APPEALED FROM: In the matter of Appeal No C969010 against the decision of Dorset Council [2010] TASRMPAT 171

Real Property - Strata title - Creation of strata title - Approval of subdivision in strata - Council approval - Whether power to approve conditionally.

Strata Titles Act 1998 (Tas), s31.

Judgment Number: [2011] TASSC 7

DORSET COUNCIL v RESOURCE MANAGEMENT AND PLANNING APPEAL TRIBUNAL

1 This appeal concerns a proposal to divide a property at Tomahawk into two lots by registering a strata plan. The property belongs to a couple named Donachie. There are two buildings on the property. One of the buildings is used by the Donachies as a holiday home. For some years, the other building has been used as a holiday home by friends of theirs, Maria Elana Hawksley and Mark Wayne Hawksley. The Donachies wish to register a strata plan so that they can sell the second building to the Hawksleys. The registration of a strata plan requires "a certificate of approval issued by the council for the area in which the site is situated": Strata Titles Act 1998 ("the Act"), s6(1A). The Dorset Council refused to issue a certificate of approval. Mr and Mrs Hawksley appealed to the Resource Management and Planning Appeal Tribunal ("the tribunal"), pursuant to the Act, s144(1)(b). The tribunal decided to grant the necessary approval. The Council is aggrieved by that decision, and has appealed to this Court.

2 The tribunal and the Donachies filed notices of submission pursuant to the Supreme Court Rules 2000, r777G. The Hawksleys were represented by counsel at the hearing of the appeal.

3 The Council contends that the tribunal's decision contained errors of law in two respects:

• In the proceedings before the tribunal, the Council argued that a change of use was proposed; that the statutory requirements relating to a change of use had not been satisfied; and that approval should therefore be refused. The tribunal held that no change of use was proposed. The Council contends that it thereby erred in law.

• The Council submitted to the tribunal that it could and should attach certain conditions to any grant of approval. The tribunal held that it had no power to grant approval conditionally. The Council contends that the tribunal thereby erred in law.

4 Counsel for the Hawksleys submitted that the tribunal did not make any appealable error.

5 The applicable planning scheme is the Dorset Planning Scheme 1996. Both of the relevant buildings were erected before the commencement of that planning scheme. There is a dispute as to whether the building that the Hawksleys want to buy is intended to be used by them as a "House" or as "Tourist Accommodation" within the meaning of the planning scheme.

6 If their proposal involves a change of use, then approval should not have been granted because of the Act, s31(3)(a) and (c). Section 31 is set out in full later in these reasons. Under s31(3)(a), before the Council issues a certificate of approval, it must satisfy itself that any requirements of the planning scheme have been complied with. Under the terms of the planning scheme, a change of use requires a permit under the Land Use Planning and Approvals Act 1993 ("the LUPA Act"), s57, but no such permit has been sought or granted. Under s31(3)(c), if the proposal relates to an existing building for which a change of use is proposed, the Council is also required to satisfy itself that there has been compliance with the requirements of the Building Act 2000. Because of these provisions, it is clear that the tribunal was obliged to refuse approval if a change of use was proposed.

7 The Council contends that the building that the Hawksleys want to buy has been used as "Tourist Accommodation", but that its proposed use is as a "House". The Hawksleys contend that no change of use is proposed; that the present use of the building is as "Tourist Accommodation"; and that its proposed use is the same.

8 In cl 7.1 of the planning scheme, the two relevant use classes are defined as follows:

"House

Any building used or intended for use for the purposes of a residence but does not include a multi-unit dwelling, aged persons accommodation or residential building.

...

Tourist Accommodation

Any land used for the purpose of providing accommodation for tourists or persons engaged in recreational pursuits and includes guest houses, host farms, motels, holiday cabins, camping areas, hostels and caravan parks but does not include a Hotel."

9 It is significant that "Tourist Accommodation" is defined not just by reference to "accommodation for tourists", but also as by reference to accommodation for "persons engaged in recreational pursuits". Counsel for the Hawksleys argued to the effect that the owner of a shack or holiday home who uses it for accommodation when engaging in recreational pursuits would fall within the scope of the definition. I disagree. Reading the definition as a whole, I think it is reasonable to infer that it relates to premises where accommodation is provided at a cost to members of the public, as distinct from private accommodation. Consistently with that interpretation, a shack or a holiday home should be categorised as a "House". The word "House" is defined by use of the word "residence", but it does not stretch the language too far to regard a shack or a holiday home as a secondary residence.

10 If one's principal residence were to constitute a "House" but one's shack or holiday home were to constitute "Tourist Accommodation", difficult questions and absurd situations could arise when individuals make a gradual transition whereby the shack or holiday home eventually takes on the role of a principal residence. At some undefined point in that transition, there would need to be an application to the council for a permit under the LUPA Act, s57. An application that was made too early in the process of transition would have to be refused. A property owner could be prosecuted if his or her holiday home had taken on the characteristics of a principal residence earlier than he or she thought. Having regard to the consequences of the interpretation suggested by counsel for the Hawksleys, I think it preferable to regard the definition of "Tourist Accommodation" as not including shacks and holiday homes that are not let out to members of the public.

11 In 2004, the Donachies obtained a permit under the LUPA Act, s57, for the use of the building in question as "Tourist Accommodation" as defined in the planning scheme. There was evidence, which the tribunal accepted, that the Donachies let the building out for tourist accommodation, but grew tired of the consequent responsibilities. There was evidence that the Hawksleys had been paying them rent for the "holiday letting" of the building. The tribunal had unchallenged evidence from Mrs Hawksley that it was intended in future to use the building only for family holidays.

12 The tribunal concluded that no change of use was proposed, on the basis that both the past and proposed uses of the property were as "Tourist Accommodation". At par[28] of its reasons, it said the following:

"28 The Council contends that use as a 'shack' is use as a dwelling and not tourist accommodation. This is a matter of interpretation. The tourist accommodation use class incorporates recreational use of the land and does not require that the user should be someone other than the owner. There is nothing in the description that requires a separation of ownership the emphasis being upon the nature of the use and its recreational features. To be a tourist is merely to be a visitor to a place who is away from his or her place of permanent residence. The proposed holiday use constitutes a continuation of the use for tourist accommodation, or use for recreational purposes. The evidence demonstrates that it is intended that the land will continue to be used by the owners as persons engaged in recreational pursuits as visitors to the area. Nothing is changed except that the 'visitor' will have title to the property. The Appellants concede that if the use became permanent, in the sense that it involved occupation for most of the time that a change of use would occur and a permit be required."

13 In my view this reasoning involved an error of law as to the scope of the definition of "Tourist Accommodation". A change of use was proposed. The intended use of the property was as a "House" within the meaning of the planning scheme. Since no permit for that change of use had been obtained, the Council was obliged by s31(3)(a) not to approve the strata plan. This appeal must succeed on that basis. The decision of the tribunal must be set aside, and the decision of the Council restored.

14 In the proceedings before the tribunal, the Council contended that a certificate of approval should be granted, subject to the following conditions:

"1 it is issued in respect of the strata application as evidenced by the plans prepared by the surveyor dated 3 February 2010;

2 prior to the issue of a strata title, an approved aerated wastewater treatment system (AWTS) is to be installed and contained within each lot. To avoid confusion, there will need to be a separate application for an AWTS on each lot and approval for such AWTS in accordance with the provisions of the Building Act 2000 and the plumbing regulations;

3 there must be installed on each lot a separate water supply and storage system to the satisfaction of the council;

4 the body corporate rules and by-laws pursuant to the Act must contain a provision which restricts the use of lot 1 to short term accommodation only;

5 each lot is to be provided with its own separate underground power supply to the satisfaction of the council."

15 As a result of certain evidence given before the tribunal, the Council did not press for the third of these conditions. The tribunal concluded that the Act did not confer any power to impose conditions when granting a certificate of approval, and therefore granted the certificate unconditionally. Although the Act is silent as to whether such a certificate may be granted conditionally, the appellant contends that that is the case, and that the tribunal erred in law in holding otherwise.

16 I think it is desirable to consider the wording of the whole of s31 in relation to this issue. The section reads as follows:

"31 Application for, and grant of, certificate of approval

(1) Before a proposal for which a council's certificate of approval is required is registered or otherwise carried into effect, the applicant must apply to the council for the area in which the site (or proposed site) is situated for a certificate of approval.

(2) The application must be accompanied by -

(a) any sketches, plans or models necessary for a proper understanding of the proposal; and

(3) Before issuing a certificate of approval, the council must satisfy itself -

(a) that any requirements of a planning scheme under the Land Use Planning and Approvals Act 1993 have been complied with; and

(b) if the proposal involves building work, that certificates for the relevant buildings have been issued under the Building Act 2000; and

(c) if the proposal relates to an existing building for which a change of use is proposed, that all requirements under the Building Act 2000 for a change of use have been complied with and that there has been substantial compliance with all other requirements under that Act relating to the scheme and to any buildings existing at the date of the application and in particular with -

(i) any safety requirements, including provision for fire exits; and

(d) if the proposal relates to a lot without a building, that the proposal is capable of being carried into effect.

(4) If the council refuses an application for a certificate of approval, the council must return any sketches, plans and models submitted by the applicant.

(5) Where a permit for use or development is required, under the relevant planning scheme approved under the Land Use Planning and Approvals Act 1993, for the proposed use of the lots, a certificate of approval may be issued only if -

(b) any separation of buildings would not contravene that planning scheme.

(6) A council must refuse an application for a certificate of approval if the council reasonably considers that the proposal is for a subdivision within the meaning of Part 3 of the Local Government (Building and Miscellaneous Provisions) Act 1993."

17 Counsel for the Hawksleys submitted that Parliament did not intend s31 to confer any discretion on a council at all. He argued to the effect that it was the role of a council to determine whether there had been compliance with the requirements of s31(3) and (5); to refuse approval if those provisions were not satisfied in some respect; to refuse approval under s31(6) if it considered the proposal was really one for a "subdivision"; and otherwise to grant approval. That is to say, he argued that a council has an implied obligation to grant approval whenever there is no statutory requirement for it not to do so.

• A council is a democratically elected body. Under the Local Government Act 1993, s20(1), its functions include representing and promoting the interests of the community, and providing for the peace, order and good government of the municipal area. Ordinarily therefore, when a statute gives a council a power to do something, one would expect that the council is given a discretion to act or to refuse to act, as it thinks fit, having regard to the interests of the community.

• The notion of approval implies the making of a value judgment, rather than the making of an assessment as to whether the law has been complied with in certain respects. The Act provides for certificates of approval, not certificates of compliance.

• When a statute requires that an approval be refused in certain circumstances, it does not follow that the statute requires approval otherwise to be given. The Bankruptcy Act 1890 (UK), s3(9), required a court, in certain circumstances, to refuse to approve a scheme of arrangement unless a certain sum in the pound was secured. That was held by the English Court of Appeal not to mean that the court was obliged to approve the scheme if that amount was secured: In re Burr; ex parte Board of Trade [1892] 2 QB 467.

• If Parliament had intended a council to be obliged to give approval in certain circumstances, it could have said so in clear language, as the Queensland Parliament apparently did in similar legislation: Romacourt Pty Ltd v Gold Coast City Council [1984] 1 Qd R 632.

19 Counsel for the Council referred me to a series of authorities concerning the power of statutory authorities to impose conditions when exercising statutory powers: Johns v Australian Securities Commission [1993] HCA 56; (1993) 178 CLR 408, at 428 - 429 (Brennan J) and 469 - 470 (McHugh J); Country Roads Board v Neale Ads Pty Ltd [1930] HCA 5; (1930) 43 CLR 126 at 134 - 135; Taylor v Tweed Shire Council (1977) 34 LGRA 154 at 160; North Sydney Council v Michael Standley & Associates Pty Ltd [1998] NSWSC 163; (1998) 43 NSWLR 468 at 475 - 476; Southern Pacific Co v Olympian Dredging Co [1922] USSC 167; 260 US 205 (1922); 1643 Pittwater Road Pty Ltd v Pittwater Council [2004] NSWLEC 685.

20 In Johns, at 469 - 470, McHugh J summarised the relevant principles very well in the following passage:

"The scope of a statutory power is ascertained 'by the character of the statute and the nature of the provisions it contains' (Morton v Union Steamship Co of New Zealand Ltd [1951] HCA 42; (1951) 83 CLR 402 at 410). When the exercise of a power is left to the discretion of some person, the scope for implementing the power is fettered only by the necessity to maintain consistency with the purpose or purposes of the legislation. Consequently, the repository of the power may impose conditions on those affected by the exercise of the power as long as the conditions are not inconsistent with the purpose for which the power is granted."

21 In my view, when one considers the statutory context of the power conferred on a council to grant a certificate of approval for a strata plan, there are good reasons for concluding that a council does not have the power to impose conditions requiring things to be done after the issue of the certificate.

22 The issue of a council's certificate of approval is one of the last steps that needs to be taken before a strata plan is registered. Under the Act, s6, a strata plan, when lodged with the Recorder of Titles for registration, must be endorsed with the certificate of approval and accompanied by all the relevant certificates of title, any other documents required by the Recorder, and the prescribed fee. Under s6(3), the Recorder must register the plan if she is satisfied that the requirements for registration have been complied with. If a developer's documents are in order, lodgement and registration are the next steps after the issue of the council's certificate of approval. As soon as the strata plan is registered, the Recorder is required by s8(2)(a) to create new folios in the Register for each of the lots created by the strata plan. If there have been sales "off the plan", transfers could be registered almost immediately, and the transferees would get indefeasible titles: Land Titles Act 1980, s40. There is no statutory mechanism whereby a condition attached to a certificate of approval can be made binding upon an owner's successors in title.

23 Having regard to the character of the Act and the nature of the provisions it contains, I think Parliament must have intended a certificate of approval to be something like a green light, telling a developer or a proponent for the registration of a strata plan that, subject to any formal requirements of the Recorder of Titles, the plan may proceed to registration. Such an interpretation will not leave councils powerless. Since they have a discretion to grant or withhold approval, I do not see any reason why a council may not, in an appropriate case, withhold approval until certain things are done. For example, if a council were to decide that each lot in a proposed strata plan should have its own wastewater treatment system, approval could be withheld until the necessary works were completed to the satisfaction of the council.

24 For these reasons, I conclude that a council does not have the power to impose conditions when granting a certificate of approval for a strata plan. The grounds of appeal relating to this issue must fail.

25 Because of the error of the tribunal as to the proposed change of use, I order that the appeal be allowed; that the decision of the tribunal be set aside; and that the decision of the Council to refuse to issue a certificate of approval be affirmed.