Ms Natali Otzen, Town Planner, appeared on behalf of the Responsible Authority.

Ms Natali Bannister, Solicitor, with Ms Lisa Moore, Solicitor, appeared on behalf of Melbourne Water, a referral authority. Ms Bannister called Dr Melita Stevens, Principal Scientist for Melbourne Water, and Mr Shane Haydon, Manager Water Quality for Melbourne Water, as witnesses in support of her submissions.

Mr Stewart Morris QC appeared on behalf of the Applicant for Review and Permit Applicant. Mr Morris called Mr Samir Cabbabe, Permit Applicant, Mr Tony Pitt, Agricultural Consultant, and Mr Robert Van Der Graaf, Soil Scientist, as witnesses in support of his submissions.

1. This is an application to review the decision of the Responsible Authority to refuse permission for a second dwelling at North Jindivick Road in Jindivick. The land is within the catchment of the Tarago Reservoir, The refusal of permit was issued in accordance with an objection from the referral authority, Melbourne Water, and the reason for refusal was:

"Melbourne Water has objected to the proposal on the basis that it fails to meet the Interim Guidelines for applications in open, portable water catchment storage areas or the provisions of the Baw Baw Planning Scheme and will increase the potential for water quality deterioration with the Tarago Reservoir."

2. The Tarago catchment has a total area of approximately 11400 ha some 2800 ha of this area is open farmland while the balance is within State forest. The farmland is predominantly used for grazing. The catchment area could be described as being somewhat "off the beaten track" but is in fact quite close to the metropolitan area. Therefore, the very high scenic values, the sense of isolation, and the convenient access to the city, make the catchment a very attractive location for people choosing to live within a rural environment.

3. The subject land has an area of approximately 30 ha and is in an elevated location overlooking the Reservoir. The land having in the past been used for grazing, and has an existing modest dwelling which is presently occupied.

4. Mr Samir Cabbabe is an international airline pilot who will shortly reach the compulsory retirement age for pilots. It is his intention to develop a new dwelling on the land and to reside there with his family. Mr Cabbabe wishes to pursue an active retirement by developing and operating an olive grove on his land, and to this end had already planted an area of the site under olives. I accept Mr. Pitt's evidence that an olive grove could be a productive use of this valuable agricultural land.

5. Mr. Morris in his submissions indicated that the permit applicant would accept the following restraints in the context of a permission for a second dwelling on the land, and argued that these restraints are in fact positive attributes of the proposal in the context of the planning considerations relevant to this case. The restraints which would be accepted are:

1. a requirement to consolidate all the titles comprising the land,

2. a requirement that grazing cease on the land and,

3. the use of an all waste treatment system incorporating disinfection and surface irrigation of waste water.

6. The subject land falls within the Rural Zone and is affected by two Environmental Significance Overlays, one in respect of high quality agricultural land and the other in respect of water catchments. The planning policy framework, and the Zone and Overlay provisions affecting the land were described in some detail in the submissions to the Tribunal, I do not intend to set out these provisions here it was common ground that the provisions placed very strong emphasis on the protection of the productive capacity of high quality agricultural land, and the protection of water quality in catchments.

7. The Tarago catchment is an open portable water supply catchment, and therefore of relevant consideration are the "Interim Guidelines for Planning Permit Applications in Open Portable Water Supply Catchment Areas, August 2000". The most relevant guidelines from this document is Guideline 1 which is set out below:

When a planning permit is required to use land for a dwelling or to subdivide land:

* The density of dwellings should be no greater than one dwelling per 40 hectares (1:40 ha); and

* Each lot created in the subdivision should be at least 40 hectares in area.

* A catchment management plan or similar project addressing land use planning issues has been prepared for the catchment, and the objectives, strategies and requirements of the plan or project have been included in the planning scheme; and

* A land capability assessment for the on-site management of domestic wastewater has been completed which shows that a greater or lesser minimum subdivision area and density of development is appropriate.

The land capability assessment should be undertaken in accordance with the requirements of Appendix A to the Code of Practice - Septic Tanks, On-site Domestic Wastewater Management, Environment Protection Authority, March 1996, to the satisfaction of the responsible authority.

The Environment Protection Authority is preparing an information bulletin which will set out in greater detail, the procedure and criteria for preparing a land capability assessment and will supplement Appendix A."

8. It was argued by reference to the original Interim Guideline released by the Minister for Planning in 1999 that this guideline should be interpreted to mean a density of 1 dwelling for every 40 ha within the entire catchment, that is including that part of the catchment within State forest. I agree that this is the correct but almost certainly unintended interpretation of the drafting of the original guideline. I believe this result is unintended because it would lead to a density of septic tanks of 1 septic tank for every 9.8 ha within the private land portion of the catchment, which is unacceptably close to the density of 1 septic tank per 6.7 ha at which the United States Environmental Protection Agency would designate the area as a region in which there is a potential for contamination of ground water by septic tank effluent. It is difficult to conceive of this as being an appropriate density of septic tank systems within a potable water catchment.

9. In general terms septic tanks do not treat effluent to any great extent, rather septic tanks are designed to disperse contaminants into the environment at a rate which can be safely absorbed by the environment. For this reason the actual local density of septic tanks is the important consideration, not the notional density of septic tanks over some broader area. All waste treatment systems like that proposed in this case are more complex than conventional septic tanks, and treat the effluent to a greater degree than conventional septic tanks (including in this case disinfection) but nevertheless relies contaminants being absorbed by the environment and therefore local density is still an issue, although less of an issue than it would be for conventional systems.

10. Whatever the intention in the 1999 Interim Guidelines I do not think the August 2000 guidelines can be interpreted in this way. The Guidelines set out density standards which relate to the land which is the subject of the application. It is not a prohibition, within its own terms it sets out considerations which may lead to a different density outcome, and it is expressly a guideline, something which must be considered in the balancing process which is a characteristic of all planning decisions.

11. Turning first to the question of whether or not the proposal for a second dwelling is consistent with the use of the land in accordance with the provisions of the Rural Zone. In this regard I think that the following observations can be made:

* A density of 1 dwelling for every 15 ha, which would be the result of this proposal, it is in the normal course of events a high dwelling density in the context of a Rural Zone. Although the land is high quality agricultural land, this locality is not one in which irrigated market gardens and orchards are the predominant use, and in which as a consequence small farm sizes are the norm.

* The proposed second dwelling does not result in the further fragmentation of agricultural land, indeed, the applicant is prepared to accept the consolidation of the existing small lots which constitute the land.

* The construction of a large house, its garden and effluent disposal field will result in some loss of productive agricultural land, albeit a relatively small percentage of the overall land area.

* The existence of a second dwelling would make it easier, at least in an economic sense, for the applicant to engage the services of a person expert in olive production, and more generally the existence of the second dwelling would earn rental income which would be of benefit to any land owner.

* The second dwelling is not required for the productive use of the land, the land is not so large that it will require two family groups for effective use. While I accept Mr Cabbabe's desire to get expert assistance in establishing his olive grove, his own evidence in relation to the relatively small number of days per year in which is required to be committed to the care of an olive grove does not generally support the idea that permanent assistance is needed for the operation of this proposed venture.

12. Therefore if I put aside for the moment the fact that the land is within a water supply catchment, the ordinary considerations which would apply in respect of land within a Rural Zone do not support the construction of a second dwelling on the land. However, the site specific disbenefits of the proposal are not so great that they would on their own warrant a refusal of permission. However, if one is to take a more strategic longer term view, development of this intensity over the whole locality would not really be consistent with the purposes of the Zone, and would count against the proposal from this perspective.

13. Turning now to the issue of the appropriateness of the proposal in the context of the water supply catchment.

14. Firstly I accept Dr Van Der Graaf's evidence that the land area, soil types and climate are suitable for the installation of an additional septic tank system and the issue of effluent disposal would not be an issue if it was not for the fact that the land is located within a potable water supply catchment. I also accept that the use of a no all wastes treatment system with disinfection and surface irrigation would result in an even higher standard of outcome when operating to specification.

15. An all waste treatment system is significantly more complex than a conventional septic tank system and would require a higher level of maintenance. Nevertheless, any failure of the system would ordinarily come more quickly to the attention of the land owner than in the case of a septic tank system which is largely out of sight and out of mind. However, I do not believe that this would be true for every type of failure. For example, if the disinfection system failed the failure might not be picked up until the system is inspected or serviced.

16. At what point does the level of human activity and the density of septic tank systems within a catchment lead to unacceptable contamination of the water supply or even an unacceptable risk of contamination of the water supply. The answer is I think unknown to any degree of certainty.

17. Acceptance of this proposal would imply that a density of 1 septic tank system for every 15 ha of privately owned land is acceptable within the catchment.

18. The United States Environment Protection Authority designates areas with septic systems density of 6.7 systems per ha and as regions in which there is a potential for contamination of ground water systems as a result of septic effluent. A study of contamination from septic tank systems near Benalla demonstrated that septic tanks at this density can cause contamination. We do not know what density of septic tanks would inevitably lead to contamination within this catchment. The density proposed is approximately half that used by the USEPA as its criterion. Is a safety margin of two satisfactory within a portable water supply catchment.

19. In application for review 1999/079077, Alan Hobb v Macedon Ranges Shire Council, I and Mr Quirk concluded in relation to this uncertainty:

1. In the Australian context water generally and palatable(sic) water more particularly is a very valuable resource. One of planning's most important roles is to protect resources so that they can be most effectively utilised for the benefit of the community at large.

2. The unresolvable debate between Dr O'Connor and Dr Van der Graaff demonstrates how difficult it is to establish with any sort of certainty the likely impact of the future use of this land arising from the proposed subdivision will have on the quality of water in the Merrimu catchment. Dr Van der Graaff submits that the lots are sufficiently large, the soil types sufficiently appropriate, and the lots are sufficiently distant from water courses, for the Tribunal to be satisfied that there is a negligible in the risk of contamination. Moreover, the civil engineers propose a system of catchment drains and ponds to intercept and filter all surface runoff whether or not it is contaminated in some way or other. On the other hand the approach adopted by the Minister's interim policy, is much more conservative, While it accepts that land within open portable water catchments will be used, and have reasonable expectation to be used for purposes consistent with the Zone, the policy nevertheless focuses on limiting the extent to which land within such catchments are used for residential purposes.

3. It is our view that having regard to the importance of the resource, the conservative approach of the Interim Guidelines is the most appropriate approach. It is not really a matter of being sure that in some way the proposed septic tank system is functioning adequately, in a more general sense the subdivision will result in a significant increase in human activity within the catchment area and this must lead to an increase in risk. The proposed increase in activity is not really associated with the continued rural use of the land in accordance with the purposes of the Zone and therefore it seems difficult to justify the additional risk involved, however slight it may be. ...

20. In many respects the issues in this appeal relate to fundamental planning questions, that is the appropriate and sustainable use of land having regard to the present and future needs of the community. These fundamental issues find expression in the objectives of planning in Victoria setting out in Section 4 of the Planning and Environment Act 1987:

(1) The objectives of planning in Victoria are--

(a) to provide for the fair, orderly, economic and sustainable use, and development of land;

(b) to provide for the protection of natural and man-made resources and the maintenance of ecological processes and genetic diversity;

(g) to balance the present and future interests of all Victorians.

21. Ms Bannister urged the Tribunal to take a precautionary approach to its decision in this application for review. In my view the proposal while not being totally inimical from the perspective of the Zone, is not generally supported by the Zone provisions. This factor and the inherent uncertainty in relation to the risk associated with the ongoing development of the catchment at the intensity implicit in this proposal support the adoption of the precautionary approach advocated by Ms Bannister.

22. While it follows from the above conclusion that I will not directing the grant of a permit for a second dwelling on the land, it is my understanding that it is the permit applicant's intention to construct the new dwelling whatever the outcome of this application, even if it is dependent on the removal of the existing dwelling. In this context I think it is appropriate to comment upon the only other issue raised in the application for review, and that is the siting of the dwelling and its impact on the landscape values of the locality.

23. On inspection it is apparent that the proposed house site is slightly down-slope from the peak of a hill or ridge on which there is a substantial group of Cyprus trees. It is my opinion that any two storey house in the proposed location would be set against the back drop of these trees, and therefore would not be seen against the skyline. It is my observation that this is a successful approach to the siting of dwellings in locations such as this. The new dwelling is afforded attractive views, while not being unattractively intrusive in the landscape. I can see no reason why the permit applicant should not be able to replace the existing dwelling with a new two storey dwelling on the site proposed in this application for a second dwelling.