Application of section 18(1A) Subdivision Act 1988 to a subdivision when an amount is specified in the schedule to clause 52.01 of the planning scheme - case remitted to Tribunal following decision of Court of Appeal in Maroondah City Council v Fletcher and Minister for Planning [2009] VSCA 250

This proceeding has been remitted to the Tribunal following the successful appeal to the Court of Appeal by the council from an earlier decision by the then President of the Tribunal, Justice Morris in Fletcher v Maroondah SC [2006] VCAT 2205. The case involved the subdivision of two lots into three lots by way of 2 x 2 lot subdivisions and whether a public open space contribution was payable. In particular, the primary issue on the appeal was whether s 18(1A) of the Subdivision Act 1988 applied to the public open space specification in clause 52.01 of the planning scheme.

For reasons substantially different from those of the Tribunal, the majority of the Court of Appeal, Warren CJ and Osborn AJA, reached the same conclusion as the Tribunal and held that clause 52.01 must be read as subject to the limitations contained in section 18(1A). Redlich AJ held that the operation of this clause was not so confined.

Being bound by the majority decision, this latest decision applies the factors set out in paragraphs (a) - (f) of section 18(1A) to conclude that there will be a need for more open space as a result of the three lot subdivision. Accordingly, a public open space contribution is required under clause 52.01 of the planning scheme. However, if the planning scheme has fixed the level of public open space contribution in clause 52.01, there is no power to vary or reduce it in the event that section 18(1A) applies.

Clause 52.01 - public open space contribution - application of section 18(1A) Subdivision Act 1988

Fletcher v Maroondah CC (includes Summary) (Red Dot) [2010] VCAT 670

1. The decision of the Responsible Authority is varied.
2. Condition 6 in permit no. M/2005/921is varied to read as follows:

[6] The applicant or owner must pay to the council a sum equivalent to 5% of the site value of all land in the subdivision. This payment shall be made prior to the issue of a Statement of Compliance and may be adjusted in accordance with Section 19 of the Subdivision Act.

1. A new condition is included in permit no. M/2005/921 as follows:

The subdivision may be carried out in two stages to the satisfaction of the Responsible Authority.

1. The Responsible Authority is directed to issue a modified permit in accordance with this order.

Mr Simon Merrigan, town planner, of Miller and Merrigan.

1. This proceeding has been remitted to the Tribunal following the successful appeal to the Court of Appeal by the council from an earlier decision by the then President of the Tribunal, Justice Morris[1].
2. The case concerns a subdivision of two existing lots, each of which contains a dwelling, into a total of three lots. Two of the lots contain an existing dwelling and there is one vacant lot. The subdivision has been undertaken in stages, each involving a two lot subdivision.
3. The planning permit[2] allows:

Variation of the easement and variation of the covenant to enable subdivision of the two existing lots into three lots.

1. The permit contains a condition requiring payment of a 5% public open space contribution.[3] The application for review of this condition[4] claimed that this condition is contrary to the exemption in clause 52.01 of the Maroondah Planning Scheme, which provides that:

Subdivision is exempt from a public open space requirement, in accordance with Section 18(8) of the Subdivision Act 1988, if

• It subdivides land into two lots and the council considers it unlikely that each lot will be further subdivided.

1. Justice Morris agreed with the applicant and deleted condition 6 from the permit. The Court of Appeal[5] set aside the Tribunal's order and the application for review was remitted for rehearing in accordance with law and by a differently constituted Tribunal to consider two issues:
   • The disjunction between the subdivision applied for (a 2 x 2 lot staged subdivision) and that permitted by council (permit for a 3 lot subdivision).
   • The application of the provisions of section 18(1A) of the Subdivision Act 1988 to this subdivision.
2. With respect to the application of section 18(1A), I consider there are two aspects to resolve:
   • Whether, on the facts of the case, as a result of the subdivision there will be a need for more open space having regard to the factors set out in sub paragraphs (a) - (f).
   • If there will be a need for more open space, whether the 5% public open space contribution specified in the schedule to clause 52.01 must be applied or whether there is discretion to reduce the amount.

1. The court of appeal decision was not unanimous. The majority decision was delivered by Warren CJ and Osborn AJA. The minority decision was delivered by Redlich JA.
2. I am bound by the majority decision. However, the difference of opinion between the majority and minority decisions about the application of section 18(1A) to a public open space contribution specified in the schedule to clause 52.01 raises issues of significance about the operation of the public open space provisions of planning schemes, the Planning and Environment Act 1987 and the Subdivision Act 1988, which need to be properly resolved by the Government by way of legislation, if necessary.
3. The decision of Redlich JA reflects the commonly held view that if an amount is specified in the schedule to clause 52.01, then contribution of this amount is mandatory and there is no discretion to either vary the amount or dispense with it having regard to the factors set out in section 18(1A).
4. The basis of the appeal and the disparity between the majority and minority decisions are set out by Redlich JA at paragraphs [124]-[130] of the Court of Appeal decision. It is not necessary for me to recount them in detail. In essence, as Redlich JA said:

[127] The primary issue on the appeal was whether s 18(1A) of the Subdivision Act applied to the POS specification in clause 52.01 of the Scheme. For reasons substantially different from those of the Tribunal, Warren CJ and Osborn AJA reached the same conclusion as the Tribunal that clause 52.01 must be read as subject to the limitations contained in s18(1A). I am unable to agree. In my view the operation of this clause is not to be so confined.

1. The findings by Warren CJ and Osborne AJA were summarised by them as follows:

(a) The limitations upon the power to fix a POS contribution pursuant to s 18(1) had no application to the proposed subdivision before the Tribunal, because it was concerned with a case in which the planning scheme fixed the level of such contributions.

(b) Section 18(1A) did however apply to the proposed subdivision, because it (together with other provisions not expressed to relate to requirements made pursuant to s 18(1)) are of general application to requirements for POS made by municipal councils upon subdivision pursuant to the P&E Act.[46]

(c) In the present case it remains for the Tribunal to determine whether in the terms of s 18(1A) the result of the proposed subdivision would 'be a need for more open space'.

(d) The exemption contained in s 18(8)(c) and repeated in the planning scheme provision also applied, but considered as a staged subdivision this was a case in which the Council was bound to consider at the time of approving stage 1, that one of the lots would be further subdivided.

(e) There is a disjunction between the form of subdivision applied for and that permitted by the Council. This disjunction is a matter for the Tribunal to resolve.

DISJUNCTION BETWEEN SUBDIVISION APPLIED FOR AND PERMIT GRANTED

1. The disjunction that the Court of Appeal identified arose from one of the grounds of appeal, namely whether the Tribunal erred in law in characterising the subdivision authorised by the permit as two x 2 lot subdivisions. On this point, Warren CJ and Osborn AJA said:

[115] It can be seen that in a sense this question agitates the disjunction between the form of the permit application and the terms of the permit granted. The Council's position is that it did not permit two subdivisions, although as we have observed, this is what the owner sought permission for. This disjunction was not squarely addressed and resolved by the Tribunal.

[116] Section 37(2) of the Subdivision Act requires that if a permit authorises a staged subdivision, that subdivision may be effected either as a series of separate subdivisions each in accordance with the provisions of the Act, or by way of the procedure set out in s 37(3)-(10). The latter procedure envisages the creation of sequential plans of subdivision within the framework of a master plan.

[117] In the present case no staged subdivision of the latter sort was ever contemplated. What the owner sought was a permit for two separate sequential subdivisions. What was permitted was one single three lot subdivision. The procedure referred to in s 18(2) and s 37(3)-(10) of the Subdivision Act was not in issue.

[118] It seems to us that the dispute with respect to the nature of the primary permission and its consequences for the application of s 18 should also be remitted to the Tribunal. The question of whether a single three lot subdivision should be permitted or whether two separate staged subdivisions should be permitted, is a question which may involve issues of planning discretion. If the view be taken that the staged subdivision is appropriate then that view could only be reached on the basis that the permit would create a situation where potentially only the first stage of the subdivision occurred and there was a period (currently intended to be only intermediate) in which the original lots were saleable and usable in their initial restructured layout. This stage would allow the smaller lot to be sold off before stage 2 was proceeded with.

[119] If the Tribunal takes the view the Council was correct to permit only a three lot subdivision, then s 18(1A) will fall to be applied to the proposal as a whole. If it takes the view that Council should (responsively to the application) have granted a permit for sequential subdivision of the land in two separate stages, then s 18(1A) will fall to be applied to each of those stages. Section 18(8)(c) of the Subdivision Act will also fall to be applied to each stage. It may be objected procedurally by the Council that the application for review lodged with the Tribunal did not in terms take issue with the language of the permit permission to subdivide. As we have said however the grounds of application were centrally founded on the proposition that the application for permit was for a two stage development of two, two lot subdivisions. The procedural complications in these circumstances also seem to us to be matters which the Tribunal not this Court should resolve.

1. The disjunction issue is not really in contention by the parties before me. Although the permit application and supporting material described the proposal in various ways, I find that the effect of the proposal and the outcome which the permit application sought was accurately described in the covering letter from Miller Merrigan dated 23 September 2005 as a proposal "to subdivide the subject land which consists of two allotments into three (3) allotments." The practical and legal effect of what was proposed is a subdivision resulting in three lots. I find that this proposal should be characterised as a three lot subdivision and that this is what the permit allowed.
2. I further find it was intended to undertake this three lot subdivision in stages. The applicant suggests that the existing permit should be amended to include in what the permit allows, after the words "into three lots", the words "in stages". In my view, it is unnecessary to amend what the permit allows in this way. Rather, a condition may be included in the permit, which provides that the subdivision may be carried out in stages.
3. Section 62(2)(d) of the Planning and Environment Act 1987 provides that a responsible authority (and the Tribunal) may include any condition that it thinks fit including -

(d) a condition that the development is to be carried out in stages over the periods specified in or under the permit;

1. Under the Act, development includes subdivision[6]. The provisions of the Residential 1 Zone require a permit for subdivision: a permit is not required to stage a subdivision. Therefore, any proposal for staging should be included by way of condition rather than in what the permit allows.
2. As a result of this finding and based on what the Court of Appeal has said, section 18(1A) must be applied to the proposal as a whole.

APPLICATION OF SECTION 18(1A)

1. Section 18(1A) of the Subdivision Act 1988 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. I will now consider each of these factors in the context of the facts of the present case.
2. With respect to the existing and proposed use or development of the land, the three lot subdivision will include two existing dwellings and potential for an additional third dwelling. The subdivision will result in increased development for residential purposes.
3. Due to the additional dwelling, there is likely to be a consequential increase in population. As a result, I find it is likely that existing open space will be more intensively used after than before the subdivision.
4. According to figures supplied by the council, average annual growth for Croydon increased between 2001 and 2006 by 0.7%. The population is projected to increase. The creation of an additional household as a result of this subdivision will contribute to an increase in population even though the quantum of the increase is small.
5. Whilst the increase in population density may be so slight as to be inperceptable, nevertheless it will add to the cumulative increase in population, which is projected to occur within the municipality. There is no reason to assume that population density in the area of the subdivision will not also increase cumulatively through the effects of infill development such as this subdivision.
6. There are existing places of public resort and recreation in the neighbourhood of the subdivision as follows:
   • Grandfell Reserve - Bushland reserve located directly opposite the subject land
   • Alto Reserve - Bushland reserve located approximately 250 metres from the subject land.
   • Ainslie Park - Sport reserve located approximately 500 metres from the subject land.
7. No land in the subdivision is set aside for places of public resort and recreation for lot owners[7]. There is no basis for assuming that future residents of the subdivision will not wish to make use of public open space facilities.
8. The council has an open space strategy called Making the Best of Open Space, which it adopted in August 2005. This is a comprehensive assessment of Maroondah's open spaces and needs and it is intended to guide the planning, development and management of the network of public parks, reserves and open space in Maroondah for the next 10 to 15 years, with specific actions for the next 5 years. The strategy recognises the need to provide space for increasing residential densities and to improve existing open space to cater for increased usage and demand. Public open space contributions from subdivision will be used for these purposes.
9. In addition to relevant state planning policies[8], clause 21.06 contains a specific local planning policy on open space. The objectives of this local policy relate to the provision and enhancement of open space. The strategy to achieve the objectives of the local planning policy is to develop an open space strategy and a planning framework to ensure the preservation and enhancement of open space resources in the municipality. The council has done this in part by adoption of its strategy, Making the Best of Open Space. The policy also refers to ensuring that any developments that increase the density of land use contribute to the funding of the open space network via an appropriate amount of open space or monetary contribution. This policy therefore supports the need for more open space, bearing in mind that "more open space" includes enhancement of existing open space.
10. I therefore find that having regard to each of the factors set out in section 18(1A) there will be a need for more open space as a result of the three lot subdivision. Accordingly, I find that a public open space contribution is required under clause 52.01 of the planning scheme.

1. On behalf of the applicant, Mr Merrigan submitted that:

There appears to be no justification for Council's request for a public open space contribution in this case. It is requested that the Tribunal determine that no public open space is required for this subdivision. If the Tribunal determines that a public open space contribution is required the fact that two of the lots contain long standing dwellings must be recognised and any contribution should be limited to the vacant land only. It is noted that this is provided for in the wording of condition of the permit.

1. Once it has been determined under section 18(1A) that, as a result of the subdivision, there will be a need for more open space, I do not consider there is any discretion to reduce the amount of public open space contribution specified in the schedule to clause 52.01.
2. The words of clause 52.01 make no provision for the exercise of any discretion to reduce the amount specified in its schedule. This is unlike section 18(1) of the Subdivision Act 1988, which provides that if a requirement for public open space is not specified in the planning scheme, the council may require public open space contribution (by way of money or land or a combination of both) "not exceeding 5 per cent". These words, "not exceeding 5 per cent", create a discretion to vary the amount. There are no similar words in clause 52.01. Instead, 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". This is a fixed amount.
3. The clause goes on to provide that:

If no amount is specified, a contribution for public open space may still be required under Section 18 of the Subdivision Act 1988.

1. In my view, there would be no purpose in enabling a planning scheme to specify a requirement for public open space if it was subject to exactly the same discretion regarding the amount as section 18(1). The distinction between the two provisions turns on the discretion that exists under section 18(1) and the lack of discretion under clause 52.01.
2. This reflects the view expressed by Warren CJ and Osborn AJA[9] that:

(a) The limitations upon the power to fix a POS contribution pursuant to s 18(1) had no application to the proposed subdivision before the Tribunal, because it was concerned with a case in which the planning scheme fixed the level of such contributions.

1. I therefore find that if the planning scheme has fixed the level of public open space contribution in clause 52.01, there is no power to vary or reduce it in the event that section 18(1A) applies.
2. As a result, I find that condition 6 should not be varied to reduce the amount of 5 per cent, which is the amount specified in the schedule to clause 52.01.
3. The only change that should be made to condition 6 is to remove the words "or a particular lot or lots". These words are contrary to clause 52.01 and should be deleted.

[1] Fletcher v Maroondah SC [2006] VCAT 2205

[2] Permit no. M/2005/921 issued on 13 June 2006

[6] The applicant or owner must pay to the council a sum equivalent to 5% of the site value of all land in the subdivision or a particular lot or lots. This payment shall be made prior to the issue of a Statement of Compliance and may be adjusted in accordance with Section 19 of the Subdivision Act.

[4] Under section 80 of the Planning and Environment Act 1987

[5] Maroondah City Council v Fletcher and Minister for Planning [2009] VSCA 250

[6] Section 3 Planning and Environment Act 1987

[7] I do not consider that paragraph (e) is referring to private open space within individual lots. This is a provision about public open space and I consider it needs to be interpreted in this context.

[8] Clause 12.05 - "A Great Place to Be"; Clause 15.10 - "Open Space"; Clause 19.01 - "Subdivision".

[9] [2009] VSCA 250 at [22]