[2003] VCAT 1319

The decision of the Responsible Authority in relation to Planning Permit Application No. 971/2000 is affirmed.

It is directed that a permit must not be granted to subdivide the land at 33 Ormond Esplanade, Elwood into two lots.

Dr Leo Teller appeared on his own behalf and on behalf of a number of other objectors, as set out in a list attached to his written submission. Leave was also granted to some of those persons to make individual submission, namely; Mr W. Hill, Ms C. Jones and Mr M. Cassar.

In addition, Ms P. Liew appeared on her own and her husband's behalf.

Mr John Carey, Solicitor with Minter Elllison Lawyers

1. This was an application under Section 77 of the Planning and Environment Act 1987 (the Act) for review of a decision by Port Phillip City Council to refuse to grant a permit (in Permit Application No. 871/2000) to subdivide the land at 33 Ormond Esplanade, Elwood into two lots.

2. The subject land, which is irregular in shape and has a frontage of 27.15m to Ormond Esplanade and an area of approximately 1,560 sq m, is located one property to the south of the corner of Normandy Road and Ormond Esplanade.

3. A substantial two storey dwelling occupies the southern part of the land. This dwelling is currently leased out as five separate tenancies, three of which were referred to as "bedsits" with one of these being an outbuilding located in the north-eastern corner of the site.

4. The land is burdened by a restrictive covenant dating from 1916. This covenant promises "that not more than one detached private dwelling house or not more than two semi-detached dwelling houses shall be erected on the land". The beneficiaries of the covenant include most of the dwellings fronting Normandy Road. It is clear that in a few cases, most notably at 33 Normandy Road which abuts the land to its north-east, the option of two semi-detached dwellings has been availed of. However most contain single dwellings.

5. The subject land is zoned Residential 1 under the Port Phillip Planning Scheme. It is also included in a Heritage Overlay, the Heritage Place being HO8 - Elwood - Glenhuntly Road, Ormond Road.

6. The land is also located within the Design and Development Overlay Schedule 7. However this overlay has no effect in relation to this proposal.

7. Pursuant to Clause 32.01-2 of the Scheme a permit is required to subdivide land in the Residential 1 Zone. Such applications are exempt from the notice requirements of Section 52(1)(a), (b) and (d), as well as the Act's third party review rights. Before deciding on such applications the Responsible Authority must consider, as appropriate, the objectives and standards of Clause 56 (ResCode Residential Subdivision provisions). There is an exception to this. If the application is to subdivide land into lots each containing an existing dwelling, Clause 56 does not apply. In the subject case Lot 1 is proposed to contain what Mr Carey described as a bedsit which at present occupies the ground floor, north-western corner of the existing dwelling. In a strict sense therefore it could be argued, as suggested by Mr Carey, that the discretion to grant a permit is not fettered by the requirement at Clause 56, that a subdivision "should meet" all of the objectives and standards of that clause.

8. Pursuant to Clause 43.01-1 of the Scheme a permit is required to subdivide land within a Heritage Overlay area. Such applications are not exempt from the notice requirements or third party review rights of the Act.

9. The proposed plan of subdivision shows the land divided into two lots with Lot 2 containing the majority of the existing dwelling and having a frontage of 13.68m. Lot 1 would comprise the northern part of the allotment and have a frontage of 13.47m. As already noted, it would include one of the current bedsit dwellings, as well as the outbuilding presently leased as a bedsit.

10. Mr Carey advised that the purpose of the subdivision is to enable the separate disposal of both parcels of land with Lot 1 retaining the option of being developed with a semi-detached dwelling to be attached, primarily, along what is shown as an "M" line on the plan, although there appears to be no reason also why a wall would not be attached elsewhere where the current external wall and windows form the allotment boundary.

11. The existing dwelling on Lot 2 would likely remain unless a permit was to be granted for its demolition and/or re-development under the Heritage Overlay and single dwelling provisions of the Scheme. The existing building is identified in the Port Phillip Heritage Review as a building with contributory significance to the Heritage Overlay area. By contrast, No. 31 Ormond Esplanade, the building next door to the north and located on the corner of Normandy Road, is shown as a "significant" building. This latter dwelling is also burdened by the same, or a similar, single dwelling or two semi-detached dwellings, restrictive covenant. I was advised that following a recent VCAT decision requiring the building's retention, No. 31 is being re-developed for two dwellings. The new dwelling is to be attached to the original dwelling's north-eastern side. This will ensure that the resultant structure comprises two "semi-detached" dwellings, consistent with the covenant.

12. The principal issue in this application was whether the subdivision is premature, in the absence of any detailed proposal for the future redevelopment of proposed Lot 1.

13. It was submitted by Mr Cicero that, given the special circumstances of a Heritage Overlay and a "semi-detached" dwellings covenant, it would be a "piecemeal" planning approach to sanction the land's subdivision without a proper understanding of whether or how Lot 1 might be able to be further developed, consistent with the zone, overlay and covenant requirements. Any future dwelling on Lot 1 would have to be a semi-detached structure in order that it not breach the covenant. At the same time it would have to be found to achieve the outcomes sought under the Scheme's heritage controls as well as meeting the single dwelling requirements of Clause 54.

14. In Mr Cicero's submission the redevelopment of No. 31 Ormond Esplanade had raised the question of how much "attachment" is required in order that a second dwelling can fall within the terms of this particular covenant. A similar issue could be raised here. Importantly, Section 61(4) of the Act provides that a responsible authority must refuse to grant a permit that might authorise anything that would result in the breach of a registered restricted covenant, unless a permit has issued or a decision made to grant a permit to allow the removal or variation of the covenant.

15. Mr Cicero referred me to the decision of the Tribunal in Max Chester v Banyule City Council VCAT 167 [2003]. This case also involved the subdivision of land affected by a restrictive covenant. In the course of that proceeding a question of law had been referred to Deputy President Horsfall who held that the subdivision would not breach the covenant, per se, but that in effect the desired future uses of the land would be a breach of that covenant.

16. The Tribunal Member constituted to hear the application, Member Eccles, went on to hold that:

"given the provisions of the covenant, to all intents and purposes the subdivision, if approved, would result in the creation of a lot which was incapable of being developed. In determining this application to subdivide I am required to consider pursuant to Clause 32.01-2, inter alia, the decision guidelines at Clause 65 of the Banyule Planning Scheme. Clause 65 (sic) the matters set out in Clause 65.02 include `the existing use and possible future development of the land and nearby land'. That the proposed new lot would be, to all intents and purposes incapable of being developed without breaching the covenant is therefore a relevant consideration. It would not be orderly and proper planning to create such a lot. I have therefore not allowed Application for Review P1802/2002."

17. The subject application can be distinguished from the Chester case because the development of Lot 1 with a semi-detached dwelling would not constitute a breach of the covenant. What is at issue however is whether, in the absence of actual plans for redevelopment it is open to find that the proposed subdivision would not unduly compromise or prejudice the redevelopment of Lot 2 having regard to the complexity of the planning and covenant constraints that apply to the land.

18. The respondent objectors were likewise concerned at the prospect of this land's future redevelopment and in particular the extent to which approval of this subdivision might provide a stepping stone to a future variation of the covenant, of which many of them are beneficiaries.

19. Mr Teller referred in particular to the provisions of the Act requiring notice to be given to all beneficiaries of a covenant that is proposed to be varied, noting that if a breach of the covenant were to occur as a result of the grant of this permit then such persons should be given an opportunity to be heard. He expressed doubt as to whether the bedsit, so called, that is to be transferred into Lot 1 could be described as being semi-detached to the existing dwelling. In his submission it was more integrated with the main dwelling than the term "semi-detached" allowed.

20. Dr Teller referred also to the current five tenancy occupation of the existing dwelling, submitting that this already appeared to be in breach of the covenant. In his submission this was a relevant matter for the Tribunal to have regard to.

21. Dr Teller also expressed concern at the prospect of additional traffic and parking that might be generated by a further allotment, especially in view of the fact that the existing dwelling appears to be housing five households. In his submission the site's proximity to the Bay meant that parking is already at a premium in this area, particularly in the warmer months.

22. Dr Teller noted also that the proposed subdivisional layout cuts off vehicular access to the exiting dwelling's side garage. Accordingly a new crossover to service the existing dwelling would be required to be provided off Ormond Esplanade. Because the southern side setback is not wide enough to allow for a driveway along that side of the land, the implication is that any future garage or carport would be required to be located within the front garden setback. This could compromise the cultural significance of the existing building.

23. The primary contention put by Mr Carey was that any future development of Lot 1 would not be so unduly constrained as to warrant deferral of a permit for subdivision pending preparation of a detailed design for Lot 1's future redevelopment.

24. In his submission, any future development would provide a trigger for assessment against the provisions of the Heritage Overlay and the objectives and standards of Clause 54, including meeting the objectives for neighbourhood character, building height, overlooking and car parking. This he contended was security enough against inappropriate development. He also advised that his client was prepared to take the risk of the Council refusing to grant a permit on the grounds of ResCode and/or the heritage provision outcomes not being met or of the covenant being breached.

25. In Mr Carey's submission the proposed subdivisional layout was such that it enabled the construction of a semi-detached dwelling, consistent with the covenant. In his submission also the side by side lot layout would preclude any new development being forced to sit forward of and thereby denying views of the existing building. Accordingly the contributory significance of the existing building need not be compromised.

26. Notwithstanding Mr Carey's assurances to the contrary I am not persuaded that a permit should be granted. Put simply, I find that I was provided with insufficient evidence to demonstrate that this proposed subdivisional layout could indeed enable an appropriate redevelopment outcome. That is to say, an outcome that would not unduly compromise the liveability and cultural significance of the existing dwelling and at the same time not breach the covenant.

27. As already noted in the extract from the Chester's, case one of the matters required to be considered pursuant to Clause 65.02, when deciding whether to grant a permit to subdivide land, is "the existing use and possible future development of the land and nearby land". My principal concerns are that this proposed subdivision eliminates a primary, north facing window in the existing dwelling, makes no provision for off-street parking for Lot 2 - without running the risk of compromising the heritage values of the existing dwelling - and results in part of the existing building's roof line being located across the lot boundary. This latter issue would have implications for the building's architectural integrity if fire separation requirements for walls on boundaries were to be met under the Building Act.

28. It seems to me that to approve this particular subdivisional layout would indeed constitute a piecemeal approach to this land's future development and would seriously compromise decision making in relation to that future development.

29. Mr Carey's submission that his client would be prepared to take the risk of a future refusal of permit is not, I find, an appropriate or useful argument to put. What if his client is not the future owner of this land or what if, failing the grant of a permit, his client determines to sell the land to someone else? Should not that person be able to have a reasonable expectation that the subdivisional layout would enable Lot 2's future development with something other than the existing bedsit?

30. My inspection of this bedsit revealed a very poorly laid out set of three small interlinked spaces that I would have great difficulty in describing as a well designed dwelling. There are certainly no proper kitchen facilities and I regard the fact of entry directly into what might be described as a bedroom - albeit that it is really not big enough to accommodate even a single bed - as undesirable. I agree with Dr Teller that the singling out of this part of the existing dwelling, in order that under the covenant it may be described as a semi-detached dwelling, has more the appearance of a contrivance to bridge the gap between the exiting dwelling and Lot 1, than an appropriate residential outcome. And although my decision does not turn on this, I have serious reservations that such a set of rooms, integral to the existing dwelling, could be described as a "semi-detached" dwelling. "Embedded" might be a more apt description.

31. Whilst this application can be distinguished from Chester's case - because redevelopment following subdivision would not necessarily result in a breach of the covenant - redevelopment following subdivision is significantly constrained.

32. As subdivision applications go, this is an unusual case. In most instances the dimensions and layout of two such lots in a neighbourhood of this sort and even in the context with the applicable Planning Policy Framework for Elwood - with its emphasis on family sized dwellings - would be unremarkable. However, given the competing constraints of the covenant, the resultant loss of liveability and parking for the main dwelling and the implications of any consequent redevelopment on the cultural significance of this building, I find, without a clearer understanding of how all these issues could be addressed in concert, that it would be premature to grant a permit for subdivision at this stage.