Clause 17.01, 17.02, 21.01, 21.07, 22.09, 33.03 & 65

The land consists of two lots (lots 28 & 29 PS332167K) located on the south-west corner of Mitcham Road and Redland Drive, about 500 m north of Canterbury Road. It forms part of the Redland Drive industrial estate. It is irregular in shape with a frontage to Mitcham Road of about 47 m and a curved frontage to Redland Drive of about 83 m and has an area of 6,947 sq m. It is developed with a building comprising three separate forms (the tallest being four storeys) joined by ground level lobbies plus two common basement levels, mainly for car parking. The building has a gross floor area of about 9,200 sq m. It was constructed in 2010 (although internal partitioning is unfinished) and remains vacant. The Council states 'the Redland Drive estate is characterised by large, contemporary factory, research and development and associated office buildings, generally two storeys in height ... '.

Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council (1970) 123 CLR 490, [1970] HCA 42

Pyx Granite Co Ltd v Ministry of Housing and Local Government [1958] 1 QB 554

Melbourne Water Corporation v Domus Design Pty Ltd [2007] VSC 114

Land Use Town Planning Services Pty Ltd v Knox CC [2010] VCAT 848

1. Whitehorse City Council granted a permit to subdivide the existing building on the subject land into 29 lots. The Council granted the permit subject to the following condition -
   1. Prior to the issue of a Statement of Compliance the landowner/permit holder is required to enter in a Section 173 Agreement which covenants that the subject land only be used and/or developed consistent with or allied to the purpose of industry.

All costs associated with the preparation, execution and registration of the agreement shall be borne by the owner.

As a Section 173 Agreement is required to be entered into for the development of this site, all construction works, landscaping and drainage works as required by Planning Permit WH/13906 and relating Council conditions of this permit (as below) may be covered by the Agreement.

1. The Applicant, on behalf of the owners of the subject land, has applied to the Tribunal to review the condition.
2. The main issues in this proceeding are -
   • Is the condition void for uncertainty?
   • Does the condition unnecessarily constrain the future use of the land?
   • Is the condition invalid because it fetters the discretion of the Council?
   • Is the condition invalid because it does not have a nexus with the proposed development?
   • If the Application is upheld, can the condition be severed from the permit?
3. My two main findings are -
   • The condition is void for uncertainty and is therefore invalid.
   • The condition cannot be severed from the permit because the permit would not have been granted without the condition.
4. I have therefore cancelled the permit under s 85(1)(g) of the Planning and Environment Act 1987. My reasons follow.

1. The subject land is in the IN3Z under the Whitehorse Planning Scheme. The purpose of the IN3Z includes to implement the policy framework, to provide for industry and associated uses in specific areas so that inter-industry conflict is avoided, to buffer IN1Z or IN2Z land from 'local communities' and to ensure uses do not affect the safety and amenity of nearby, more sensitive uses.
2. In the IN3Z, a permit is required to subdivide land and to use land for industry, warehouse or office. Industry includes a research and development centre. Office is subject to the following condition -

The leasable floor area must not exceed 500 square metres.

1. Relevant decision guidelines include the orderly planning of the area, and the existing use and possible future development of the land and nearby land.
2. A range of State and local policies are relevant. I will not detail them here. Under local policy, the subject land is part of the Rooks Road industrial area. Local policies of a more specific nature include encouraging offices in certain areas (that do not include the Rooks Road industrial area) and encouraging industry in the Rooks Road industrial area.

1. The Council issued a permit (the original permit) on 11 April 2006 to construct the existing building and use the land for 'industry, including research and development, warehouse, restaurant, function centre and dispensation for car parking ...'. The research and development centre was to occupy about two-thirds of the building's gross floor area. The permit included a condition that -

The use of land for administration (office) must be ancillary to the uses which are approved under this permit. The combined leasable floor area of office within the development must not exceed 500 [sq m].

1. In assessing the application for the original permit, Council's planning staff reported that -

The [scheme] specifies that research and development centres may also include administration, and it is therefore considered appropriate that the [R&D] tenancies will include a small office component, provided that this will be ancillary to the main use. ...

The current proposal includes a small factory/warehouse component, restaurant and business service centre, which are considered to be suitable uses to be co-located with a research and development centre. The business service centre will allow existing businesses in the area to hire space for meetings, conferences and seminars, which is consistent with the scope of a research and development centre.

1. The original permit included a condition that the use must start within two years. This time has passed and no extension was sought. The use has not commenced and the building remains vacant. The Council acknowledges that it amended the permit despite it being possible or likely that the permit had expired.[1]

1. The effect of registration of the agreement required by the first paragraph of the condition is that 'the subject land only be used and/or developed consistent with or allied to the purpose of industry'. There is an important missing word in this part of the condition immediately before the expression 'only be used and/or developed'. The omission makes the condition ungrammatical. Did the Council intend to include 'must', 'will', or 'may' at this point? Having regard to the officer's report, it is more likely than not that the Council intended a mandatory restriction and the missing word is 'must'. But the matter is not free of doubt.
2. The condition does not restrict use and/or development for the purpose of industry, but to use and/or development 'consistent with or allied to' the purpose of industry. It is unclear what is 'consistent with' or 'allied to' the purpose of industry.
3. First, is 'consistent with' intended to mean 'for' the purpose of industry? I doubt that it does, otherwise the Council would have used the clearer expression 'for' the purpose of industry. It is well understood that use or development for industry includes activities that are ancillary to the purpose of industry. Requiring the use or development to be consistent with that purpose suggests a narrower formulation, but it is not clear.
4. Second, is 'allied to' intended to mean 'for' the purpose of industry? The natural meaning of 'allied to' is broader than 'consistent with'. Planning law does not recognise 'allied uses' so the meaning has to be clearly drawn from the provision in proper context. What is allied? How or to what extent allied? What is the intended or actual effect on permitted uses under the original permit? There is nothing in the permit or condition that offers assistance.
5. The Council's planning officer's report states that the agreement will -

... manage the use of the lots to be consistent with the approved development permit and intended primary purposes of the [IN3Z].

1. On its terms, the officer intended that the use of the subject land be consistent with the original permit and intended primary purposes of IN3Z. This creates the following further uncertainty -
   • The report does not refer to an 'allied' use and does not refer to 'use or development', as does the condition.
   • The report refers to uses consistent with the original permit. The permit allows 'industry, research and development, including warehouse, restaurant [and] function centre'. The condition does not expressly allow those uses, but refers to 'consistent' or 'allied' 'purposes'. Would use in accordance with the original permit breach the agreement?
   • The report also refers to 'intended primary purposes of the [IN3Z]' and this is also not included in the condition. What are the 'intended primary purposes'? Are they the purposes of the IN3Z? Are they the uses in section 1 of the IN3Z? The question becomes murkier at this point because the purposes refer to providing for 'industries and associated uses' which introduces a further concept of 'associated uses'. It is unlikely that it refers to section 1 uses because industry, warehouse and office are section 2 uses.
2. I find there is significant and unsatisfactory uncertainty in the first paragraph of the condition. The agreement, if entered into in the terms of the condition, would make compliance with the agreement difficult and create potential contraventions. The first paragraph of the condition is so vague as to be unworkable.
3. The third paragraph of the condition requires that 'all construction works, landscaping and drainage works as required under the original permit ... may be covered by' the proposed Agreement. First, there was no evidence that any works were outstanding. Second, even if there are such works, it is uncertain what works must be included in the agreement. Third, it is also unclear what conditions of the (subdivision) permit are intended to be included in the agreement.[2] In particular, it states the conditions '(as below)' 'may be' included in the agreement.
4. I therefore find that the first and third paragraphs of the condition, and hence the condition as a whole, are void for uncertainty. I would therefore uphold the Application on the ground that the Council had no power to impose the condition.

1. The Applicant submitted the condition should be omitted on its merits because it is 'unreasonable, inappropriate and unnecessarily constrains the future use and development of the land'. Having regard to my finding that the condition is void for uncertainty, it is unnecessary to decide this issue.

1. The Applicant submitted that the condition is invalid because it attempts to fetter the discretion of the Council in the future considering other permit applications that could be made under the scheme. Having regard to my finding that the condition is void for uncertainty, it is unnecessary to decide this issue.

1. The Applicant submitted the condition is invalid because it 'has insufficient nexus with the proposed subdivision'. Having regard to my finding that the condition is void for uncertainty, it is unnecessary to decide this issue.
2. The nexus requirement relates to a test established by the English Court of Appeal in Pyx Granite Co Ltd v Ministry of Housing and Local Government.[3] However, I do observe in passing that the Supreme Court has stated that the test established by the High Court in Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council,[4] which does not include the Pyx Granite nexus requirement, represents the law in Australia.[5]

1. The Council submitted that if I were to uphold the Application, I should not vary the decision and order the deletion of the condition, but that I should cancel the permit.
2. Section 85(1)(g) of the Planning and Environment Act 1987 provides the Tribunal may cancel a permit if a challenge to a condition is upheld because there was 'no power to impose the condition'. I have made that finding. The section requires that the Tribunal must consider 'that the permit should not or would not have been granted without the condition'.
3. There is evidence that the permit would not have been granted without the condition ie it was fundamental to the grant of a permit. The Council officer's report included the following passage -

The proposal fails to satisfy two of the decision guidelines of Clause 65.02 of the [scheme], in particular ... the existing use and possible future development of the land and nearby land.

The creation of 29 lots further reduces the size of each leasable lot to less than 500 [sq m] facilitating the use as 'office' which is not consistent with the intent and primary purpose of the [IN3Z].

A section 173 agreement will be conditioned to manage the use of the lots to be consistent with the approved development permit and intended primary purposes of the [IN3Z].

1. This passage makes it clear that the Council was concerned that while the original permit allowed no more than 500 sq m of office on the subject land, the permit would 'facilitate' the use of each of the 29 lots for up to 500 sq m of office. It intended the agreement would, in part, restrict the office use to less than 500 sq m in the whole building as specified in the original permit.
2. There was a basis for the Council's concern. When the Applicant applied to the Council for the permit, it stated that 'the lots created are all less than 500 sq m in area and some or all of the lots are intended for office use'. The Council tendered photographs of signs recently fixed to the building offering it for sale or lease as a 'brand new corporate office complex' and that the proposed range of building areas would 'suit offices, showroom and high technology businesses'.
3. On the basis of the Applicant's statements, the Council included the condition and would not have granted the permit without the condition.
4. The Tribunal's power to cancel a permit is discretionary and needs to be exercised carefully.
5. The Council's concern was, in part, unfounded because even if 'some or all of the lots' were intended for up to 500 sq m of office, the Council would be required to grant a permit for that use in respect of each lot. If the Council remained of the view that the restriction in the original permit was appropriate, it could refuse any permit that resulted in more than 500 sq m of office on the subject land or the whole building.
6. I would exercise my discretion to cancel the permit mainly because the planning process employed by the Applicant to facilitate the use of the 29 lots for offices has been unsatisfactory.
7. The Applicant knew the original permit restricted office use to 500 sq m in the whole building. It told the Council that office use of each lot was 'intended' and told potential purchasers or occupiers that each lot was suitable for office use. It knew potential purchasers or occupiers would have to apply for permits for office use and hence it knew the Council would have to decide a potential plethora of permit applications. In my view, the Applicant's strategy is a piecemeal approach.

1. I have found the condition is void for uncertainty. It is therefore unnecessary to consider whether the condition is either invalid on a range of other bases or unreasonable on its merits.
2. The Council would not have granted the permit without the condition. The condition is therefore fundamental and cannot be severed from the permit. Accordingly, I will cancel the permit.

[1] The original permit has been amended on three occasions. One amendment allowed the use of the subject land for a child minding centre and a gym that had been subject of separate permits.

[2] There is also a drafting error in that 'to' has been omitted after 'relating' in the paragraph.

[3] [1958] 1 QB 554.

[4] (1970) 123 CLR 490, [1970] HCA 42 at [13] (Walsh J).

[5] Melbourne Water Corporation v Domus Design Pty Ltd [2007] VSC 114 at [64]. The Tribunal has applied this authority eg in Land Use Town Planning Services Pty Ltd v Knox CC [2010] VCAT 848 at [32].