JT Snipe Investments Pty Ltd v Hume CC (Red Dot) [2007] VCAT 1831

1. John Anthony Dal Pozzo is substituted as respondent in lieu of Killara Road Pty Ltd.
2. The decision of the Responsible Authority is affirmed and no permit is granted.
3. The application is dismissed.

1. John Anthony Dal Pozzo is added as a respondent to the proceeding.
2. The decision of the Council is affirmed and no statement is made under s 36(1) of the Subdivision Act 1988.
3. The application is dismissed.

Mr Graeme Peake of counsel, instructed by Rennick & Gaynor, solicitors. Mr Peake called the following witnesses:

• Dr Ian Bennetts, Principal Risk Consultant, of Noel Arnold & Associates Pty Ltd.
• Samuel John Snipe, a director of the applicant.

Mr Egils Stokans, solicitor of Russell Kennedy, solicitors.

Mr Paul Connor of counsel, instructed by McMahon Fearnley, solicitors. Mr Connor called the following witnesss:

• Shane Leonard, building surveyor of Phillip Chun & Associates Pty Ltd.
• John Anthony Dal Pozzo, the respondent.

1. Through these proceedings, the applicant seeks to establish the pre-conditions for the acquisition of an access easement over adjoining land. The matter thus turns on the proper application of s 36 of the Subdivision Act 1988 - one of the very rare instances under Victorian law where a private landowner can compulsorily acquire an interest in land from another private landowner.

1. In 1987, the Council authorised the development and use of three factory/warehouses on land in Killara Road, Campbellfield. The factories were built in 1989.
2. Through a process of subdivision and consolidation in the period from 1987 to 1989, there are now effectively two lots relevant to this proceeding:
   • No. 87 Killara Road is owned by the applicant and contains a single factory used predominantly as a warehouse.
   • No. 89 Killara Road (or, more correctly, Nos. 89-91) is owned by the respondent, and is a consolidated lot containing a large factory used for the assembly and testing of construction machinery.
3. Running for the full length between the factories at No. 87 and No. 89 is a 6.4m driveway. Critically, the whole driveway is located entirely within the title of No. 89. The driveway provides access to a roller door at the rear of the No. 89 factory. From the material provided by the parties, it can be ascertained that:
   • The factory at No. 87 takes its primary access directly from Killara Road. There is an office and large roller door at the front of the factory. The car park for No. 87 is also at the front of the factory, with direct access to Killara Road.
   • Some of the original development and subdivision 'application' plans for the broader land parcel show the driveway as a 'carriageway easement', and marketing material from that period infers that No. 87 has shared rear access along this driveway and a 'secondary' access to its front car park from the driveway.
   • The factory at No. 87 has a rear splay corner with a second roller-door, and a fire door, both providing access to a narrow concreted area at the rear of the factory. This rear concrete area has historically connected to the driveway, and has no possible street access but for the driveway.
4. Despite what might have been initially intended, the formal plans of subdivision and consolidation sealed by the Council in the period between 1987 and 1989 did not contain any 'carriageway easement' over the No. 89 driveway in favour of No. 87, and no such easement is registered on the title to either No. 87 or No. 89.
5. The applicant purchased No. 87 in 1989, and at least until early 2006 has had access to both the rear of the No. 87 factory and the front car park via the No. 89 driveway. Although the rear access has existed for practical purposes, it does not appear to have been commonly utilised during this period. The applicant enjoyed a good relationship with the former owner of No. 89 and the 'legal' basis for driveway access was apparently never in issue. However, in late 2005, with the prospect of No. 89 being sold, the applicant perhaps realised the possible loss of access and requested the Council to create a formal easement to give effect to the original permit plans. The Council declined that request.
6. The respondent purchased No. 89 in 2006. Shortly after settlement in May 2006, he constructed a fence along the boundary with No 87. The fence has the effect of preventing access by the applicant along the No. 89 driveway both to the rear of the No. 87 factory and the secondary access to the front car park at No. 87. The fence has a gate between the No. 89 driveway and the concrete area at the rear of the No. 87 factory, but that gate is locked and is not accessible from No. 87.
7. As a consequence of the above, the applicant sought a planning permit to create an easement over a 6m width of the No. 89 driveway, and also sought a statement pursuant to s 36 of the Subdivision Act 1988. The Council's refusal of both the permit and statement forms the subject matter of these proceedings.
8. I note in passing that the applicant did not attempt to argue that it had some accrued or enforceable right to have the easement created in its favour simply arising from the 1987 permit application or plans, or to give effect to the presumed 'intention' of the developer and Council at that time. On this issue, the Responsible Authority also referred me to the decision of the High Court in Hilpalm Pty Ltd v. Heaven's Door Pty Ltd [2004] HCA 59, as authority for the view that a permit condition requiring a right of way did not pass to a successor-in-title or, of itself, create the right of way. Once a plan of subdivision has been approved, and titles have issued, an earlier application plan or development condition purporting to require an easement cannot have continuing effect[1]. For whatever reason, the 'new 6.4m carriageway easement' notionally shown on the 1987 permit plan for the development was never included on the plan of subdivision.
9. Mr Peake for the applicant conceded (at least for the purpose of these proceedings) that, given there is no registered easement, the applicant could not rely solely on the 'intent' of the 1987 plans and therefore had to make out its case for the acquisition of an easement on its merits under s 36 of the Subdivision Act 1988. Consequently, it is appropriate to first consider the proper meaning of that provision, before applying it to the present case.

Section 36 of the Subdivision Act 1988

1. The relevant parts of section 36 of the Subdivision Act 1988 provide as follows:

36. Power of owner to acquire or remove easements

(a) when considering a proposed amendment to a planning scheme or an application for a permit or to amend a permit; or

(b) in implementing an amendment to a planning scheme; or

the Council or a referral authority states in writing that it considers that the economical and efficient subdivision or consolidation (whether existing or proposed) or servicing of, or access to, land covered by the amendment, proposed amendment, application or permit requires the owner of land to -

(d) remove a right of way over the owner's land; or

(i) other land in the subdivision or consolidation; or

and that the removal or acquisition will not result in an unreasonable loss of amenity in the area affected by the removal or acquisition, the owner may apply to the Victorian Civil and Administrative Tribunal for leave to remove the right of way or acquire or remove the easement compulsorily.

(1AA) In conferring powers on a Council or referral authority under sub-section (1) it is the intention of Parliament that, in considering a matter for the purposes of that sub-section, the Council or referral authority should make an assessment of the engineering and amenity aspects of the matter, is not bound to notify anyone affected or to hear objections, but objections to that assessment may be raised before the Tribunal.

(1A) The Tribunal may give leave subject to any conditions it thinks fit.

1. Section 36(2) relates to the registration and compensation arrangements if leave is given, and is not relevant in these proceedings.
2. The section 36 framework is complex and the wording of the provision is cumbersome. However, the consequence of the s 36 process is the compulsory acquisition by one private landowner of an interest in the land of another private landowner. This may have potentially significant impacts for the landowner whose interest is sought to be acquired, and there is no Public Acquisition Overlay or 'public purpose' test such as commonly applies to the compulsory acquisition of land by public authorities. Despite the potential for compensation to be paid, a provision that facilitates compulsory acquisition and affects private interests in land in this way must therefore be very carefully considered and strictly applied.
3. In this context, it is useful to break s 36(1) down into its constituent parts[2], as a means of isolating discrete elements relevant to its proper interpretation and application in relation to the obtaining of a s 36 statement and the compulsory acquisition of an easement for access over private land. From this, the following principles can be adduced:

1. The Council[3] must make the s 36 statement. However, given the right of review in s 40(2) of the Subdivision Act 1988, if the Council refuses to make the statement, the Tribunal on review can itself make the statement or direct the Council to make the statement[4]. 2. The Council is not 'at large' in exercising its power to make a s 36 statement. It can only do so in the circumstances described - i.e. if there is a 'trigger' through considering a proposed planning scheme amendment or permit application, in implementing a planning scheme amendment, or in a condition in a permit.

1. It follows that a landowner can also only seek a s 36 statement if one of the trigger circumstances applies. There is however no requirement for a landowner to formally 'request' a s 36 statement, or to do so in writing. The Council could conceivably act of its own volition, provided one of the trigger circumstances applies. However, a right of review can only sensibly arise if there has been a 'request' or 'application' by an 'owner' that has been 'refused'[5].

1. If the s 36 trigger is a permit application, the 'permit' is any planning permit under the Planning and Environment Act 1987[6]. The permit does not have to be a permit for subdivision or consolidation[7]. There is nothing inherent in the wording of s 36(1), by itself, that prevents a s 36 trigger from arising through a planning permit application for some other use or development. However, the need to comply with all of the other elements of s 36 will necessarily operate as an indirect fetter to the sorts of permit applications that might act as a trigger. The provision may thus be triggered pro-actively, and not only as a consequence of a permit application for subdivision, and could conceivably arise through a permit application for the creation of an easement[8] or where the primary purpose of the permit application is to trigger s 36 to obtain a statement. The power of a Council to make a s 36 statement is however 'subsidiary' to the consideration of the permit application[9]. 2. The Council must be satisfied that access to the 'land covered by the application' requires the acquisition of an easement over 'other land'. There must be two discrete land parcels involved. 3. By reference to the two preceding elements, there is potentially a significant constraint on using a permit application for the creation of an easement as the sole basis for triggering the s 36 process to acquire that easement. If the permit application covers exactly the same land as the land over which the easement is sought, there is no 'other land' for the purpose of s 36(1)(e), and a necessary pre-condition to the s 36 process would not be met. 4. The Council's s 36 statement must be 'in writing'. However, this requirement is satisfied if the s 36 statement is included as a permit condition. 5. The Council must consider that the 'economical and efficient' access to the land requires the acquisition of the easement. These terms are used conjunctively, and both must be objectively satisfied[10]. 6. Critically, the consideration of the relevant factors must lead to a view that the landowner 'requires' acquisition of the easement. The word 'requires' in this context must be given its plain meaning - i.e. the easement must be necessary or indispensable, rather than merely useful or desirable or convenient[11]. If the matter can be resolved by any reasonable or practical means, other than the creation of the easement, that means should be adopted and preferred[12]. 7. By reference to the two preceding elements, it is not sufficient for the landowner to demonstrate that the easement will simply improve the economic return from the land or facilitate improved and more efficient access. For an easement to be 'required', it is necessary to demonstrate that there is a real and material impediment to be overcome. For example, without limiting how this might be demonstrated in a particular case, it might need to be demonstrated that the use and development of the land is not technically or economically viable without the acquisition of the easement. Normally, supporting evidence would be required to support such a claim on both of these 'economical' and 'efficient' grounds. 8. The 'necessity' for the easement is not limited to the existing use or development of the land, but may arise from its future use or development. However, this does not require the Council to consider 'at large' the future potential of the land - rather it allows the Council to consider whether an easement is required in the context of any future use or development specifically contemplated by the permit application before it.

1. The Council must, in considering all of the matters under s 36, make an assessment of the engineering and amenity aspects of the matter[13]. The separate references to 'engineering' and amenity' aspects in s 36 suggests that the relevant factors to be taken into account by the Council in deciding to make a s 36 statement are not limited solely to either technical or planning considerations, but involve both.

1. The Council must also consider that the acquisition of the easement will not result in an unreasonable loss of amenity in the area affected by the acquisition. This is an additional constraint that applies even if the easement is 'required'[14]. The 'affected area' may presumably vary from case to case, depending on the nature of the acquisition. In some instances, the immediate area affected by the acquisition may only be the land over which the easement is sought. In other instances, a changed access arrangement may have broader amenity impacts to be assessed - eg. different traffic patterns, noise etc. 2. The s 36 statement is required before a landowner can apply to the Tribunal for leave to compulsorily acquire an easement. The statement and leave cannot be sought from the Tribunal at the same time[15]. 3. The requirement to obtain leave from the Tribunal after a s 36 statement has been obtained, and the fact that the Tribunal has been given no clear decision guidelines but can grant leave on such terms as it deems fit, suggests that there is still an overriding test of reasonableness that may be applied to the compulsory acquisition according to the circumstances of a particular case. A Council's s 36 statement that the easement is 'required' is not, by itself, determinative, but only a necessary pre-condition to the leave application to the Tribunal[16].
2. The parties before me did not universally 'agree' on all of the elements of s 36 outlined above - no doubt because particular findings on the interpretation of s 36 affect the application of the provision in the particular circumstances of these proceedings. However, I believe that the principles that I have outlined respond to the competing arguments before me and properly reflect the intent of s 36, and the strict interpretation that ought to be given to its wording given the serious outcomes the provision potentially facilitates.

Application of s 36 to the present proceedings

1. When the proper interpretation of s 36 is applied to the facts, submissions and evidence of the parties in this case, it is my view that the applications before the Tribunal clearly fail for a number of reasons.
2. Although witness statements were filed on behalf of both Mr Snipe and Mr al Pozzo and they were called by their respective Counsel to give evidence, this was limited in its usefulness to an understanding of the present layout, and the current and proposed use of both No. 87 and No.89 Killara Road. The circumstances of whether a carriageway easement had been intended by the original developer or under the 1987 permit, and the past use of the No.89 driveway, are largely irrelevant to the matters under the permit application or under s 36 of the Subdivision Act 1988. As I have indicated, no reliance can be placed on the 1987 permit as a basis for now creating a carriageway easement. I endorse the conclusion of the responsible authority in this regard.
3. In this matter, the applicant has sought a planning permit for the sole purpose of creating the carriageway easement over the No. 89 driveway. This is still a sufficient 'application for a permit' to initially trigger s 36 of the Subdivision Act 1988, and the applicant has formally requested the Council to make a s 36 statement when considering the application. Given there is no other use or development sought by the applicant, it is appropriate for the Council to have considered the matters together. Whilst the s 36 statement is, in a sense, subsidiary to the permit application, the Council does not have to determine the permit application first. The Council must deal with the request for a s 36 statement 'when considering' the permit application.
4. Despite the above, it is not apparent to me from the responsible authority's submission, or the officer report, that the responsible authority has recognised that its joint consideration of both the permit application and request for the s 36 statement must still ultimately lead to the exercise of two separate discretions - i.e. to grant or refuse the permit, and to make or refuse the statement . Based on my observations as to the proper interpretation of s 36, I do not agree with the responsible authority's first ground of permit refusal - i.e. that the proposal is inconsistent with s 36 and ought to have been made in conjunction with an application for subdivision. Whilst I appreciate that it is difficult where the permit application and request for a s 36 statement are as intertwined as they are in this case, the permit application has a separate status, and must still be determined by the responsible authority on its merits irrespective of the view the Council ultimately takes on the s 36 statement.
5. I nonetheless find that the responsible authority's second ground of permit refusal is substantiated. Based on the largely uncontested evidence of the respondent as to the use of his outdoor area (i.e. the No. 89 driveway) for the testing of construction machinery and rigs on a regular basis, I am satisfied that the proposal contemplated by the permit application (i.e. the creation of a carriageway easement over that driveway) would unreasonably impact on the respondent's ability to carry out the legitimate business activities for which the land is used. If looking at the merits of the permit application in isolation, I would refuse the application on such basis. I find nothing in the applicant's references to various planning scheme provisions, zone controls or policies to warrant a different view. Those provisions in any event apply just as much to support the respondent's efficient use of its land for industrial purposes as to the applicant's attempts to maximise the potential industrial use of its land.
6. In considering the request for the s 36 statement within the context of the permit application, it is my view that several of the necessary elements of s 36 are not satisfied, and it is appropriate that no s 36 statement be made.
7. In both the application for permit, and the application for review to this Tribunal, the applicant has identified the land at No. 89 as the land description for the land covered by the applications. The applicant also seeks a s 36 statement acknowledging that an easement is 'required' over this very same land. There is therefore no 'other land' for the purpose of s 36(1)(e)[17], and a necessary pre-condition to the operation of s 36 in this case has not been met. If there had been, for example, an application for a redevelopment or re-subdivision of No. 87 that triggered, at least in the permit applicant's mind, a need for access over the No. 89 driveway, then two discrete parcels of land would be involved. However, no such circumstance arises here.
8. More particularly, I am not at all satisfied that the 'economical and efficient' access to No. 87 'requires' the acquisition of a carriageway easement over the No. 89 driveway. Mr Peake for the applicant submitted that these elements were satisfied for the following reasons: it facilitates the originally contemplated access, it enables efficient use through the provision of front and rear access to the warehouse, it would facilitate the use of the factory in more than one occupancy, and it would facilitate flexible interior use in accordance with the building regulations. However:
   • No evidence was provided on 'economical' access, or to demonstrate that the use of No.87 is in some way unviable without the easement;
   • No. 87 has its main access to Killara Road. The land is fully developed, and the office entrance and main warehouse entrance both front the road and enjoy continuing and unimpeded road access;
   • All of the car parking spaces at No. 87 have access to Killara Road;
   • I agree with the respondent's submission that many factories and warehouses in Melbourne, and in the immediate neighbourhood to the subject land, operate economically and efficiently without a second or rear access.
9. Whilst it may be desirable or convenient for the applicant at No.87 to have a second or rear access, this cannot be said in the circumstances of this case to be necessary or indispensable to the continuing or potential future use of No. 87. The existing factory/warehouse operations at No. 87 do not appear to commonly utilise the rear access, and there was no evidence that the applicant's existing warehouse operations have unduly suffered as a result of the boundary fencing erected by the respondent. To the extent, the applicant might seek the easement to facilitate a second occupancy operating from the rear of the warehouse at No. 87, this is again a matter that might be considered by the applicant to be desirable. However, it does not satisfy an objective test of being 'required' in the sense of being necessary or indispensable to the economical and efficient use of No. 87. The simple fact is that the factory/warehouse at No. 87 already enjoys a reasonable level of access to Killara Road.
10. There is one related issue deserving of separate mention. There is a fire door leading from the rear of the factory at No. 87 to the concrete apron behind the factory. The effect of the fence erected by the respondent is that this concrete apron is now, for practical purposes, 'land-locked' from Killara Road. The applicant contended that this fire door formed a necessary part of No. 87's compliance with building regulations, and that this compliance contemplated and necessitated egress from the fire door to a road or open space that could only be achieved with access along the No. 89 driveway.
11. Both the applicant and respondent adduced expert evidence on the operation and effect of relevant building regulations, and the maximum internal travel distances to fire exits that may result from different partitioning or internal use of the factory. I am satisfied on the evidence of Dr Ian Bennetts[18] that the factory at No. 87 may no longer comply in all instances with the 'deemed-to-satisfy' provisions of the Building Code of Australia with the absence of egress via the rear fire door to a road. However, I am equally satisfied on the evidence of Shane Leonard[19], and the concessions made by Dr Bennetts under cross-examination, that there are alternative solution assessments, or modifications or dispensations that are available and could be issued under the Building Code. I accept the evidence that it is a relatively 'common occurrence' for these alternatives to be utilised to vary maximum internal travel distances to fire exits. I also accept Mr Leonard's assessment that it is unlikely that a factory/warehouse such as No. 87 would commonly have extensive internal partitioning leading to the worst-case scenarios for internal travel distances contended for by the applicant.
12. Whilst it may be desirable to have a fire door at the rear of No. 87 ultimately having access to a road, the absence of this for all internal fit-out or use scenarios for No. 87 is not something that 'requires' a 6m wide carriageway easement along the No. 87 driveway. There appears to be reasonable and satisfactory means, other than the creation of the easement, to deal with this issue, and those other means should be preferred[20]. I also note that the respondent indicated in submissions and evidence that he was willing to reconfigure the gate in the fence near the rear fire door so as to facilitate emergency access from No. 87. This co-operative arrangement is to be encouraged.
13. As indicated, in considering whether to make a s 36 statement, the decision maker must consider both the engineering and amenity impacts. The consideration of amenity in this context perhaps raises something akin to a 'net benefit' consideration as between the benefits to the applicant compared to the potential detriment to the respondent or others in the vicinity. It would be a curious outcome in my opinion if one landowner could compulsorily acquire an easement based on a desire to improve the economical or efficient use of its land, and thus obtain an interest in an adjoining landowner's land that had the effect of materially reducing the economical or efficient use of that adjoining land. There is no net planning or amenity benefit in the present case achieved by favouring the applicant over the respondent in such a way. Clearly a higher level imperative is required to merit the applicant's use of the s 36 process.
14. I am also not satisfied that the acquisition of an easement would not result in an unreasonable loss of amenity in the area affected by the acquisition. I agree with the submission by the respondent that the immediately affected area in this instance is the respondent's land. I also accept the respondent's evidence that, if the easement is created, he would be unreasonably constrained in his ability to use the outdoor area (i.e. the No. 89 driveway) for the regular testing of construction machinery and rigs, which is the primary purpose for which the land was purchased and is being used.

1. It follows, by reason of all of the above, that the permit application for the creation of an easement ought to be refused, and that there is no proper basis for the making of a statement under s 36 of the Subdivision Act 1988 for the acquisition of such an easement.

[1] See also Cope v. Hobson's Bay CC [2004] VCAT 2487 at [44] per then President Justice Morris

[2] This was also the approach adopted by the applicant and respondent at the hearing before me, albeit with differing views on a number of elements. It is also worth noting that Member (and now Deputy President) Gibson had set out some of the principles applying to the s 36 process in an annexure to her decision in Ogrodnick v Wellington SC (1996) 17 AATR 41, 42. Those principles remain sound although her decision pre-dates VPP-based planning schemes, and some subsequent amendments to s 36.

[3] To avoid confusion, and because there is no relevant referral authority in this case, references to a 'referral authority' in s 36 are omitted in this discussion. However, s 36 and the principles outlined here apply equally to a Council or a referral authority.

[4] applying s 51(1)(a) of the Victorian Civil and Administrative Tribunal Act 1998, and following Clarcor Pty Ltd v Maroondah CC [2003] VCAT 435 at [15]- [16]

[5] and given the specific wording of the review provision in s 40(2) of the Subdivision Act 1988.

[6] "permit" is defined in s 3 of the Subdivision Act 1988.

[7] Although the applicant contended that Clarcor (op cit, at [15]) might on a narrow reading lead to a view that the 'permit' application had to be an application for subdivision, the decision cannot be considered authority for that view. The reference to a 'subdivision' permit in that decision simply arises because the application in that case was for subdivision, and Senior Member Byard did not express any opinion of broader principle.

[8] eg. under s 23 of the Subdivision Act 1988 and clause 52.02 of all Victorian planning schemes.

[9] i.e. as the wording of s 36 suggests: "When considering ... an application for a permit ...". See also Clarcor (op cit) at [15]

[10] applying Barnett v Frankston CC [2005] 21 VPR 157 at [90]

[11] generally applying Barnett (op cit) at [88]. It is also interesting to note that the 1994 amendments to s 36 were prefaced, in the second reading speech in Parliament, to avoid a carriageway easement being obtained 'for convenience rather than to solve a genuine access problem' and to provide for the assessment of amenity as an additional consideration to technical aspects of the matter.

[13] Section 36(1AA) of the Subdivision Act 1988. The reference to engineering aspects was added to s 36 in 1991 and the further reference to amenity aspects was added in 1994. (See also footnote 11)

[14] The word 'and' is again used conjunctively in applying this element. (See also footnote 11)

[15] Following my earlier decision in this matter, striking out a leave application as premature. See JT Snipe Investments Pty Ltd v Hume CC (Real Property) [2007] VCAT 755

[16] There may also be other matters to be considered, and it is useful to note that an application for leave is heard by the Tribunal in its 'Real Property List', rather than the 'Planning and Environment List' that exercises the review jurisdiction in relation to the making of a s 36 statement.

[17] applying elements 'e' and 'f' discussed in para 14 above

[18] Principal risk consultant with Noel Arnold & Associates, called by the applicant

[19] Building Surveyor with Philip Chun & Associates, called by the respondent

[20] applying element 'i' discussed in para 14 above