Victorian Civil and Administrative Tribunal|2007-09-28

The application under s 149A of the Planning and Environment Act 1987 is dismissed.

Mr Craig Porter of counsel, instructed by Fetter Gdanski, solicitors and consultants.

Mr Adrian Finanzio of counsel, instructed by Maddocks Lawyers.

This case ultimately turns on a single issue of legal principle arising from the relationship (or, more correctly, the distinction) between "use" and "development" under Victorian planning law. The proceeding raises the question whether the protection of existing use rights afforded by s 6(3) of the Planning and Environment Act 1987 (the Act) extends to the demolition of a building used for a purpose which enjoys those existing use rights.

The background facts are not materially in dispute. Essentially:
- The applicants purchased the land at 32 Nightingale Street, Balaclava at auction on 22 April 2007. The land contains a single dwelling which appears to be in a serious state of disrepair.
- Immediately following the auction, and through May and June 2007, the applicants[1] commenced a process for demolition of the dwelling, including the obtaining of vendor consent, seeking a quotation, and making application for a building permit for demolition. The applicant also commenced concept planning for a two-unit development on the land.
- At the relevant time, the land was zoned Residential 1, with a Special Building Overlay. No planning permit was required for demolition under this zone or overlay.
- The building permit for demolition was issued on 25 June 2007, and the applicants arranged for demolition to commence shortly following settlement of the land purchase.
- Settlement took place on 23 July 2007. The same day, the Council issued a skip bin permit, and a skip bin was delivered to the land.
- On 23 or 24 July 2007, several internal fittings and fixtures were removed, and iron lacework from the verandah was removed. Heavy equipment was arranged to facilitate more significant demolition of the main building structure to commence on 26 July 2007.
Significantly, on 25 July 2007, Amendment C66 to the Port Phillip Planning Scheme was approved and gazetted by the Minister for Planning at the request of the Responsible Authority, and without prior notice to the applicants. The Amendment introduced an interim site-specific control that included the land within a Heritage Overlay. From 25 July 2007, Clause 43.01-1 of the planning scheme therefore applies to the land, and a planning permit is required to demolish or remove a building on the land. As a consequence, the Responsible Authority instructed the applicants to cease work unless or until a planning permit for demolition is obtained - a matter which the applicants contest, but which they have at least voluntarily complied with at this stage pending the determination of this proceeding.
Although a matter of some debate, I am satisfied that the removal of the external iron lacework constituted the first step of demolition, such that demolition had essentially commenced on the land on or before 24 July 2007[2]. However, nothing really turns on this finding. The legal principle that is ultimately determinative in this case does not depend on whether demolition had physically commenced on the land before Amendment C66 commenced operation.

The s 149A application

The applicants seek a declaration under s 149A of the Act that the demolition of the dwelling may continue without the necessity of first obtaining a planning permit for demolition under the Port Phillip Planning Scheme as amended by Amendment C66.
The sole ground supporting the application is an assertion that the land has an existing use right for a 'residential' purpose and that, as a matter of law, this existing use right encompasses demolition of the dwelling as part of the protected use. The argument is therefore that the ability to demolish the dwelling without a planning permit is protected by s 6(3) of the Act, and that Amendment C66 cannot and does not alter that position.
I note in passing that the applicants did not seek to argue that the building permit for demolition created an accrued right to carry out the demolition that in some way overrides the potential application of the planning permit requirement subsequently introduced by Amendment C66. Nor did the applicants argue that the 'commencement' of demolition, by itself, created an accrued right to continue the demolition other than by reason of the existing use rights. Mr Porter for the applicants expressly confirmed he was not making such an argument in this s 149A proceeding, and Mr Finanzio for the Responsible Authority indicated he would not therefore address these issues.
I also note in passing that neither the merits of Amendment C66 nor the heritage significance of the dwelling are strictly relevant matters in the proceeding before me, nor is it relevant for me to consider the merits or likelihood of the applicants obtaining a planning permit for demolition if they are now required to seek such a permit. It is however fair to reflect that there has been no impropriety alleged on the part of the applicants or their contractors, that the applicants have been taken quite by surprise by the approval and gazettal of Amendment C66, and that the consequence of the Amendment is one that may cause them significant financial loss.

The definition of "use" in the Act includes "use or proposed use for the purpose for which the land has been or is being or may be developed" (my emphasis). The applicants were therefore initially concerned to ensure that the existing use right for their land was not characterised in a way that limited it to a use for the purpose of a 'single dwelling' as exists on the land at present, but that the existing use right encompassed a use for a broader 'residential' purpose.
The Responsible Authority did not contest this characterisation. I am satisfied having regard to the authorities commonly cited in relation to existing use rights[3] that the existing use right should be liberally construed in this context. In my view, the existing use right for the land in question protects use for a relatively broad 'residential' purpose not limited to a 'single dwelling'. In the present case, the proposed use of the land for two dwellings would be a reasonable augmentation or intensification of the existing use and still for the same substantial purpose.

The issue in this case is not however really about "use" in this more limited context of what constitutes the real and substantial purpose of the use. It is about whether this residential 'use' of the land, as characterised and protected by existing use rights, also encompasses demolition. For the reasons set out below, I do not believe that it does. Nor do I believe, despite the application before me, that the issue is really at all in doubt.
Section 6(3) of the Act provides essentially that nothing in a planning scheme or amendment shall prevent a use of land lawfully carried on immediately before a planning scheme or amendment commences from continuing after that planning scheme or amendment commences. An amendment to a planning scheme cannot therefore prohibit a pre-existing lawful use from continuing on the land, or subject an 'as of right' existing use to a requirement for a planning permit for the use. This includes the use of any building or works in the course of being lawfully erected or carried out immediately before the planning scheme or amendment commences[4]. What is abundantly clear is that protection afforded by s 6(3) applies to 'use'.
The applicants did not rely on any particular wording within s 6(3) to support the notion that the protection of existing use rights under the provision expressly covers demolition as a separate matter from 'use'. Rather, they argue that demolition implicitly forms part of the "use" referred to in the provision.
The applicants' case relies on a comment by the High Court in Nancy Shetland Pty Ltd v MMBW[5] that the definition of "use" suggests that "neither development nor subdivision by itself constitutes a 'use'"[6] (applicants' emphasis) in the sense in which the word is used for the purpose of existing use rights. It was thus contended that this comment supported the notion that "development" (including demolition) could constitute a use if not considered by itself but as part of other work. It was argued that the demolition in the present case should be so characterised as part of the designated use for residential purposes, including the future use of the proposed two-unit development. It was also claimed that, by inference, this position was endorsed by DP Gibson in Casey City Council v Gerard [2004] VCAT 1838. From this, the applicants argued that:

To the extent that demolition is included in the statutory definition of "development", it is submitted that demolition was part of the use of the property when Amendment C66 came into force[7].

In my view, a reading of both Nancy Shetland and Gerard, in context, simply does not support the applicants' interpretation. In Gerard, DP Gibson applied Nancy Shetland to support the proposition that the development of land for a future purpose amounts to already using the land for that purpose[8]. That observation simply flows from the statutory definition of "use" itself - ie "use" includes use or proposed use for the purpose for which the land is being or may be developed. What this means simply is that, once a development has commenced, the purpose for which the land is proposed to be used as a consequence of the development is also deemed to have commenced even though the actual use might not physically commence until the development is completed. There is nothing in this observation or in the definition of "use" to suggest that development actually forms part of a use (or vice-versa).
There is a clear distinction in Victorian planning law between "use" and "development". Both terms are defined in the Act. I have already referred to the definition of "use". The definition of "development" expressly includes constituent components such as construction and subdivision and, importantly, includes:

(b) The demolition or removal of a building or works.

It might indeed be said that the distinction between "use" and "development" is fundamental to the planning framework in Victoria - both through the way in which the expressions are used in many provisions of the Act, and in the structure and operation of the zones, overlays and other planning scheme provisions. Within this framework, demolition is clearly dealt with as part of "development" and not "use".
The distinction between "use" and "development" is equally fundamental to the operation of existing use rights, and this has been recognised in cases such as Nancy Shetland Pty Ltd v MMBW [9] and Sorrento Apartments Pty Ltd v Mornington Peninsula Shire Council[10]. Nancy Shetland related to the statutory precursor to the present s 6(3) of the Act[11], which was of substantially similar effect. The High Court confirmed that "development" and subdivision do not fall within the statutory definition of "use" and do not enjoy the protection of existing use rights. What is protected is the future use for the purpose for which the land is being developed or subdivided (eg for residential purposes) rather than the actual development or subdivision itself [12].
Given that the statutory definition of "development" expressly includes demolition, this outcome applies equally to demolition.
To take a different view would be to make redundant most of the development controls operating in Victoria. Existing use rights prevail over much of the State where residential, industrial, rural, and other uses pre-date the introduction of planning controls. The logical extension of the applicants' argument is that no development, whether it be for construction, subdivision or demolition, would ever need a planning permit for the development if an existing use right was established. This is simply not correct.
In Sorrento Apartments, following Nancy Shetland, the Supreme Court also confirmed the clear distinction between "use" and "development" for the purpose of existing use rights. The court found that a Design and Development Overlay (DDO) requirement was a control on the "development" which may be carried out on the land in the course of the enjoyment of the existing use[13]. The development control was not considered to be inconsistent with the existing use right (as the land could still continue to be used for the same purpose) and the DDO applied to the land and had to be complied with despite the existing use right. The same may be said of a development control imposed by way of a demolition permit requirement under a Heritage Overlay, as in the present case.
A proper reading of Nancy Shetland, and the specific decision in Sorrento Apartments, therefore stand as authority in direct opposition to the interpretation of the limited quote in Nancy Shetland contended for by the applicants. The applicants' interpretation is also in my view contrary to the plain wording of the Act.
There is nothing in s 6(3) of the Act that prevents a planning scheme or amendment from introducing a development control over land that enjoys existing use rights. Height, design, heritage, neighbourhood character, and many other development controls commonly operate in this way without interfering with the purpose for which the land is used. The introduction through Amendment C66 of the requirement for a planning permit for the demolition of dwelling on the land cannot be said in any way to interfere with the purpose for which the land is used, or is intended to be used - ie for residential purposes. The control introduced by Amendment C66 operates only as a potential fetter on "development" in the course of the enjoyment of the existing use rights, in the same way as the building and works controls regulate future development of the land under the Residential 1 Zone and Special Building Overlay already applying to the land.
Existing use rights are simply as the name suggests - rights which protect "use". They are not existing "development" rights, and no such protection over the introduction of development controls arises under s 6(3) of the Act. For the applicants, the consequence of Amendment C66 is that the continuation of demolition of the dwelling on the land is now subject to a planning permit requirement.

[1] The reference to the applicants includes, to the extent relevant, assistance provided to the applicants by Harry Mrocki, the father of one of the applicants.

[2] Following the principle in cases such as Day v Pinglen Pty Ltd [1981] HCA 23; [1981] 45 LGRA 168 (High Court). Given the way in which relevant controls operate, it is unlikely that the removal of internal fittings and fixtures by itself constituted "demolition".

[3] Shire of Perth v O'Keefe [1964] HCA 37; (1964) 110 CLR 529, City of Nunawading v Harrington [1985] VicRp 64; [1985] VR 641. See also, in relation to the characterisation of a 'residential' purpose, Sorrento Apartments Pty Ltd v Mornington Peninsula Shire Council (2001) 117 LGRA 43.

[4] s 6(3)(d) of the Act.

[6] (1974) LGRA 151, at p.153.

[7] Applicant's outline of legal submissions, at paragraph 29.

Mrocki and Anor v Port Philip CC [2007] VCAT 1719 (28 September 2007)

Mrocki and Anor v Port Philip CC [2007] VCAT 1719

At a glance

Court

Decision date

Source

Judgment (26 paragraphs)

Parties

Cases Cited (2)

Mrocki and Anor v Port Philip CC [2007] VCAT 1719 (28 September 2007)