1. The decision of the Responsible Authority is varied.
2. The Tribunal directs that permit No. KP-172/2012 must contain the conditions set out in the Permit No. Kp-172/2012 issued by the Responsible Authority with the following modifications:
   • (a) Condition 4 is amended by deleting the words "five percent (5%)" and substituting the figure "2.25 percent".
3. The Responsible Authority is directed to issue a permit amended in accordance with this order.

Mr Chris Townshend SC, instructed by Norton Rose Fulbright

Mr Townshend called Mr Andrew Rodda, a town planner

Mr Wren called Mr Alex Hrelja, urban planner and economist

Subdivision of land having an area of 8.12ha. into two allotments, one of 3.646ha. and the other of 4.474ha.

Application under section 80 Planning and Environment Act 1987 to review Condition 4 of Planning Permit No. KP-172/2012

Development Plan Overlay Schedule 5, Environmental Audit Overlay, Heritage Overlay Schedule 105. The land abuts the Nepean Highway which is in a Road Zone Category 1.

The land is located on the east side of Nepean Highway, Mentone, having a frontage of 130.49m to Nepean Highway and a depth of 305.89 metres. The land forms part of the previous industrial complex known as the Nylex site.

Stubbs Street Kensington Pty Ltd v Melbourne CC [2009] VCAT 1947

Stupak v Hobsons Bay CC [2011] VCAT 618

PM Kennedy Land Surveyor v Hobsons Bay CC [2009] VCAT 48

Georgiou v Bayside City Council [2006] VCAT 1134

Ahmed v Hobsons Bay City Council [2008] VCAT 1673

Parry v Bass Coast SC [2011] VCAT 1977

Agnew v Yarra CC [2008] VCAT 489

Barker Monaghan Pty Ltd v Moreland CC [2008] VCAT 2432

1. This is an application by Bunnings Properties Pty Ltd to review Condition 4 of Planning Permit No. KP-172/2012 for the subdivision of land at 27 - 29 Nepean Highway, Mentone, into two allotments.
2. Condition 4 provides:

Prior to the issue of a Statement of Compliance, the applicant or owner must pay to the Kingston City Council an amount equivalent to five percent (5%) of the site value of all land in the subdivision. If the payment is not made within 12 months of the date of this permit, Council will request a revaluation of the site value at each anniversary, and will vary the amount of the payment accordingly.

1. It was agreed between the parties that the site value of land is $30 million.
2. The applicant contends that the condition should be either deleted or amended to provide for a public open space contribution of less than one percent of the site value.

1. The land the subject of the application has an area of 8.12 hectares. Lot 1, which is to the north, has an area of 3.646 hectares and is intended to be used as a homemakers centre incorporating several bulky goods tenancies and associated car parking. Planning Permit No. KP73/2006/B has been granted to approve this use. Lot 2, which occupies the southern portion of the site, has an area of 4.474 hectares and is currently used for a Bunnings store and associated car parking.
2. The land forms part of a larger parcel which was subdivided approximately four years ago. No open space requirement was made at that time.

1. Clause 52.01 Kingston Planning Scheme relevantly provides:

A person who proposes to subdivide land must make a contribution to the council for public open space in an amount specified in the schedule to this clause (being a percentage of the land intended to be used for residential, industrial or commercial purposes, or a percentage of the site value of such land, or a combination of both). If no amount is specified, a contribution for public open space may still be required under Section 18 of then Subdivision Act 1988.

The clause also states that a public open space contribution may be required only once in respect of the land to be subdivided.

1. In this case the schedule to the clause does not specify a contribution. This means that the power to require a public open space contribution arises under s18 Subdivision Act 1988. Section 18(1) provides as follows:
   1. Council may require public open space

(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.

1. This power is qualified by s. 18(1A) of the Act which provides as follows.

(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.

1. The legislation raises two questions.
2. First, will there be a need for more open space as a result of the subdivision. This issue is to be resolved having regard to the matters set out in paragraphs (a) to (f) of sub-section (1A).
3. Secondly, if the first question is resolved in the affirmative, what contribution should be required? In relation to this question the legislation is silent as how the contribution should be determined or calculated.
4. It is important to keep in mind that any requirement for public open space in this case arises under the Subdivision Act 1988, not the Kingston Planning Scheme. By not specifying an open space requirement in the schedule to clause 52.01 the planning scheme in effect abdicates responsibility for the provision of open space in a new subdivision and leaves the matter to be dealt with under the Subdivision Act 1988. This means that considerations which govern decision making under the planning scheme are not relevant in this case save to the extent that they coincidently overlap the criteria set out in the Subdivision Act 1988.
5. An instance of overlap is sub-s. (1A) paragraph (f) which requires the policies of the council regarding the provision of places of public resort and recreation to be taken into account. In most cases those policies will find expression in the planning scheme as well as other policy documents.
6. On the other hand the failure to specify a contribution in the schedule to clause 52.01 does not restrict or inhibit the exercise of the council's powers under the s. 18 Subdivision Act 1988 (Stubbs Street Kensington Pty Ltd v Melbourne CC)[1].

1. In this case it is not necessary to analyse the application of the s. 18(1A) criteria to the circumstances of the case because the applicant for review "does not argue that there is no need for a public open space contribution" (see Applicants outline of Submissions paras 7.1 and 8.2). The first question is therefore answered in the affirmative.

1. As mentioned the legislation is silent as to how the contribution to public open space is to be calculated. The absence of guidance has been commented upon by the Tribunal. In Stupak v Hobsons Bay CC[2] Dep. Pres. Gibson said (at para 16):

[16] The difficulty associated with considering the criteria in section 18(1A) is that whilst they may lead to a conclusion there is need for more open space, no assistance is provided about quantifying the percentage of the open space contribution that should be required under section 18(1).

[26] The lack of guidance in section 18(1) about what percentage of public open space may be required means that a discretion must be exercised in each case and this may lead to apparent inconsistencies from time to time. This is unfortunate and potentially inequitable. The decisions of PM Kennedy, Scarlett and Ahmed illustrate this point.

[27] Consistency would be better assured if the council included a figure in the schedule to clause 52.01 of the planning scheme. ...

1. The avoidance of misfortune and inequity can easily be achieved by simply specifying the contribution in the schedule to clause 52.01 of the planning scheme. That is the very purpose of the schedule. Indeed, different contributions can be specified for different situations. The specification of a contribution or contributions relieves the council from the task of defending its assessment under s. 18 Subdivision Act 1988.
2. I adopt with respect what was said by Dep. Pres. Dwyer in PM Kennedy Land Surveyor v Hosbsons Bay CC[3]:

[4] However, Mr Rantino's submission also appeared to suggest that a 5% contribution should be treated as a 'normal' contribution and, having regard to the factors in s18(1A) of the Subdivision Act 1988 in a holistic way, should commonly support Council's policy for an open space request of 5%. He argued that do otherwise could lead to arbitrary outcomes between 0% and 5% that may be difficult to reconcile in planning terms across different parcels of land. If this is what Mr Rantino is contending on behalf of the responsible authority, I do not share that view. If the responsible authority wishes to apply the 5% as a 'standard', it should introduce a schedule into clause 52.01 of its planning scheme (as Councils have been encouraged to do in the past[4]). This would entrench the degree of proportionality and consistency across development that the Council apparently seeks to achieve. However, if the Council fails to deal with the matter through clause 52.01, it implicitly accepts the flexible exercise of discretion on a case-by-case basis, which may well lead to differing outcomes. As Senior Member Byard noted in Agnew, if 5% is the 'right amount', then it can be imposed just as can any lesser percentage thought to be appropriate.

1. The Responsible Authority urged me to follow the Tribunal's decision in Parry v Bass Coast SC[5] which treated 5 percent referred to in s. 18(1) of the Act as a "default position". In that case the Tribunal (Member Keaney) said (at paras 52 and 53):

[52] In my view, the open space requirement should not be a "free for all" where arbitrary amounts are bandied around as negotiating tools. If the principle is accepted that open space provision is of benefit to the community, and that that open space area will need to be developed and maintained, then it seems to be an entirely proper use of the planning system to levy a set amount for those who are improving their land (and generating more people) and then to specifically apply that amount to an equitable open space provision. The speculative exercise of picking a figure somewhere between zero and five has, and will, lead to endless doubt and inconsistency. A system that expressly locked in the 5% would remove that speculation.

[53] It seems to me that once the 'need' criteria has been satisfied, then a contribution of 5% is really the "default" position with the onus on the applicant to justify any reduction. In my view, no such justification has been advanced in this case. As Council has clearly justified its case for more open space on a 'needs' basis, I can find no basis to discount the amount specified in Section 18 of the Subdivision Act.

1. As I and other Divisions of the Tribunal have said "endless doubt and inconsistency" can be avoided by utilising the schedule to clause 52.01.
2. In my view it is useful to return to basic principles. As former justice of the High Court, Kirby J., was fond of saying "But what does the statute say?". In this case the statute says that the council may impose a land contribution or an amount "not exceeding 5% of the site value of all the land in the subdivision". This is not the creation of a default position. This is the imposition of a cap, or ceiling, on the amount that can be required from the subdivider.
3. Two observations should be made. Firstly, no inference can be drawn that a subdivision cannot create a demand for public open space greater than five percent of the value of the land. If such an inference was open the appropriate amount in any particular case could be assessed relative to a hypothetical maximum. For example, if high density residential development in an area devoid of public open space generates the maximum demand for public open space, less intense development or other types of land use must therefore be less than five percent. But the five percent is not a statutory definition of what the maximum demand for open space can be. It is no more than a limit on what can be asked of the subdivider.
4. I adopt, with respect, what was said by Senior Member Byard in Agnew v Yarra CC[6]:

[13] There may well be circumstances where a larger percentage might be justified, but the power under this section is subject to the statutory limit of 5%.

[14] It is sometimes said that this available range of zero to 5% means that 5% should be taken as the top of the available range to be applied to only the strongest cases in favour of the largest contribution, and that all others should be scaled down or discounted accordingly.

[15] This does not strike me as being the right approach. If a reasonable and logical assessment of the circumstances of a case indicate 7% or 10% or 15%, that assessment can be made, but the actual requirement is limited to 5%. Of course, if 5% is assessed as the right amount, then that can be imposed just as can any lesser percentage thought to be appropriate.

[16] This may be a somewhat theoretical argument. I mention it only to expose what I think is a fallacy of saying that 5% can apply only to the extreme cases of the very highest category, ...

1. Secondly, the power to require a contribution for public open space should not be regarded as a tax and therefore interpreted narrowly. The provision of public open space is a legitimate element in the proper planning of the community. As a matter of basic planning principle it is appropriate that new development makes provision for public open space. Even in the absence of clause 52.01 and s. 18 Subdivision Act 1988 it would be open to a responsible authority to require the provision of open space by way of a permit condition in appropriate cases. The difference is that open space required by a permit condition would need some nexus with the permitted development whereas an open space contribution under the Subdivision Act 1988 may be applied in a way that is not geographically connected with the subdivision.
2. I adopt, with respect, what was said by Dep. Pres. Gibson in Stubbs Street Kensington Pty Ltd v Melbourne CC, Supra, (at para 15):

[15] In my view, there is no justification for attempting to demonise public open space requirements as some form of tax that, as a matter of principle, the Tribunal should seek to constrain. Public open space requirements are a long standing and recognised means by which councils can collect money to help pay for the acquisition and upgrading of public open space land and facilities for the benefit of the community[7]. The objective is not to tax development, but to provide councils with a source of land or funds to help carry out a legitimate and beneficent responsibility. As communities evolve, it is incumbent on councils to maintain, improve, upgrade and add to public open space facilities as a means of meeting the social needs and changing demands for passive and active open space. Councils are encouraged to prepare public open space strategies and may include open space objectives and strategies in the local planning policy framework of their planning schemes. Thus one of the criteria included in section 18(1A)(f) refers to any policies of the council concerning the provision of places of public resort and recreation.

1. What then are the considerations relevant to determining the amount of the contribution for public open space? As mentioned, s.18(1A) criteria are relevant only in determining whether there is a need for more open space, not the contribution to that should be asked of the subdivider if there is that need. However, s.18(1A) does provide a legislative context that can give some broad guidance.
2. The "need" that s. 18(1A) addresses is a need that arises "as a result of the subdivision". Given that the contribution is to satisfy that need it follows that the same nexus must exist between the contribution and the subdivision. The question therefore is: What contribution will satisfy the need for more open space which arises as the result of the subdivision. This involves an identification of the need and an assessment of what is required to satisfy it.
3. I consider that as a matter of logic this requires consideration of the following factors.
   • (a) The existing and likely future use of the land. This will be the basic determinant of the demand for more open space. It is trite that a high density residential development in a neighbourhood lacking any public open space will generate a greater demand for open space than an industrial development which is not labour intensive. The similarity of this criterion with s. 18(1A)(a) is coincidental.
   • (b) The extent and quality of open space currently accessible to the land. If the land adjoins significant tracts of open space it may be unlikely that the subdivision will generate much demand for additional open space.
   • (c) The amount of land that is reasonably required to satisfy the demand. Residential development is likely to generate greater use of open space for longer periods than commercial development where the use of open space will be mainly by employees during work breaks.
   • (d) The cost of providing the land, and whether that cost exceeds five percent of the site value of the land.

I should add that these factors are not exhaustive of all factors that may be relevant in all cases. Each case must be decided according to its own particular circumstances, and the factors relevant to determining the amount of a public open space contribution may vary.

1. I now turn to consider how each of these factors I have identified in the case applies

1. The subject land forms part of the Nylex site. Until 2005 the land was used for a large industrial operation manufacturing plastic goods, and employing up to 12,000 people. The council placed some reliance on this, but in my view a consideration of a previous discontinued use of the land which is unlikely to be revived is not relevant.
2. The land is now zoned Business 4 Zone. The basic purpose of this zone is to encourage bulky goods retailing. I was informed that the land would shortly be included in the new Commercial 2 Zone which will allow a slightly wider range of activities than the current zoning. This has now occurred. However, the land is and will remain subject to a Development Plan Overlay, and I was informed that the permit that has been issued in relation to Lot 1 is an accurate reflection of the development plan.
3. The approved development of Lot 1 comprises 13,605m2 of restricted retail floor space contained in four buildings and divided into approximately ten tenancies. Having regard to the zoning, the development plan and the planning permit I consider that this must be regarded as the likely future use of Lot 1.
4. Lot 2 has already been developed as a Bunnings store with 18,886m2 of floor space. Clearly this use will continue. The Bunnings operation employs 178 staff.
5. In evidence given to the Ministerial Panel which in 2005 considered the rezoning of the land to Business 4 it was stated that the development of the site as a homemaker centre would create 347 equivalent full time jobs. The development plan expects that the centre will generate a demand for 830 car spaces. These figures give some indication of the number of people that could be expected on the subject land at any one time. The figure of 800 suggested by the council is not unrealistic and was not disputed by the Applicant.
6. The demand for open space is likely to be generated mainly by employees seeking fresh air or stretching their legs at lunch time and during other work breaks. The use of the space is likely to be of short duration, and broken up according to work shifts. The demand for open space created by customers is in my opinion likely to be low. A visit to a homemaker centre can be a recreational experience but it is more likely to be a single purpose destination which does not make concurrent use of nearby open space.

1. The future use of the land, although commercially quite intense and employing a relatively large work force, is in my opinion not likely to create a significant demand for public open space. The open space would be used by some employees during work breaks and by a few customers.
2. I am of the view that this demand could be adequately met by a small park of the size of a neighbourhood park of between 1500 - 2000m2.

The extent and quality of open space currently available.

1. There are two reserves within walking distance of the subject land. The Elliott Reserve is located on the north side of Elliott Street, Cheltenham, about 300 metres north of the subject land. It is a small "pocket" park having an area of just 1200m2. In my opinion it is most unlikely that either persons employed on the subject land or customers visiting the homemaker centre or Bunnings would make use of this reserve.
2. The other nearby reserve is the Reg Marlow Reserve which is located at the south-west corner of Oak Avenue which borders the north side of the subject land and Warragul Road. This reserve is about 285 metres from the land. It has an area of 0.44 hectares. The reserve serves primarily as a family recreational area for residents of the subdivision that was created from part of the Nylex site. The reserve is subject to the preparation of a Master Plan under the City of Kingston Open Space Strategy, June 2012 (see p. 57).
3. In my view it would be inappropriate to load onto the Reg Marlow Reserve the open space demand created by employees and customers of Bunnings and the homemaker centre. Not only would this intensify the use of the reserve which is already extensively used by residents of the adjoining subdivision for family type recreation; it will introduce a different type of user with possibly different requirements eg somewhere to smoke a cigarette, to the reserve.
4. The applicant suggested that there is an area of 650m2 along the Oak Avenue frontage at the north east corner of the site that could be used for open space. This is very much a leftover pocket and in my view of inadequate size to satisfy the demand created by the subdivision. Having said this I would not dissuade the applicant from landscaping or otherwise setting aside this area for use by the work force of the homemaker centre.
5. Accordingly I conclude that there is no suitable area of open space currently accessible from the subject land that could either satisfy or alleviate the need for open space resulting from the subdivision. This is consistent with the council's Open Space Strategy which identifies this area of the municipality (Local Area 4D/6B) as deficient in the supply of open space. The demand resulting from this subdivision should not exacerbate this deficiency.

1. It was agreed that the site value of the subject land is $30,000,000. This can be taken as a broad indication of the cost of land in the neighbourhood.

1. Having regard to the above factors I consider that the appropriate contribution for public open space that should be required in the present case is 2.25 percent of the site value of the land. If the determination of that contribution is attended by a certain lack of science it is because the statute confers a wide discretion with no specific guidance as to how it should be exercised.
2. I would add only that once the open space contribution has been assessed under s. 18 Subdivision Act 1988 nothing in the Act or the planning scheme requires the council to actually provide the open space proximate to the subject land. It is entirely a matter for the council as to whether the contribution is expended in the neighbourhood of the subject land or applied to the provision, augmentation or improvement of open space elsewhere in the municipality.

1. Condition 4 of the Planning Permit No. KP-172/2012 will be varied by deleting the words "five percent (5%) and substituting the figure '2.25 percent'.

[1] [2009] VCAT 1947

[2] [2011] VCAT 618

[3] [2009] VCAT 48

[4] See for example the general comments of Member Hewet in Georgiou v Bayside City Council [2006] VCAT 1134, particularly at paras [15]-[18]. In relation to Hobsons Bay City Council, see also the comments of Member Rickards in Ahmed v Hobsons Bay City Council [2008] VCAT 1673

[5] [2011] VCAT 1977

[6] [2008] VCAT 489 (at p.5)

[7] In this context, it is well established that a need for more open space includes improvements to existing open space. For example see Georgiou v Bayside CC [2006] VCAT 1134 at [22], and Barker Monaghan Pty Ltd v Moreland CC [2008] VCAT 2432 at 15