MEDIUM NEUTRAL CITATION: [2002] VCAT 1751

With respect to planning permit application no. 370/2001/P, the Responsible Authority's decision to grant a permit is set aside. A permit must not be granted.

Mr D Loughnan, Planning Consultant, appeared for the Responsible Authority.

Mr C Griffiths, Planning Consultant, appeared for the applicant for review.

Ms N Bannister, solicitor with Blake Dawson and Waldron appeared for the permit applicants.

1. This was an application under Section 82 of the Planning and Environment Act 1987 against the Responsible Authority's decision to grant a permit with respect to Permit Application No. 70/2001/14P.

2. The permit application seeks permission for the re-subdivision of land known as 340 and 348 Middle Hut Road, Arthurs Creek, into three lots.

3. The permit application was lodged with the Responsible Authority on 8 June 2001. The Responsible Authority wrote to the Permit Applicant and requested further information including a land capability report. After the further information was submitted, the Responsible Authority required notice of the application to be given under Section 52 of the Planning and Environment Act 1987. Three objections were received in response to the notice. Mr Loughnan summarised the grounds of objection as follows in his submission:

* The proposal is contrary to the purposes and aims of the Rural Zone and Clause 22.02 - Small Lot Subdivision Policy of the Nillumbik Planning Scheme.

* Given that two of the three titles are land locked the land has effectively been one property. The Small Lot Subdivision policies intended to allow a once - off excision for an existing dwelling. Both dwellings are located on one title and only one may potentially be excised in this manner.

* The proposal will contribute to the fragmentation of rural land.

* The proposal will erode the rural character of the area.

4. The Responsible Authority's Planning Department also sought comment from the Council's Environmental Health Unit. The Environmental Health Unit advised that it had no concerns with respect to the proposed subdivision subject to the inclusion of standard conditions.

5. Despite receiving a report from its Planning Officer recommending that the application be refused, on the 15 May 2002 the Responsible Authority made its decision to grant a permit subject to conditions.

6. The Application for Review was filed with the Tribunal on 17 July 2002. The grounds of the application are:

* The proposal "is in clear breach of the policy which allows for one lot excision for an existing dwelling". (Council Officer Report 8.5.2002)

* The three lot subdivision proposal is contrary to the purposes and aims of the Rural Zone: -

* The proposal is contrary to the purposes and aims of the Municipal Strategic Statement.

* The proposal undermines the proper future planning of the area.

* The proposal is contrary to orderly planning of the area.

* The proposal will contribute to the fragmentation of rural land.

* The proposal affects long term viability of rural land for agricultural use.

* The proposal will contribute to a negative impact on the environment.

* Furthermore, several important conditions were removed by Councillors from permit conditions prepared by Council Officers, against State and Local policy:-

* Deletion of requirement for land management plan - protection, controls and replanting.

* Deletion of Section 173 requirements re: land management plan.

* Deletion of Section 173 requirements re: future dwellings siting and design.

* Alteration to Section 173 requirement for prohibition of further subdivision by the addition of a sunset clause.

* Deletion of requirements for relocation of buildings, minor boundary adjustment from presented proposal and new access point.

* The proposal as currently approved by Council is contrary to State Planning Policy Framework Clause 15.01-2 projection of waterways, ground water and catchments.

* Even if prepared by Council Officers, the condition requiring a land management plan (deleted by Council) did not provide for protection of waterways and the natural drainage corridors in the waterway, gully and catchment areas of the land, in accordance with Clause 15.01-2.

7. The Permit Applicants, Mr and Mrs Bond, rely on the following grounds in contesting the Application for Review.

1. The proposal is consistent with the purposes and aims of the Rural Zone, small lot subdivision policy (Clause 22.02), the Municipal Strategic Statement and the State Planning Policy Framework;

2. The proposal ensures the long term viability of the land for agricultural use;

3. The proposal protects against the fragmentation of rural land;

4. The proposal is sympathetic to the rural landscape and environment;

5. The proposal is consistent with the proper future planning of the area;

6. The proposal contributes to the orderly planning of the area;

7. The conditions imposed by Council are appropriate.

8. Ms Bannister set out the following useful description of the subject land locality in her submission:

"The site consists of three separate lots with a combined area of 72.87 hectares. These lots are 32.38, 32.38 and 8.11 hectares in area. The property is cleared of most vegetation and has been used for grazing of livestock for many years. The back eastern block of the property (existing Crown Allotment 31) retains some good stands of Yellow Box and Stringy Bark Eucalyptus. This back block is the smallest block, with an area of 8.11 ha.

There are two existing dwellings on the property. The first dwelling was built circa 1980 after the Bonds bought the property in 1978. This is currently the main homestead and there are a number of farm buildings located behind the homestead. The second dwelling was built in 1996. This second dwelling was approved by the former City of Whittlesea as a caretaker's house.

The land is undulating and there are a number of watercourses which cross the property. There are some 15 small dams across the property (8 of which are shown on the plan of feature survey). There is also a creek which runs diagonally across the rear portion of the site from northwest to southeast.

Access to the property is from Middle Hut Road, which is a gravel road maintained in good condition. Electricity and telephone services are available. The dwellings obtained their water supply from an extensive tank system and dispose of their wastewater into a septic tank system.

The surrounding land is predominantly cleared and used for grazing purposes. However there are also a number of residential developments in the surrounding area. There is a major subdivision being built nearby, to the west Yan-Yean Road (which is within the Shire of Whittlesea). The Township of Nutfield and a row of rural residential properties on Arthurs Creek Road a located to the north-east of the land."

9. In addition to the above I note that the middle and rear lots have their frontage to an unmade government road which extends from Chapel Lane. Mr Loughnan said that the Responsible Authority's Infrastructure Development Branch has advised that the Council would not construct this road.

10. Ms Bannister also set out the details of the proposal as follows:

"The proposal includes the re-subdivision of the three existing crown allotments into three new lots. This would create two new lots, each of which contain one of the existing dwellings, and which have an area of 1.918 ha and 1.897 ha respectively. The third lot would contain the balance of the farmland and be 69.058 hectares in area.

The third lot contains a building envelope which is shown as the "proposed house site" on the plan of feature survey. The building envelope is approximately 100 meters square and located 350 metres from Middle Hut Road. It is also approximately 100 metres from the northern boundary and 190 metres from the southern boundary of Lot 3.

There is an existing gravelled vehicle track which runs diagonally through the property to the building envelope. This access track will join the existing vehicle crossing to Middle Hut Road next to the existing dwelling on Lot 1."

11. Under the planning scheme the subject land is located within the Rural zone, the provisions for which are found at clause 35.01. The purpose of the Rural zone is:

To implement the State Planning Policy Framework and the Local Planning Policy Framework, including the Municipal Strategic Statement and local planning policies.

To provide for the sustainable use of land for Extensive animal husbandry (including dairying and grazing) and Crop raising (including Horticulture and Timber production).

* Protection and creation of effective rural infrastructure and land resource.

* Improvement of existing agricultural techniques.

* Protection and enhancement of the bio-diversity of the area.

* Value adding to agricultural products at source.

* Promotion of economic development compatible with rural activities.

Development of new sustainable rural enterprises.

To ensure that subdivision promotes effective land management practices and infrastructure provision

12. Pursuant to Clause 35.01-4 a permit is required to subdivide land. The clause specifies that the minimum lot size n the zone is 40 hectares. However, a permit may be granted to create smaller lots if, amongst other things:

* The subdivision is the re-subdivision of existing lots. The number of lots must not be increased and all lots must be at least 0.4 hectare.

13. "Dwelling" is an "as of right" or no permit required use within the Rural zone provided that the lot must, amongst other things, be at be at least 40 hectares in area. If this condition is not met, then the use falls within Section 2 of the land use table and as such, a permit is required to use the land for this purpose.

14. Decision guidelines for the consideration of applications to use and subdivide land in the Rural zone are at clause 35.01-6 and cover general issues, rural issues, environmental issues as well as design and siting issues.

15. The land is also affected by the Environmental Significance Overlay, the provisions for which are found at clause 42.01.

16. The general decision guidelines must also be considered noting that those at clause 65.02 specifically apply to applications for subdivision. These require consideration to be given to matters such as the purpose of the zone, orderly planning, the amenity of the area, the subdivision pattern, the size and dimensions of the lots, density and the existing use of the land and surrounding uses.

17. The purpose of the zone, overlay and the decision guidelines require consideration to be given to the State Planning Policy Framework [SPPF] and the Local Planning Policy Framework [LPPF]. Based on the submissions presented by the parties and Mr Bauer's evidence, there are numerous policies, objectives and strategies set out within the both the SPPF and LPPF which are in some way relevant to the consideration of the proposal before me. I do not propose to set the details of these policies out in these written reasons as to do so would simply lengthen them unnecessarily. Suffice to say that those which are most directly relevant to the consideration of the proposal include:

* Clause 21.05-3 MSS - Environment Conservation and Landscape

19. At the hearing, the parties tabled and spoke to written submissions. In addition I was presented with various other documents and material relevant to the consideration of the proposal. These included plans, maps, photographs of the land and a survey plan. In addition, Ms Bannister called expert evidence from Mr F Bauer, a town planning consultant and Mr P Coates, an agricultural consultant. Both witnesses were made available for cross examination. All of the material and evidence has been taken into account and is retained on the Tribunal's file.

20. After the hearing I inspected the subject land and locality.

21. After having considered the evidence and submissions, the details of the proposal and the relevant matters to be taken into account under the planning scheme and legislation, it seems to me that the key issue in this matter is whether the proposed re-subdivision of the land represents an appropriate outcome having regard to orderly and proper planning of the area. This assessment requires, amongst other things, for consideration to be given to the purpose of the zone, the planning scheme's policies, objectives and strategies and the relevant decision guidelines.

22. During the course of the hearing Ms Bannister raised a number of other matters which, in her submission, should be considered as favouring the grant of a permit. In light of the submissions made, it is appropriate that I set out my views with respect to these.

23. First it was submitted by Ms Bannister that one of the advantages of the proposed re-subdivision is that it will provide the opportunity for Mr and Mrs Bond to be able to sell the two dwellings proposed on the smaller lots to their children. Ms Bannister submitted that the advantage of this is that the Bond's children and their families would be able to come and live close to the farm and they can then assist in the operation of the farm. Ms Bannister went on to argue that this would make it more likely that the most of the subject land would continue to be used for agricultural purposes.

24. Arguments which are based around an applicant's personal circumstances have been put forward and considered before by other divisions of this Tribunal and essentially, the position taken is that it is not a matter which can be given any substantive weight in making a decision such as this.

25. For example, in Armstrong v Shire of Baw Baw (Appeal No. 95/2228 unreported) the Tribunal said:

"Mr Morris informed the Tribunal that his clients wished to retire and intended to build a retirement house on the excised lot, with the intention of being in a position to support their son who would then take over the operation on the principal farm. The Tribunal is confident that this is the Applicant's genuine intention, but such arrangements are inevitably relatively short term. The proposed subdivision is easily seen to be an appropriate response to the Applicants particular family circumstances, but again the Tribunal has serious doubt that this can be a significant influence on the appropriate planning decision which must have regard to the long term orderly planning of the area."

26. It is also relevant consider the Tribunal's comments from the following extract in Douglas v Gannawarra Shire (2000/86943 unreported)

"As I have alluded to above, part of the Applicant for Review's justification for the grant of a permit is based on the Applicant's intention to sell the lot created by the proposed subdivision to a member of the family, and that therefore many of the concerns raised by the council will not arise. It is clear however that the lot which would be created is capable of being sold at any time after the creation of a separate title, and there is no mechanism available to prevent the lot from being sold outside the Applicant's family. The identity of the intended owner is not therefore a matter which ought to influence me in deciding whether or not this subdivision achieves acceptable planning outcomes under the provisions of the planning scheme."

27. Whilst I have no reason to doubt that Mr and Mrs Bond's intentions are genuine, the simple fact of the matter is that personal circumstances can change. The reality is that the subdivision involves the creation of lots which contain dwellings and each lot is capable of being sold by the owner, irrespective of whether it is Mr and Mrs Bond or one of their children, to anyone at any time. As such I share the view set out in the Douglas case decision, namely, that the identity of the intended owner is not a factor that should influence the decision.

28. It was also argued that the sale of the proposed smaller lots will provide the applicant with funds which will make it far more likely that the larger lot will continue to be used for farming. I also have doubts about giving this factor any substantial weight in circumstances such as these. The simple fact of the matter is that whilst the re-subdivision of the land may provide for the injection of cash into the farming venture, this is still at discretion of the applicant. There is nothing to compel the continued farming of the land.

29. In addition I must say that I agree with the following view expressed by the Tribunal in Phyland v Nillumbik Shire Council (Application 2001/7722 [2001] VCAT 1604 26 July 2001)

That the Phylands wish to subdivide so that they can sell off the smaller lot and therefore raise capital to invest in the vineyard proposed for the other lot does not justify not giving effect to these policies. If it were sufficient justification, then any owner of land who wished to subdivide off a parcel and then sell it to provide additional finance for activities on the balance of the property would receive permission to do so and this would make a nonsense of having any minimum allotment size in the Rural zone and result in fragmentation of rural land, the very thing that policies in the State Planning Policy Framework and the Local Planning Policy Framework are aimed at preventing.

30. Quite simply, the subdivision of land to enable it to be sold off to raise capital is not sufficient justification to grant a permit. Fundamentally what needs to be considered is the outcome and whether it is appropriate in planning terms.

31. In considering the merits of this matter, it is also relevant to say something about the nature of the discretion to be exercised in this case. The proposed subdivision is not "as of right"; rather it is one which must be assessed on its merits. It is not as simple as saying that the re-subdivision of land into the same number of lots will not bring about any significant change. It must be demonstrated that the re-subdivision of the land will bring about an appropriate planning outcome. I think the approach to be adopted is well set out in the Tribunal's decision in Morris v South Gippsland Shire Council & Ors. (2001/25648 [2002] VCAT 508 9 May 2002) when the Tribunal said:

"It is clear to me that a significant factor in the selection of the number of lots proposed here has been the fact that the subject land already comprises eight lots. The fact however that a permit may be granted for eight lots under the specific exemption provision at Clause 35.01-4, is not to imply however that a permit should or will be granted. This much is made very clear at Clause 65 of the Planning Scheme. This clause goes on to say that the Responsible Authority must decide whether a proposal will "produce acceptable outcomes in terms of the decision guidelines of the clause". These decision guidelines refer to the State and Local Planning Policy Framework, the purpose of the zone and any matter required to be considered under the provisions of the zone. In addition, specific guidelines are set out for subdivision...........

I am not persuaded that this present amalgam of eight lots must necessarily stand as justification for an eight lot outcome".

32. Again it is relevant to note the Tribunal's view that the acceptability of the outcome needs to be based on planning grounds.

33. It would be fair to say that the most positive aspect of the proposal is that the subdivision will facilitate the creation of one large lot, much larger than the minimum lot size, and furthermore that the integrity of that lot will not be further compromised by way of future subdivision given that the applicant has agreed not to contest the permit condition for a Section 173 agreement preventing further subdivision.

34. Whilst I agree with Mr Bauer's view that the creation of the larger lot is a positive aspect of the proposal and one which would not be at odds with policy, the proposal also involves the creation of two relatively small lots which have little, if any, capacity to be used for agricultural purposes. Although the subject land in this case comprises three lots, two of the existing lots are relatively large, tradeable parcels which have some capacity to be used as part of one farming unit, whether it be as part of the applicant's current operation or alternatively, as additional grazing land to supplement other agricultural ventures.

35. Indeed it would seem that up until recently, the applicants themselves have leased other nearby land (about 110 acres) as part of their own farming venture. The more land in the area is fragmented, the more difficult it is to assemble viable farming parcels not only due to the size of the lots, but also due to these smaller lots being appealing to persons who are seeking a residential lifestyle in a rural setting and thus putting pressure on land values.

36. In addition it is also relevant to consider that despite the amalgam of land to create the larger Lot 3, Mr Coates maintains the view that it is reasonably unlikely that this lot will be big enough to facilitate this lot being available farm unit in it own right.

37. Therefore the conclusion which I have come to is that whilst the creation of the larger lot has its positive aspects, the extent of the benefit is limited given the expert evidence that it is still not a sustainable farming unit in its own right and that the land is already mainly comprised of two reasonably sized lots.

38. This leads me to the fundamental difficulties which I have with the proposal.

39. First, the proposal will facilitate the creation of two rural residential lot set amongst an area which is designated for broad acre farming under the Planning Scheme's MSS. Fundamentally I cannot find any substantive policy or strategic justification for the creation of small lots of this type in this area.

40. Clause 21.05-2 in the MSS deals with rural issues. The overall objectives include:

* To limit the fragmentation of land in rural areas.

* To facilitate the separation of conflicting rural land uses.

* To minimise infrastructure servicing demands in rural areas.

41. I fail to see how the creation of two small lots as proposed works towards the above objectives. I do not accept that the creation of these two small lots will "promote sustainable agriculture". Rather, I find that they will add to the fragmentation of land and furthermore will introduce an inappropriate form of residential use in an area identified for broad acre farming.

42. The conflicts which typically arise when rural residential uses are introduced into an area designated for broad acre farming are well set out in the following extract of the "Small Lot Subdivision policy" at Clause 22.02:

"As stated in the Municipal Strategic Statement, the creation of small lots within rural areas has the potential to compromise the productive potential of agriculture by removing land from production as well as introducing uses (generally residential) which may conflict with agricultural uses (through the use of fertilisers, the use of farm equipment, increase traffic on local roads, the introduction of dogs etc.).

43. Fundamentally, small lots of this type are out of place in an area such as this.

44. I also consider that the argument that two dwellings already exist on the land and that this proposal will not add to the number of dwellings is too simplistic and misses the point. The simple fact of the matter is that the two dwellings on the land are associated with an existing rural use. The newer dwelling was constructed only 7 years ago, as a caretaker's house, which by definition, means that its use was ancillary to the farm.

45. The proposed subdivision, however, not only removes the existing "homestead" from the farm, but also the relatively recent caretaker's house. Furthermore, the proposal will, as put forward by the applicant, involve the development of a third dwelling to service farmland that already has the benefit of two dwellings.

46. Given the circumstances of this case, I am unable to form the view that the proposed re-subdivision of the land accords with the notion of orderly planning when consideration is given to the purpose of the zone which is not directed towards the creation of rural residential style lots, nor is the creation of such lots encouraged by the planning scheme. Rather, the creation of such lots is discouraged.

47. It is easy to look at the small picture, that is, the impact associated with one proposal in terms of introducing two small lots into a broader area. However, it is incumbent upon planning authorities and this Tribunal to look at the big picture outcome. In my view, the advantages associated with the creation of one large lot do not outweigh the disadvantages associated with the creation of two smaller rural residential lots together with the further development required in the form of a dwelling for the larger lot.

48. On this point I note that the Tribunal comments in Crisera and Knight v Rural City of Mildura (2001/P51276 [2002] VCAT 639 30 May 2002) when it said:

"I also consider the comments of Ms. Monk in David and Linda Morris v South Gippsland Shire Council (2001/25648) are worthy and agree there may be a need to balance the advantages of creating one 16.9 hectare lot for agricultural production through such means as a Section 173 Agreement against the disbenefits of introducing non-rural activities or at least subdivision of lots which would encourage or increase expectations of residential development abutting agricultural practices. However I do not consider that the merits of this application outweigh the disbenefits and therefore consider the proposal should not be supported."

49. Whilst the proposal will create one larger lot, I have not been persuaded that the outcome is appropriate given:

* the evidence that the larger lot created is not capable of supporting a rural use in its own right;

* the association which the two existing dwellings have with the rural use of the land will be jeopardised because the two small lots can be sold off to anyone at anytime;

* the policies and strategies in the scheme do not support the creation of two small rural residential lots in this area;

* the creation of rural residential lots and the potential for a third dwelling will add to the potential for land use conflict between residential and rural uses, and

* the proposal works towards the urbanisation of an area which is currently clearly zoned for broad acre farming.

50. If the Responsible Authority is of the view that the proposal achieves the type of outcome which it considers appropriate for the area within which the subject land lies, then the proper course of action is for the zoning of the land and the policies which apply to be amended so that the outcome to be achieved is clear.

51. In this case the Responsible Authority's decision will be set aside. A permit must not be granted.