McInnes v Horsham Rural CC [2025] VCAT 406

Judgment (8 paragraphs)

[1]

The applicant submits it is inappropriate and unfair to require a section 173 agreement to prohibit further subdivision of the subject land. It submits the larger approved lot will have an area of 33.6ha, enabling the potential for further subdivision (subject to planning approval), given the minimum lot size in the schedule to the FZ is 16ha.
The applicant also drew the Tribunal's attention to JSW Brian Pty Ltd v South Gippsland SC [2019] VCAT 1730, ('JSW Brian Pty Ltd') heard before Senior Member ('SM') Daicic.
JSW Brian Pty Ltd involved the excision of an existing dwelling and subdivision of land in a FZ under the context and provisions of the South Gippsland Planning Scheme. While the responsible authority supported the issue of a permit for subdivision, it also included a section 173 agreement that prohibited further subdivision and no further dwellings to be constructed on the newly created lots, until such time as the subject land was rezoned to a residential or rural living zone.
It was common ground between the parties in that matter, there was an opportunity for a dwelling to be located on the Balance Lot created by the approved subdivision, without triggering a planning permit under the FZ and overlays that applied.
While accepting that a section 173 agreement could be legally applied to the subject land under the provisions of the relevant planning scheme and planning act, SM Daicic found it was 'unreasonable and unnecessary to impose a agreement that prevented the subdivision of the Balance Lot on the subject land, noting that the planning scheme enabled an application for subdivision to be made and considered by the responsible authority'.

I find it is not appropriate or necessary to require a section 173 agreement to restrict further subdivision of each lot on the subject land created under PA2400794.
While the decision of SM Daicic in JSW Brian Pty Ltd dealt with physical settings and policy differences to the matter before me, I agree with her finding regarding the use of section 173 agreements, that 'exceptional circumstances' should be demonstrated to warrant the imposition of a section 173 agreement that seeks to restrict further subdivision of the subject land. I have applied and given weight to that finding in my review of condition 6 on PA2400794.
I find the use of the section 173 agreement in this instance, 'fetters' the opportunity to assess any further subdivision and effectively removes the discretion to grant a planning permit for a subdivision form that is contemplated (albeit by discretion) by the planning scheme. I do not consider this achieves an orderly and proper planning outcome.
Apart from the provisions of state and local policy at clauses 14.01-1L and 1S, I was not taken to any exceptional circumstances that would warrant the imposition of this section 173 agreement as proposed. While I accept the section 173 agreement can be legally applied to the subject land, I have not been persuaded that this would translate into an orderly and proper planning outcome at this time.
I make these findings noting both council and the applicant have not undertaken a detailed land quality or capability assessment of the review site. Nor have they specifically assessed any potential impacts from further potential subdivision on existing vegetation, nor assessed impacts on water quality and protection. These are important considerations that form part of the decisions guidelines are expressed in the FZ and ESO that apply over the review site.
I was also advised there is no specific local policy in the planning scheme that specifically deals with small lot excisions or prohibits subdivision of lots into minimum 16ha in the FZ under particular circumstances. While council noted that new strategic planning work in this area was being considered, this work had not commenced at this time.
I was also advised by the applicant the existing dwelling on the smaller Lot 1 was not connected to the agricultural use of the larger proposed lot and has effectively been used for 'rural living' style purposes.
I accept that further subdivision of the subject land requires 'appropriate' and careful 'balancing' of policy provisions that seek to protect productive agricultural land and encourage tourism opportunities.
In this policy setting, I find the suite of decision guidelines expressed in the FZ and ESO provides a robust and appropriate planning assessment regime for the responsible authority, if a further subdivision of the subject land was contemplated and lodged by the land owner. I find the use of the section 173 agreement as proposed in condition 6 of PA2400794 is inappropriate. In my view it is unnecessary to apply the section 173 agreement in the manner proposed in PA2400794.

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Judgment (8 paragraphs)

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Legislation Cited (1)

Cases Cited (1)

McInnes v Horsham Rural CC [2025] VCAT 406 (7 May 2025)