Appellant v Respondents

1 This appeal is brought pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) by the Boroondara City Council from the order of the Tribunal made on 8 August 2011, by which the Tribunal set aside the decision of the Council not to grant the first respondent a permit, granted the relevant permit and directed it to be issued in accordance with endorsed plans and conditions.

2 The development for which a permit has been granted is a relatively modest extension to the existing Woolworths supermarket and Target store complex at

15-25 Station Street, Camberwell (the 'existing complex').

3 The development and use of the existing complex took place pursuant to a permit[1] issued by the Council on 11 January 1996 (the 'existing permit') and an agreement made under s 173 of the Planning and Environment Act 1987 (Vic) (the 'Act') which, among other things, limited the use or development of the land 'for any purpose other than as a supermarket with a maximum of 4,740 square metres Gross Lettable Floor Area and a discount department store with a maximum of 7,250 square metres Gross Lettable Floor Area' (the 's 173 Agreement').

4 It was a condition of the existing permit that the development and use of the land would be carried out in accordance with the s 173 Agreement.

5 The first respondent is the owner of the existing complex. In 2005, the first respondent applied to the Council for the permit that is the subject of the Tribunal's decision in order to develop and use of part of the land that is currently an open decked car park at the southern end of the existing development as additional retail floor space. The Council refused the application on amenity grounds (relating to car parking, scale and built form, and the location and use of loading dock facilities) and on the ground that the proposal was inconsistent with the s 173 Agreement and its limit on gross lettable floor area.

6 On 3 September 2007, the first respondent applied to the Tribunal for review of the Council's decision to refuse the permit application. The Tribunal ultimately heard the application over a number of days in June 2011 and ordered a permit[2] to issue on

8 August 2011, allowing construction of a building and the carrying out of works, and the reduction in the provision of car parking spaces (the 'new permit').

7 It is common ground that the new permit involves the use and development of the land for a supermarket and discount department store with a gross lettable floor area that exceeds the maximum area specified in the s 173 Agreement. If the development were to be undertaken by the first respondent, it would contravene the s 173 Agreement.

8 However, the Tribunal has imposed a permit condition providing for the new permit to come into force or effect only when the s 173 Agreement has been removed from the relevant part of the land, either by agreement between the parties or pursuant to a determination by the Tribunal under the Act. The condition also requires cancellation or amendment of the existing permit and - if the Council does not agree to the removal of the s 173 Agreement from the land - entry into a new agreement under s 173 of the Act.

9 The relevant condition - Condition 35 - is in the following terms:

This permit will not come into force or effect until either:

(a) the section 173 agreement entered into on 5 March 1995 ('the existing 173 Agreement') between the Responsible Authority and Fabcot Pty Ltd and recorded against the title to the subject land is amended to remove that part of the subject land to which this permit applies ('the permit land') from the continued operation of the existing 173 Agreement;

(b) the owner enters into a new section 173 agreement with the Responsible Authority with respect to the permit land which prohibits any use or development of the permit land otherwise than in accordance with this permit; and

(c) planning permit BOR9941 is amended, or alternatively cancelled, so that it does not apply to the permit land.

or alternatively:

(d) the section 173 agreement entered into on 5 March 1995 between the Responsible Authority and Fabcot Pty Ltd and recorded against the title to the subject land is amended so that the use and development allowed by this permit is not contrary to the 173 agreement; and

(e) planning permit BOR9941 is amended, or alternatively cancelled, so that it does not apply to that part of the subject land to which this permit applies ('the permit land').

10 The Court was informed that the alternative formulation was designed to reflect the possibility that the parties might agree on the amendment of the s 173 Agreement, having regard to the Tribunal's findings on the amenity issues.

11 In its reasons for decision,[3] the Tribunal recorded some of the background to the permit application under consideration. It noted that, 'waiting in the wings' and dependant on the outcome of the Tribunal proceeding, was a further application by the first respondent to amend the s 173 Agreement to remove the land on which the development is proposed from the application of the s 173 Agreement.[4]

12 The permit application before the Tribunal was also intertwined with an earlier application to amend the s 173 Agreement that was made to the Tribunal in 2008 under s 184(3) of the Act (the 'original amendment application'). The original amendment application was made principally on the grounds that the Council had repudiated the s 173 Agreement and that there had been an alteration in the character of the neighbourhood such that the restrictions in the s 173 Agreement could not longer be justified. The Tribunal's review of the permit application was adjourned pending the hearing and determination of the original amendment application. The original amendment application was not successful. On 4 November 2009, Deputy President Macnamara dismissed the original amendment application on the basis that the Council had not repudiated the s 173 Agreement and it remained on foot, and there was no 'relevant planning permit' to enliven the power of the Tribunal to amend the s 173 Agreement under s 184(4) of the Act.[5]

13 The first respondent appealed to this court against the decision of Deputy President Macnamara. However, when that appeal came on for hearing before Osborn J on 4 October 2010, his Honour adjourned the hearing of the appeal for the following reason:

I propose to adjourn this matter sine die to enable the plaintiff [the first respondent] to make application to VCAT with respect to the merits of the permit application which they ultimately desire to pursue. That merits application will enable VCAT to consider the underlying merits of the situation in planning terms and the plaintiff [the first respondent] has foreshadowed that it will also form the basis of an application pursuant to s 184(3) and (4) of the Planning and Environment Act 1987 for removal of the land from the application of the current s 173 agreement if the plaintiff [the first respondent] is otherwise successful.[6]

14 As a result of the adjournment of the appeal from the original amendment application, the application for review of the Council's decision to refuse the permit was resurrected. A fresh application to amend the s 173 Agreement under s 184(3) has been lodged, but it awaits the grant of 'a relevant permit' as required by s 184(4) of the Act.

15 As a result of this sequence of events, the Tribunal's review of the Council's decision to refuse a permit was conducted on the basis that the s 173 Agreement prevented the use and development for which the new permit was sought and that an application to remove the relevant part of the land from the s 173 Agreement would be considered by the Tribunal in a separate proceeding if the Tribunal decided to grant a permit based on the planning merits of the proposal. In this context, the Tribunal identified two issues for determination:

(b) the weight that should be placed on the existence of the s 173 Agreement in deciding whether the permit should be granted.[7]

16 The Tribunal decided that on the planning merits, a permit should issue. In so doing, it concluded that the s 173 Agreement should not preclude the grant of a planning permit. It is this second aspect that is now the subject of challenge by the Council.

17 Before the Tribunal, the Council and a number of objectors resisted the grant of a permit on amenity grounds. They submitted that inadequate off-street car parking was provided under the proposal, that the building's scale and form would have a detrimental effect on the amenity of the area, and that the operation of the loading bay would have an adverse effect on the operation, safety and amenity of a neighbouring street. The Tribunal considered these matters, '[p]utting aside the issue of the section 173 agreement and its relevance to the consideration of the merits of the application...'.[8] It gave consideration to the issues of car parking, loading facilities and built form. It concluded, in relation to car parking, that the proposed provision of parking would make a reasonable contribution to the publicly available parking in the centre and that the location, design and configuration of the car-park were acceptable;[9] in relation to loading facilities, that the proposed loading facilities, while not optimal for the site, were acceptable;[10] and in relation to built form, that having regard to the existing condition of the site, the nature of the uses on the eastern side of it, the zoning of the land and its location within a principal activity centre, there were no unacceptable amenity impacts on the residential areas to the east.[11] The Tribunal concluded that neither the Council nor the objectors had presented any submissions that persuaded it that the development of the site and its use for retail purposes was not supported by the Boroondara Planning Scheme.[12]

18 With respect to the operation and effect of the s 173 Agreement on the permit application, the Tribunal held as follows:

(a) The grant of a permit for the proposal would not, in itself, be a breach of the s 173 Agreement;[13]

(b) Nothing in the Act specifically directed that s 173 agreements should be attributed great weight necessarily and there was no requirement in the Act to attribute any specific weight to them;[14]

(c) There was a requirement under the Act to have regard to any s 173 agreement, but there was no obligation to refuse to grant the permit if the use or development would contravene a s 173 agreement, and the existence of a s 173 agreement was not determinative;[15]

(d) It would be wrong to say that the existence of a s 173 agreement which would be breached by a use or development under a permit automatically required a very cautious approach to be taken unless there was a strong argument that the circumstances made the agreement redundant;[16]

(e) The weight to be placed on any s 173 agreement would depend on the facts and circumstances of each case when deciding whether to grant a permit for a proposal that would contravene the s 173 agreement.[17]

19 As to whether the s 173 Agreement should preclude the grant of a permit in this case, the Tribunal was not persuaded that the s 173 Agreement was a sufficient reason to refuse to grant the permit, based on a number of factors, including the following:

(a) There was a 'clear intention' that the appeal from the original amendment application be adjourned by the Supreme Court to enable the permit application to be determined on its planning merits and, if a permit were granted, for it to provide the basis for enlivening a fresh amendment application under s 184(3) of the Act. Such a course would enable arguments to be considered on their merits about whether it was inappropriate for the s 173 Agreement to continue to apply to the land. This intention would be defeated if the opportunity was cut off by refusing to grant the permit on the basis of the s 173 Agreement;[18]

(b) The s 173 Agreement was a 'product of its time' in that it was entered into in 1995 to resolve a particular legal and planning dispute. The Council (and one of the objectors) agreed that an agreement of that kind would probably not be entered into today. However, whether the s 173 Agreement was redundant or otherwise inappropriate was a matter for an application under s 184(3) of the Act;[19]

(c) Before an application is made under s 184(3), the parties to the s 173 Agreement must be unable to agree on its amendment. If a new permit is granted, Council should have an opportunity to further consider its position on the amendment of the s 173 Agreement;[20]

(d) The planning officer's report on the permit application found that the proposal was acceptable and that there should be a new agreement locking in the use and development parameters of the proposal. It would also be appropriate to delete those obligations under the s 173 Agreement that had been discharged, which appeared to comprise the bulk of the s 173 Agreement;[21]

(e) Amending the s 173 Agreement in this way (that is, in relation to the matters identified in (d)) required the Council's agreement under s 178 of the Act, as the Tribunal's power under s 184(3) was limited to removing land from the application of the s 173 Agreement;[22]

(f) The grant of a permit did not mean that the application under s 184(3) would be a fait accompli. The outcome was not certain because different considerations would apply to an application to amend the s 173 Agreement from those that applied for the grant of a permit;[23]

(g) If a permit were granted, it was not the case that that would be 'a very relevant factor' in considering an application under s 184(3).[24] The question of whether the s 173 Agreement was redundant or superseded was best left for consideration in the context of the application under s 184(3). If a permit was granted for the land, it would clearly be a relevant permit, but it would not be determinative. It was appropriate for there to be a two step process.[25]

For these reasons, we have therefore reached the conclusion that notwithstanding the existence of the section 173 agreement, a permit should still be granted for this proposal. However, we consider that a condition should be included in the permit that the permit will not come into force or effect until the section 173 agreement is removed from the land or amended so that there is no conflict between what the permit allows and the agreement.

Such a condition accords with principles of orderly and proper planning to ensure that permits are not granted, or at least do not come into effect, until any agreement, which might conflict with what the permit allows, is amended or removed from the land. It safeguards the integrity of the agreement until the fate of the agreement is determined, either by agreement between the applicant and the council or by means of the section 184(3) proceeding. It also means that in the event there is no change to the agreement, then the permit will not come into operation. It ensures that the fate of the agreement must be determined before the proposal can proceed. [26]

21 The Council challenges the lawfulness of the Tribunal's decision to grant the new permit generally and the validity of Condition 35 specifically, having regard to the existence of the s 173 Agreement. It submits that Condition 35 cannot be severed from the new permit and that the new permit must fall if Condition 35 is invalid.

22 The grounds of appeal in respect of the decision to grant the new permit are as follows:

(a) The Tribunal acted for improper purposes or took into account an irrelevant consideration when it decided to direct the Council to issue the new permit and/or directed the imposition of Condition 35 viz the need for the first respondent to satisfy the jurisdictional requirement for the Tribunal to amend a s 173 agreement under s 184(4) of the Act;

(b) The Tribunal erred in law when it held it could direct a permit to issue for a development in circumstances where a breach of a planning permit and of a s 173 agreement relating to the subject land would occur if the development was constructed;

(c) The Tribunal erred in law on the proper construction of Division 2 of Part 9 and ss 84B(2)(h) and 85 of the Act when it held that it was authorised to grant a permit in respect of a development that would contravene an existing permit and an agreement under s 173 relating to the subject land;

(d) The Tribunal erred in law when it failed to take into account relevant considerations viz that it was unlawful for the development described in the planning application to proceed having regard to the existence of the existing permit and the s 173 Agreement and the requirements of Division 2 of Part 9 of the Act;

(i) nothing in the Act specifically directed that s 173 agreements should be attributed great weight necessarily;

(ii) there is nothing in the Act that attributes any specific weight to s 173 agreements;

(iii) some Tribunal decisions which have said that the Tribunal must automatically give agreements great weight misread the Act; and/or

(iv) a distinction could be drawn between applications to remove land from the effect of s 173 agreements and granting permits for land that were subject to a s 173 agreement.

23 The grounds of appeal in relation to Condition 35 are as follows:

(a) The Tribunal erred in law on the proper construction of ss 62, 67 and 85(1)(b)(ii) of the Act when it considered that it was authorised to impose as a condition on the permit a condition precedent to the operation of the permit itself;

(b) Condition 35 is not a valid condition and its imposition was beyond the power of the Tribunal;

(c) Condition 35 is subject to so many contingencies and is so vague and uncertain as to be invalid;

(d) Condition 35 is inconsistent with s 67 of the Act.

24 The central question on appeal is whether the Tribunal acted lawfully in granting the new permit for a development that, if undertaken, would contravene the existing permit and the terms of a s 173 agreement binding on the permit applicant as the land owner. This question arises in the context of the Tribunal's power under s 184(4) of the Act to approve an amendment to a s 173 agreement to remove land from the application of the agreement.

25 Two Divisions of the Act are especially relevant to the issues on appeal:

(a) Division 2 of Part 4 of the Act, which governs review by the Tribunal of decisions made by a responsible authority with respect to planning permit applications; and

(b) Division 2 of Part 9 of the Act, which provides for the creation, registration, amendment and ending of agreements made pursuant to s 173 of the Act.

26 The application for review of the Council's decision to refuse to grant a planning permit for the proposed development was brought under s 77 of the Act. Pursuant to s 85, the Tribunal had power, on the review, to grant the permit, direct that the permit contain one or more specified conditions and direct the responsible authority to issue the permit.

27 Section 84B of the Act specifies the matters that the Tribunal may or must take into account on review. In respect of an existing s 173 agreement affecting the land:

(a) Section 84B(1)(a) requires the Tribunal to take into account any matter which the responsible authority properly took into account or was required to take into account in making its decision. Section 60(1A)(i) provides that the responsible authority may consider any agreement made pursuant to s 173 affecting the land the subject of the application.

(b) Section 84B(2)(h) provides that the Tribunal must (where appropriate) have regard to any agreement made pursuant to s 173 affecting the land the subject of the application.

28 Part 9 of the Act confers on responsible authorities and Ministers a variety of powers, including the power to enter into agreements under Division 2. Section 173(1) empowers a responsible authority to enter into an agreement with an owner of land in the area covered by a planning scheme for which it is the responsible authority. Pursuant to s 174(2), such an agreement may provide for the prohibition, restriction or regulation of the use or development of the land, or the conditions subject to which the land may be used or developed for specified purposes. However, s 180 provides that an agreement must not require or allow anything to be done which would breach a planning scheme or a permit.

29 It is common ground that the s 173 Agreement is an agreement made under s 173 of the Act and that it regulates the use and development of the land, including by prohibiting its development to extend retail floor space in the manner proposed.

30 Section 179 of the Act requires the responsible authority to lodge a copy of an agreement at the office of the Minister and to keep a copy of each agreement (indicating any amendments) at its office for any person to inspect. Section 181 provides for a recording of a s 173 agreement to be made in the Register of Titles on application by a responsible authority. Pursuant to s 182, the effect of registration is to make the burden of any covenant in the s 173 agreement run with the land and to enable the responsible authority to enforce the covenant against any person deriving title from any person who entered into the covenant as if it were a restrictive covenant.[27]

31 By this means, s 173 agreements registered on title affect the use and development of land, irrespective of whether the owner is or was a party to the agreement.

32 Section 114 of the Act provides for the Tribunal to make enforcement orders 'if a use or development of land contravenes or has contravened, or, unless prevented by the enforcement order, will contravene' an agreement under s 173. Pursuant to s 119, an enforcement order may direct the person against whom it is made to stop the use or development, not to start the use or development and/or to do specified things to restore the land or otherwise ensure compliance with the s 173 agreement.

33 Section 126 makes it an offence to contravene or fail to comply with an agreement under s 173.

34 Again, it is common ground that the Council may enforce the term of the s 173 Agreement governing the maximum gross lettable floor area against the first respondent as land owner. Moreover, the first respondent would commit an offence if it moved to commence the development of the land in accordance with the new permit.

35 Sections 176 and 177 specify, respectively, when a s 173 agreement comes into effect and when a s 173 agreement comes to an end. Pursuant to s 177(1), the agreement itself may provide for when it comes to an end. Alternatively, sub-s (2) provides:

An agreement may be ended wholly or in part or as to any part of the land by the responsible authority with the approval of the Minister or by agreement between the responsible authority and all persons who are bound by any covenant in the agreement.

36 Similarly, s 178 provides for the amendment of a s 173 agreement as follows:

An agreement may, with the approval of the Minister, be amended by agreement between the responsible authority and all persons who are bound by any covenant in the agreement.

37 The Act therefore contemplates that the parties may agree to bring an agreement to an end at any time, and may amend an agreement at any time subject to the approval of the Minister. This reflects the hybrid nature of a s 173 agreement, which is in part a private agreement and in part a planning control applying to land.[28]

38 Section 184 also gives the Tribunal a role with respect to the amendment of s 173 agreements. It provides:

(1) An owner of land may apply to the Tribunal for an amendment to a proposed agreement if -

(a) under a planning scheme or a permit the use or development of land for specified purposes is conditional upon an agreement being entered into under this Division; and

(b) the owner objects to any provision of the agreement.

(2) The Tribunal may approve the proposed agreement with or without amendments.

(3) A purchaser of land who is a party to an agreement, or an owner of land, may apply to the Tribunal for an amendment to the agreement to remove the land from the application of the agreement, if the parties to the agreement cannot agree that the agreement should be amended.

(4) The Tribunal may approve the amendment if -

(a) it considers that the land owner is not subject to any further liability under the agreement; or

(b) having regard to any relevant permit, or requirements under the Subdivision Act 1988, it considers it inappropriate that the agreement should continue to apply to the land and the owner.

39 In other words, sub-ss (1) and (2) permit the Tribunal to approve a s 173 agreement proposed by a responsible authority where the land owner does not agree to it. It may do so with or without amendments to the proposed agreement. This entails a fairly broad power to amend the terms of a proposed agreement. By contrast,

sub-s (3) permits a land owner to apply to the Tribunal to amend an existing agreement, but only by removing the land from the application of the agreement. Pursuant to sub-s (4), the Tribunal may approve an amendment removing the land from the application of the agreement only by reference to the considerations described in paragraphs (a) or (b).

40 Paragraph (b) is relevant for present purposes. It provides that the Tribunal may amend the s 173 agreement to remove the land from the application of the agreement if it considers it inappropriate that the agreement should continue to apply to the land and the owner, having regard, relevantly, to 'any relevant permit'. In the absence of 'requirements under the Subdivision Act', the existence of a 'relevant permit' therefore appears to be a pre-requisite to the exercise of the power to remove the land from the s 173 agreement pursuant to paragraph (b).

41 The grounds of appeal arising from the grant of the permit are based on the following contentions:

(a) The Tribunal ordered that a permit issue to manufacture a 'relevant permit' so as to facilitate the application to amend the s 173 Agreement under s 184(3) of the Act;

(b) The need for there to be a 'relevant permit' for the purposes of enlivening the power in s 184(4)(b) was an improper purpose and an irrelevant consideration for the grant of the new permit (Ground 5(a));

(c) The grant of the new permit was not permitted by the statutory regime, given that the development would breach the existing permit and the s 173 Agreement (Grounds 5 (b) and (c));

(d) There was a failure to properly, genuinely and effectively take into account the fact that it was unlawful for the development to be undertaken because of the existing permit and the s 173 Agreement (Ground 5 (d));

(e) There was a misapplication and/or misunderstanding of the requirements of the Act regarding the weight to be given to s 173 agreements and as to the distinction between applications made under s 184(3) and permit applications in respect of land that is subject to a s 173 agreement (Ground 5(e)).

42 There is considerable overlap in these contentions. They flow from the proposition that the Tribunal could not lawfully direct the issue of a permit given the terms of the existing permit and the s 173 Agreement, which prohibited the very type of development that the respondent wished to undertake pursuant to the new permit. Underlying the appeal is an allegation that the Tribunal engaged in a 'stratagem' intended to upset the binding and continuing affect of the s 173 Agreement by issuing a permit in order to provide a jurisdictional base to discharge or modify the s 173 Agreement otherwise than with the agreement of the Council under ss 177 or 178 of the Act.

43 It is convenient to commence with the grounds of appeal based on the submission that the legislative scheme precludes the grant of a permit authorising a use or development that would contravene an existing s 173 agreement.

44 The Council stressed the importance given to s 173 agreements by the Act, reflected in the registration of agreements on title,[29] the limited circumstances in which they can be removed or amended, the availability of enforcement orders under s 114 and in the creation of an offence under s 126 of Act for the contravention of an agreement. The Council also referred to the planning framework objective in s 4(2)(k) of the Act to provide for effective enforcement procedures to achieve compliance with agreements.

45 The Council submitted that s 84B(2)(h) of the Act required the Tribunal to have regard to the s 173 Agreement, and it had no power or capacity under the Act to remove the s 173 Agreement by way of a permit. A s 173 agreement can only be brought to an end or amended using the mechanisms provided in ss 177, 178 and 184 of the Act and those mechanisms are confined in scope in order to give s 173 agreements certainty, efficacy and enforceability. According to the Council, the effect of the Tribunal's decision would be that the use or development of land in contravention of a s 173 agreement could be authorised by the issue of a permit, even though the Act simultaneously enabled an enforcement order to be made in respect of a prospective contravention of the s 173 agreement.[30] It described this position as 'bizarre'.

46 I reject any submission that the Tribunal has purported to remove the s 173 Agreement from the land by means of a permit, or that it has authorised the contravention of the s 173 Agreement. The permit that was granted patently did not purport to discharge or amend the s 173 Agreement. To the contrary, Condition 35 was directed[31] to ensuring that there would be no conflict between what the new permit allowed and what the s 173 Agreement prohibited. By Condition 35, the Tribunal sought to 'safeguard[...] the integrity of the agreement until the fate of the agreement is determined, either by agreement between the applicant and the council or by means of the section 184(3) proceeding'.[32] This makes express the position that exists in law, which is that the s 173 Agreement continues to operate as a control on the use and development of the land unless and until removed or amended in accordance with the procedures in ss 177, 178 or 184 of the Act.

47 The grant of the new permit did not breach the existing permit or the s 173 Agreement. A planning permit is permissive, but in a limited sense. It entitles the permit applicant to do certain things, but subject to any conditions in the permit and any other restrictions imposed by law on the use or development of the land. The grant of a planning permit will overcome a particular restriction on the use or development of the land, namely the requirement to obtain a planning permit under the Act, but it will leave other restrictions untouched. As a result, it is not unusual for a planning permit to authorise a use or development that cannot take place until some other legal barrier has been removed, for example, by the grant of a gaming licence or an approval under environment protection legislation. This is a function of the layering of controls over land use and development, including in the Act itself.[33]

48 The legislative arrangements for planning permits and s 173 agreements intersect in s 180, which provides that a s 173 agreement must not require or allow anything to be done which would breach a planning scheme or a permit. The parties cannot agree that something can be done or must be done that is prohibited by the planning scheme or a planning permit. As Morris P observed in Solid Investments, s 180 reflects the primacy of the planning scheme and any relevant permit over an agreement under s 173 of the Act.[34] However, the Act contains no corresponding provision preventing a permit from authorising something that is prohibited by a s 173 agreement. There is no express prohibition on the grant of a permit authorising something that would result in a breach of a s 173 agreement as there is for a registered restrictive covenant. [35]

49 Indeed, whether a s 173 agreement is required to be taken into account when making a decision in respect of a permit application will depend on the circumstances. Section 84B(2)(h) provides that the Tribunal must 'where appropriate' have regard to any s 173 agreement. In this case, it was clearly appropriate for the Tribunal to have regard to the s 173 Agreement, and it did so. The weight that it gave to the s 173 Agreement was a matter for the Tribunal.

50 The grant of the new permit was not precluded because the development that it contemplates would, if carried out, entitle the Council to apply to the Tribunal for an order under s 114 of the Act to enforce the s 173 Agreement. Although s 114 is expressed to apply to conduct that 'will contravene' an agreement under s 173, the words 'unless prevented by the enforcement order' indicate that there must be a prospect of contravention, that is, a threat that the development will be commenced or carried out in breach of the s 173 Agreement. In my view, the mere grant of a permit, with or without a condition like Condition 35, does not create the circumstance for an enforcement order to be made. Section 114 is directed to preventing acts of use or development - in this case, the construction of the additional retail space - not to preventing their authorisation by a planning permit.

51 That the Tribunal could be asked to make an enforcement order to enforce restrictions on the use or development of land that it has otherwise authorised by the grant of a planning permit is a function of the different layers of regulation or control affecting the use and development of land. Such a construction is not inconsistent with the objectives of the planning framework established by the Act to provide for effective enforcement procedures to achieve compliance with planning schemes, permits and agreements.

52 It is uncontroversial that the legislature has given considerable importance to s 173 agreements as planning controls. Section 173 agreements and planning permits are intended to work together - harmoniously - as planning controls. It will be a rare event for the Tribunal to conclude that a planning permit should issue authorising a use or development that is prohibited by a s 173 agreement, given that the s 173 agreement would remain enforceable on application by any of the persons named in s 114(3) of the Act. Nonetheless, the legislative scheme does not preclude the grant of a planning permit where there is an inconsistent s 173 agreement.

53 The legislative scheme did not preclude the grant of the new permit. It was open to the Tribunal to exercise its planning discretion to grant a permit in respect of a development that would, if commenced, contravene an existing permit and an agreement under s 173 relating to the subject land.

55 The Council's first ground is that the Tribunal's reliance on what it described as 'the jurisdictional requirement of a s 184(3) application' that there be a relevant permit as a justification for granting the new permit shows the Tribunal to have decided to grant the new permit for an improper purpose, in that it was not a purpose authorised by s 84B or the objectives of planning in s 4(1) of the Act. As a corollary, the so-called jurisdictional requirement is submitted to have been an irrelevant consideration that the Tribunal was bound not to take into account in determining whether a permit should issue.

56 The Council submits that in determining the application for review under the Act, the Tribunal's function was not to establish the jurisdictional basis for a separate application, but to determine whether a permit should issue based on the planning merits of the application having regard to the matters set out in ss 84B(1) and (2), including any s 173 agreement affecting the subject land.

57 Having carefully reviewed the Tribunal's reasons, I am not persuaded that the Tribunal relied on the 'jurisdictional requirement of a s 184(3) application' to grant the new permit or that it granted the new permit to establish the jurisdictional basis for such an application. It granted the new permit having regard to the planning merits of the application, that is, to considerations of amenity (car parking, built form and loading dock considerations) in light of objections raised by the Council and objectors. It did so in an entirely unexceptional manner and by reference to the relevant policies in the Boroondara Planning Scheme.

58 The Tribunal's reasons show that the availability of a mechanism under s 184(4) to amend the s 173 Agreement was one of a number of bases upon which the Tribunal decided that the s 173 Agreement should not preclude the grant of a permit. In considering whether the s 173 Agreement should preclude the grant of a permit, the Tribunal also had regard to the historic character of the s 173 Agreement, to the fact that many of its terms had no further work to do and that the Council's own planning officer had recommended that there be a new agreement removing some of the Council's obligations and locking in new development parameters. The Tribunal took into account the possibility that the Council might agree to amend the s 173 Agreement under s 178 of the Act if amenity considerations were appropriately dealt with by the new permit.

59 Underlying the Tribunal's consideration of whether the existence of the s 173 Agreement should preclude the grant of the new permit was the clear recognition that the s 173 Agreement made the actual development of the land in accordance with the new permit unlawful and that, in order for the proposed development to be carried out, the s 173 Agreement would need to be amended or removed from the land. However, the Tribunal correctly treated an application under s 184(3) to amend the s 173 Agreement as a separate process and observed that the grant of a planning permit did not pre-determine any s 184(3) application (or render it a fait accompli). Although it is unnecessary to decide, having regard to the broad way in which the legislature has formulated the Tribunal's power to amend a proposed s 173 agreement in ss 184(1) and (2) of the Act, and its relatively confined power to amend an existing s 173 agreement under ss 184(3) and (4) by way of removing the land from the agreement,[36] there remains a real question as to whether the s 173 Agreement will be amenable to amendment under s 184(4), notwithstanding the existence of the new permit.

60 It is clear from the decision of the Tribunal that, whilst it recognised that a consequence of directing a permit to issue might well be to enliven the Tribunal's power to amend the s 173 Agreement, its decision to grant the new permit was not motivated by a desire to subvert the operation of the s 173 Agreement. There was a proper planning basis for the grant of the new permit having regard to the matters required to be taken into account by s 84B of the Act, including the relevant State and local policies in the Boroondara Planning Scheme and the objectives of planning in Victoria.

61 Insofar as the grant of the new permit creates a platform for the amendment application under s 184(3) or enlivens the Tribunal's own power under s 184(4), I am not satisfied that in deciding to grant the new permit the Tribunal was 'materially influenced' by those factors so as to make them a substantial purpose for the decision made.[37]

62 Accordingly, the ground that the Tribunal exercised its power for an improper purpose or that it took into account an irrelevant consideration is not made out.

Section 173 Agreement as a relevant consideration

63 The Council submitted further that as a s 173 agreement is a relevant consideration that must be taken into account by the Tribunal when considering whether to grant a permit, the Tribunal must 'really', 'genuinely', 'properly' and 'effectively' take the s 173 agreement into account, and in this case there was no such consideration of the s 173 Agreement. Rather, the Tribunal imposed Condition 35 as a mechanism to circumvent the obstacle posed by the existence of the s 173 Agreement. According to the Council, the circumstances of this case required the Tribunal to take into account not merely the existence of the s 173 Agreement, but the fact that the permission being sought would contravene the s 173 Agreement. The distinction drawn by the Tribunal between applications under s 184(3) to remove land from the ambit of a s 173 agreement, and granting permits for land that is subject to a s 173 agreement, ignored the fact that a s 173 agreement is presumed to continue to operate as a control affecting the use and development of the land until the Council agrees to its amendment or an application is made to consider its appropriateness under s 184(3).

64 Again, I reject the submission that the Tribunal did not take into account the s 173 Agreement, or that the Tribunal treated the s 173 Agreement simply as an obstacle to be circumvented. For the reasons that I have already given, it was open to the Tribunal in the exercise of its powers under the Act to grant the new permit on the basis that it would not and could not be acted upon until the s 173 Agreement had been amended.

65 I am satisfied that the Tribunal 'really', 'genuinely', 'properly' and 'effectively' considered the s 173 Agreement when deciding whether to grant the new permit. In a section headed 'The 173 Agreement', the Tribunal considered the relevant terms of the s 173 Agreement and the extent to which the development authorised by the permit would conflict with those terms.[38] It went on to consider the weight to be given to the s 173 Agreement, concluding that it was a relevant, but not a determinative, consideration.[39] It evaluated the facts and circumstances of the case before it and determined that it was appropriate to grant a permit notwithstanding the terms of the s 173 Agreement.[40]

67 Finally, the Council submitted that the Tribunal erred in holding that -

(i) nothing in the Act specifically directed that s 173 agreements should be attributed great weight necessarily;

(ii) there is nothing in the Act that attributes any specific weight to s 173 agreements;

(iii) some Tribunal decisions which have said that the Tribunal must automatically give agreements great weight misread the Act; and/or

(iv) a distinction could be drawn between applications to remove land from the effect of s 173 agreements and granting permits for land that were subject to a s 173 agreement.

68 These are statements made by the Tribunal in the course of its reasoning as to why the s 173 Agreement did not preclude the grant of a permit. I have found the Tribunal's reasoning to conform to the scheme of the Act and for it to have been open to the Tribunal to conclude that the s 173 Agreement did not preclude the grant of a permit in this case.

69 The impugned statements, propositions or conclusions do not contain any material error. It was a matter for the Tribunal as to the weight to be accorded to the s 173 Agreement.

71 The first respondent concedes that there is a defect in Condition 35 by reason of the prefatory words, 'This permit does not come into effect until ...'. It is well established that a permit condition which operates as a condition precedent to a permit coming into effect is invalid on the basis that it is ultra vires.[41]

72 The prefatory words do not cause any difficulty for parts (c) and (e) of Condition 35, which provide that the new permit will not to come into effect until the existing permit has been amended. This is because s 62(2)(b) of the Act expressly authorises a condition in those terms.

73 The first respondent submits that the defect in the remaining paragraphs can be cured in a manner which preserves the substance of the Tribunal's intent by replacing the prefatory words in Condition 35 with the words, 'The development approved by this permit must not commence until ...'. Condition 35 can then be broken up to ensure that the prefatory words relate lawfully and directly to each part of the Condition.

74 The first respondent has proposed the following revised version of Condition 35:

(1) This permit will not come into effect until planning permit BOR9941 is amended, or alternatively cancelled, so that it does not apply to that part of the subject land to which this permit applies ('the permit land').

(2) The use and development approved by this permit must not commence until:

(a) the section 173 agreement entered into on 5 March 1995 ('the existing 173 Agreement') between the Responsible Authority and Fabcot Pty Ltd and recorded against the title to the subject land is amended to remove that part of the subject land to which this permit applies ('the permit land') from the continued operation of the existing 173 Agreement;

(b) the owner enters into a new section 173 agreement with the Responsible Authority with respect to the permit land which prohibits any use or development of the permit land otherwise than in accordance with this permit; and

or alternatively:

(c) the section 173 agreement entered into on 5 March 1995 between the Responsible Authority and Fabcot Pty Ltd and recorded against the title to the subject land is amended so that the use and development allowed by this permit is not contrary to the 173 agreement; and

75 The ground that Condition 35 is invalid because it imposes a condition precedent to the permit coming into effect is made out. However, the defect can be remedied by altering the form of Condition 35. The proposed revision appears to me to be an appropriate solution to the legal difficulty that has been identified.

76 I will consider the remaining grounds on the basis that Condition 35 is amended as proposed.

77 The Council submits that the imposition of Condition 35 was beyond the power of the Tribunal in that it did not satisfy the test for a valid permit condition established by the High Court and this court.

78 There are limits on the broad power to impose such conditions on planning permits as the decision-maker 'thinks fit'. In Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council,[42] Walsh J (with whom Barwick CJ, Menzies and Windeyer JJ agreed) held that the legislation should be understood as conferring a power to impose conditions which were reasonably capable of being regarded as related to the purpose for which the function of the authority was being exercised, as ascertained from a consideration of the scheme and the Act.[43] Following this, in Melbourne Water Corporation v Domus Design Pty Ltd,[44] Gillard J said:

In order to determine the validity of a condition imposed in a planning matter where the power to impose a condition is expressed in general terms, the tribunal is required to undertake the following step by step process:

(i) identify and state the proposed condition;

(ii) consider and determine the relevant planning policy by considering all relevant legislation dealing with the topic, which would not necessarily be confined to planning legislation and schemes; and

(iii) consider and determine whether the condition was reasonably capable of being related to the implementation of that planning policy.

79 The test therefore requires the determination of the scope of planning policy.[45] As the High Court also said in Allen Commercial Constructions, it is from the legislation and the planning scheme, and not from some pre-conceived general notion of what constitutes planning, that the scope of planning policy is to be ascertained.[46]

80 The Council submits that there is nothing in the Act or in the Boroondara Planning Scheme that would authorise a condition such as Condition 35, which was designed to hold in abeyance a s 173 agreement pending its amendment or removal from land. To the contrary, s 173 agreements are established under the Act as important planning controls, and the imperative of planning policy is to protect their integrity as a form of planning control. On this basis, so it is contended, Condition 35 is unrelated to the implementation of planning policy as derived from the Act and the Boroondara Planning Scheme. Rather than acting in the implementation of planning policy, the Tribunal has 'acted on expedience to facilitate the issuing of a "relevant permit" within the meaning of s 184(4)'. Implementation of planning policy as contained in the Act would require 'the upholding of the s 173 agreement and the extant planning permit relating to the subject land'.

81 I have already explained why the grant of the new permit does not affect the enforceability of the s 173 Agreement. It remains enforceable. Its integrity is not threatened by the new permit. So much is a function of the legislative arrangements for the grant and enforcement of planning permits and the making and enforcement of s 173 agreements. The Tribunal's reasons reveal that it included Condition 35 in furtherance of orderly planning by stipulating that the development could not commence until steps were taken to ensure that the development could occur lawfully.

82 In my view, it was not strictly necessary for a condition restraining the commencement of development to be included in the new permit. That restraint exists as a matter of law, having regard the terms of the s 173 Agreement and to ss 114 and 126 of the Act. Nonetheless, Condition 35 describes the form of the restraint and enables it to be identified by reference to the new permit itself. In the circumstances, the attachment of such a condition seems to me to be prudent and, because it reflects the legislative scheme, to be related to the implementation of planning policy. While Condition 35 is not directly referable to the achievement of any of the policies in the Boroondara Planning Scheme, it satisfies the objectives of planning in Victoria to provide for the orderly use and development of land and to facilitate development in accordance with that objective.

83 Moreover, Condition 35 is related to the implementation of planning policy in much the same way as a condition made under s 62(1)(aa) or s 62(2)(b) of the Act providing for a permit not to come into effect until a registered restrictive covenant has been removed or varied or a specified planning permit has been cancelled or amended. Conditions of this kind are expressly contemplated by the Act.

84 In my view, Condition 35 is reasonably capable of being related to the implementation of planning policy insofar as it elucidates and reinforces the way in which the different controls applying to the land will operate together in this case.

85 The ground based on the substantive invalidity of Condition 35 is not made out.

86 Condition 35 is difficult to understand. It endeavours to deal with a number of variables or contingencies. It is not possible to ascertain solely by reference to its terms if, and if so when, the development authorised by the new permit can commence. It contains alternative requirements depending on whether the s 173 Agreement is amended by agreement or whether it proves necessary to pursue the application under s 184(3). It therefore manifests uncertainty as to which alternative accords with the reality of the situation as it unfolds and the uncertainty of outcome that is inherent in Tribunal proceedings.

87 Nonetheless, I am not persuaded that Condition 35 is invalid because it is vague or uncertain. It is possible to understand its practical effect by ascertaining whether the s 173 Agreement has been amended or removed from the land.

88 The existence of the s 173 Agreement means that it has long been necessary to look outside of the existing permit to understand the permitted use and development of the land. The s 173 Agreement is not necessarily a static control: it can be brought to an end or amended to remove or alter restrictions on the use or development of the land at the instigation of the parties at any time.[47] Although the approval of the Minister is required to amend - as opposed to end - a s 173 agreement, no notice of a proposed amendment is required to be given to members of the public.

89 Furthermore, as the Tribunal suggested in its reasons, the s 173 Agreement is the product of peculiar circumstances and contains many terms that no longer have a raison d'etre, including terms imposing obligations on the Council that it does not propose to perform. The position is already a confusing one. The Tribunal has endeavoured to clarify the situation, based on the planning merits of the proposed development.

90 The form of Condition 35 was a product of negotiation by the parties.[48] The attempt to capture the alternative courses by which the s 173 Agreement might be amended has resulted in some complexity and uncertainty. Nonetheless, subject to the amendment of the prefatory words, the form of Condition 35 and the manner in which it is expressed seem to me to be sufficiently clear for it to avoid being invalid as uncertain.

91 The ground that Condition 35 is invalid as vague or uncertain is not made out.

92 The Council submitted that Condition 35 is inconsistent with s 67 of the Act, which provides that a permit operates from the date specified in the permit or, if no date is specified, from the date of the decision of the Tribunal (where the permit was issued at the direction of the Tribunal) or the day on which it is issued in any other case. The Council submitted that if the permit is expressed not come into force or effect until the occurrence of a specified event, that does not accord with the permit operating from the date specified on the permit, the date of the decision of the Tribunal or the date of issue of the permit, as the case may be.

93 Although Condition 35 (as revised) stipulates that the development cannot commence until the s 173 Agreement is amended or removed, that will not affect the operative date of the new permit. The fact that development cannot commence on the operative date is of no consequence.

94 It is also to be observed that the Act provides in ss 62(1)(aa) and 62(2)(b) for conditions to be imposed that a permit is not to come into effect until something else happens. Such conditions must be taken to work with s 67. Insofar as Condition 35 (as revised) provides that the new permit will not come into effect until the existing permit has been amended or cancelled, it must be read as being subject to the requirements of s 67.

95 The ground that Condition 35 is invalid because it is inconsistent with s 67 of the Act is not made out.

96 The Council submits that Condition 35 is not severable as its deletion would alter the substantive intended effect of the Tribunal's determination. I accept this submission. Even though Condition 35 is essentially a statement of the legal position as to the continuing nature of the obligations imposed by the s 173 Agreement, it forms an integral part of the way the Tribunal made its decision to grant the new permit. The Tribunal's reasons make it clear that it would not have granted the new permit without such a condition.

97 The only ground of appeal on which the Council has succeeded is the ground conceded by the first respondent that the form of Condition 35 is invalid as imposing a condition precedent to the operation of the permit.

98 It is common ground that Condition 35 requires amendment.

99 The first respondent submitted that the Court should exercise its power under s 148(7) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) to order that the new permit issue subject to the amended condition. However, the imposition of permit conditions is a job best left to the Tribunal. It forms part of the essentially factual, evaluative and ministerial judgments the legislature has given the Tribunal to make.[49] The conditions on the new permit must work as a whole, and the Tribunal has crafted a set of permit conditions that have not been exposed or the subject of any argument in this court.

100 The order of the Tribunal will be set aside and the proceeding will be remitted to the Tribunal for determination according to law, to consider in particular the form of any permit condition that the Tribunal wishes to impose in lieu of Condition 35.

101 I will hear the parties on the appropriate form of orders.

[3] Sixty-Fifth Eternity Pty Ltd v Boroondara CC [2011] VCAT 1825 (8 August 2011) (the 'Reasons').

[5] Sixty-Fifth Eternity Pty Ltd v Boroondara CC [2009] VCAT 2314 (4 November 2009).

[6] Transcript, Boroondara City Council v Sixty-Fifth Eternity Pty Ltd & Ors (Supreme Court of Victoria, Proceeding No. 4683/2011, Osborn J, 4 October 2010, 63).

[18] Ibid [26]. The Tribunal observed that this would give rise to a 'Catch 22' situation.

[24] Ibid [33] (emphasis in original).

[27] Despite the fact that it may not be positive in nature or that it is not for the benefit of any land of the responsible authority.

[28] Solid Investments Australia Pty Ltd v Greater Geelong City Council [2004] VCAT 2356 [43] ('Solid Investments').

[29] On application by the responsible authority.

[30] Section 114 provides that any person may apply to the Tribunal for an enforcement order if a use or development of land 'contravenes or has contravened, or, unless prevented by the enforcement order, will contravene' a s 173 agreement.

[31] Albeit in a form that is problematic; see below.

[33] The Act specifically contemplates the situation where the grant of a new permit might affect an existing permit relating to the land. Section 62(2)(b) provides that in granting a planning permit, a responsible authority may include a condition that the permit is not to come into effect unless a specified permit is cancelled or amended.

[34] Solid Investments Australia Pty Ltd v Greater Geelong City Council [2004] VCAT 2356 [48].

[36] And then only by reference to a 'relevant permit' or a requirement under the Subdivision Act where the land owner continues to be subject to liability under the agreement.

[37] East Melbourne Group Inc v Minister for Planning [2008] VSCA 217; (2008) 23 VR 605, [337].

[41] Spurling v Development Underwriting (Vic) Pty Ltd [1973] VicRp 1; [1973] VR 1, 4-5.

[42] Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council [1970] HCA 42; (1970) 123 CLR 490.

[44] [2007] VSC 114; (2007) 16 VR 539 [64].

[46] Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council [1970] HCA 42; (1970) 123 CLR 490, 499.

[47] Subject to the approval of the Minister.

[48] Over the objection of the Council.

[49] Osland v Secretary to the Department of Justice [2010] HCA 24; (2010) 241 CLR 320.