Mr Egils Stokans, Solicitor, of Russell Kennedy. He called the following witness:

• Peter Ross Stenhouse, Town Planner, Manager Planning, Moira Shire Council

Mr N J Tweedie of Counsel, instructed by Deacons. He called as a witness:

• David Norman Merrett, Town Planner, ISIS Planning

3 These applications concern a proposal to convert an old 1960's style motel in Numurkah into low cost permanent rental accommodation and to subdivide the motel building into 19 lots.

4 Application P1357/2004 is made pursuant to section 77 of the Planning and Environment Act 1987 to review the refusal by the responsible authority to grant a permit for subdivision. Application P2453/2004 is made by the responsible authority, Moira Shire Council, pursuant to section 149A of the Act and seeks declarations that:

The use carried out on the subject land is, one of:

1.1

a Residential Village; or

1.2

a Residential Building; or

1.3

an innominate use under the broad heading of "Accommodation", which requires a permit under clause 32 of the Moira Planning Scheme.

and therefore the current use of the Subject Land is in contravention of the Moira Planning Scheme.

That the Internal Works (as described in this Application) do not benefit from the exemption contained within clause 62.02 of the Moira Planning Scheme relating to:

"The internal rearrangement of a building or works provided the gross floor area of the building, or the size of the works, is not increased."

and therefore a planning permit was and is required for the said Internal Works.

5 The subject land has operated for many years as a motel with some 18 units (bedroom plus bathroom) plus a manager's residence together with a playground, pool and parking area. The owner, Foxy Investments Pty Ltd, has recently carried out various works on the subject land, namely:

•

Removal of the playground and pool

•

The addition of basic cooking and kitchen facilities ("internal works") into each of the 18 motel rooms

•

Erection of signage relating to "Studio Apartments" and adding 18 post boxes

6 The result is that the former motel rooms have been converted from temporary accommodation to permanent residences which are rented out as studio apartments. No planning permit was obtained for the internal works or the change of use from motel. The first issue is whether a permit was required for the internal works and how the current use of the land should be characterised.

7 The second issue is whether a permit should be granted for subdivision of the motel building. The proposed subdivision would subdivide each of the 18 motel units and the former manager's unit into separate lots. The remainder of the land would be converted to common property in accordance with Plan of Proposed Subdivision No S3816. No unit has any private open space or designated car parking. The internal amenity of the units is minimal with little space for storage, sitting or entertaining, even at the most modest level, and there are no laundry facilities. The Council resolved to refuse the application on the following grounds:

The proposed subdivision would result in individually titled "dwelling units" which do not provide an appropriate standard of residential amenity.

The proposed subdivision would result in the creation of individual dwelling units lacking in private open space and car parking as would normally be associated with a dwelling unit.

The proposed subdivision would result in the creation of individual dwelling units insufficient in size to accommodate fixtures and facilities normally associated with a dwelling.

The proposed subdivision is not in keeping with the orderly planning of the area and will reduce the existing standard of residential amenity in the immediate area.

8 The subject land is zoned Residential 1 under the Moira Planning Scheme in which "dwelling" is an as of right use, but all other forms of accommodation require a permit. There is no condition or limitation on the number of dwellings for which land may be used in the Residential 1 Zone without requiring a permit.[1] Therefore, if the use for which the subject land is currently being used is for "dwelling", no use permit is required, but for all other types of accommodation (nominate or innominate) a permit for use is required.

9 In respect of buildings and works (development), clause 32.01-4 requires a permit to, inter alia:

•

Construct a dwelling if there is at least one dwelling existing on the lot.

•

Construct two or more dwellings on a lot.

•

Extend a dwelling if there are two or more dwellings on the lot.

•

Construct or extend a residential building.

10 If the use is characterised as a form of accommodation other than a "dwelling" or, alternatively, as an innominate section 2 use, then pursuant to clause 32.04-6, a permit for development is required.

11 If the use of the land is characterised as "dwelling", then clause 32.01-4 of the planning scheme requires a permit for development in respect of the internal works (because there are more than two dwellings on the lot) unless the exemption in clause 62.02 applies.

12 Clause 62.02 sets out a list of buildings and works which are exempted from permit requirements. At the time of the works, the relevant part of clause 62.02 exempted the need for a permit for:

•

The internal rearrangement of a building or works provided the gross floor area of the building, or the size of the works, is not increased and the number of dwellings is not increased.

This does not apply if a permit is specifically required for any of these matter_s._

There is nothing in the schedule to the Residential 1 Zone which requires a permit for the internal rearrangement of buildings.

14 Amendment VC26 (an amendment to all planning schemes in Victoria) has been gazetted since the internal works were carried out and it modifies the above exemption to read:

•

The internal rearrangement of a building or works provided the gross floor area of the building, or the size of the works, is not increased and the number of dwellings is not increased.

The amendment was introduced to clarify the type of issue raised by this case.

15 The definition of dwelling in the Moira Planning Scheme is:

A building used as a self contained residence which must include:

It includes out-buildings and works normal to a dwelling.

16 This definition of dwelling has two components - a use component and a development component. The use component of the definition is: "A building used as a self contained residence." Residence means a place where people live. The key aspect of the definition is the self contained nature of the accommodation. The primary way in which one can tell if accommodation is self contained is by reference to the nature of the development, namely the facilities detailed in the definition.

17 In this case, the units meet all aspects of the definition. Each of the units includes a kitchen sink, food preparation facilities, a shower, and a closet pan and wash basin. The facilities might be minimal but they are all present. The units are places where people live or reside permanently or for a considerable time (see Derring Lane Pty Ltd v Port Phillip City Council [1999] VSC 269). I therefore find that the individual units are each dwellings within the meaning of the Moira Planning Scheme. I am not persuaded otherwise by the complex reasoning applied by the Council in its efforts to characterise the use as something other than "dwelling" and hence something that requires a permit for the following reasons.

18 On behalf of the Council it was submitted that the purpose for which the land is now being used is not a "dwelling" but "residential village" which is defined as:

Land, in one ownership, containing a number of dwellings, used to provide permanent accommodation and which includes communal, recreation, or medical facilities for residents of the village.

19 Mr Stokans pointed to the single ownership of the property and argued that:

"The use of the Subject Land must be considered as a whole. It is possible to have a number of detached dwellings which, if they function independently of each other, could be characterised as dwellings. If, on the other hand, they are attached and operate in combination as they do here, the use is transformed from dwelling to residential village, villa unit or some other innominate use.

The residential village definition specifically refers to land in one ownership, containing a number of dwellings. Reliance by the residents on communal facilities for recreation, clothes drying, storage and parking transforms the purpose of the land use from dwelling to residential village."

20 With respect to the definition of residential village, I do not consider that the units fall within the meaning of this use. The fact that residents may share laundry facilities is not of itself sufficient to characterise this feature as "communal, recreation or medical facilities for residents of the village." I consider that the definition of residential village describes a quite different concept to the situation in this case. It describes a comprehensive development in which the communal, recreation or medical facilities for residents are an essential or integral component of the village rather than a minor or incidental aspect.

21 Similarly I disagree with the Council that the communal use of facilities such as cloths lines, storage and parking facilities transforms the purpose of the land use from dwelling to residential village simply because these sort of facilities are normally enjoyed on an exclusive basis by residents of conventional dwellings. There is nothing in the definition of dwelling though that requires the provision of such facilities for the exclusive use of residents. Many blocks of older style flats, which in fact may still be in single ownership, provide communal facilities of this type, however they clearly fall within the definition of dwelling both as defined in the planning scheme and in common perception. I consider it is twisting the meaning of the definition of residential village to attempt to apply it to the current circumstances.

22 I also consider it is irrelevant whether the units are detached or attached. There is no longer any basis in the definitions in the planning scheme for drawing a distinction between types of dwellings depending on whether they are attached or detached. One of the features of the Victoria Planning Provisions is that the single use "dwelling" replaced the multiplicity of uses found in earlier planning schemes such as detached house, flat, row house, attached cluster house and detached cluster house, all of which were dwellings but having a different physical form. By making "dwelling" an as-of-right use in residential zones, the Victoria Planning Provisions intended to separate consideration of the use of land for "dwelling" from the development of a building as a dwelling(s). It is for this reason that there are separate provisions in each zone dealing with the construction and extension of one dwelling on a lot, or two or more dwellings on a lot. This enables the development controls (where applicable) to deal solely with development issues, such as standards of accommodation, off site amenity and other impacts like neighbourhood character, without opening for debate the issue of whether the use of land for a dwelling is appropriate in a residential zone.[2]

23 The structure of the Residential 1 Zone in the Moira Planning Scheme means that it is possible to convert an existing use to a section 1 use for "dwelling" without the need for a planning permit. In fact, the whole point of section 1 uses is that they do not need a permit. A permit would only be required for any development associated with the change in use if the planning scheme provides that such development requires a permit. However, development for a dwelling in a Residential 1 Zone does not always require a permit and it is possible to convert an existing development into a dwelling where there is no specific requirement for a planning permit for buildings and works.

24 It was argued by the Council that:

If the Respondent's arguments are taken to their logical conclusion, any motel or holiday accommodation which includes a kitchenette is a dwelling and therefore applying the respondent's interpretation, hundreds of motels across Victoria are not in fact motels, but are dwellings and, therefore, a section 1 use in all Residential zones. This interpretation leads to an absurd result.

25 It is true that both a dwelling and a motel may contain the same facilities or the necessary facilities may be easily provided, as in this case, without need for a permit. However, in differentiating between accommodation otherwise possessing all of the facilities included in the definition of dwelling, the critical factor in deciding whether a use is "dwelling" or "motel" depends upon whether the accommodation is used for temporary accommodation or long term residence. The definition of motel includes reference to "accommodation and serviced rooms for persons away from their normal place of residence" whereas the definition of dwelling refers to the use of land as a "residence". The case of Derring Lane Pty Ltd v Port Phillip City Council [1999] VSC 269 held that "residential building" must be taken to refer to a building constructed for the purpose of people dwelling there permanently or for a considerable period of time, or having in that building their settled or usual abode: motel did not fall within this concept of a "residential building". Whilst the definitions in the Victoria Planning Provisions have changed somewhat since the case of Derring Lane was decided, the distinction drawn between a place where people live and temporary accommodation remains valid when considering the difference between the definitions of dwelling and motel.

26 I also reject the Council's submission that the land is used as a residential building, which is a definition that specifically excludes dwelling, or that the land is being used for an innominate use. Clause 74 of the planning scheme provides that "a use or activity in relation to land which is not listed in the table must not be characterised as a separate use of land if the term is obviously or commonly included within one or more of the terms listed in the table." In my view, the use of the buildings is obviously included within the definition of dwelling. There is nothing in that definition which conflicts with the current way that the land is being used and there is therefore no justification to characterise the use in any other way.

27 It seems that in rural areas old motels are falling into disuse. On the other hand, cheap, compact accommodation is not generally available in rural towns. Affordable accommodation is very difficult to provide in a cost effective manner. It cannot be built and can only be provided by way of conversion of existing buildings. Foxy Investments is looking to recycle an otherwise redundant building for which there is no current use and thereby provide a much needed, affordable style of housing. The accommodation being provided is in high demand and, at the date of the hearing, 18 of the 19 units available were let on both short term and long term leases to a variety of people such as itinerant workers, students, singles etc. The site is in a good location and close to facilities. From a planning perspective, the motel conversion supports the settlement objective in the Moira MSS to provide sufficient diversity of housing opportunities by promoting "a wide range of housing opportunities in urban areas that respond to the housing needs of the population through all stages of the lifecycle" (clause 21.04-4). In particular it responds to the challenges set out in the following extract from the MSS in clause 21.04-1 of the planning scheme relating to housing diversity.

The population of the Moira Shire is ageing. Increased options for housing this population will be required, particularly in the four large urban centres of Cobram, Yarrawonga, Numurkah and Nathalia where there is greater access to both physical and social services. Affordable housing needs to be provided within walking distance to facilities or transport to such facilities. Alternative forms of housing, such as smaller one and two bedroom units, will be required if objectives for affordability and accessibility are to be met. Diversity in housing options is also important in maintaining a diverse population mix within the Shire. In particular, the provision of accommodation to suit the housing needs of young people will be vital to retaining a balanced population mix.

28 In the present instance, much of the Council's opposition to the conversion of the motel units into dwellings has been related to the perceived lower standards of facilities and amenity enjoyed by the units compared to what would be required for new dwellings that must comply with clauses 54 or 55 of the planning scheme. This ignores the fact that whilst the amenity of the units may be relatively low, they have been welcomed by a segment of the community which sees this accommodation as a viable residential alternative to conventional housing. This is evidenced by the very high rate of occupation.

29 As noted previously, I consider the issue of characterisation of use to be quite straight forward. The Council's concerns about the standard of amenity should not be allowed to cloud this definitional question. There are regulations other than planning that will adequately address building, health and safety standards. For these reasons I therefore confirm my finding that the use of the land is for "dwelling" and no permit for the use is required.

30 In essence, the relevant internal works comprised the installation of kitchen sinks and cooking facilities (microwaves, range hoods, and cook tops) in the motel units. At the time the internal works were carried out in January 2004, clause 62.02 of the planning scheme provided that no planning permit was required for:

•

The internal rearrangement of a building or works provided the gross floor area of the building, or the size of the works is not increased.

•

Repairs and routine maintenance to an existing building or works.

31 The Council attempted to argue that the works did not fall within the exemption because there was no internal "rearrangement" of building. It was argued that adding entirely new and distinct elements is not a "rearrangement". However, even if the Council's argument is accepted that there was no "rearrangement", the question then arises whether the installation of new fixtures, fittings or chattels within a building, which was effectively what the "internal works" consisted of, requires a planning permit.

32 There is a clear intention in the exemption provided in clause 62.02 to exempt internal rearrangements of a building as well as repairs and routine maintenance. The purpose of these exemptions is to establish that there are some things that planning does not need to control where there is no effective change to the status quo, such as what happens inside a building where the external size or appearance of a building are not affected.

33 I consider that the words "internal rearrangement of a building or works" should be interpreted liberally to include the removal or construction of walls, floors, fixtures, fittings and chattels. In my view, any changes to the internal space of a building or works would be caught by this expression provided the gross floor area of the building or size of the works is not increased and, since amendment VC26 was introduced, the number of dwellings is not increased. If there is a valid planning reason for controlling the internal arrangement of a building or works then the zone, overlay or other provision should specifically require this, as the caveat to clause 62.02 provides.

34 The clear scheme of the Victoria Planning Provisions is to provide a general exemption in clause 62.02 for certain buildings and works that do not require a permit notwithstanding any requirement in the scheme relating to the construction of a building or the construction or carrying out of works. If any of these buildings and works are not to be exempt, then a permit must be specifically required for them. The Heritage Overlay (clause 43.01-1) is an example of a provision where a permit is required to "internally alter a building if the schedule to this overlay identifies the heritage place as one where internal alteration controls apply." There is nothing similar in the provisions of the Residential 1 Zone that specifically requires a permit for internal construction or alteration, or the introduction of new fixtures, fittings or chattels. Therefore I conclude there is no justification for reading down the clear intention of the exemptions in clause 62.02.

35 I agree with the comments of the Tribunal in the case of A'Beckett v Yarra City Council [2004] VCAT 599 which, when also considering whether internal works fell within the exemption in clause 62.02, said that:

[32] It is irrelevant that the internal area of the building is in some way transformed to enable the building to be used in a different way to how it was previously used, as in the present case the use it is being transformed into is an as of right, no permit required use in the planning scheme.

36 I therefore find that no permit was required for the internal works at the time they were carried out.

37 The reasons for the Council's refusal to issue a permit for subdivision are set out in paragraph 7.

38 On behalf of Foxy Investments it was submitted that:

"There can be no planning objection to the dwellings being on separate titles. They can all be properly serviced, there will be no real change to the current use of the land, and the separation of titles simply allows for flexibility with respect to land ownership. It will allow long term tenants to purchase their homes, rather than simply rent them.

The Council's grounds of objection are not related to an application for subdivision, but rather seek to challenge the appropriateness of the use. Issues of residential amenity do not arise when considering the subdivision of existing dwellings."

39 The submissions and evidence put on behalf of Foxy Investments reflect a common perception that there can be no planning objection to the subdivision of an existing building or development, especially one used for dwellings, because there will be no real change to the status quo or the current use of the land. It was submitted that the considerations which properly apply to a subdivision application are not those that relate to the potential future use of the land.

40 However, the Tribunal has generally taken the view that the consequences of decision making involving subdivision, including future use and development, are proper matters to take into consideration. This view is supported by the provisions of the planning scheme. Decision guidelines are set out in clause 65 of the planning scheme and apply to all decision making under the planning scheme. The first paragraph of clause 65 provides:

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.

41 Clause 65.01 sets out matters that must be considered before deciding on any application or approval of a plan. Clause 65.02 sets out further matters that must also be considered before deciding on an application to subdivide land. The first two of these matters are:

• The suitability of the land for subdivision.

• The existing use and possible future development of the land and nearby land.

42 A good expression of the approach taken by the Tribunal is found in McHugh & KG Goodeson and Associates v Shire of Eltham (unreported 1990/38738) where Member Liston said:

Decision making always involves a consideration of a consequence of the decision, decision making in the planning context must always be concerned about the present and future use and development of land.

Subdivision in most instances takes place to facilitate the development and use of the land, and it would be both artificial and unsatisfactory to consider the issue of subdivision without proper regard to the consequences of the use and development which would spring from the subdivision. ...

This Tribunal is of the view that the future use and development of the land must be the primary consideration in applications for subdivision. The Responsible Authority and the Tribunal must be satisfied that the land is capable of being developed and used in accordance with the implication of the subdivision. The consequences of such considerations will vary from case to case. ... However, in expressing this view the Tribunal does not say that the ambit of discretion in applications for subdivision is limitless, relevant considerations and the decisions/conditions which flow from them must reasonably relate to the subdivision and its real consequences in the context of the planning controls in the locality.

43 In Tee & Adis v Booroondara City Council & Charnley Glen Pty Ltd

4 VPR 9 Senior Member Byard quoted this passage with approval. He said with respect to an application for subdivision:

[30] In considering such an application it is appropriate to consider the planning implications and ramifications of a grant of the permission sought. That is probably true of any decision on an application for a planning permit. It is certainly true of this one. One does not merely regard the proposed subdivision as lines on a plan without regard to its effect and what it enables and what effect it would have on the achievement of planning policies and purposes.

44 The Tribunal's decision in Tee & Adis was overturned by the Supreme Court in Charnley Glen Pty Ltd v Booroondara City Council [2000] VSC 340, 6 VPR 93. However the Court did not disagree with the proposition that an application to subdivide should not be considered "without regard to its effect and what it enables and what effect it would have on the achievement of planning policies and purposes". Rather, the Court held that the Tribunal had erred because it went too far. The Tribunal had disagreed with the process adopted in the case rather than considering the specific outcomes of the subdivision within the context of the planning controls as they existed. With respect to this the Court said:

[29] ...His decision appears to have been based entirely on his view that an application for a permit for a two-lot subdivision with the intention of building a house on each lot is inappropriate and should not be permitted because of the possible planning effects, which in his view are incurable....

[31] In summary, the Senior Member did not suggest that the Council did not consider the application in the light of the planning considerations which it was required to take into account; and appears to overlook the fact that in addition to those considerations it also took account of the Good Design Guide, which it was not required to take into account. He did not attempt to redraft the conditions proposed to be imposed by the Council on the permit. His decision deals only briefly with the facts before him, and is based instead on what he perceives as shortcomings in the relevant controls, and potential planning difficulties. The discretion of the Tribunal in matters arising under the Act is extremely wide, but is not unlimited. The necessity to take planning policies and purposes into account does not empower the Tribunal to ignore the operation of planning controls as they exist.

45 The planning controls as they exist in this case include clause 65 and the planning policies included in the Moira MSS referred to previously.

46 Therefore, when considering an application to subdivide it is necessary to take into account the operation of the existing planning controls and to consider the effect of the subdivision, including what effect it would have on the achievement of planning policies and purposes in the light of those controls and whether, in accordance with clause 65, "the proposal will produce acceptable outcomes in terms of the decision guidelines of this clause."

47 The most direct effect of a permit to subdivide land is that ownership of the subdivided land will be fragmented. The whole purpose of subdivision is to create lots that can be separately disposed of. Therefore I consider it to be relevant when considering this application to subdivide the existing motel buildings what the effect will be of the fragmentation in ownership of the individual units.

48 The motel was never designed or built with the intent that it would be owned, operated and maintained other than as a single entity by a single owner. It is an aging building and there was no evidence before the Tribunal that, apart from the internal works, the overall fabric of the building has been refurbished or modified with a view to the buildings passing into multiple ownership. No thought appears to have been given to the management of parking (there are no car spaces associated with each unit) or the provision of private open space. A very large proportion of the land will become common property that will require ongoing maintenance, as will the communal laundry. No consideration appears to have been given to how the property will be maintained and managed in the future. If the units are sold individually, they are likely to be relatively inexpensive. Whilst this has some advantages in terms of enabling entry into the property market for people who might not otherwise be able to afford to purchase their own home, the age and condition of the property may involve future hidden costs that could affect the overall affordability of this accommodation.

49 As it presently stands, the use of the former motel as low cost rental accommodation is fulfilling a planning need within the community. A reasonable standard of maintenance, management and amenity for residents is assured by virtue of the single ownership and the obligations imposed on landlords. The benefits of the existing use are not safeguarded should the building be subdivided and its ownership fragmented.

50 A further effect of fragmentation of ownership as a result of subdivision concerns the possible future development of the land. It is a large site, centrally located, close to all facilities and quite under-developed in terms of plot ratio. The age and low cost nature of the existing buildings mean that the site has considerable potential for redevelopment. Whilst in the current climate there is not much development demand in Numurkah, this may change in the future. The Moira MSS seeks to encourage smaller housing units and medium density housing near the town centre where walking access to town services is possible (clause 21.04-4). Fragmenting the ownership of the subject land will limit its future development potential and potentially undermine achievement of this planning policy.

51 I am not persuaded that an acceptable outcome is always produced by allowing the subdivision of existing buildings even though they may be able to be serviced and there may be no change to the current use of the land. Good planning entails looking beyond the here and now. Developments that have been designed and built with a view to future subdivision and separate ownership are in a different category to developments where this was not contemplated at the time of construction. That does not mean such buildings are not capable of being, or should not be, subdivided but regard should be had at the time of subdivision to their future maintenance and liability as a consequence of the subdivision and to the effects that a fragmentation in ownership may have on the achievement of planning purposes. The effect of subdivision should not be to create problems for the future. In this respect I rely upon the objectives of planning in Victoria set out in section 4(1) of the Planning & Environment Act 1987 to provide for the fair, orderly, economic and sustainable use, and development of land; and the need to balance the present and future interests of all Victorians. I also rely upon the requirements of section 60 (1) (b) of the Act, especially the need to consider social and economic effects where the circumstances appear to require.

52 Taking all these matters into consideration, I am not persuaded that the subject land is suitable for subdivision in the manner proposed and the subdivision will not produce acceptable long term outcomes in terms of implementing planning policy for Numurkah.

53 In respect of application P2453/2004 my conclusion is that the use carried out on a subject land can be characterised as "dwelling". No permit is required for this use and the use of the subject land is therefore not in contravention of the Moira Planning Scheme. At the time when the internal works were carried out, they were buildings and works that fell within the exemption contained within clause 62.02 of the planning scheme and did not require a permit. On the basis of these conclusions it is not appropriate to make the declarations sought by the Council.

54 With respect to application P1357/2004 my conclusion is that no permit should be granted for the subdivision.

[1] Compare with Low Density Residential Zone where the section 1 use of dwelling has a condition that it "must be the only dwelling on the lot".

[2] The same rationale applies in other zones where dwelling is a section 1 use and any section 1 conditions are met.