Victorian Civil and Administrative Tribunal|2011-03-17

McKinnon Hotels Pty Ltd v Glen Eira CC (includes Summary) (Red Dot) [2011] VCAT 413 (17 March 2011)

The practice of VCAT is to designate cases of interest as 'Red Dot Decisions'. A summary is published and the reasons why the decision is of interest or significance are identified. The full text of the decision follows. This Red Dot Summary does not form part of the decision or reasons for decision.

REASONS WHY DECISION IS OF INTEREST OR SIGNIFICANCE

VPP Planning Schemes cl 52.28 & 63; extent of existing use rights for gaming in a hotel;

PRACTICE OR PROCEDURE - consideration of individual instance or systemic issues

whether establishment of existing use rights removes permit requirement for additional gaming machines under cl 52.28; meaning of "install and use"; whether installation of additional gaming machines still requires permit even if no permit required to use machines

CHANGE TO LEGISLATION OR VPPS - whether change to VPPs or statutory provisions is required or desirable

Clarification recommended to ensure policy intent is correctly reflected in Act and/or planning scheme

The McKinnon Hotel sought a declaration that a proposal to increase its gaming machine numbers did not require a planning permit from the responsible authority to install or use the additional gaming machines, by reason of existing use rights. It contended that it only required approval under the Gambling Regulation Act 2003.

The case was essentially one of planning scheme interpretation. The responsible authority did not materially contest the existence of some form of existing use rights, but contended that clause 52.28 of the Glen Eira Planning Scheme still applied to the proposal, and that a permit was still required to use and install additional gaming machines.

The Tribunal found that, when clause 52.28 was amended in 2006 to remove the 25% area rule under which the gaming had previously operated at the hotel, the McKinnon Hotel was being lawfully operated as a hotel for planning purposes. The lawful activities comprised within the use of land for the purpose of a hotel included the use of gaming machines within the hotel's existing gaming room. Clause 63.05 of the planning scheme allows such a use to continue despite a change in the scheme, provided any condition or restriction to which the use was subject continues to be met. Subject to any such condition or restriction, clause 63.05 does not operate to prevent the intensification of the use for the same purpose.

Applying relevant case law principles, the Tribunal found that, given that the purpose of the use of the McKinnon Hotel already included the activity of gaming machines in its existing gaming room, what was proposed in this case was an intensification of a lawful existing use, and not use for a new or different purpose.

By reference to s 6(3) of the Planning and Environment Act 1987, the Tribunal disagreed with the Council's contention that, despite the establishment of existing use rights, the current planning scheme must still be complied with, including the 'use' control on gaming now imposed under clause 52.28-2. The effect of the existing use rights, once established, is to prevent a limitation on those rights through a subsequent change to the scheme. It followed that a planning permit is not required under clause 52.28 to use additional gaming machines in the hotel's existing gaming room, although the use of additional machines may still require regulatory approval under the Gambling Regulation Act 2003.

Clause 52.28-2 provides that a permit is required to install or use a gaming machine. The applicant argued that the word 'install' should be given no separate status in clause 52.28-2, and that any alternative view would lead to an absurd outcome. The installation was just the placing of chattels or equipment on the floor of the premises, internal to the premises, and without planning impact.

The Tribunal nonetheless found that 'installation' and 'use' were two separate concepts in terms of planning, by reference to relevant aids to interpretation. Only the 'use' was protected by existing use rights. A planning permit was therefore still required to 'install' the additional machines.

The Tribunal commented on the practical implications of this finding, where a planning control over 'installation' alone is of limited utility if existing use rights are established. It has suggested that the policy intent and operation of this provision be clarified.

Planning and Environment Act 1987 s 149A; Glen Eira Planning Scheme cl 52.28 & 63; extent of existing use rights for gaming in a hotel; whether establishment of existing use rights removes permit requirement for additional gaming machines under cl 52.28; meaning of "install and use"; whether installation of additional gaming machines still requires permit even if no permit required to use machines

McKinnon Hotel Pty Ltd (as trustee for the McKinnon Hotel Business Trust)

McKinnon Hotels Pty Ltd v Glen Eira CC (includes Summary) (Red Dot) [2011] VCAT 413

Pursuant to s 149A of the Planning and Environment Act 1987, I determine that, in respect of the land at 251 McKinnon Road, McKinnon:

immediately prior to 18 October 2006, the land was being lawfully used for the purpose of a hotel. The lawful activities comprised within the use of the land for the purpose of a hotel included the use of gaming machines within the hotel's existing gaming room. 2. by reason of the existing use rights established as at 18 October 2006 (when clause 52.28 of the Glen Eira Planning Scheme was amended by Amendment VC39), a planning permit is not required under clause 52.28 of the planning scheme to 'use' additional gaming machines in the hotel's existing gaming room. The use of any additional gaming machines may still require regulatory approval under other legislation such as the Gambling Regulation Act 2003.

assuming that the land is not in a strip shopping centre (but reserving the opportunity to the parties to contest that assumption in any future proceeding), a planning permit is still required under clause 52.28-2 of the Glen Eira Planning Scheme to install additional gaming machines in the hotel's existing gaming room.
The application is otherwise dismissed.

Mr Nicholas Tweedie of counsel, instructed by O'Donnell Salzano Lawyers.

Mr Terence Williams, a director of the applicant company, and nominee of the McKinnon Hotel

The McKinnon Hotel currently has 19 electronic gaming machines, in a dedicated gaming room within the hotel. It seeks to increase the number of gaming machines within this existing gaming room.
The applicant seeks a declaration that its proposal does not require a planning permit from the Council to install or use the additional gaming machines, by reason of existing use rights. It contends that the only approval it requires is under the Gambling Regulation Act 2003. The Council contests this view.

The facts are not materially in dispute. The debate is essentially one of planning scheme interpretation. Indeed, the Council does not materially contest the existence of some form of existing use rights, but contends that clause 52.28 of the Glen Eira Planning Scheme still applies to the proposal.
Based on the largely uncontested evidence of Mr Terence Williams, a director and nominee of the McKinnon Hotel, and the submissions made on behalf of the applicant, I am satisfied that:
- A hotel has existed on the land for many years, perhaps since the 1860's.
- The hotel first operated as a gaming venue in 1985, and has had electronic gaming machines installed and operated continuously since that time in a dedicated gaming room that occupies about 9% of the floor area of the hotel premises.
- A venue operator's licence issued in March 1985 authorised not more than 25 gaming machines within the restricted area of the gaming room. 23 machines were operated until 22 June 2006 when the number of machines was reduced to 19, and the venue operator's licence was amended to reflect this reduction.
- The current venue operator's licence under the Gambling Regulation Act 2003, current until 2018, allows 19 machines in the gaming room area but this number is capable of being increased subject to approval under that Act.
- The existing gaming room has a theoretical capacity of more than 40 machines, and the hotel is hopeful of increasing its entitlement from 19 to 35 machines in 2012 when its current operating licence arrangement with Tabcorp expires.
A planning permit for hotel renovations issued by the Council in 1998 has endorsed plans that show provision for up to 35 gaming machines in the gaming room. This permit was essentially for 'buildings and works' rather than use.

It is common ground that from 1985 (when gaming machines were first established at the McKinnon Hotel) until 18 October 2006, despite the various iterations of planning schemes that existed over this period[1], the regulation of gaming machines for planning purposes remained relatively consistent - at least insofar as relevant to this matter. Effectively, no planning permit was required to install or use a gaming machine in a 'restricted area' (under the relevant gaming legislation) if that restricted area did not exceed 25% of the floor area where liquor may be consumed. This was known as 'the 25% rule'. The planning regulation was thus based on maximum floor area, rather than machine numbers.
The gaming machines at The McKinnon Hotel have always existed within an approved restricted area that occupies less than 25% of the floor area where liquor may be consumed. A planning permit to install and use the original 23 (now 19) machines was not therefore required, and the use continued lawfully.
On 18 October 2006, Amendment VC 39 amended all planning schemes, including the Glen Eira Planning Scheme. The Amendment amended clause 52.28 that related to gaming and until then had embodied the 25% rule. The 25 % rule was instead replaced by clause 52.28-2 which provides:

A permit is required to install or use a gaming machine.

This does not apply in either of the following circumstances:

Clause 52.28-3 or Clause 52.28-4 specifically prohibit a gaming machine.
the gaming machine is in an approved venue under the Gambling Regulation Act 2003 on 18 October 2006 and the maximum number of gaming machines for the approved venue on 18 October 2006 is not exceeded.

Subject to the limited exceptions, the new regulation essentially imposes a planning permit requirement for all new gaming machines, irrespective of floor area. The applicant concedes that, but for any existing use rights, clause 52.28-2 would apply to its proposal to increase the number of gaming machines at the McKinnon Hotel. The maximum number of gaming machines approved for the venue on 18 October 2006 was 19 machines, so the applicant would not come within the second dot point exemption in clause 52.28-2 with its proposal to increase the number of machines above the 19 it has at present.
There is an important difference between the parties' respective positions that should be noted. The applicant concedes that, but for existing use rights, it would be required to obtain a planning permit under clause 52.28-2. The Council however contends that the hotel is in a strip shopping centre and the use may be prohibited by reference to the first dot point in clause 52.28-2. The parties did not require me to decide this, but the Council merely wished to reserve its position on the issue. Subject to that reservation, I have considered the submissions on the basis that, but for existing use rights, the applicant would require a planning permit under clause 52.28-2.
The applicant's counsel took me to relevant principles pertaining to existing use rights established in cases such as City of Nunawading v Harrington[2], Norman v Gosford Shire Council[3], and more recently in Stonington City Council v Southern Property Corporation Pty Ltd[4]. The latter case discussed these principles in the context of clause 63 of all planning schemes (which deals with existing use rights) and in the specific context of a hotel. The Council did not contest these principles, and I do not need to canvass them here, save to say that existing use rights are concerned with the 'purpose' of a use rather than the actual use, which ought to be liberally construed at an appropriate level without a meticulous examination of component processes or activities. A use for which an existing use right is established may be intensified over time provided the use remains for the same purpose.
Applying these principles, the McKinnon Hotel clearly has existing use rights as a hotel. The characterisation of a 'hotel' use at that level of generality has been held to be appropriate[5], and neither party agitated for a different characterisation here.
Clause 63.05 of the planning scheme allows such a use to continue despite a change in the planning scheme, provided any condition or restriction to which the use was subject continues to be met. Such a condition or restriction should ordinarily be founded in a planning control (e.g. the planning scheme or a permit), rather than implied through an examination of the actual activities or components at a particular date[6]. However, subject to any such condition or restriction, clause 63.05 does not operate to prevent the intensification of the use for the same purpose.
When clause 52.28 was amended on 18 October 2006 to remove the 25% rule under which the gaming had operated, the McKinnon Hotel was being lawfully operated as a hotel for planning purposes. The lawful activities comprised within the use of land for the purpose of a hotel included the use of gaming machines within the hotel's existing gaming room. This lawful existing use for the purpose of a hotel was subject to a planning control that limited gaming machines to a restricted area occupying no more than 25% of the floor area available for the consumption of alcohol. Applying clause 63.05, I consider this to be a relevant restriction to which the use was then subject, and which must continue to be met if existing use rights are relied upon to continue the use. Subject to this, however, the existing use rights established as at 18 October 2006 allow for the intensification of the hotel use over time, and this would allow further gaming machines to be used, provided they remain within the restricted area of the existing gaming room.
The key to this finding is in considering whether the additional gaming machines would comprise an intensification of the purpose of the use for a hotel. Given that the purpose of the use of the McKinnon Hotel already includes the activity of gaming machines in the existing gaming room, and applying the principles from cases such as Norman v Gosford Shire Council[7] and Rockdale Municipal Council v Clark[8], I am satisfied that what is proposed here is an intensification of a lawful existing use, and not use for a new or different purpose.
For the record, had there been no gaming to date at the McKinnon Hotel, I am not convinced that the introduction of gaming machines for the first time would be an intensification of a hotel use for the same purpose, but rather the introduction of something quite different, or a different kind of operation[9]. I do not need to finally decide that issue here given the activity of gaming already clearly exists at the McKinnon Hotel.
There was some discussion at the hearing as to whether the existing use rights could extend beyond the existing gaming room to the full extent of 25% of the floor area. The applicant did not however pursue an establishment of existing use rights to that extent, and it is also unnecessary to finally decide that issue. However, I observe that the restriction in the planning control operating prior to 18 October 2006 was in relation to a 'restricted area' not greater than 25% of the floor area. The emphasis appears to be on the restricted area (i.e. here, the existing gaming room), and the applicant had never prior to 18 October 2006 pursued any notional planning scheme entitlement (insofar as it may have then existed) to extend its restricted area whilst that opportunity existed within the scheme. I therefore doubt that existing use rights would extend further than that contended for by the applicant in this case - i.e. within the existing gaming room.

Is a permit still required for 'use' under clause 52.28-2 despite the establishment of existing use rights?

The Council contends that, despite the establishment of existing use rights, the current planning scheme must still be complied with, including the additional 'use' control on gaming now imposed under clause 52.28-2. It was suggested that, although s 6(3) of the Planning and Environment Act 1987 provides that a planning scheme cannot prevent the continuation of a lawful existing use, the additional permit requirement in clause 52.28 did not offend that provision. On the Council's view, the existing use for the 'purpose' of a hotel is not affected, nor is the continuation of the activity of gaming within that use within the existing gaming room. There is merely a new permit requirement to use additional gaming machines.
The Council argued that its view was bolstered by three additional matters. First, the permit requirement in clause 52.28-2 is subject to an exemption (set out earlier in these reasons) where a gaming machine was previously approved and the maximum number for the approved venue is not exceeded. It was argued that this exemption would be redundant unless the permit trigger for additional machines also applied in an existing venue. Secondly, the Council argued that other applicants and other divisions of the Tribunal had implicitly operated on this basis. Thirdly, the Council argued that the Explanatory Report and Advisory Note to clause 52.28 supported its view and evinced an intention by the then government to require a planning permit for additional gaming machines in an existing venue.
I do not agree with the Council's view on these matters. Section 6(3) of the Planning and Environment Act 1987 means what it says in relation to the protection of a continuing use. I agree with the applicant that, to the extent a provision of a planning scheme purports to fetter the protection afforded by existing use rights, that provision would be ultra vires and invalid[10]. Planning schemes are a subordinate instrument that must be read subject to the overriding statutory protection of existing use rights, and not vice versa. Moreover, use provisions of more general application (i.e. not solely directed to existing uses) do not apply to uses for which an existing use right is established. This is the case whether the use provision is in a zone, an overlay or particular provision. All are parts of a planning scheme to which s 6(3) applies.
It is now a well-established principle of existing use rights that a use for which existing use rights are established may reasonably intensify over time (provided it is for the same purpose) without losing the protection afforded by s 6(3). In this case, the 'use' of additional gaming machines within the existing gaming room would comprise an intensification of the existing use within such a principle. The new permit requirement in clause 52.28-2, to the extent it introduces a 'use' control over gaming machines, cannot fetter the reasonable intensification of the McKinnon Hotel's existing use rights for the purpose of a hotel that includes the activity of gaming machines within the hotel's existing gaming room. To the extent a permit could conceivably be refused, the permit requirement in clause 52.28-2 would impose a fetter on those existing use rights, and does not therefore apply to the McKinnon Hotel's current proposal.
I do not consider that this conclusion makes the exemption in the second dot point of clause 52.28-2 redundant. That exemption reads as a transitional provision, protecting gaming machines already in existence in premises or that may not have the benefit of existing use rights, but not beyond the maximum approved under gaming legislation.
The Council referred me to cases where an existing use right did not remove the obligation to comply with other parts of the scheme, but these cases relate to the need to comply with new or additional controls on development, rather than controls affecting the protected use[11]. It is well established that where an existing use right is established, other planning scheme controls on matters other than use may still apply.
The Council also referred me to two cases where a permit had been granted by the Tribunal under clause 52.28-2 for additional gaming machines in a hotel where existing use rights had been established. However, in both cases, the reference to existing use rights for the hotel is made by way of general background. In neither case was it argued that the existing use rights removed the need for a permit, and it does not appear that the Tribunal or parties turned their minds to that issue. Those cases are not therefore helpful.
I do not consider the Explanatory Report or Advisory Note materially assist in addressing this issue. Both parties conceded some ambiguity in these documents, and the applicant pointed me to some parts of these documents (on other matters) that were plainly wrong. Whilst documents of this type may be an aid to the interpretation of clause 52.28, they cannot (and do not on their face purport to) remove the protection of existing use rights.
It follows that I do not accept the Council's argument that clause 52.28-2 operates to introduce a permit requirement for use that operates despite the existing use rights established here. I am satisfied that, by reason of the existing use rights established as at 18 October 2006, a permit is not required under clause 52.28 of the Glen Eira Planning Scheme to use additional gaming machines in the hotel's existing gaming room. The use of any additional gaming machines may still require regulatory approval under other legislation such as the Gambling Regulation Act 2003.

'Install' vs. 'use'. Is a permit still required to 'install' additional gaming machines despite the establishment of existing use rights?

Clause 52.28-2 (set out earlier in these reasons) provides that a permit is required to install or use a gaming machine. This raises the issue of what is meant by the words "install or use". Even if the establishment of existing use rights serves to protect the applicant from needing to obtain a planning permit to 'use' additional gaming machines in the existing gaming room at the McKinnon Hotel, is a planning permit nonetheless required under clause 52.28-2 to 'install' those machines?
It is well established that existing use rights (as the name implies, and as s6(3) of the Planning and Environment Act 1987 applies) only relate to 'use', and no clause equivalent to clause 63 appears in planning schemes that deals with existing development. There is no similar statutory protection afforded to existing development[12]. As indicated earlier, even where an existing use right is established, other planning scheme controls on matters other than use may still apply.
The applicant argued that the word 'install' should be given no separate status in clause 52.28-2. It was contended that the words "install or use", collectively and in context, related essentially to the use of the gaming machines, and that their installation was at most a constituent and necessary part of the use through the placing of the gaming machines in position so they could be operated by hotel patrons. The applicant indicated that any alternative view would be absurd, as the installation of the gaming machines was a benign act that was not a development or works intended for regulation under the planning scheme. It was just the placing of chattels or equipment on the floor of the premises, internal to the premises, and without planning impact.
It worth noting that the Council did not press strongly for the opposite conclusion, as its underlying concerns were primarily with 'use', and there may be little for the Council to consider or deal with in practical planning terms if faced with a permit application only for the installation of additional gaming machines. However, I have come to a different view to that promoted by the applicant on this issue.
First, the clause uses two separate words 'install or use'. If the draftsman had thought 'use' included installation, the word 'use' alone would have sufficed. Applying common principles of statutory interpretation, some meaning should be given to the draftsman's intent to use the two words instead of one, and some attempt should thus be made to give separate meaning to the additional word 'install'. This is particularly the case in the context where 'use' is such a fundamental concept to the way in which the planning system operates in Victoria.
The applicant referred me to the dictionary definition of 'install' (e.g. "to place in position for service or use"[13]), arguing that it provided little assistance. However, the dictionary definition does give separate status to the word 'install' as a precursor to use, and thus something other than the use itself.
Similarly, the applicant referred me to the limited references to 'install' or 'installation' in planning schemes. For example, the building and works control in clause 32.01-4 indicates that it does not apply to the installation of an ATM. Clause 52.04 provides that a permit is required to use land or to construct or install or carry out works for a satellite dish. The applicant again argued that this provided little assistance. However, these references both carry with them an implication that the concept of 'install' is a physical act more correlated to development or works, and thus something different to use.
The applicant argued that the installation of the gaming machines would not constitute 'development' or 'works' as those terms are defined in the Planning and Environment Act 1987. "Development" is however an inclusive (rather than exhaustive) definition, so the Act definition alone is inconclusive. Moreover, I agree with the Council that larger infrastructure installations would clearly constitute development or works, even if the placement of smaller chattels or equipment such as gaming machines may not. It may be a matter of fact and degree. Either way, as I have indicated, the word 'install' is more closely correlated to the concept of development and works, and is a different concept to 'use'. Furthermore, even if the installation of gaming machines is not strictly 'development' or 'works' in this case, that does not mean by default that it is 'use'. Unless the applicant could establish that the installation of gaming machines is part of the 'use' (which I do not believe would be the correct interpretation for the reasons I have indicated), the installation simply does not obtain the benefit of the existing use rights. Here, I consider the installation of the machines is not part of the use, but a precursor to it.
In the proceeding, I was referred generally to the Gambling Regulation Act 2003, albeit not in this specific context. Clause 52.28-2 refers to that Act, and it is part of the combined regulatory scheme for the control of gaming, and potentially an aid to interpretation in how particular words are used in the context of gaming. Although not argued before me, I note that provisions such as s 3.1.4 of that Act refer separately to the 'use' (in s 3.1/4(1)(a)) and 'installation' (in s 3.1.4(1)(c)) of gaming equipment in what comprises the 'conduct of gaming' under the Act. This is not strictly determinative of how the words 'install or use' should be construed in clause 52.28-2 of the planning scheme, but it perhaps bolsters the view I have reached.
It follows that I am of the view that the word 'install', where used in the phrase 'install or use' in the permit requirement in clause 52.28-2, necessarily means something different and additional to 'use', and a precursor to use. It relates to the installation of the gaming machines by the licensees or operators rather than their use by hotel patrons. In a planning context, it therefore presumably covers matters such as the layout and configuration of the gaming machines within the gaming room, and potentially the impact this may have on internal amenity. I doubt that it would include matters pertaining to the type of machines, or adjustments made to the machines to limit their operation, as these are not really planning matters but regulatory matters for the gaming authorities under the Gambling Regulation Act 2003. It is sufficient to note that the installation of additional gaming machines at the McKinnon Hotel is a separate concept to their 'use', and the installation does not therefore benefit from any protection given to existing 'use' rights.
Despite not requiring a permit for use, a permit would therefore still be required under clause 52.28-2 to install additional machines at the hotel.
Having reached this conclusion, it is perhaps worth making comment on the practical implications of it. The applicant is required to seek a planning permit merely to install additional gaming machines, even though the planning system does not commonly regulate the internal rearrangement of buildings or the placing of chattels or equipment within them. The broader implications of the use of the additional gaming machines are not a matter for planning consideration given the protection afforded here by existing use rights, albeit that those broader implications can, to some extent, be dealt with by the gaming regulators in any approval process required under the Gambling Regulation Act 2003.
I would not go so far as the applicant to say that these outcomes are 'absurd', but they do create a planning control of limited utility where existing use rights are established. It is not however for the Tribunal to change this outcome under the guise of statutory interpretation. Rather it is a matter for the regulators. If it is not intended to create a permit trigger to 'install' gaming machines and regulate that installation separately from 'use', then the words 'install or' should be deleted from clause 52.28-2. Alternatively, the intent should be clarified. If it is the intent that a planning permit should be obtained to use additional gaming machines as the Council here contends, even where existing use rights are established, then s6(3) of the Planning and Environment Act 1987 may require amendment[14]. These are policy matters for government.

[1] e.g. initially under the State Section of the former Moorabbin Planning Scheme and, following council amalgamations and the introduction of VPP-based schemes, under the predecessor clause 52.28 of the Glen Eira Planning Scheme.

[4] [2006] VSC 435 per Osborn J.

[5] e.g. in the Southern Property Corporation case referred to above.

[6] e.g. again, in the Southern Property Corporation case referred to above, although Osborn J found it unnecessary to finally decide this issue.

[9] cf Associated Minerals Consolidated Ltd v Wyong Shire Council [1975] AC 538, 557 (Privy Council)

[10] Following Kraan v Cardinia SC [2006] VCAT 1629 per DP Gibson

[11] E.g. my own decision in Mrocki v Port Phillip CC [2007] VCAT 1719

[12] unless some form of 'accrued right' has been obtained (for example, under a permit) for the purposes of the Interpretation of Legislation Act 1984 that maintains that right despite a change in legislation. It is not necessary to consider that issue in this case.

[14] e.g. similar to Codes of Practice under s 6(4A) that apply notwithstanding existing use rights.

Environment Act 1987

Legislation Act 1984

McKinnon Hotels Pty Ltd v Glen Eira CC

At a glance

Court

Decision date

Source

Judgment (49 paragraphs)

McKinnon Hotels Pty Ltd v Glen Eira CC (includes Summary) (Red Dot) [2011] VCAT 413 (17 March 2011)

Parties

Legislation Cited (3)

Cases Cited (1)