The decision of the Responsible Authority in permit application no. P206-0067 is set aside. A permit is not granted and no permit is to be issued.

Ms C Gillings & Mrs L Neve with Mr G Cumming and supplementary submissions by Mr C Haddon, Mr N Hill & Mr T Flow.[1]

For Applicant in P2616/2006 and Respondent in P2331/2006

Mr J Cicero, solicitor of Best Hooper solicitors. Expert evidence was called from Mr R Milner, town planner, and Ms G Austin, traffic engineer. Evidence was also called from Mr J Tatoulis, permit applicant.

1 Macedon Lodge is an impressive thoroughbred horse stables/training establishment with a small vineyard in the picturesque Barringo Valley. It is several kilometres to the east and south of the Macedon and Mt Macedon townships respectively. Jilbandi Pty Ltd proposes a residential hotel (72 beds in 39 suites) re-using and adding to the existing sandstone stables, plus a restaurant (150 persons), day spa, new stables and owner's residence to develop the Lodge property into the "Mt Macedon Country Resort".

2 The Macedon Ranges Shire Council determined to grant a permit for the proposal subject to conditions. Applications have been brought by Mrs Neve (with other nearby residents/owners) and Mrs A Carroll seeking review of the Council's decision. Their grounds focus on the nature and extent of the proposed use, the potential impact on important landscape and environmental qualities, whether the proposed uses meet the necessary tests under the provisions of the Planning Scheme, and whether the proposal accords with the applicable Zone purpose and Overlay objectives. Other concerns relate to vehicle movement to and from the site. An Application has also been brought by Jilbandi Pty Ltd seeking review of conditions included in the Council's Notice of Decision.[2]

3 Having considered the well prepared submissions presented by all parties, and having inspected the review site and locality subsequent to the hearing, we have decided to set aside the Council's decision. Our reasons follow.

4 The review site is approximately 121.3 hectares in area, in multiple lots, positioned within a scenic valley. It abuts Tucketts Road, Zig Zag Road, Syndicate Road and Boundary Road (unmade in part). It is surrounded by 28 lots that vary in size with multiple smaller parcels particularly along Boundary Road. Many are used for rural living. Several involve activities such as horse and cattle grazing, olive growing and home-based commerce.

5 Macedon Lodge is developed with sandstone horse stables, containing around 74 large stalls and a live-in manager's unit in a horse-shoe shaped building. There are also separate staff quarters, a 75 metre horse pool, a horse walker, an oval horse training track, a 1.2 kilometre long straight track, a 3+ kilometre bush & hill training track, a 2.8 hectare vineyard[3], sheds, outbuildings and pasture. Much of the lower land is cleared with larger stands of vegetation to the northern and south-western portions of the site on steeper slopes framing the property. The site is maintained in an immaculate condition and the facilities are clearly of a high standard.

6 Mr Rantino and Mr Milner said the primary use of the review site is for thoroughbred horse training. The land operates under Permit P98-0400 for "Horse Stabling and exercise complex, for approximately 75 horses, including accommodation and illuminated exercise area" issued by the Council in 1998. The equine operation is leased to an external entity Eliza Park[4] and used on occasion by other trainers. Current activities include stabling, training and breaking-in of horses. Additional activities on the land include horses on agistment, cattle grazing and grape growing.

7 Tucketts Road is the primary access into the review site. It is sealed with roadside vegetation for much of the review site's eastern boundary. It becomes un-sealed toward the north-east corner of the review site. There is a single width bridge along this road close to the Carrolls' property. That property is a small lot excision on Tucketts Road with a dwelling. Tucketts Road links with Syndicate Road and Glen Drouitt Road that are sealed with single lane bridges. Tucketts Road joins Zig Zag Road (unmade) to its north and that in turn meets Boundary Road and Taylors Road.

8 A permit application was lodged by Jilbandi Pty Ltd to use and develop the review site for a residential hotel involving the conversion and extension of the existing sandstone stables, as well as a restaurant, day spa, new stables, new training track, polo field and owner's residence.

9 The Council's Notice of Decision includes removal of polo field resulting in the existing oval training track remaining in its current location.[5] As that aspect of Council's decision is not being reviewed, the proposal is focused on the following new components to create the "Mt Macedon Country Resort":

o 72 bedrooms in 39 suites of 63 - 620m2 comprising -

s 8 x one bedroom rooms on a single level;

s 16 x two bedroom two-level suites (that could adapted to be two x single level);

s 3 types of two bedroom two-level luxury suites including several suites with studies and one penthouse (three level) with private pool and study;

s 2 x three bedroom two-level luxury suites (plus studies);

o all suites fitted with living spaces, a kitchen, laundry, walk-in robes, ground level courtyard and/or upper level external terrace(s);

o re-use of the existing sandstone building, additions to the ground level, addition of a second floor and small third floor.

•

Restaurant and conference room for 150 persons including indoor and outdoor seating within the centre of the sandstone building. Proposed hours of operation are 7am - 10.30pm Sunday to Thursday and 7am to 12 midnight Friday and Saturday (unless varied with Council's consent).

•

A day spa with six treatment rooms and separate gymnasium.

•

Conversion of the 75 metre horse pool to a lap pool.

•

Parking to service the hotel and restaurant comprising:

o 48 cars in undercover structures setback a minimum of 7.8 meters from Tucketts Road; plus

o 83 spaces around the balance of the frontage (east) of the building

•

Two illuminated tennis courts setback by around 20 metres from Tucketts Road.

•

New stables, containing 80 stalls, located west of the tennis courts, in a single storey structure around 75 metres from Tucketts Road .[6]

•

The development of an "organic market garden" to the north-east corner around 200 metres from the restaurant/hotel complex.

10 An owner's residence comprising 4 bedrooms, 2 studies, media room, pool, gym, sauna and multiple living areas is proposed over three levels with lift. It would be located to the south-east of the site, 15.56 metres from Tucketts Road and 120+ metres from Syndicate Road. The building would be set into the slope requiring a cut of around 5.7 metres and affording expansive views. Polished concrete, render and corrugated roofing are proposed plus some longer concrete wall elements as discussed in Mr Milner's evidence.[7]

11 The vineyard, agistment paddocks, staff quarters would remain as would the bush/hill horse training track and the straight track. We were advised at the hearing that vehicle access to the stables would be shared with the hotel and restaurant. No parking is shown in association with the new stable complex. A replacement horse walker is shown in association with the new stables complex. A landscape plan has not been finalised. Access to the owner's dwelling would be via a separate gate closer to the corner of Tucketts Road and Syndicate Road. The development would be connected to reticulated sewer and mains water.

12 It is proposed that the hotel be marketed to those in the racing fraternity, such as jockeys, trainers and owners, who may come from Melbourne, inter-state or overseas. Mr Tatoulis explained that owners are the primary group that is sought to be provided for - enabling owners to be close to their horses and enjoy the thoroughbred setting. In addition the resort would be targeted to other racing and riding enthusiasts with the ability to lodge a horse on-site or for guests to ride horses. The facilities would be available for conferences by those involved in the equine industry. Any of the proposed facilities, whether a hotel room or visits to the restaurant or day spa, would individually be available to the public without a direct arrangement with horses on the land.[8]

13 A permit is required to use and develop the land for a residential hotel, restaurant and dwelling under the Rural Conservation Zone Schedule 1 of the Macedon Ranges Planning Scheme.[9] Conditions in Section 2 require a residential hotel and a restaurant to be "in conjunction with" (among other things) "agriculture". The proposed residential hotel and restaurant are respectively limited to maxima of 80 and 150 persons. [10]

14 Under the RCZone, a permit is also required for a building within 20 metres of Tucketts Road or within 100 metres of a dwelling that is not in the same ownership (ie. stables that are proximate to the Carroll property and owner's residence).

15 Mr Rantino and Mr Cicero both considered that the provisions of Clause 63 are relevant in relation to the horse stables and track.

16 Several Overlays apply to the land but not all are triggered in this case:

•

A permit is required for buildings and works under a Significant Landscape Overlay Schedule 1 (Mountain Ranges and Features).[11]

•

A Vegetation Protection Overlay is not triggered by this proposal but a VPO over roadside vegetation would be triggered if Council's condition requiring roadworks and bridge widening was implemented resulting in the removal of roadside vegetation.

•

An Environmental Significance Overlay affects the land (Schedule 5 - Other Water Catchments). As the development would be connected to reticulated sewerage, no permit is required.

17 A Wildfire Management Overlay is proposed over the land.[12]

Are the conditions referred to in section 2 of the RCZone met?

18 This is a threshold question. If the proposal meets the conditions for residential hotel and restaurant set out in Section 2 use in the RCZone then we can proceed to assess the planning merits and determine whether a permit should be granted. If the conditions are not met then the proposed use(s) is(are) prohibited and a permit cannot be granted.

19 There is no doubt that the restriction on the number of bedrooms and patrons are met so the only matter we must determine is whether the residential hotel and restaurant would both meet the test that they "must be used in conjunction with Agriculture, Rural industry, or Winery".

20 Clause 64 of the Scheme was introduced after the Council made its decision.[13] No transitional provisions apply to the Clause and it is common ground between the parties that the proposal must comply with it. Clause 64 states:

If a provision of this scheme provides that a use of land must be used 'in conjunction with' another use of the land:

•

there must be an essential association between the two uses; and

•

the use must have a genuine, close and continuing functional relationship in its operation with the other use. [Tribunal emphasis]

Are the residential hotel & restaurant proposed in conjunction with "agriculture"?

21 The first aspect is whether the proposed residential hotel and restaurant are proposed to be in conjunction with "agriculture" (there is no contention that the proposed uses would be in conjunction with a rural industry or winery).

22 Through Mr Carroll's submission it was contended that the existing use is "intensive animal husbandry" which is a prohibited use in the Rural Conservation Zone. That is based on the definition of intensive animal husbandry set out at Clause 74 of the Scheme:

Land used to keep or breed farm animals, including birds, by importing most food from outside the enclosures....[14]

23 "Intensive animal husbandry" includes cattle feedlots and broiler farms, reflecting the intensive nature of that group of uses. By contrast, horse stables and animal training are defined uses. Both are nested with "animal husbandry"[15] that in turn is nested with "agriculture". In addition, there is the vineyard ("crop raising") and cattle grazing ("extensive animal husbandry") on the land; activities that are also nested with agriculture and Section 2 uses within the Rural Conservation Zone.

24 No matter which way we look at this question, we are satisfied that through the existing permit and/or its current use the review site is used for purposes that are defined by the Planning Scheme as being "agriculture" and none of the current activities are prohibited uses within the Zone. We add that unlike some of the other cases before the Tribunal where the nature of the agricultural activity was argued to have been speculative to varying degrees, the current application benefits from existing bona fide agricultural activities already being present on the land.

Do the residential hotel and restaurant meet the "in conjunction with" test?

25 The next question is whether the residential hotel and restaurant meet the requirements of Clause 64. There are two parts to the test:

•

is there an essential association between the two uses?

•

does the use have a genuine, close and continuing functional relationship in its operation with the other use?

26 Both requirements must be met although, we think, there can be overlap.

27 Clause 64 post-dates the Council's decision. At the time of the Council's consideration of the application it was necessary for both the residential hotel and restaurant to be determined as being "in conjunction with" agriculture (per Section 2 of the RCZone then operating).

28 This matter is not mentioned in the officer report although it is canvassed in the planning report accompanying the permit application. We are not aware to what extent, if any, the Council was made aware of an obligation for the uses to meet a statutory test before contemplating the planning merits.

29 Clause 64 raises the bar; tightening the Section 2 condition. Clause 64 was a Ministerial amendment to clarify the term "in conjunction with". It had the aim of ensuring that the nature and scale of uses in green wedges (including RCZ) do not conflict with green wedge policy.[16] We understand this arises from concerns about a somewhat tenuous, superficial or artificial link between uses such as accommodation and the rural-based activity it was claimed accommodation would operate in conjunction with.[17]

30 The Applicants submitted the Clause 64 tests are not met while the Council and Respondent submitted that they are satisfied. In our review of the submissions and evidence about Clause 64, we have considered a discussion on the meaning of "essential association" and "genuine, close and continuing functional relationship" in MWC.[18] We agree with the Tribunal's observations in MWC[19] the core of which we extrapolate as:

•

the Section 2 condition in a Green Wedge Zone (RCZ in our case) requires activities that can operate separately and independently to be linked by a necessary association and functional relationship(s).

•

the test should be applied purposively rather than being too literal.

•

the associations and relationships required by the condition must relate to activities on the subject land [20]; we consider those associations and relationships on the site are the most critical in applying the statutory test.

•

broad economic, functional and aesthetic associations and relationships can exist between uses within the same zone so the purpose of the zone and permitted uses within the applicable zone provide a context for considering the Clause 64 test.[21]

31 We have had regard to other decisions[22] required to address "in conjunction with" prior to the introduction of Clause 64. They referred to the need for a functional nexus in meeting the test and this was usually seen as the "critical ingredient"[23].

32 The Respondent relies primarily on the horse training complex to establish an essential association although reference is made to produce from the land being served in the restaurant. From the material presented by the Respondent, we adduce the essential associations between uses relied upon[24] are:

•

providing new facilities to better serve jockeys, trainers and race horse owners from Melbourne, other regions, interstate or overseas, who can be accommodated on the same site as their thoroughbred/business.

•

marketing the hotel to persons in the equine industry such as racehorse owners in syndicates.

•

expecting the restaurant to be primarily used by hotel guests.

•

marketing the restaurant/function facility to the racing industry.

•

hosting conferences/business functions for the racing fraternity.

•

providing an owner's dwelling allowing the owner to reside and manage the same land.

•

offering wines produced from the vineyard's grapes, organic produce from the market garden and meats from cattle on-site in the restaurant.

•

improving training infrastructure and facilities and possibly expanding the vineyard.

33 The planning report accompanying the permit application states that the facility would operate like golf resorts where guests utilise the hotel rooms and restaurant but are visiting the site for the primary purpose of monitoring the progress of their horse as well as to enjoy training and riding.[25] Mr Milner's evidence was the ability to meet Clause 64 is not compromised if the hotel happens to accommodate the general public as there is still a substantial association between agriculture and the hotel by way of:

•

the attraction of staying in a environment that is focussed on horses and horse training; that is, a tourist facility for persons who can stay in a top tier hotel surrounded by an environment that is equine focussed;

•

an ability to learn, experience and appreciate the equine industry through a close visual association between the hotel and horse training facilities;

•

the appeal of eating food and drinking wine that is prepared from ingredients on the site; "from paddock to plate".

34 We consider an "essential association" requires a nexus with agriculture (winery or rural industry) that includes[26]:

•

a required or necessary link(s) between bona fide activities;

•

a demonstrable, rather than speculative, link(s) between uses;

•

a link(s) of substance not of minor, token or tenuous association;

•

an association with agriculture from inception.

35 Furthermore, an "essential association" between uses:

•

requires more than just a physical co-existence or co-location.

•

does not confine the nature of the link(s) which may be, for example, practical, functional, aesthetic and/or economic;

•

does not demand a distinction between primary and ancillary activities although the relative scale of uses may be relevant;

•

does not go so far as to require co-dependency (although we think that would demonstrate an essential association).

36 Applying those criteria would, in our view, reflect the intent of the Clause to ensure genuine associations. Proposals such as that considered in Buxton[27] would, we consider, meet those criteria.

37 In the current case, we see the potential for synergies and associations between the horse stabling/training complex and the residential hotel or the restaurant. But we are not persuaded that there is a sufficient and necessary association to meet the criteria we have set out.

38 We see the potential firstly in terms of marketing the hotel, its facilities and restaurant to those in the horse racing industry and clients of Eliza Park. We accept this is proposed but the potential is unknown and speculative to a considerable extent. We have no evidence of information as to the prospects of this market. It is not, on the submissions or evidence before us, a pre-requisite to commence the hotel and/or restaurant or linked in their ongoing operation; many other potential markets were referred to including the film industry with which Mr Tatoulis is involved.

39 We see the potential secondly in terms of the experience of hotel guests enjoying watching racehorses, riding or inspecting horses and the associated facilities or the setting. But visitors at the restaurant (and spa) would not see the horses, tracks or landform from the restaurant given the layout whereby the restaurant and spa are enclosed within the sandstone structure. That layout may indicate the restaurant will share custom with the hotel[28] and integration between those uses. But the restaurant can operate without any physical or visual link to the training complex other than to drive past; that is not enough to meet the test.

40 There is no indication that the operation of either the hotel or restaurant relies upon or is directly linked with the equine operation to any substantial degree. As put forward, the facilities would co-exist but do not share an essential association economically or practically. They can operate independently even within an overarching management structure intended by the proponent. The owner's residence is not critical in this as it is well separated from the balance of the facilities and could potentially be subdivided from the balance of the land and existing/proposed uses.

41 We have no evidence and little through submissions that income from the hotel/restaurant would be returned to the agricultural establishment or to enhance the environmental qualities of the land, other than mention of a potential to expand the vineyard. The same is the case with other aspects of the operation such as water recycling that was mentioned as assisting the maintenance of the land. There seems no strong association in these facets.

42 Although some reliance has been placed in written material on enhancements to the training facility as being part of this permit application, that aspect of the proposal has been modified by the deletion of the polo field and dressage facilities.[29] There is no definite revised position for the new stables [given the Council's Condition 1(f)] and there is no suggestion of replacements for the horse pool and other elements of the training facility that would be displaced by the construction associated with the hotel and restaurant (other than the horse walker). There is also no apparent replacement for the offices within the stables or car and/or float parking for the stables. We observe that there is plenty of space on the land for additional exercise equipment/structures and parking but our impression is that the equine components have not been given the same attention as the hotel and restaurant particularly with the demise of the polo field. We think the equine relationship has changed with the deletion of the polo and dressage components via uncontested aspects of the Notice of Decision.

43 In the context of the scale of operations, and the Applicant's equine emphasis as the integral agricultural component, we do not consider the sale of wine and use of produce in the restaurant and/or hotel is sufficient to tip the balance so as to represent an essential association for either use.

44 In summary, although we accept some direct associations (notably aesthetic and in the use of produce) and potential associations, there is little more for us to rely upon to reach a conclusion that the associations are essential or necessary in the terms required by the Scheme. The proponent should not be "penalised" for trying something new. But we have not been persuaded that there is a direct substantive association between agriculture and hotel and/or restaurant from the outset. We are struggling to find any substantive essential associations in terms of demonstrable and necessary links. We therefore find the proposal fails this arm of Clause 64.

Do the uses have a genuine, close and continuing functional relationship in their operation with agriculture?

45 In our words, this test requires the proponent to establish a legitimate functional relationship of an enduring nature in the operation of the hotel with agriculture and in the operation of the restaurant with agriculture.

46 In MWC the Tribunal identified some relevant considerations in deciding whether there is a genuine, close and continuing functional relationship[30]:

a. The physical association of the various uses on the land;

c.

The sharing of management and staff;

d.

The possibility that patrons can either passively, or actively interact with the other elements of the relevant mix of land uses.

47 We would add economic and other practical relationships to the above list.

48 As there is some overlap with criteria we have set out above in undertaking our assessment we have considered the same elements cited at paragraph 32 as the functional links relied upon by the Respondent as these were all of the links identified in submissions and evidence. We note that Mr Milner also stated that the on-going relationship between agriculture and the hotel and restaurant could be bound by a condition of permit so that the nexus is maintained and so that uses are not 'divorced' from one another.

49 For similar reasons as set out above, we are not persuaded that there is an enduring and close relationship between the operation of the equine facilities and hotel or the equine facilities and restaurant to persuade us that the proposal satisfies this arm of the statutory test.

50 We accept that:

•

wine and food supplied from produce grown/animals grazed on the review site provides a close functional relationship at a small scale;

•

the hotel and training complex could be said to share a physical/aesthetic relationship by viewing over the training facilities.

•

an relationship between the restaurant and racing complex is not close or necessarily enduring given:

o the physical separation between the restaurant and the equine facilities;

o a lack of any certainty in relation to sharing of clientele/guests;

o a lack of identified operational and practical relationships.

•

on the information we have, an equine marketing theme is intended but not a required component of the resort; it does not represent an enduring/close functional relationship with agriculture on the land.

•

the intended central management team would provide a relationship between land use elements but there is uncertainty as to that structure and no business planning relating to it; the extent to which this is a close and genuine functional relationship is uncertain to us.

•

there little evidence of economic relationships between uses; the link seems stronger between the hotel and restaurant than either has with agriculture.

•

there is little indication of a sharing of facilities or services between the hotel/racing complex and restaurant/racing complex including in relation to matters such as water re-use.

•

the opportunity for watching horses and some interaction with horses by restaurant guests could be a component of a close and enduring functional relationship but does not meet that criterion alone having regard to layout and practical considerations.

•

the picturesque setting may also provide a relationship between uses but again it not sufficient in our view to be a close and enduring functional or operational relationship in terms sought by the Scheme.

52 Clause 64 sets a high test, one requiring uses that can work independently to operate with a level of integration that we think is not achieved by this proposal. Even though there are aspects of the proposal that may be said to represent functional relationships of varying degrees or potential, we are unable to accept submissions that either the 72 bed hotel or 150 seat restaurant would have genuine, close and continuing functional relationships in their operation with agriculture to satisfy Clause 64.

53 Having failed to meet the requirements of Clause 64, the proposal fails to meet the requirements of Section 2 of the RCZone. Nonetheless, we have proceeded to summarise our findings on the merits of the proposal.

54 The Applicants oppose the intensity of commercial activity proposed citing it as a radical change in use when compared with small scale commercial activities in the area. They contend that the RCZ and policies for the Macedon Ranges seek to protect areas of high environmental and landscape quality - development should be in harmony with the natural environment and maintain the rural character.[31] They argue that the valley should be protected against high intensity residential activity/habitation as proposed and submitted the Council placed too much weight on tourism objectives.

55 In response, Mr Milner referred to the Scheme's broad support for tourism and the proposed uses given their association with the racing complex. He said the proposed owner's dwelling is related to the agricultural role of the land and acceptable when mindful of rural living lots seen nearby. He referred to the connection of the development to mains water and reticulated sewerage as well as stormwater recycling - these being elements of the proposal consistent with Clause 22.03 and the RCZone.

56 The attraction of this valley for a hotel, spa and restaurant are self-evident on inspection. That would be the case if the review site was grazing land or maintained as an equine facility. There are views to the memorial cross atop Mt Macedon and expansive valley views as well. The area has a sense of seclusion despite its relative proximity to major roads and townships.

57 The zoning of the review site provides for rural uses in a setting with high environmental and landscape values. Decisions about land uses are required to take these values into account. Specific values identified in Schedule 1 to the RCZone include the protection of the character and landscape values as well as water quality.

58 Clauses 21 and 22 have strong themes relating to containment of urban development, protection of environmental and landscape values, protection of water catchments, the importance of tourism to the economic base of the Shire. They draw attention to tensions between uses and the need to carefully balance competing aims. Clause 22.02-1 has an objective that:

Extension of infrastructure services and urban use and development outside identified urban growth boundaries will be strongly discouraged.

59 The principle of additional tourist facilities aligns with the policy directions of the Scheme. However, the scale and intensity of the proposed hotel, restaurant, spa and gym, is significant in the physical context of the review site and having regard to the purpose of the RCZone and its Schedule 1.

60 As we have said, the location seems quite remote although it is only several kilometres to two townships. Considered at the upper limit applied for - 150 persons at one time possible in the restaurant and for functions from 7am to midnight on Fridays and Saturdays, plus up to 72 bedrooms with more guests if more than one person per bedroom and 130+ car spaces around the hotel/restaurant - the intensity of activity is substantial in this location. We accept that the uses would not operate consistently at capacity and may even seldom do so. Nonetheless, we have an underlying concern about the extent of activity in terms of maintaining the character of the valley and meeting the purposes of the RCZone and Schedule 1. Existing commercial activities are low key and do not seem at odds with the character. The proposal would introduce people-intensive uses into a concentrated area on the land in a manner we consider is not consistent with the RCZone and applicable policies. We would have less concern with a lower intensity of use (including in terms of built form as discussed below).

61 A contentious element of this proposal is the format of the hotel. The hotel's suites are large and spacious, fully self-contained with facilities equivalent to or greater than many standard dwellings. The layout is identical to the previous permit application for 39 dwellings. There is an obvious fear that the suites will become de-facto dwellings; a use that is expressly discouraged outside urban areas based on local policies[32] and at odds with Clause 64. We must assess the proposed use on the basis that it would be a "residential hotel" but we can appreciate the prospect for the suites to accommodate persons for much longer periods of time.

62 A positive feature of the proposal advanced by the Council and Respondent is connection to mains water and reticulated sewerage. That can be regarded as appropriate in terms of the protection of water quality in this catchment. However, an extension of urban infrastructure is strongly discouraged by local policies (cited at paragraph 58) and Council's support for this aspect of the proposal appears at odds with the directions it has set. A concern is that extending mains services has the potential to create demand for more intensive use and development in this valley.

63 An owner's dwelling is not a problematic in land use terms in the context of this proposal.

64 Therefore, we find the scale and intensity of the proposed uses, including the proposed extension of mains services, are consistent with some policies of the Scheme but do not accord with other directions of the Scheme.

Are the built form and landscape outcomes acceptable?

65 The Applicants submitted the built form outcome is at odds with the character of the area and landscape outcomes sought by SLO1. They referred to a concentration of built elements associated with the hotel/restaurant and stables close to Tucketts Road, the inability of new landscaping to address the visual impact, the visibility of structures in the wider valley as well as expressing concern about the scale and position of the owner's dwelling. In response, Mr Milner addressed each of the proposed structures through his written and oral evidence. We note several changes to which he referred such as landscaping around the hotel complex and revisions to the owner's dwelling to reduce its visual impact.

66 The landscape character objectives to be achieved under SLO1 are:

To ensure that all development in significant landscape areas is developed in accordance with the objectives of the Macedon Ranges and Surrounds Local Policy.

To promote the siting and design of buildings and works including the choice of building materials, that are responsive to the landscape character of the site.

67 The RCZone and its Schedule 1 plus the local policies identify similar outcomes in terms of development that can sit comfortably with the rural setting and landscape values.

68 The proposal involves re-using the existing sandstone stables, filling in and adding to the existing wings and adding a second and small third storey. The overall height would not be substantially different when compared with the existing pitched roof that has a very large internal volume. However, the visual presence of the structure would change given the added breadth, stronger horizontal form and flat roof.

69 This setting has considerable ability to absorb the increased built form associated with the hotel, restaurant and spa complex, when viewed from within the site and properties to the west, north-west and south. That is because the development is proposed at the eastern edge of the site wherein the balance of the review site mitigates the presence and provides a sense of setting despite the strong and long two level form (plus small third level).

70 When considered from the east and along Tucketts Road the situation is quite different. Given the position of the land in the valley and vegetation (including roadside vegetation), the physical form of the additions would be mostly exposed to the north of the site along Tucketts Road. The larger form would be seen from Glen Drouitt Road but with vegetation in the foreground. The taller elements would be recessed behind the single storey front section of the building. When taking into account the breadth of the structure (including two new enclosed parking areas to the north and south ends of the building) and the expanse of parking forward of the building, the physical presence would be significant. When then also considered with the position of the proposed tennis courts very close to the intersection of Tucketts Road and Glen Drouitt Road we consider the massing to be too great in this concentrated and exposed location even though we accept that landscaping could assist to soften the impact and the slope assists to mitigate the visibility of parking. Re-use of the void associated with the existing stables structure would have less impact while still allowing a substantial second level for temporary occupation.

71 The extent to which built elements would be added to by the new stables is unknown. We accept that a stable structure might be proposed further into the site. That would lessen its impact from public roads but it would add a large built element into the middle of the valley and impact on sightlines from the hotel to the training tracks and possibly other site features.

72 We also have significant concerns about the siting and form of the owner's residence. This three level structure is cut into the side of a slope by 5.7 metres and is designed with large expanses of concrete wall. Although it is some distance from the corner of Tucketts Road and Syndicate Road it would be readily seen despite being set into the land. Changes proposed by Mr Milner would reduce the massing but we have fundamental concerns about the scale of this structure and its impact on the character of the valley.

73 The ability of the local road network to accommodate increased traffic generated by the proposal is strongly questioned by the Applicants. Various doubts were raised about the capacity of the roads to cater for additional traffic in the context of the particular circumstances relating to the roads and their geometry as well as climatic conditions that can affect visibility and safety. Evidence in response was given by Ms Austin.

74 Access to the development via Tucketts Road would mean increased traffic along Syndicate and Tucketts Road. Traffic along Glen Drouitt Road would also increase. These roads are sealed while others, such as Tucketts Road north of the review site and Zig Zag Road, are not sealed. While we do not agree with all of the assumptions within the traffic evidence (for example, we do not accept that no traffic would travel north of the main entry) we accept that, in traffic engineering terms, the road network could accommodate increased traffic associated with the proposal. That would be subject to some road and bridge improvements. If we had determined to direct the grant of a permit we would have required the two bridges to be upgraded and road surface on Tucketts Road to be improved (but not sealed). We would have sought to minimise or prevent vegetation removal.

Would the uses create unreasonable direct off-site amenity impacts?

75 Issues raised by the Applicants in terms of off-site amenity impacts primarily focus on the potential for noise transmission, light emissions and the visual impact of the development.

76 We agree that there would be potential for noise emissions in this setting with night time having the greatest potential to create some nuisance or disturbance. We accept that noise will travel some distance with sources of emissions including the tennis courts and activity associated with the restaurant and function facilities (including movement to and from the site). Light emissions could arise from the tennis courts. Conditions are proposed by the Council to address noise, lighting and general amenity considerations and additional conditions were recommended by Mr Milner. We accept some of these matters could be dealt with by conditions limiting the hours of operation but the scale and extent of impact is inconsistent with the reasonable expectations of residents living in this RCZone given the physical context. A much lower intensity would be required in our view.

77 We do not consider the physical form of the proposed development would create direct and unreasonable impacts in terms of visual bulk to other properties. That is primarily a function of distance and topography. That does not mean the development would not be seen. Rather, at the distances proposed, and with landscaping, the outcome would be acceptable.

78 Other concerns were raised in submissions about the proposal (for example, vegetation, environmental and catchment issues) and in discussing contested conditions. We do not intend addressing these concerns given our primary findings on the statutory test and the other findings in relation to the planning merits.

79 For the reasons we have set out above, we will set aside the Council's decision and direct that no permit be issued. We do not consider the proposal meets the conditions associated with Section 2 of the Rural Conservation Zone when assessed against the provisions of Clause 64 of the Scheme. Even if the necessary statutory test was achieved we find the proposal to be of a scale and intensity that is inappropriate having regard to the specific circumstances of the review site, the purpose of the Rural Conservation Zone and applicable policies.

[1] A statement by Mr S Ryan was circulated prior to the Hearing but he was not called as an expert witness.

[2] Conditions #2(a) relating to subdivision and lot consolidation, #12 requiring connection to reticulated gas, #28 requiring widening of two bridges & #30 requiring the upgrade & sealing of Tucketts Road north of the review site to Zig Zag Road.

[3] Mr Tatoulis said the vineyard produces around 10,000 tonnes of premium grapes per annum processed at a local winery.

[4] Macedon Lodge is one of three sites associated with this group per http://www.elizapark.com.au/farms.php

[5] The permit applicant did not contest the removal of the polo field and advised us at the hearing that deletion of that element would enable the oval-shaped training track to remain in its current location. Ms Austin's and Mr Milner's witness statements include the polo field.

[6] Mr Rantino explained that Condition 1(f) on the Notice of Decision requires the stables to be relocated to a position no closer than the existing stables in relation to the Carroll property. Mr Tatoulis identified a site for this structure.

[8] Based on Mr Tatoulis' oral evidence at the hearing.

[9] Clause 32.06. Transitional provisions apply. Decision guidelines in the Zone have been taken into account by the Tribunal in addition to Clauses 11, 12, 15.01, 15.05, 15.11, 15.12, 17.02, 17.04, 18.02, 19.03 of the State Planning Policy Framework. Clause 12 applies to metropolitan development ; the "objectives and strategies influence municipalities beyond Metropolitan Melbourne and should be taken into account where relevant". Applicable local policies include Clauses 21, 22.01 (Macedon Ranges and Surrounds), 22.02 (General & Mt Macedon Township), 22.03 (Catchment Management and Water Quality Protection, 22.05 (Environmental Management Guidelines), 22.06 (Vegetation Protection), 22.09 (Steep Land and Ridgelines), 22.10 (Wildfire Risk) and 22.13 (Road Construction in Rural Areas). Bicycle, car parking and loading provisions (Clauses 52.06, 52.07, 52.34) have been considered as well as general decision guidelines at Clause 65.

[10] There is also now a further provision that the lot upon which the use is conducted must be at least the minimum subdivision specified in the schedule to this zone (being 40 hectares) where the land is in metropolitan Melbourne. But that is not applicable given the transitional provisions. Moreover the site is outside the metropolitan area.

[11] Clause 42.03 and Schedule 1 have been considered including the landscape character objectives to be achieved and both sets of decision guidelines.

[12] Amendment C26 that has yet to be considered by an independent Panel.

[13] The Notice of Decision was issued on 15 September 2006 and VC43 was introduced on 31 October 2006.

[14] A number of exceptions are then listed.

[15] Defined as "Land used to keep, breed, board, or train animals, including birds."

[16] Amendment VC43 Explanatory Report.

[17] Melbourne 2030 policy 2.4.3 refers to amending planning schemes affecting green wedges to ensure that recreation-type developments, such as golf courses with associated housing development, are only approved where they support Melbourne 2030 and local settlement.

[18] A decision to which we referred the parties - MWC Mornington Wine Company Pty Ltd v Mornington Peninsula SC [2006] VCAT 2651 at paragraphs 29 - 52.

[19] MWC Mornington Wine Company Pty Ltd v Mornington Peninsula SC [2006] VCAT 2651 at paragraphs 30 and 48.

[20] MWC Mornington Wine Company Pty Ltd v Mornington Peninsula SC [2006] VCAT 2651 at paragraph 31.

[21] Broader relationships may also be relevant to an assessment on the merits dependent on the particular facts and circumstances that apply.

[22] Croydon Developments Pty Ltd v Yarra Ranges SC [2006] VCAT 360, J G Knowles Associates Pty Ltd v Mornington Peninsula SC [2006] VCAT 2204; Dandenong Ranges Steiner School v Cardinia SC (Red Dot) [2005] VCAT 1152; Buxton v Yarra Ranges Shire Council [2006] VCAT 1645. We record that these cases deal with different activities in several different Zones and where the Section 2 conditions are also not identical to that we must consider.

[24] As we have drawn out from the planning report accompanying the permit application, Mr Cicero's submission and the evidence of Mr Milner, Ms Austin and Mr Tatoulis.

[25] That report also relies upon the dressage and polo activities that are no longer pursued by the permit applicant.

[26] We have not turned our minds to proposed uses with a strong temporal/seasonal emphasis.

[27] Buxton v Yarra Ranges Shire Council [2006] VCAT 1645.

[28] Ms Austin's evidence is based on 25% restaurant guests staying on the premises.

[29] The polo field was deleted in the description on the Notice of Decision of what the permit would allow. The "dressage facility" referred to in the planning report accompanying the permit application (at page 3) is precluded by Condition 8 on the Notice of Decision.

[30] MWC Mornington Wine Company Pty Ltd v Mornington Peninsula SC [2006] VCAT 2651 at paragraph 49.