and accordingly no discretionary ground warranted refusal of the modification application.
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