Appellant v Respondents

A public open space contribution may be made only once for any of the land to be subdivided. This does not apply to the subdivision of a building if a public open space requirement was not made under Section 569H of the Local Government Act 1958 or Section 21A of the Building Control Act 1981 when the building was constructed.

A subdivision is exempt from a public open space requirement, in accordance with Section 18(8) of the Subdivision Act 1988, if:

• It is one of the following classes of subdivision:
  • Class 1: The subdivision of a building used for residential purposes provided each lot contains part of the building. The building must have been constructed or used for residential purposes immediately before 30 October 1989 or a planning permit must have been issued for the building to be constructed or used for residential purposes immediately before that date.
  • Class 2: The subdivision of a commercial or industrial building provided each lot contains part of the building.
• It is for the purpose of excising land to be transferred to a public authority, council or a Minister for a utility installation.
• It subdivides land into two lots and the council considers it unlikely that each lot will be further subdivided.

6 The schedule to the clause provided for a contribution of 5% for public open space save in one specific location in which 8% is provided for.

7 This provision is to be understood in the context of s.18 of the Subdivision Act, and in particular subsections (1), (1A) and (8) which provide:

(1) If a requirement for public open space is not specified in the planning scheme, a Council, acting as a responsible authority or a referral authority under the Planning and Environment Act 1987 may require the applicant who proposes to create any additional separately disposable parcel of land by a plan of subdivision to -

(a) set aside on the plan, for public open space, in a location satisfactory to the Council, a percentage of all of the land in the subdivision intended to be used for residential, industrial or commercial purposes, being a percentage set by the Council not exceeding 5 per cent; or

(b) pay or agree to pay to the Council a percentage of the site value of all of the land in the subdivision intended to be used for residential, industrial or commercial purposes, being a percentage set by the Council not exceeding 5 per cent; or

(c) do a combination of (a) and (b) so that the total of the percentages required under (a) and (b) does not exceed 5 per cent of the site value of all the land in the subdivision.

(1A) The Council may only make a public open space requirement if it considers that, as a result of the subdivision, there will be a need for more open space, having regard to -

(a) the existing and proposed use or development of the land;

(b) any likelihood that existing open space will be more intensively used after than before the subdivision;

(c) any existing or likely population density in the area of the subdivision and the effect of the subdivision on this;

(d) whether there are existing places of public resort or recreation in the neighbourhood of the subdivision, and the adequacy of these;

(e) how much of the land in the subdivision is likely to be used for places of resort and recreation for lot owners;

(f) any policies of the Council concerning the provision of places of public resort and recreation.

(8) A public open space requirement is not required if -

(a) the subdivision is of a class of subdivision that is exempted from the public open space requirement by the planning scheme; or

(b) the subdivision is for the purpose of excising land to be transferred to a public authority, Council or a Minister for a utility installation; or

(c) the subdivision subdivides land into two lots and the Council considers it unlikely that each lot will be further subdivided.

8 On appeal, the Tribunal directed that condition 4 be deleted and that the following be substituted:

Prior to the issue of a statement of compliance, the owner must enter into a s.173 agreement with the Responsible Authority and made pursuant to s.173 of the Planning and Environment Act 1987 to prohibit the further subdivision of either lots 1 and 2, except with the written consent of the Responsible Authority.

Before the issue of a statement of compliance, application must be made to the Registrar of Titles to refer the s.173 agreement on the title to the land under s.181 of the Act.

The owner/operator under this permit must pay the reasonable costs of the preparation, and execution and registration of the s.173 agreement.

9 The form of clause 52.01, which I have set out above, prompts two preliminary observations. First, the provision is an arbitrary one in that the Tribunal was confronted with the choice of imposing either a condition requiring a 5% contribution, or, if the terms of the exemption were met, requiring no contribution at all. In this regard, the planning scheme stands in contrast with the provisions of s.18 of the Subdivision Act. In circumstances where each of the proposed lots contained an existing dwelling, it is apparent that this choice had the capacity to work injustice upon both the owner and the Council depending upon subsequent events.

10 Secondly, condition 4 as formulated by the Council went beyond the terms of clause 52.01. There is no warrant for imposing a 5% levy by reference to the site value of the proposed lots. Accordingly, and to this extent at least, the owner's appeal was justified.

11 The Tribunal's reasons for decision record the nature and form of the proposed subdivision, the relevant planning controls and the basic principles governing the validity of planning conditions.

12 After dealing with other conditions in issue, the Tribunal turned to the question of open space provision and stated that the critical question was whether the subdivider was exempt from making a contribution under clause 52.01.

13 The owners of the land sought to invoke the exemption which is applicable if land is subdivided into two lots and the Council considers it unlikely that each lot will be further subdivided.

14 It was submitted on behalf of the owners that they had no intention of seeking a further subdivision of the land and that they would accept a condition requiring them to enter into an agreement preventing the land from being further subdivided.

15 It was submitted on behalf of the Responsible Authority that having regard to the size and configuration of the land, and the nature of the surrounding locality, lot 1 was capable of being further subdivided. It was further submitted the intention of the current owners was irrelevant.

16 The Tribunal accepted that it was possible that lot 1 would be redeveloped in the future and that a further subdivision of lot 1 could occur.

The possibility of the land being further subdivided is one thing, but the likelihood of it occurring is an entirely different matter and that is the test which needs to be applied to determine whether the exemption under clause 52.01 is applicable. This test needs to be applied in each individual case and it requires the Council to form a view that it considers it unlikely that each lot will be further subdivided, in order for the exemption to take effect.

18 The Responsible Authority accepts that the Tribunal was correct to deal with the relevant issue in these terms.

[26] In the circumstances of this case having regard to the size and configuration of the lots, the imposition of a permit condition requiring the applicant to enter into an agreement made under s.173 of the Planning and Environment Act 1987 preventing the land from being further subdivided, is, in my view, sufficient to enable a view to be formed that the exemption under clause 52.01 is met ...

[29] I will direct that conditions 1(a), 3, 4, 5, 6, 7, 8, 9 and 10 be removed from the permit. I will also direct that a new condition be included requiring the applicant to enter into an agreement made under s.173 of the Planning and Environment Act 1987 preventing the land from being further subdivided.

(1) In the circumstances of the application before the Tribunal, was the imposition of a condition purporting to preclude or limit the possibility of further subdivision of the land by a requirement to enter into an agreement pursuant to s.173 of the Act a valid planning condition?

(2) Alternatively, even if the condition sought to be imposed by the Tribunal is a valid condition, was it reasonably open to the Tribunal to conclude that the terms of the condition were sufficient either alone or with other factors to make the further subdivision of the land "unlikely"?

21 The Responsible Authority submits that the substituted condition 4 is invalid.

22 Mr Finanzio, who appeared for the Responsible Authority before me, summarised the relevant principles as follows:

1. It is well settled[3] that although the discretion to impose conditions is expressed very broadly in the Act, the discretion is not absolute and is constrained by principles that construe the power as extending to the purpose for which it is conferred. In other words (and relevant to this case) for a planning permit condition to be valid it must:

(a) Fairly and reasonably relate to the permitted use or development, that is to say that there must be a real connection between the permission granted and the limitation placed upon it; and/or

(b) Serve a planning purpose by implementing planning policy that is objectively ascertainable from the scheme of the legislation and the planning scheme and not some general notions of planning; and

(c) Must not be imposed for an ulterior or extraneous purpose.

1. The underlying test of validity of a permit condition by reference to purpose is whether the relevant condition is reasonably capable of being related to the implementation of planning policy when the scope of that policy is ascertained from the relevant planning legislation and planning scheme.[4]

23 I am content to accept this summary for present purposes.

24 It is submitted first, that condition 4 does not fairly and reasonably relate to the subject matter of the permit.

25 In my view it does. It is concerned with the planning consequences of the proposed subdivision. It seeks to confine the applicants to their stated intentions. Such a condition thereby defines the content of the permitted proposal.

26 It is further submitted that the condition was not imposed for a valid purpose in that it is not reasonably capable of being related to the implementation of planning policy when the scope of that policy is ascertained from the relevant planning legislation and planning scheme.

27 In my view, this submission must also fail. It is apparent from the planning scheme that it is planning policy in the relevant sense, to seek to ensure that subdivision does not occur without the reasonably appropriate provision of public open space. [5]

28 It was submitted on behalf of the Responsible Authority that this objective was necessarily outweighed by the urban consolidation objectives of the planning scheme, which encourage subdivision of land such as that in issue.

29 In my view this involves a question of planning judgment, rather than a question of law. The purpose for which the condition was imposed was a valid one, and it was for the Tribunal to decide whether it was determinative, having regard to the fundamental notions of sustainable development and net community benefit in all the circumstances of the case including relevant planning policy.

30 It may be observed at the outset of consideration of the second question, that whereas the Tribunal decided the matter on the basis that it would impose a condition that would "prevent" the land from being further subdivided, the condition it in fact imposed does not do that in the ordinary sense of that term.

31 The condition imposed requires entry into an agreement which prohibits further subdivision of either lots 1 and 2 "except with the written consent of the Responsible Authority".

32 It is the capacity for this consent which lies at the heart of the Responsible Authority's complaint. The Responsible Authority submits that having regard to relevant planning policy, and in particular, policies of urban consolidation, the overwhelming probability is that if application were made for consent to further subdivision, consent would necessarily be granted on the planning merits.

33 It points in particular to the municipal strategic statement which designates the area, within which the land is contained, as the area suitable for most intensive residential development ("apartment development") within the whole municipality.

34 In essence, it is the Responsible Authority's position that good planning does not prevent further subdivision of the land. What it desires is the provision of an open space contribution.

35 The Tribunal made its decision concerning the terms of the exemption having regard first, to the size and configuration of the lots and second, its capacity to impose a permit condition requiring a s.173 agreement "preventing the land from being further subdivided".

(a) because the condition it imposed does not in fact require a s.173 agreement preventing the land from being further subdivided;

(b) because the Tribunal did not address the question whether the requirement for consent pursuant to a s.173 agreement in the terms it proposed would in fact render future subdivision of the land unlikely;

(c) because unless the required s.173 agreement in truth "prevented" further subdivision, it could not necessarily be regarded as determinative of the future likelihood of subdivision; and

(d) because a requirement for further consent does not of itself render further subdivision unlikely, when the consent in issue is not one which it can reasonably be anticipated the Council (or on review the Victorian Civil and Administrative Tribunal pursuant to s.149(1)(a) of the Planning and Environment Act 1986) would necessarily refuse, having regard to relevant planning considerations including competing policy considerations.

37 In the circumstances, I accept that it was not reasonably open to the Tribunal to conclude that the terms of the condition it ultimately imposed were sufficient to make the further subdivision of the land "unlikely".

38 This conclusion should not be regarded as one on the merits of the case. It turns on a fundamental and unexplained inconsistency between the Tribunal's reasons and the condition it imposed.

39 Accordingly, the decision of the Tribunal with respect to condition 4 should be set aside and the matter remitted for further hearing in accordance with law.

[2] The reference to a statement of compliance is a reference to the statement required by s.21 of the Subdivision Act 1988 ("the Subdivision Act").

[3] Roads Corporation v McCarthy [2004] VSC 369; (2004) 137 LGERA 433 at 448; 271 William Street Pty Ltd v City of Melbourne [1975] VicRp 15; [1975] VR 156 at 162; Allen Commercial Constructions Pty Ltd v The Council of the Municipality of North Sydney [1970] HCA 42; (1970) 123 CLR 490 at 499; Chrichton v City of Moorabbin [1992] VicRp 69; [1992] 2 VR 372; Pyx Granite Co Ltd v Ministry of Housing and Local Government [1958] 1 QB 554 at 572; Protean (Holdings) Ltd v Environment Protection Authority [1977] VicRp 5; [1977] VR 51 at 59; Western Australian Planning Commission v Temwood Holdings Pty Ltd [2004] HCA 63, (2004) 137 LGERA 232.

[4] Roads Corporation v McCarthy [2004] VSC 369; (2004) 137 LGERA 433 at 448; 271 William Street Pty Ltd v City of Melbourne [1975] VicRp 15; [1975] VR 156 at 162; Allen Commercial Constructions Pty Ltd v The Council of the Municipality of North Sydney [1970] HCA 42; (1970) 123 CLR 490 at 499; Chrichton v City of Moorabbin [1992] VicRp 69; [1992] 2 VR 372.

[5] See 12.05-1, 15-10 and 21.06 of the Planning Scheme.