[2004] VCAT 1855

The decision of the Responsible Authority is affirmed. It is directed that no permit issue.

Mr James Iles, Town Planner. He called evidence from Mr Digby Thackeray, former principal consultant in waste management and recycling, EPA Victoria. The applicant, Mr Leonard was also given leave to make a personal submission.

1 This application for review raises as a principal issue the desirable density of unsewered human settlement in an open, potable, water supply catchment and how such settlement should be managed, in order to protect both the quantity and quality of water harvested within the catchment.

2 The permit applicant, Mr Leonard, seeks permission to construct and use a dwelling on land that is without reticulated water or sewerage, which is zoned Rural and has an area of 2.75 hectares - when the preferred lot size is 40 hectares.

3 The land is located approximately 1km to the west of the small hamlet of Dunnstown. Mr Leonard, an electrician with a farming family background, claims connection with Dunnstown and would like to set up house in the area, which is some 10 minutes drive from Ballarat.

4 The local council refused to grant a permit, not because it wanted to but because it was bound to do so as the relevant water authority, Central Highlands Water, objected to the application for permit. Mr Leonard has applied to this Tribunal under Section 77 of the Planning and Environment Act 1987 (the Act) for review of this decision.

5 The subject land is located on the north-west corner of Ti-Tree Road and Tierneys Road. The land is triangular in shape and is relatively flat. It slopes towards an intermittent creek which runs roughly parallel to and on the opposite side of Tierneys Road. This watercourse is located within 100m of the subject land and would eventually drain into the Lal Lal Reservoir, some 15km away. The reservoir is the main water supply source for the regional city of Ballarat.

6 Mr Glossop at page 12 of his submission noted that the Lal Lal Catchment was gazetted as a special drinking water supply catchment in 1973, making it one of the Shire's oldest drinking water catchments. The catchment comprises an area of 219 km2 most of which is held in private ownership and is zoned Rural. There are however a number of small, unsewered towns in the catchment, including Dunnstown. Land use within the catchment includes potato farming, some cropping and grazing and very low density residential development. Most of the catchment has high quality Class 1 or 2 soils with agriculture being either intensive or semi-intensive.

7 By way of background, in 1990 a differently constituted division of the then Administrative Appeals Tribunal considered and rejected a similar application for permit to construct a dwelling on this land (Appeal No. 1989/38030 West Moorabool Water Board and Shire of Buninyong v R. & D. Harden). The concluding three paragraphs of that decision are worth repeating here:

Most of the concentration with respect to the cross-examination of all witnesses related to the likely risk of contamination of water supply from the effluent disposal system. The Tribunal is reasonably satisfied that if an appropriate system is installed and maintained in efficient working order, then any chemical waste should not constitute a significant problem beyond the site. The Tribunal noted that the exact situation with respect to ground water levels was not adequately measured to cover the range of seasons for the year. However, as with all septic systems, unusual conditions can be allowed to develop and proper maintenance may not always occur. Though the Council has a very thorough policy of supervision, that can never reach the stage where there is virtually continuous monitoring of the system. That depends on the responsibility of the owner and may, through negligence or ignorance, not receive adequate attention at the time when problems occur. The Tribunal is also mindful that though this dwelling is beyond the 100 metre Stream Buffer Zone, it is not far removed from this buffer and hence the potential impact is greater than with a property at a greater distance.

However, it is not only the issue of human waste but of the changed pattern of land use that lies at the root of the problem. Though it is acknowledged that existing farm practices do allow wastes to reach the water supply, those practices are constantly being improved - perhaps due largely to the costs of fertilisers, and on balance do not constitute the same degree of threat to the quality of water that a more dense pattern of land occupation is likely to produce. Though it may be unrealistic to assume that the 3,000 existing allotments in the Lal Lal catchment will be all developed, it is not unrealistic to take the view that if a permit is granted in this case and in similar cases, then there is likely to be an exponential increase in applications in the near future. The risks with respect to water quality of such a process are too great to responsibly leave with future generations. It is preferable to err on the side of caution - at least until such a time as appropriate planning policies are operational with respect to existing townships and preferred areas for rural residential development.

The main thrust of Planning Scheme requirements is clear. The proposal would fly in the face of encouragement to retain good quality land for efficient farming and would contribute, with other such development, to a risk to the quality of the water supply in the Lal Lal Reservoir. Though such a conclusion may well represent a considerable disappointment for the Applicants, any advice that they have received concerning the purchase of this site must surely have alerted them to the long history of planning conflict within this area and also to the general trend of planning appeal decisions regarding similar situations. The Tribunal would be surprised if those who bought the site and those who sold it were not fully aware of the risks involved.

8 In the Rural Zone under the Moorabool Planning Scheme, unless a parcel of land has an area of 40 hectares or more its use for the purpose of a dwelling requires a permit. A permit is also required in the zone to construct a building for a permit required use as well as to construct any building within 100m of a watercourse. The proposed dwelling would be located 59m from a watercourse.

9 At Clause 35.01 of the Scheme the stated purpose of the Rural Zone, in addition to implementing the State and Local Planning Policy Framework is to:

Provide for the sustainable use of land for extensive animal husbandry (including dairying and grazing) and crop grazing, including horticulture and timber production.

* Protection and creation of an 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.

10 The subject land is also within a area affected by an Environmental Significance Overlay. The relevant schedule is Schedule 1 which refers to proclaimed water catchment areas. The environmental objectives to be achieved under Schedule 1 are:

* To protect the quality and quantity of water produced within proclaimed water catchments.

* To provide for appropriate development of land within proclaimed water catchments.

11 Within the ESO a permit is required to construct buildings and works and to remove vegetation. There are exceptions but these are not applicable here. Relevantly however one of the exceptions is in the case of the construction of a dwelling in a Rural Zone when the lot exceeds 40 hectares and its septic tank effluent absorption area is not located within 100m of a waterway or upstream of a dam or wetland and, among other things, no stormwater is discharged less than 100m from a waterway unless into an approved drainage system.

12 All applications under the ESO are required to be referred, pursuant to Section 55 of the Act, to the relevant water authority, in this case Central Highlands Water.

13 Even without the ESO, permit applications within a Special Water Supply Catchment Area listed in Schedule 5 of the Catchment and Land Protection Act 1994 and which provides water to a domestic supply, are required to be referred in accordance with Section 55 of the Act to the relevant water board or water supply authority pursuant to Clause 66 of the Planning Scheme.

14 If a referral authority objects to an application the responsible authority must refuse to grant a permit.

15 The subject application for permit was lodged with the Responsible Authority in July 2003. Following the giving of notice of the application under Section 52 of the Act no objections were received. The application was however referred to Central Highlands Water as the relevant water authority under the provisions of the Overlay and Clause 66 of the Scheme. The Authority in its correspondence with the Responsible Authority noted the outcome of the previous planning appeal in respect of this land and formally objected to the application on the following grounds:

1 The proposal would be inconsistent with the State Planning Policy Framework and the Local Planning Policy Framework.

2 The proposed development is inconsistent with the purpose of the zone, the applicable overlays and decision guidelines.

3 The proposal would contribute to the further fragmentation of agricultural land.

4 The application would be detrimental to surrounding agricultural land use.

5 The proposal to erect and occupy a dwelling would be contrary to the Ministerial Guidelines for Open Potable Water Supply catchments.

6 The proposal would be contrary to Central Highland Water's adopted catchment policy for this area.

7 The land was subject to an identical application in 1989 that was reviewed by the then Administrative Appeals Tribunal. The Tribunal resolved to uphold the appeal and directed that no permit be granted. The issues that decided that appeal remain unchanged, and if anything, have been further strengthened by the current state and local policies.

8 The proposal would create an undesirable precedent for other development.

16 In February 2004 the Responsible Authority considered the application and, not withstanding its officer's recommendation to refuse a permit resolved, having heard from the permit applicant, that it would have granted a permit subject conditions. The conditions included; moving the sewerage treatment system, the dwelling and the effluent disposal field so that these would be at least 100m from the watercourse and requiring the provision of a landscape and/or integrated land management plan. This plan was required to include details about planting indigenous species and a maintenance program and be prepared by a suitably experienced professional.

17 However, not withstanding the Council's support for the application, because Central Highlands Water had objected the Responsible Authority was obliged to issue a Notice of Refusal of permit. The stated ground for refusal was simply that the Authority had objected.

18 The application for review was lodged in March 2004. The grounds for review were essentially a rebuttal of the water authority's objections.

19 Some two weeks prior to the hearing Mr Iles, on behalf of the permit applicant, filed and served with the Tribunal and other parties a number of documents as follows:

* A revised land capability assessment by Bruce Cossins and Associates Consulting Civil and Structural Engineers. This included a site plan showing the effluent disposal envelopes set back at least 100m from the watercourse. It had been shown at 83m previously. Notably the plan made no mention of the location of the dwelling or the sewerage treatment system.

* A farm feasibility study and a separate witness statement by a Ms Elizabeth Hak. The documents indicated that Ms Hak has a diploma of applied science in farm management, a bachelor of applied science in chemistry and a graduate diploma in engineering (quality technology). Her report put forward the case that the land would be able after five years to sustain an economically profitable Fuji apple orchard. Accompanying plans showed the dwelling in the original position of 59m from the watercourse and with the apple tree rows along the western side of the land, including across the area indicated on the latest land capability assessment plan as the effluent disposal field.

* A witness statement from Mr Digby Thackeray a graduate in applied science from RMIT with 30 years of experience within the recycling industry principally solid waste recycling in plastics, glass and paper.

20 Only Mr Thackeray was made available for cross-examination. Accordingly, the evidence of Mr Cossins and Ms Hak was not able to be tested by cross-examination.

21 At the hearing the parties' representatives tabled and spoke to written submissions. These together with the plans, photographs and the considerable number of former Tribunal decisions - all of which have been read by the Tribunal - have been attached to the Tribunal's file. Following the hearing I inspected the subject land and surrounding area as well as the hamlet of Dunnstown.

22 Also following the hearing Mr Iles forwarded a copy of a letter addressed to Mr Thackeray from the Chairman of the Environment Protection Authority. This letter was dated after the date of the hearing and was not requested by the Tribunal. Copies were however circulated to other parties. The letter referred to the Department of Infrastructure's Interim Guidelines for Waste Water Treatment in Potable Water Catchments. I am not persuaded that it makes any contribution to the issues in this proceeding. It simply states what the interim guidelines already state namely that the density of dwellings should not be greater than 1 per 40 hectares but that this may be able to be varied if a land capability assessment carried out in accordance with the EPA's Septic Tank Code of Practice indicates that a greater or lesser density is appropriate. What the letter fails to point out however is that this may be considered if a catchment management plan has also been prepared and included in the Planning Scheme. This has not occurred here.

23 Clause 65 of the Planning Scheme sets out decision guidelines that must be considered, as appropriate, before deciding on any application for permit. This clause commences with the following relevant statement:

Because a permit can be granted does not imply that a permit should or will be granted. The responsible authority must decide whether the proposal will produce acceptable outcomes in terms of the decision guidelines of this clause.

24 The decision guidelines relevant to the issues in this application were set out in some detail in the written submissions of the parties and were not in particular contention. These decision guidelines includes the purpose of the Rural Zone, the environmental objectives to be achieved by the overlay, the State and Local Planning Policy Framework relevant to catchments and rural development and the matters able to be considered under Section 60 of the Act. In this case the matters under Section 60 would extend to include the interim guidelines for planning permit applications in open potable water supply catchment areas, referred to earlier as well as the July 2003 Water Catchment Protection Policy Protecting Water Quality in the Moorabool Shire. This latter policy was prepared by the four water authorities (including CHRWA) listed as referral authorities in Moorabool's Planning Scheme.

25 Both the State Planning Policy Framework and the Local Planning Policy Framework emphasise the importance of protecting the quality and quantity of water in water catchments. The Moorabool Shire is especially noted for its extensive areas comprising potable water supply catchments. The catchments serve both a local need as well as a regional need, outside of the municipality - most notably the water needs for the City of Ballarat.

26 At Clause 21.08, the use and management of land within catchments is referred to as critical for the protection of water quality. At Clause 22.01 a local policy for townships and settlements is set out. The maintenance of the distinctive character of townships such as Dunnstown is recognised. In this regard it is a basis of the policy that maintenance of the distinctive rural character and living environments that differentiate the townships from metropolitan Melbourne be preserved and that:

Development of these settlements must consider limitations on ultimate size, providing a "hard edge" to urban development, consolidating development around existing and planned infrastructure, ensuring a clear separation between towns and farming activities and providing strong attention to environmental values and high quality design objectives.

27 Later at Clause 22.07 a local policy for houses and house lot excisions in rural areas is set out. The clause entitled Policy Basis refers to inappropriate fragmentation and housing development that could compromise the ongoing agricultural viability of rural areas of the shire. While the policy recognises that small lots may be excised in order to accommodate existing dwellings it notes, for example, that in water supply catchment areas small lot subdivision will be strongly discouraged in order to protect water quantity and quality.

28 A reading of the Planning Scheme provisions, in particular the Rural Zone and overlay controls confirms that the area of 40 hectares has a special significance as does a setback of 100m from a watercourse.

29 These figures are repeated in the two other relevant documents which this Tribunal may have regard to pursuant to Section 60 of the Act namely the Interim Guidelines and the Water Catchment Protection Policy. At page 5 of the Water Catchment Policy, which is the most current policy document, it is stated that within a proclaimed water catchment dwelling density generally should not exceed 1:40 hectares within the Rural, Rural Living and Environmental Rural Zones and that dwelling density will be established by calculating the number of dwellings within a 1km radius of the site of the proposed dwelling - except that areas of public land will not be included when calculating dwelling density. The policy goes on to state:

A density of one dwelling per 40 hectares of land is considered to be a reasonable benchmark of dwelling density in special water supply catchments having regard to the current state of scientific knowledge and the precautionary principle. The water authorities will take the following matters into consideration when assessing dwelling density in a particular area:

* The proximity of the land to a water supply reservoir and/or a waterway.

* The time taken for water from the site to travel to a water supply reservoir.

* The link between the proposal and the use of the land for a productive agricultural purpose.

* The existing lot and dwelling pattern in the vicinity of the site.

* Any site remediation or improvement works that form part of the application.

* The intensity or size of the development or use proposed and the amount of run-off that is likely to be generated.

30 A density of 1:40 hectares translates to approximately eight dwellings within a 1km radius (ie. 314 hectares) of a proposed development.

31 The number of unsewered dwellings within a 1km radius of the subject site - adopting Mr Glossop's cental point on the subject point - is 23. Of these, six are on land zoned Township within the hamlet of Dunnstown and it was agreed that one at least is derelict.

32 Mr Iles' 1km radius diagram - on the last page of his attachments - had its centre point at the far south-western corner of the subject land, thereby eliminating three and possibly four of the dwellings on Mr Glossop's equivalent plan, outside of the township. I have noted however that Mr Iles' plan fails to include two dwellings at the western side of his circle. Adding in these Mr Iles' 1km radius encompasses 14 dwellings and Mr Glossop's 16 - not including the derelict dwelling and Township Zoned properties. Adding a further dwelling, as is proposed here would give 15 or 18 dwellings within a 1km radius that is to say a density of approximately 1 to 20 hectares or 1 to 18 hectares respectively. This compares with the 1 to 40 hectare threshold below which a permit is required and below which the interim guidelines and Catchment Policy apply.

33 The principal issue in this proceeding was the intensity of unsewered, out of township, human settlement that would result from the grant of a permit and its implications for the quantity and quality of potable water within the Lal Lal Catchment.

34 The State and Local Planning Policy Framework recognises the importance of carefully managing development within catchments and, due to the additional implications for public health, within open potable water supply catchments in particular. To this end it is policy that small lot development beyond Township zoned boundaries be discouraged and the Rural Zone is applied over much of the catchment with its minimum subdivision size - except in certain specific circumstances -of 40 hectares.

35 While many of the existing townships within the catchment remain unsewered - including Dunnstown - it was submitted by Mr Glossop that this at least provides the opportunity for the introduction of reticulated sewerage at some future time. Of course the concentration of development within defined townships has a wider strategic basis than for simply catchment management. There are other social, economic and environmental advantages both for the township and as a means of protecting the viability of agricultural land, particularly given the very high land capability assessment which land within this catchment enjoys.

36 An important consideration in this catchment, as referred to by the Tribunal in the previous case, is the number of small allotments that exist within it. At page 3 of its decision the Tribunal refers to evidence confirming that there are in excess of three thousand (3,000) existing allotments in the Lal Lal Catchment. Most of these are original Crown allotments that date from the 1870s.

37 A real issue therefore is that of the precedent and/or expectation that can establish if a permit is granted for the construction of a dwelling on land that might otherwise be capable of being operated as part of a larger farm holding. Such approvals flag the possibility of a permit being granted for other lots and indeed this has occurred here, having regard to Mr Leonard's references to other properties close to Dunnstown that have obtained permits in more recent times. The resultant upward pressure on land values - from a rural farm value to a residential value - can seriously undermine the ability for such land to be purchased and economically farmed. Put simply the residential return outweighs the farm return. This flow-on effect has been referred to by the Tribunal in numerous other decisions including the previous decision in relation to this particular parcel of land.

38 An important driver in the water authority's opposition to this and similar applications has been the difficulty in defining or determining the point at which a series of what, on the face of it may appear innocuous changes, will combine to produce a tangible impact on the quality and quantity of potable water required to be harvested from this catchment.

39 It was Mr Glossop's submission that faced with this difficulty the proper approach is a strategic approach:

We say that this application could have been refused solely on the basis of its zoning and the Council's strategic vision for its rural areas. The fact that it is also within a drinking water catchment simply reinforces (if necessary) the desirability of refusing this application.

Submissions that merely demonstrate that the land is capable of containing effluent or that the land is provided with the basic infrastructure for rural living development miss the point. Planning schemes are driven by strategy and policy considerations. Very rarely will matters be determined on purely engineering terms. The appellant must justify this application in a strategic sense, not simply demonstrate that a house can be physically accommodated on the land. We say that this will be difficult given the content of the Moorabool Planning Scheme.

40 In support of this Mr Glossop referred me to the observations of Planning Panels Victoria in its final report on the new format planning schemes dated April 1999. The following extract, referring to the Panel report, is from paragraph 28 of Mr Glossop's submission:

Section 5 of the report examines the relationship between land use planning and catchment management. Good catchment management practices are especially important in open catchments, where a range of land uses and activities are possible. The report emphasises the need for decision-makers to adopt a consistent approach to catchment management over a long period of time. At page 29, the report states that:

"No doubt in Sydney there was no one single development or land management practice that led to the contamination of its water. More likely, it was the incremental creep of many minor decisions, omissions and oversights that led to the current problem. It is the cumulative impact of individually insignificant developments and activities that must always be considered and guarded against. Two key sources of pollution in this respect are septic tanks and farming practices.

41 The case for the applicant was to the effect that in this particular case, despite the small size of the site, development of a dwelling need not necessarily prevent the land from being used, consistent with the purpose of the zone for an agricultural purpose - namely a Fuji apple orchard.

42 It was Mr Iles' submission and based on the evidence of Mr Thackeray and the Land Capability Report and Farm Management Report of Mr Cossins and Ms Hak respectively that this could occur without any tangible impact on water quality within the catchment. A further benefit, as submitted by Mr Leonard, was that his household could participate in and thereby provide an economic and social benefit for the Dunnstown community - despite being located outside of the township boundary.

43 The difficulty with Mr Iles' argument and as found by the Tribunal in the previous case is that there can be no guarantee that the fruit growing venture will continue for all time.

44 It is also difficult in this particular case to ignore the fact that it was only in the lead up to the hearing of this application for review that Mr Leonard determined to add orcharding to his professional pursuits. It could not be said therefore that the dwelling is required in order to conduct the agricultural pursuit. Rather, in Mr Leonard's case the opposite applies.

45 In addition, because Ms Hak was not made available for cross-examination her contention that the growing of apples could be economically profitable and environmentally sustainable was not able to be tested. This makes it difficult for me to accord much weight to her opinions. In particular, I have reservations about the security of any water supply required to sustain such an intensive fruit growing activity.

46 Should Mr Leonard find it uneconomic or otherwise unfeasible to produce and sell apples from this land for all his days what then?

47 I have not been able to be persuaded that the possibility of apple production being economic on this land is sufficient to overcome the otherwise strategic discouragement for dwellings to be approved on small lots outside of the defined township within this potable water supply catchment.

48 On the matter of the possible environmental impacts of a dwelling on this land again, as in the previous case, I am reasonably satisfied from the evidence of Mr Thackeray and from the two land capability assessments by Mr Cossins that the disposal of waste water can comply with the Septic Tank Code of Practice.

49 However, if compliance with this Code was all that was required of residential developments within a potable water supply catchment it could reasonably be anticipated that the only control necessary in such areas or indeed elsewhere within the Rural Zone would be for compliance with this Code. However this is not the case.

50 The water authority is not in a position to state at what intensity of human settlement or indeed agricultural intensity the quality and quantity of potable water in the catchment might be compromised - other than to accept that at an intensity of one per 40 hectares and with appropriate watercourse setbacks there is unlikely to be much of a problem.

51 Below this the proximity of a site to an uptake reservoir and/or tributary stream or more particularly the time taken for surface and sub-surface waters to reach the reservoir has relevance, as do issues such as the long-term maintenance of waste disposal systems and the other impacts of human settlement associated with residential use.

52 The water authority concedes that in the vicinity of the subject site an intensity of 1 to 40 hectares may be unduly conservative given the 15km distance from the reservoir albeit that a watercourse is proximate. It was Mr Glossop's submission that the Authority could be prepared to accept a ratio of 1 to 30 hectares, established by calculating the number of dwellings within a 1km radius to the proposed dwelling. Applying this test the addition of the proposed dwelling would give an intensity of 1 to 18 hectares applying Mr Glossop's calculations or one to 20 hectares applying Mr Iles' calculations.

53 On either measure the resultant intensity is significantly lower than 1 to 30 hectares.

54 I have not been able to be persuaded that there are any mitigating circumstances that should cause me to go so far beyond the suggested policy outcome. Indeed, having regard to the fact that in most respects this is a repeat appeal to that heard and determined in 1990 I am further persuaded that it is appropriate to find against the grant of a permit.

55 Since the earlier case the changes to the planning controls have, if anything, become more stringent - especially with the addition of the Environmental Significance Overlay. In the subject proposal a more up to date waste disposal system is proposed. This includes disinfection and incorporates an aerobic digestion process that, properly maintained, can produce the Class A 10/20/30 performance level required from municipal treatment plants. It must nevertheless be maintained by an individual household and there are stringent maintenance requirements. These include constraints on household cleansing agents, constraints on surge flows and low flows, three monthly checks by technicians and regular desludging.

56 The construction of a dwelling on this 2.76 hectare lot would convert the land for all time to a residential purpose. Inevitably it would set a precedent for other such lots to be so converted, thereby upping the value of such holdings within the catchment and at the same time reducing their economic viability for agricultural use. If, over time, more and more of these lots were to be converted, all with the need for individually maintained waste systems and with the many other associated impacts of residential occupation, then the water authority's concerns could well be realised. In the circumstances I find myself unable to ignore the strategic discouragement for such small, out of township, rural allotments to be converted to residential use.