Town planning - Application for subdivision of rural land - Informal "policies" identify the need to maintain the productive capacity of agricultural lands in Perth Metropolitan Region - Whether the "economic viability" of rural pursuits proposed to be carried out on subdivided lots is a factor relevant to the exercise of discretion to approve subdivision - Whether the personal motivation and financial circumstances of the applicants in making the subdivision application are relevant to the exercise of the discretion to approve subdivision

Town Planning & Development Act 1928 (WA), s 20(1)(a), s 24(3), s 26(1)(a), s 39 Pt V, s 54B.

Crisp v Western Australian Planning Commission (2001) 28 SR (WA) 8

D'Alessandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198

Gerah Imports Pty Ltd v Minister for Industry, Technology and Commerce (1987) 17 FCR 1

Marshall v Western Australian Planning Commission (1995) 15 SR (WA) 170

Morrissey v State Planning Commission (1994) 11 SR (WA) 35

Permanent Trustee Australia Ltd v City of Wanneroo (1994) 11 SR (WA) 1

Permanent Trustee Australia Ltd v Western Australian Planning Commission (1998) 20 SR (WA) 192

Richardson v Western Australian Planning Commission [2002] WATPAT 18

Royce v Western Australian Planning Commission (1996) 16 SR (WA) 278

2 The appellants are registered as the proprietors of Lot 396 Selkirk Road, Serpentine, Western Australia as tenants in common in equal shares. On about 23 May 2001, the appellants applied to the respondent (the Commission) for approval to subdivide Lot 396 into two lots, each of approximately 20 hectares in area. The application was made pursuant to s 20(1)(a) of the Town Planning & Development Act 1928 (WA) ("the Act").

3 Following subdivision, the appellant, Mr Ingram, proposed to use the western lot (which he would own) for a beef cattle enterprise. The appellant, Mr Harrington, proposed to use the eastern lot created by the subdivision (which he would own) to establish an olive grove of up to 12 hectares in area.

4 The Commission rejected the appellants' application for approval to subdivide Lot 396.

5 The appellants appealed to the Town Planning Appeal Tribunal pursuant to Pt V of the Act. The Tribunal also refused to approve the appellants' plan.

6 The appellants appeal to this Court against the Appeal Tribunal's decision. By virtue of s 54B(2) a person may only appeal against a decision of the Appeal Tribunal if the appeal "involves a question of law". If a decision does involve a question of law, and the Tribunal has made an error of law in coming to the decision, the whole of the decision and not merely the question of law is open to review: Ruhamah Property Co Ltd v Federal Commissioner of Taxation [1928] HCA 22; (1928) 41 CLR 148 at 151; Temwood Holdings Pty Ltd v Western Australian Planning Commission [2001] WASCA 199, [12] - [15], overruled, but not in this respect, in Temwood Holdings Pty Ltd v Western Australian Planning Commission [2002] WASCA 10; Pinder Architects Pty Ltd v City of Stirling (1996) 92 LGERA 165. These authorities also establish that an appeal under s 54B of the Act is by way of re-hearing, in the sense described in Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 at 203 - 204; that is to say, it is not an appeal in the strict sense or de novo. By contrast, the appeal to the Appeal Tribunal is an appeal de novo.

7 The appellants say that the decision of the Tribunal involves a number of questions of law in respect of which the Tribunal erred. However, as Counsel for the appellants rightly suggested in their written submissions, the issues raised by the grounds of appeal (which are attached) may be reduced to three:

1. Whether the appellants were obliged to establish that the rural activities they respectively planned on the proposed lots were likely to be "economically viable" or "profitable".

2. Whether the Tribunal was entitled to have regard to the financial and personal circumstances of the appellants in making the application to subdivide.

3. Whether the Tribunal failed to regard relevant evidence or misconstrued or misunderstood evidence adduced at the hearing of the appeal in the Tribunal.

8 Ultimately, the question in this appeal is whether the Tribunal regarded the relevant factors and disregarded irrelevant factors when determining the appeal before it.

9 To appreciate the particular issues, raised by the grounds upon which the appellants appeal, it is necessary to say something more about the subject matter of the appeal and the nature of the evidence before the Tribunal.

10 Lot 396 is a parcel of rural land with an area slightly in excess of 40 hectares. It is located some 43 kilometres due south-east of the central business district of Perth and 4 kilometres due north-east of the townsite of Serpentine.

11 Lot 396 is zoned "Rural" under the Metropolitan Region Scheme (MRS). It is also zoned "Rural" under the Shire of Serpentine-Jarrahdale Town Planning Scheme No 2 (TPS 2). Nothing in either the MRS or TPS 2 prohibits the subdivision of Lot 396 or land zoned Rural.

12 However, the Commission (or its predecessor) and the Shire have prepared a number of planning documents for the purpose of the exercise of the power of the Commission under s 20 of the Act to approve a plan of subdivision. These documents include the Metropolitan Rural Policy (1995), the Rural Land Use Planning Policy DC3.4 (1989, amended 1991 and 1992) (Policy DC3.4), Draft Agricultural and Rural Land Use Planning Policy 2001 (Draft Statement of Planning Policy 11 or Draft SPP11) and Shire of Serpentine-Jarrahdale Rural Strategy (adopted in 1994 and re-adopted following modification in 1996) (Rural Strategy).

13 These planning documents contain statements of values and principles, as well as what are often referred to as "policies", relevant to the proposed subdivision of rural land. Although not made relevant by the Act, the Commission does intend, both through its statements therein and by its practice, that they should be applied when applications for approval of plans of subdivision are considered by the Commission.

14 There is no good reason in law why planning documents of this type, even though they have no legal status under the Act, should not be published by a decision-maker for the purpose of guiding the future exercise of discretion. Indeed, there is every reason why this should be done in the interests of good public administration. The publication and use of "policies" in these circumstances serves to promote consistent and rational decision-making. The only qualification to this statement is that policies should not be applied inflexibly so that the circumstances of a case which suggest that a variance from a policy may be appropriate on a particular occasion, are not ignored: see Falc Pty Ltd v State Planning Commission (1991) 5 WAR 522; and discussion in Clive Elliott Jennings & Co Pty Ltd v Western Australian Planning Commission (2002) WASCA 276 at pars [25] and [26].

15 Where planning documents of the type identified here lay down policies relevant to the proposed subdivision of land, it may also be said that an applicant for approval holds a "reasonable expectation" that such policies will be regarded when the application for approval is considered. Failure to do so would, on this view, constitute a breach of procedural fairness or natural justice and so also constitute an error of law: Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6 at [61 - 63], [81], [83] per McHugh and Gummow JJ; see also Gleeson CJ at [35 - 37], Hayne J at [121] and Callinan J at [148]

16 For similar reasons, a decision-maker's misconstruction or misinterpretation of such planning documents may constitute either a failure to regard a relevant factor or a denial of procedural fairness or natural justice: Minister for Immigration and Ethnic Affairs v Gray [1994] FCA 1052; (1994) 50 FCR 189 at 209; Bridgetown-Greenbushes Friends of the Forest (Inc) v Executive Director of Department of Conservation and Land Management (1997) 18 WAR 126 at 139 - 140.

17 In this case, both the Commission and the Appeal Tribunal purported to apply the policies set out in the planning documents. Plainly, they were considered relevant to a proper consideration of the appellants' application. The parties to this appeal agree that they are relevant. In the end, the question is whether the planning documents were properly construed and applied by the Appeal Tribunal.

18 In this regard it is convenient to commence with some reference to the planning controls and policies of the Shire of Serpentine-Jarrahdale. They are the most specific in terms of their potential application to the appellants' subdivision application. As noted, Lot 396 is zoned Rural under the MRS and TPS 2. Clause 5.10.1 of TPS 2 provides that the purpose and intent of the Rural zone is to allocate land to accommodate the full range of rural pursuits and associated activities conducted in the Scheme area.

19 The Rural Strategy, which is not part of TPS 2, gives "body" to the skeletal statement of purpose and intent in TPS 2. It was prepared in accordance with Policy DC 3.4 and with the agreement of the Commission. It is particularly relevant to subdivision proposals in the Shire. The evidence before the Appeal Tribunal suggests that the Commission and the Shire have consistently applied the Rural Strategy in the assessment and determination of planning proposals concerning the rural land resources of the Shire.

20 The Rural Strategy contains a number of general objectives and eight planning policies that relate to specific policy areas of the Shire. These policy areas include Rural Living, Farmlet, Rural, Agricultural Protection and Conservation.

21 Lot 396 is within the Rural Policy Area and adjacent to the Agricultural Protection Policy Area.

22 The "policy objectives" for the Rural Policy Area stated in the Rural Strategy are:

"R1. To retain and maintain the productive capacity of land and agricultural enterprise in close proximity to Perth and its markets;

R2. To encourage, provide opportunities for, and control over, a mosaic of productive agricultural land uses;

R3. To adopt pro-active and co-operative approaches with landowners and the wider community to address catchment management and land degradation problems;

R4. To promote the objectives of the Environmental Repair Overlay in the Rural Policy Area;

R5. To otherwise prevent the further fragmentation of land through subdivision for farmlet development in the Policy Area."

23 In a number of respects, the policy objectives of the Agricultural Protection Policy Area are similar to those stated for the Rural Policy Area. For example, the substance of R1 and R3 is repeated. However, additional policy objectives are stated for the Agricultural Protection Policy Area, including the following:

"AP2 To ensure that productive agricultural enterprise remains the primary land use and to maintain the integrity of agricultural infrastructures."

24 The differences in the policy objectives of the Rural Policy Area and the Agricultural Protection Policy Area are reflected in the overview of each provided in the Rural Strategy. In the Agricultural Protection Policy Area, the overview states that agriculture is the major land use in the Shire and must be protected. The overview adds that this policy area essentially maintains the current standards and practice of agricultural use and development, but provides an extra level of protection for productive agricultural land and the agricultural use to which it is, or may be put. The protection of the capacity of land for agricultural production is the most significant and overriding objective of this policy area.

25 In the Rural Policy Area, the overview states that the large Rural Policy Area maintains the integrity of the Shire's rural and agricultural character. It provides for a mosaic of agricultural uses, but does not offer the protection for agriculture embodying the Agriculture Protection Policy Area.

26 The Rural Strategy also refers to the "management of lots" in the Rural Policy Area and states:

"Commercial farming is considered the major land use in the Policy Area but viability is low because of the poor productive capacity of the sandy soils and water-logging of low lying areas."

27 Concerning "lot sizes" in the Rural Policy Area the Rural Strategy states:

"The Rural Policy Area is largely already subdivided at or below that for sustainable agricultural production. Existing farms are often amalgamations of allotments managed as a single farm. However, the subdivision of new lots is not supported below a minimum lot size of 40 hectares. Proposals to subdivide agricultural land will be assessed on a case by case basis and the minimum lot size is not considered a right or entitlement of land ownership. This is not set as a minimum viable lot size for agriculture. No meaningful minimum lot size for agricultural viability can be set where the range of agricultural and horticultural enterprise is as extreme as it is in the Shire. Rather, it is intended as a dis-incentive to subdivision for farmlets or residences. On the other hand, it is a size that allows some flexibility to subdivision for, and should not restrict, full-time commercial agricultural pursuits."

28 The reference to "farmlets" may be taken as a reference to pursuits comprehended by the Farmlet Policy Area.

29 Within the Rural Policy Area, the Rural Strategy identifies, in some detail, what it terms "desirable land uses". This includes Alternative Agricultural (eg, Aquaculture, Hydroponics) and Agricultural (Commercial and Recreational). It further identifies as "conditional" land uses such as Intensive Agricultural - Commercial and Recreational (Horticulture and Animal Feedlot).

30 In broad terms, it may be said that in the Rural Policy Area the Rural Strategy aims to maintain land that has a productive capacity for agricultural production as a resource. As a result, it does not envisage the subdivision of land within the Rural Policy Area for pursuits which would, in substance, comprise "farmlets" or "residences" or pursuits that are comprehended in other policy areas. In general terms, the Rural Policy Area envisages lot sizes that will not restrict "full-time commercial agricultural pursuits".

31 The Shire's Rural Strategy followed the promulgation by the Commission of Rural Land Use Planning Policy DC 3.4. One of the objectives of Policy DC 3.4 is to cause the preparation of local rural strategies to make good its broadly stated policies and objectives concerning the planning of rural land uses.

32 By cl 4.2.3 of Policy DC 3.4 the Commission put applicants for subdivision approval on notice that ordinarily it will not approve applications for subdivision which propose lot sizes below those permitted within the zone in which the land is situated where a minimum lot size is specified within an approved rural strategy. However, a number of exceptions to this approach are noted in Policy DC 3.4 itself, enabling it to be flexibly applied.

33 So far as the objectives of the Policy DC 3.4 are concerned, a number of them reflect the more specific objectives of the Rural Strategy. For example, one of the specific objectives set out in cl 2.2 of Policy DC 3.4 is:

"To discourage the removal of prime agricultural land from agricultural production and to prevent adverse effects on the viability of established or potential agricultural industries."

34 It can be seen how the Rural Strategy, through the creation of such policy areas as Agricultural Protection Policy Area, the Rural Policy Area and the Farmlet Policy Area has given effect to Policy DC 3.4.

35 The adoption of the Rural Strategy in 1994 was followed by the promulgation by the Commission of the Metropolitan Rural Policy in 1995. This Policy recognises the strategic importance of rural land in the Perth metropolitan region and explains the need for the Policy in terms of increasing pressure on the rural zone. In cl 1.1 it is stated, amongst other things, that:

"The expansion of urban-type activities onto rural land, the speculative purchase of land in the hope of rezoning to a higher and better use, and the subdivision of land for sale on the real estate market have traditionally been regarded as inevitable in the rural areas of the metropolitan region. Rural land has being viewed as a pool of land available for future development. There is a common view by rural landowners that urban growth will inevitably overtake them and farming and other rural uses consequently only have a limited future. These perceptions are reinforced by continued urban growth and expansion on a fringe of the city.

These traditional views of metropolitan rural land, however, are increasing under challenge from several directions.

In recent years, questions have been raised about the future form and character of the city. There are growing concerns about the need to create a more sustainable urban form with a greater emphasis on urban consolidation, reduced infrastructure costs, more efficient energy use and better transport systems. As the city continues to expand, the rural wedges have an increasingly vital role both for their amenity value and as a green belt giving shape and form to the urban areas.

There is also increasing public concern about the management of natural resources including land, water, minerals, flora, fauna, land form and landscape. This is particularly important in the rural context and is reflected in the views expressed by industry groups, conservation organisations and the general community."

36 The Metropolitan Rural Policy identifies five "Key Principles" reflecting these observations, one of which is the placement of "restrictions on the closer subdivision and fragmentation of rural land, and the ad hoc development and rezoning of rural land for more intensive purposes": Key Principle 2.

37 Key Principle 5 provides that the subdivision and development of rural land should only be permitted where it is consistent with the policy measures set out in Pt 5 of the Policy, consistent with any approved local rural strategy and consistent with any approved town planning scheme.

38 The Policy identifies the Shire of Serpentine-Jarrahdale rural area as the most significant grazing and dairy farming area in the metropolitan region, constituting 40 per cent of the pasture in the region.

39 The Policy also comments directly on lot sizes and provides as follows:

"Both horticulture and general agriculture are important land uses which require recognition and security through suitable policies. The concept of a holding size capable of supporting efficient sustainable production will remain an important element of the land use policy. Subdivision of agricultural land should not be permitted below the viable minimum lot size capable of efficient, sustainable agricultural production as advised by the Department of Agricultural. Where subdivision has already occurred below the minimum lot size, then the policy of restraint should equally apply to promote amalgamation of landholdings."

40 Much of this reflects the content of Policy DC 3.4. Like Policy DC 3.4, the Metropolitan Rural Policy also highlights the importance of local rural strategies and town planning schemes in the process of identification of land appropriate to different rural uses.

41 The common thrust of Policy DC 3.4, the Metropolitan Rural Policy and the Shire's Rural Strategy are also reflected in the Draft Agricultural and Rural Land Use Planning Policy 2001 ("Draft SPP 11"). Draft SPP 11 had been advertised for public comment at the time of the appeal before the Tribunal. It is intended that it should, following approval by the Governor, become an approved policy for the purposes of s 5AA of the Town Planning & Development Act. It identifies as a fundamental principle the protection of the State's priority agricultural land resource and provides guidance for the preparation of local planning strategies. In every respect, even though not yet approved and operative as a policy under s 5AA, it is a seriously entertained draft policy, the contents of which are consistent with the other policy documents referred to above. It sets out matters which may be considered relevant to an application for subdivision approval and may be taken into account by the Commission and the Appeal Tribunal.

42 The policy objectives and proposed policy measures of Draft SPP 11 are not only consistent with, but also emphasise the values, principles and measures referred to in the other planning documents referred to above. One of the four key objectives of Draft SPP 11 is to protect agricultural land from ad hoc fragmentation.

43 Having regard to the current zoning of Lot 396 under the MRS and TPS 2, and the terms of the Shire's Rural Strategy and the other planning documents referred to, which the Appeal Tribunal considered relevant to the determination of the appeal before it, it seems to me that the Appeal Tribunal was bound to consider, as a most relevant factor, whether, in effect, the subdivision of the land proposed by the appellants would result in the maintenance or loss of land having productive capacity for agricultural production.

44 To put this factor in terms that reflect the Rural Strategy for the Rural Policy Area, the question for the Tribunal was, in essence, whether the proposed subdivision of Lot 396 would result in lot sizes that would not restrict "full-time commercial agricultural pursuits" or, at least, not restrict the land from being used for or in connection with that purpose. Or, put in terms of the Rural Strategy and the Metropolitan Rural Policy, the question was, in essence, whether the lot sizes created by the new subdivision would not be below the "viable minimum size capable of efficient, sustainable agricultural production".

45 If the Tribunal, on the evidence before it, were to form the view that these objectives would be met, so that there would not be a loss of land with productive capacity for agricultural production, then it might approve the proposed subdivision. The principal question in this appeal is whether the Appeal Tribunal adopted this approach.

46 In that context, it is relevant to consider what in broad terms the evidence was before the Appeal Tribunal. Mr Ingram proposed that the new western lot be used for beef cattle production. He proposed that this lot should be stocked with a maximum of 50 head of cattle. He said this would enable him to raise good quality beef marketed as yearling beef. He considered the market for quality beef was good and offered high prices. His evidence to the Tribunal was that he presently ran about 30 head of cattle on Lot 396.

47 The appellants called Mr M R Wells, an environmental consultant, to give evidence about the capability of Lot 396 to support the proposed uses. In respect of the new western lot to be used for cattle production, Mr Wells found that it contained a lesser but still significant proportion of land of high or fair capability for grazing, although it also contained the steepest land, which he rated "low capability for grazing due to erosion risk". Mr Wells stated that there was little evidence of land degradation from cattle grazing in the past. He considered this was a testament to the resilience of the land and its good management. In the event he found that the proposed western lot, if used for cattle grazing purposes, had the following capability rating (within the possible range of class 1 to class 5): 41 per cent high (class 2); 8 per cent fair (class 3); 45 per cent low (class 4); 6 per cent very low (class 5).

48 As to the use of this proposed lot for beef cattle production, Mr Wells relied on the Department of Agriculture's grazing assessment criteria (ratings tables) and the stocking rates specified by them. He considered that the proposed lot would not have a stock-carrying capacity of 50 head of cattle unless supplementary feed were to be provided. Mr Ingram, in his evidence, acknowledged this to be the case and said he proposed to provide extra feed to achieve this optimal level of breeding.

49 Mr Harrington explained to the Tribunal that he only required 12 hectares of the proposed 20-hectare eastern lot on which to operate his commercial olive grove. He preferred the "hills" area rather than the coastal flats for his enterprise. He provided the Tribunal with a proposal that he had earlier prepared for financing purposes in respect of a different property containing a business plan that showed the commercial viability of such an olive grove. He produced a private tax ruling from the Australian Taxation Office which showed what would be necessary for him to claim inputs as tax deductions. He said he included those documents in his evidence to the Tribunal "to show that I am serious about using the land for a rural pursuit and have done my homework to realise my dream". The private ruling indicated that 250 olive trees is apparently considered a commercial venture by the Australian Taxation Office.

50 Mr Harrington said that he had tested the soil for Ph levels and had investigated the water supply, which included a bore with a windmill and a permanent spring. He said there were two permanent springs on the property and he considered he would have sufficient water to irrigate the trees. He said the land had some stone fruit trees growing by the spring without reticulation and this indicated a sufficiency of water.

51 Mr Harrington said his proposal in respect of olive production was initially to plant 800 trees within two and a half years. Following assessment of that part of the development, more trees might then be planted. He said olive trees begin to produce a crop within four years and become commercially viable within six years.

52 Mr Wells gave evidence to the tribunal that the area of the proposed olive grove "encompasses the major areas which are suitable for olives". He said the eastern lot contains in excess of Mr Harrington's required 12 hectares of suitable land types, with appropriate nutrient rich, water retentive, loamy soils on mainly gentle incline. Mr Wells considered there would be "minimal risk of nutrient loss or soil erosion here". He analysed the proposed eastern lot for the olive grove use as having the following land capability ratings: 73 per cent fair (class 3); 7 per cent fair to low (class 4); 20 per cent very low (class 5). In short, Mr Wells considered there was more than enough land available to meet the 12-hectare olive grove proposal put forward by Mr Harrington.

53 The Commission called Mr T C Johnston, a farm management consultant, to give evidence to the Tribunal concerning the proposed rural pursuits of the appellants. He expressed the view that the current lot size of 40 hectares was not sufficiently large to make the land sustainable in its own right as a farming operation. However, he considered that the economic use of the land is maximised for general farming by maintaining it as a single block. His reasons for expressing this opinion were twofold:

1. In its present state, the land could be run as a profitable operation where income generated from the sale of livestock would be greater than operating costs; and

2. The smaller a lot is, the greater the operating costs become in proportion to the income which can be obtained from agricultural produce.

54 Mr Johnston also expressed the view that the proposed boundary between the two lots was unsympathetic to the steepness of the terrain. While he had been unable to undertake a site visit, he assumed that the proposed fences would traverse some very steep inclines. For this reason he considered there would be a risk of degradation along the fence line that would be "very high" due to stock movement along the fence lines and the need for firebreaks. He added that "the risk of degradation will be increased by the failure of the fence line to be sympathetic to the contours of the land". He expressed the further view that the boundary reflected an arbitrary division of the lot with a fence running through the middle of the land. He did not think that the appellants had demonstrated that they had taken into consideration the steep slopes in the positioning of the boundary fence.

55 Accordingly, Mr Johnston expressed the view that any subdivision of the land will reduce the productive capacity of the land for agricultural production unless a more intensive agricultural enterprise is to result as a consequence of the subdivision. He was of the view that there was no indication that the appellants intended a more intensive use of the land.

56 Mr Johnston summarised his view that the proposed subdivision of Lot 396 into two 20-hectare lots was undesirable because it would:

2. increase the risk of degradation associated with the subdivision boundary; and

3. set an undesirable precedent for the subdivision of prime agricultural grazing land which would be to the long-term detriment of viable agriculture in the area and ultimately lead to reduced productivity from prime agricultural land or the loss of the land to productive agriculture.

57 The Tribunal dismissed the appellants' appeal. It drew together and summarised its reasons for doing so in par 45 of its reasons, in the following terms:

"• Mr Ingram wishes to subdivide because he has landed in financial difficulty for domestic reasons. He would not have considered subdivision otherwise. Mr Ingram's proposed use of his half of the land has not been proved viable.

• Mr Harrington wishes to subdivide because that would better suit his financial arrangements in respect of guarantees and/or mortgages. Otherwise, nothing prevents him establishing an olive grove under present arrangements. On the evidence, his plans for a grove are not viable.

• Subdivisions of the land below 40 hectares, as proposed, is contrary to good planning in that:

(i) the subdivision does not facilitate the introduction of new viable rural pursuits because neither proposal is viable;

(ii) the subdivision would remove a substantial part of the land from viable agricultural industry; and

(iii) the subdivision would further fragment the rural zone in a manner which raises concern for its future development without counter-balancing viable proposals."

58 Earlier in its reasons the Tribunal dealt with what it called the "background" to the subdivision application in which it explained how Mr Ingram and Mr Harrington came to be registered as proprietors of Lot 396 as tenants in common. The Tribunal drew the inference in par 10 of its reasons, that "the reasons for the proposed subdivision relate solely to financial considerations".

59 The Tribunal then turned to what it called the "planning considerations" of the appeal before it, referring to the town planning schemes and planning documents referred to above. It noted that the Rural Strategy for the Rural Policy Area is "essentially to maintain the current standards and practice of agricultural use and development". At par 22 of its reasons the Tribunal distinguished the objectives and purposes of land within the Rural Policy Area with land within the Farmlet Policy Area, noting that farmlets are "small farms used for commercial production, some intensive agriculture or hobby pursuits in association with productive rural lifestyles". It noted that a key strategy objective is to direct farmlet development to particular areas, so as to avoid issues of poor drainage, low soil productivity, erosion risk and poor effluent disposal ability.

60 Although this is not entirely clear from the reasons, the Tribunal appears to have suggested that the rural pursuits proposed by the appellants, should a subdivision of Lot 396 be approved, were more akin to the types of pursuits that should occur within the Farmlet Policy Area and not within the Rural Policy Area.

61 The Tribunal, in its reasons, further considered the "appellants' reasons for subdivision", noting that the subdivision of Lot 396 would serve the financial interests of each of the appellants. At par 30 of its reasons the Tribunal stated:

"The reasons advanced in support of the subdivision included the enhanced ability of the Appellants to borrow capital ... and the agricultural nature of the proposed ventures. The latter led in turn to consideration of the soil characteristics, topography, erosion risks, pest control, water supply and markets, all directed at establishing or challenging the commercial viability of the two proposed enterprises." (emphasis supplied)

62 The Tribunal stated that "the first issue" concerned the relevance of the facts sought to be proved, namely, that a lack of finance-borrowing capacity is caused by the present arrangement and an olive grove and intensive beef production were each "commercially viable" on 20 hectares of the land.

63 The Tribunal then considered the "viability of proposals". The Tribunal said that "commercial viability" will be influenced by many factors above and beyond land capability and noted that Mr Wells had conceded that the financial viability of the two proposed land uses was not a matter within his area of expertise.

64 Thus, the Tribunal expressly identified the "commercial viability" or "financial viability" of the proposed rural pursuits as matters relevantly in issue in the determination of the appeal.

65 The Tribunal noted that, while Mr Harrington's proposal for the olive grove was on land which had a fair capacity for olives, it was land which also had a high capacity for grazing. As a result, it thought the best grazing land would be taken for olive production, with much of the remaining land being considered of low rating for grazing. This led the Tribunal to express the view that a more "efficient" division of the land for olives and grazing is possible than that which had been proposed.

66 Additionally, the Tribunal took the view, based on Mr Johnston's evidence, that there was a significant risk of degradation to the land along the line of the proposed dividing fence which also worked against approval of the proposed subdivision.

67 The Tribunal further relied on Mr Johnston's evidence that the olive production was "not viable" for the implementation of the proposal because of an insufficient water source and the amount of shallow and surface rock.

68 The Tribunal also relied upon Mr Johnston's opinion that Mr Ingram's plan for organically grown beef was "not viable", particularly because of low soil capacity, the presence of substantial rock, a drainage line and the difficulties with organic farming, including the large amount of Patterson's Curse that needed controlling on the land.

The relevance of the "commercial viability" of the appellants' proposed rural pursuits

69 The appellants say that their appeal to the Tribunal was refused because the relevant planning factor was not considered or for reasons, or by reference to factors, that are not relevant to the proper consideration of the appeal before the Tribunal. The first of these issues, as noted earlier, is whether the question of "commercial viability" or "financial viability" of the proposed rural pursuits is something that the Tribunal was entitled to take into account.

70 While it is often correctly said that matters going to the commercial or financial viability of a land use proposal are not relevant to a proper consideration of whether that proposal should be approved as an acceptable land use, that general statement requires some clarification in the context of a proposal to subdivide rural lands in the metropolitan region of Perth.

71 The relevance of the economic purpose of a proposed land use and its economic consequences has been considered in a number of decisions. It is well-established that factors such as the economic structure of an applicant, the possible profit or loss of a proposed venture and the viability of a proposed project are not relevant town planning considerations: Gosford Shire Council v Anthony George Pty Ltd (No 2) (1968) 16 LGRA 165. In Anglo Estates Pty Ltd v Western Australian Planning Commission (1996) 18 SR (WA) 19 at 28, the Appeal Tribunal (differently constituted) applied this principle in deciding that it was not a function of the Commission (or the Tribunal) to inquire into the viability of a tree farming project which the appellant proposed to implement by means of approval of a survey-strata plan under the Strata Titles Act 1985 (WA).

72 Usually the existence and application of this principle is uncontroversial. However, the question arises whether it is appropriate for the Commission and the Tribunal to consider the question of "commercial viability" of a proposed agricultural pursuit where the proposed land use involves the subdivision of land within the metropolitan region of Perth which has been identified for planning purposes as a valuable agricultural land resource. The question is made sharper where a policy factor made explicit by the Rural Strategy suggests that lot sizes should be of a sufficient area not to restrict "full-time commercial agricultural pursuits" and the Metropolitan Rural Policy suggests that lot sizes should be of a "viable minimum size capable of efficient, sustainable agricultural production".

73 In South Parkfield Pty Ltd v Western Australian Planning Commission (1997) 18 SR (WA) 314 the Appeal Tribunal (differently constituted) dealt with issues similar to those raised in this appeal. The appellant was refused permission to excise a 40-hectare lot from a 273-hectare rural property within the Shire of Murray. The Commission refused the application because it was inconsistent with the Shire's Rural Strategy and given the poor soil types, a 40-hectare lot was not considered a "useful, tradeable parcel of land for grazing purposes". The Shire's grazing land was described in the Rural Strategy as its "agricultural heartland". The Commission's use of the expression "useful, tradeable parcel of land for grazing purposes" in its refusal was novel; it was not found in the Rural Strategy or any other relevant planning policy. However, in the context of that appeal, the Tribunal found it was a useful expression in relation to the determination of the appeal before it. The Tribunal entered into an analysis of how, in some instances, "fragmentation" of a rural holding may enhance primary production and how, in other instances, the "preservation" of land in a single holding may prove counter-productive to the objectives of the Rural Strategy. In South Parkfield at 316 the Tribunal noted that:

"Economic viability has always been a difficult concept to grasp when linked to calculation of the appropriate rate of return or the level of subsistence for a farming family. There are many holdings that are, unfortunately, not sustainable economically irrespective of size and often the issue turns on management abilities and prevailing prices. In a depressed market for agricultural products, the converse argument can be used by an applicant for subdivision as in Thomson [Thomson and Dale Bay Holdings v Western Australian Planning Commission (appeal no 24 of 1966)] where it was found that division of land into smaller lots will benefit the land by creating more intensive rural uses which have greater financial rewards."

74 This observation led the Tribunal in South Parkfield to take the view that, while the particular proposed lot was not suitable for grazing on the basis of economic viability, it was a quite "useful tradeable parcel". As such, the Tribunal held that the subdivision proposal complied with the objectives of the Rural Strategy because it would lead to the protection of the agricultural heartland of the Shire. Accordingly, the Tribunal was satisfied that the subdivision was appropriate, having regard to the Rural Strategy, the capability of the land to support grazing and consistency with prevailing lot sizes.

75 As noted earlier in these reasons, the Rural Strategy of the Shire of Serpentine-Jarrahdale in this case expressly makes relevant a consideration of whether lots are of a size that will not restrict "full-time commercial agricultural pursuits" or, at least (as noted above), will not restrict the land from being used for or in connection with that purpose. As the Tribunal in South Parkfield fairly observed (and as is the case in this appeal) not every existing lot will itself be capable, by virtue of its size, of supporting an independent full-time commercial agricultural pursuit. Indeed, this is acknowledged in the Rural Strategy's discussion of "lot sizes" in the Rural Policy Area.

76 In a case where it is acknowledged that the existing lot size is incapable of supporting an independent, full-time commercial agricultural pursuit, the complexities of applying the policies identified in the planning documents becomes evident. Thus one can understand why it was that the Appeal Tribunal in South Parkfield was attracted to and ultimately accepted the concept put forward by the Commission of a "useful tradeable parcel".

77 However, in South Parkfield and in this apppeal there is a common principle that underlies the various expressions of policy that one finds in the various planning documents including the Rural Strategy. That common principle, as suggested earlier in these reasons, is that land within an area such as the Rural Policy Area should not be subdivided if the subdivision would result in land that has a productive capacity for agricultural production being lost as a resource.

78 Thus, to the extent that a consideration of the rural pursuits proposed to be carried out on land after it has been subdivided assists in determining whether the land will be lost as such a resource, it may be considered relevant. If the evidence shows that the land may well be used more intensively or more productively, or even as intensively and as productively, than it presently is, the view may well be open that the subdivision meets the objectives of the planning documents.

79 However, in determining whether land that has a productive capacity for agricultural production may be lost as a resource it will, in my view, be seldom, if ever, useful to focus on the financial viability of a particular enterprise proposed to be carried out on the subdivided land. This is because the financial viability of a particular enterprise ultimately tells one little about the extent to which the land's productive capacity for agricultural production will be lost. An inquiry into the financial viability of a particular pursuit will often deal merely with the profitability of a particular enterprise. Profitability may indirectly tell one something about the extent to which the productive capacity of land as an agricultural resource is being exploited, but it will not be a reliable measure in all cases.

The approach taken by the Tribunal to the viability issue in this case

80 In my view, the approach taken to the question of economic viability in the reasons of the Appeal Tribunal makes it unclear whether the Tribunal truly focused on the question of whether the land's productive capacity for agricultural production would be maintained or lost as a resource by allowing the appeal before it. On the one hand, it specifically considered "the commercial viability of the two proposed enterprises": par 30 of its reasons. It noted the attempt to prove the "commercial viability" of the olive grove and the intensive beef production enterprises: par 31(b). It specifically referred to Mr Johnston's evidence that the beef production enterprise was "not viable". On the other hand, the Tribunal also identified those policies which make it clear that agricultural land should not be withdrawn from productive use as a result of a subdivision in a rural area, such as that within which Lot 396 falls, and had particular regard to the evidence of Mr Johnston to that effect.

81 In the end, and while recognising that to a certain extent the appellants' case invited the Tribunal to embark on some assessment of the financial viability of their proposed rural pursuits following subdivision, I am not satisfied that the Appeal Tribunal properly addressed the question made relevant by the Rural Strategy and the various relevant planning documents in terms of whether or not the facilitation of those rural pursuits would result in the productive capacity of land for agricultural production being lost as a resource. In the first point made in its summary at par 45 of its reasons, the Tribunal again emphasised that Mr Ingram's proposed use of his half of the land "has not been proved viable". In the second point it found that Mr Harrington's plans for an olive grove "are not viable". In the third point, the Tribunal characterised the relevant issue as concerning the removal of a substantial part of the land from "viable agricultural industry". While a Court, in conducting this sort of review on an appeal, should not undertake a painstaking review of the expression of the reasons of an expert tribunal for reaching a decision (see Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259), it appears to me that the proper approach to the question at hand may produce different outcomes from the impermissible approach in certain situations.

The relevance of the personal and financial circumstances of the applicants

82 The Tribunal also expressly found that the reasons of the appellants for the proposed subdivision related solely to financial considerations. It stated that the only reason Mr Ingram wishes to subdivide the land is because "he has landed in financial difficulty for domestic reasons", and that Mr Harrington wishes to subdivide "because that would better suit his financial arrangements in respect of guarantees and/or mortgages".

83 These factors might aid an understanding as to why the subdivision application was made, but they are irrelevant to the question whether or not a subdivision proposal is consistent with proper and orderly planning and the policies stated in the planning documents to which I have referred. Yet they do seem to have played a part in the Tribunal's decision to refuse the appeal. Having regard to the emphasis given to these statements in the Tribunal's conclusion to its reasons, I do not think they can be treated as mere surplusage.

84 Taking account of the focus of the Tribunal on the economic viability of the proposed rural pursuits and the attention given to the appellants' personal motivation in making the application, I am satisfied that the Tribunal failed to consider properly the main factor made relevant by the Rural Strategy of the Shire, the Rural Land Use Planning Policy DC 3.4 and the Metropolitan Rural Strategy of 1995: that is, whether the subdivision proposal would result in land in the Rural Policy Area which has productive capacity for agricultural production being lost as a resource.

85 For these reasons, I consider that the appellants' appeal should succeed essentially for the reasons expressed in grounds 2, 4 and 5 of the grounds of appeal.

86 The Appeal Tribunal should re-hear the appeal. This is not a case, as were Falc Pty Ltd v State Planning Commission (supra) and Pinder Architects Pty Ltd v City of Stirling (supra), where, by reason of findings already made by the Tribunal, only one conclusion is possible, enabling this Court to dispose of the matter finally. The discretion whether or not the appeal before the Tribunal should succeed should be exercised anew by the Tribunal by reference to the relevant factors, and without regard to the irrelevant factors, identified in these reasons.

87 I will hear from the parties as to the precise terms of the order which should now be made.

Take notice further that pursuant to O 65 r 4(b) the grounds for the appeal are:

1. The Tribunal erred in law by rigidly applying planning policy that each of the proposed lots must be economically viable, alternatively inappropriately applied the said planning policies.

2. The Tribunal erred in law, and acted upon an irrelevant consideration, in interpreting references in the Metropolitan Region Policy to viable minimum lot sizes capable of efficient, sustainable agricultural production, and in Policy DC 3.4 to the effect that agricultural land should not be withdrawn from productive use, as requiring economical viability for each proposed lot.

3. The Tribunal in any event unreasonably and improperly found that the proposed lots were not economically viable, by relying on the evidence of Mr Johnston without any or any due consideration of the opposing, credible evidence adduced on behalf of the appellants which substantiate economic viability.

4. The Tribunal erred in law, and acted upon an irrelevant consideration, in having regard to the motivation and personal circumstances of the applicants for the subdivision application in refusing the application.

5. The Tribunal erred in its conclusion in paragraph 8 of its reasons that the current situation of the appellants does not create an unsatisfactory position for the proper use of the land for agricultural purposes.

6. The Tribunal erred in its interpretation of the relevant planning policies, and acted upon an irrelevant consideration, in concluding that a reason for refusing further subdivision was the potential, future use of the land for non rural and non agricultural uses, whereas any such uses can only be evaluated if and when they are proposed, and when such uses are further controllable by appropriate zoning conditions, conditions of subdivision and/or conservation covenants.

7. The Tribunal erred in law and in fact in concluding that the planting of olive trees on one of the proposed lots would not facilitate the introduction of new rural economic activities, on the basis that olive production on the lot was not economically viable.

8. The Tribunal erred in law, and acted upon irrelevant considerations, in refusing the application in reliance upon each of the following:

8.1 the purported better use which could be made of the land than by the uses proposed by the appellants;

8.2 the purported circumstances that as Mr Harrington's olive plantation plans required only 12 hectares (and not 20, as in the proposed lot), a more efficient division of the land is possible;

8.3 the respondent's practice of refusing similar subdivision proposals in the locality and in the wider rural zone.

9. The Tribunal erred in its evaluation of the evidence of Mr Wells and Mr Ingram by finding that Mr Well's evidence of the effect of good husbandry on the land was of limited use because Mr Ingram's proposals to divide his land into 6 or 7 paddocks, when this proposal would further good husbandry.

10. That upon setting aside the decision of the Tribunal, the subdivision application should be approved upon a proper appreciation of the evidence and proper application of the relevant planning legislation and policies.